LOCK-UP AGREEMENT
Exhibit 10.3
LOCK-UP AGREEMENT
This Lock-Up Agreement (this “Agreement”), dated as of February 5, 2023, is among Cascadia Acquisition Corp., a Delaware corporation (the “Company”), and the other parties hereto identified as a “Holder” on the signature pages and Schedule A hereto (each, a “Holder” and collectively, the “Holders”).
RECITALS
WHEREAS, the Company, CAC MergerSub, Inc., a Washington corporation (“Merger Sub”), and RealWear, Inc., a Washington corporation (“RealWear”), are parties to the Business Combination Agreement, dated as of the date hereof (the “Business Combination Agreement”), by and among the Company, Merger Sub and RealWear, pursuant to which, among other things, on the Closing Date, Merger Sub will merge with and into RealWear, with RealWear surviving the Merger as a wholly-owned subsidiary of the Company (the “Merger”);
WHEREAS, the Company, Cascadia Acquisition Sponsor LLC, a Delaware limited liability company (the “Sponsor”), and each of the Insiders (as defined in the Prior Agreement (as defined herein), and, together with the Sponsor, the “Original Holders”) are parties to that certain Letter Agreement, dated as of August 25, 2021 (the “Prior Agreement”);
WHEREAS, the Company, the Sponsor, and each of the investors identified on Schedule B hereto (each, an “Anchor Investor”) are party to certain investment agreements, dated as of August 5, 2021 (the “Investment Agreements”); and
WHEREAS, in connection with the Merger and effective upon the consummation thereof, the parties hereto wish to set forth herein certain understandings between the parties with respect to restrictions on transfer of equity interests in the Company.
NOW, THEREFORE, in consideration of the foregoing, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. For purposes of this Agreement, the following terms have the meanings set forth below:
“Agreement” has the meaning set forth in the Preamble.
“Anchor Investor” has the meaning set forth in the Recitals.
“Board” means the Board of Directors of the Company.
“Business Combination Agreement” has the meaning set forth in the Recitals.
“Change in Control” means the transfer (whether by tender offer, merger, stock purchase, consolidation or other similar transaction), in one transaction or a series of related transactions, to a Person or group of affiliated Persons of the Company’s voting securities if, after such transfer, such Person or group of affiliated Persons would hold more than 50% of outstanding voting securities of the Company (or surviving entity) or would otherwise have the power to control the Board or to direct the operations of the Company.
“Closing Date” has the meaning set forth in the Business Combination Agreement.
“Commission” means the Securities and Exchange Commission.
“Common Stock” means the Company’s common stock, par value $0.0001 per share.
“Company” has the meaning set forth in the Preamble.
“Covered Shares” means, with respect to any Holder, the shares of Common Stock beneficially owned or owned of record by such Xxxxxx.
“Effective Time” shall have the meaning set forth in the Business Combination Agreement.
“Family” shall, with respect a Person, mean such Person’s current or former spouse or domestic partner, siblings, parents, spouse’s or domestic partner’s or former spouse’s or domestic partner’s parents or siblings, or any lineal descendants (whether natural or adopted) of such Person or any of the foregoing.
“Holders” has the meaning set forth in the Preamble.
“Investment Agreements” has the meaning set forth in the Recitals.
“Lock-up Period” has the meaning set forth in Section 2.1.1.
“Merger” has the meaning set forth in the Recitals.
“Merger Sub” has the meaning set forth in the Recitals.
“Original Holders” has the meaning set forth in the Recitals.
“Permitted Transferees” has the meaning set forth in Section 2.2.
“Person” means an individual, partnership, corporation, limited liability company, joint stock company, unincorporated organization or association, trust, joint venture or other similar entity, whether or not a legal entity.
“Prior Agreement” has the meaning set forth in the Recitals.
“RealWear” has the meaning set forth in the Recitals.
“Sponsor” has the meaning set forth in the Recitals.
“Transfer” means to, directly or indirectly, sell, transfer, assign, pledge, encumber, hypothecate or similarly dispose of, either voluntarily or involuntarily, or to enter into any contract, option or other arrangement or understanding with respect to the sale, transfer, assignment, pledge, encumbrance, hypothecation or similar disposition of, any interest owned by a Person or any interest (including a beneficial interest) in, or the ownership, control or possession of, any interest owned by a Person.
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ARTICLE II
LOCK-UP
Section 2.1 Lock-Up.
2.1.1 Except as permitted by Section 2.2, each Holder shall not Transfer any of such Holder’s Covered Shares until the date that is 180 days from the Closing Date (the “Lock-up Period”). Each certificate or book-entry evidencing any Covered Shares may include any legend that the Company deems appropriate to reflect the restrictions on Transfer set forth in this Agreement, in addition to any other applicable legends.
2.1.2 During the Lock-up Period, any purported Transfer by a Holder of such Holder’s Covered Shares not in accordance with this Agreement shall be null and void, and the Company shall refuse to recognize any such Transfer for any purpose. In order to enforce this Section 2.1, the Company may impose stop-transfer instructions with respect to the Covered Shares of such Holder (and the Permitted Transferees and assigns thereof) until the end of the Lock-up Period and any extensions applicable at the time, except for Transfers in compliance with the exceptions in Section 2.2.
2.1.3 Each Holder acknowledges and agrees that, notwithstanding anything to the contrary contained in this Agreement, such Holder’s Covered Shares shall remain subject to any restrictions on Transfer under applicable securities laws of any governmental entity, including all applicable holding periods under the Securities Act of 1933, as amended, and any successor thereto, as the same shall be in effect from time to time and other rules of the Commission.
Section 2.2 Exceptions. The provisions of Section 2.1 shall not apply to:
2.2.1 Transfers of shares of Common Stock or any security convertible into or exercisable or exchangeable for Common Stock as a bona fide gift or charitable contribution;
2.2.2 Transfers of shares of Common Stock by a Holder to a trust, or other entity formed for estate planning purposes for the primary benefit of a member of such Xxxxxx’s Family;
2.2.3 Transfers by will or intestate succession upon the death of such Xxxxxx;
2.2.4 the Transfer of shares of Common Stock pursuant to a qualified domestic order, court order or in connection with a divorce settlement;
2.2.5 if a Holder is a corporation, partnership (whether general, limited or otherwise), limited liability company, trust or other business entity, (i) Transfers to another corporation, partnership, limited liability company, trust or other business entity that controls, is controlled by or is under common control or management with such Holder, (ii) distributions of shares of Common Stock to partners, limited liability company members or stockholders of such Holder, including, for the avoidance of doubt, if such Holder is a partnership, to its general partner or a successor partnership or fund, or any other funds managed by such partnership and (iii) Transfers by virtue of the laws of the entity’s jurisdiction of formation or the entity’s organizational documents upon dissolution of the entity;
2.2.6 if Holder is a trust, Transfers to a trustor or beneficiary of the trust or to the estate of a beneficiary of such trust;
2.2.7 Transfers to the Company’s officers, directors or their affiliates;
2.2.8 Transfers to a nominee or custodian of a Person to whom a Transfer would be permissible under Sections 2.2.1 through 2.2.7;
2.2.9 Transfers in connection with any legal, regulatory or other order other than as set forth in Section 2.2.4;
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2.2.10 the exercise of stock options or warrants to purchase shares of Common Stock or the vesting of stock awards relating to shares of Common Stock and any related Transfer of shares of Common Stock in connection with such exercise or vesting: (a) deemed to occur upon the “cashless” or “net” exercise of such options or warrants; or (b) for the purpose of paying the exercise price of such options or warrants or for paying taxes due as a result of the exercise of such options or warrants, the vesting of such options, warrants or stock awards, or as a result of the vesting of such shares of Common Stock. All shares of Common Stock received upon such exercise, vesting or transfer will remain subject to the restrictions of this Agreement during the Lock-Up Period and shall bear any legend that the Company deems appropriate to reflect the restrictions on Transfer set forth in this Agreement, in addition to any other applicable legends;
2.2.11 the entry by the Holder, at any time after the consummation of the Merger, into any trading plan providing for the sale of shares of Common Stock by the Holder, which trading plan meets the requirements of Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended, so long as such plan does not provide for, or permit, the sale of any shares of Common Stock during the Lock-Up Period and no public announcement or filing is voluntarily made or required regarding such plan during the Lock-Up Period;
2.2.12 Transfers to satisfy any U.S. federal, state or local income tax obligations of a Holder (or its direct or indirect owners) arising from such Holder’s ownership of the Covered Shares, in each case solely and to the extent necessary to cover any tax liability as a direct result of such ownership of the Covered Shares or otherwise resulting from the Merger;
2.2.13 Transfers in the event of the completion of a liquidation, merger, stock exchange, reorganization or other similar transaction that results in all Company securityholders having the right to exchange their shares of Common Stock for cash, securities or other property; and
2.2.14 Transfers pursuant to a bona fide third-party tender offer, merger, stock sale, recapitalization, consolidation or other transaction involving a Change in Control of the Company; provided, however, that in the event that such tender offer, merger, recapitalization, consolidation or other such transaction is not completed, the Common Stock subject to this Agreement shall remain subject to this Agreement;
provided, however, that in the case of any Transfer pursuant to Sections 2.2.1 through 2.2.8, each pledgee or transferee shall agree in writing, in form and substance reasonably satisfactory to the Company, to be bound by the provisions of this Agreement (such transferees, “Permitted Transferees”).
Section 2.3 Release of Lock-up Restrictions. Notwithstanding the other provisions set forth herein, the Board may, in its sole discretion, determine to waive, amend, or repeal the restrictions set forth in Section 2.1 above, whether in whole or in part; provided, that any such waiver, amendment or repeal shall not make such restrictions more restrictive or apply for a longer period of time.
Section 2.4 Other Lock-up Restrictions.
2.4.1 Each of (a) the Company and (b) if such Holder is an Original Holder, each Holder hereby acknowledges and agrees that this Article II supersedes Section 7 of the Prior Agreement in all respects, and, upon effectiveness of this Agreement, the Prior Agreement shall be deemed amended to remove Section 7 of the Prior Agreement.
2.4.2 Effective at the Closing and upon receipt of written consents of such Anchor Investors to modify their respective Investment Agreements, Section 5(a) of each Investment Agreement is hereby waived, and superseded for each Anchor Investor by this Article II (and prior to the Closing, Section 5(a) of each Investment Agreement shall remain operative).
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ARTICLE III
TERMINATION
Section 3.1 Termination. This Agreement shall terminate upon the earliest to occur of: (i) the termination of the Business Combination Agreement in accordance with its terms, (ii) the date on which neither the Holders nor any of their Permitted Transferees are subject to the restrictions contained in Section 2.1, (iii) the closing of a merger, liquidation, stock exchange, reorganization or other similar transaction after the date hereof that results in all of the public stockholders of the Company having the right to exchange their shares of Common Stock for cash, securities or other property; and (iv) the liquidation of the Company.
Section 3.2 Effect of Business Combination Agreement Termination. This Agreement shall only become effective at the Effective Time, and prior to such date this Agreement shall be of no force and effect. In the event of a termination of this Agreement as a result of the termination of the Business Combination Agreement, this Agreement shall become void.
ARTICLE IV
GENERAL PROVISIONS
Section 4.1 Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given and shall be deemed to have been duly given when delivered (i) by delivery in person, (ii) by e-mail, having obtained electronic delivery confirmation thereof (i.e., an electronic record of the sender that the e-mail was sent to the intended recipient thereof without an “error” or receipt of a similar message that such e-mail was not deliverable or not received by such intended recipient), or (iii) by nationally recognized overnight delivery service to the other parties as follows (or at such other address or email address for a party as shall be specified in a notice given in accordance with this Section 4.1):
If to the Company prior to the Closing Date, to it at:
Xxxxx Xxxx
Chief Executive Officer
0000 0xx Xxx., Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Email: xxxxx@xxxxxxxxxxxxxxxxxxxxxxx.xxx
with a copy (which shall not constitute notice) to:
Xxxxxxx Coie LLP
0000 X.X. Xxxxx Xxxxxx Xxxxx Xxxxx
Xxxxxxxx, Xxxxxx 00000
Attention: Xxxx Xxxxx
Email: XXxxxx@xxxxxxxxxxx.xxx
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If to the Company after the Closing Date, to it at:
RealWear Holdings, Inc.
000 Xxxxxxxx Xxxx Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxx Xxxxxx
Email: xxx@xxxxxxxx.xxx
with a copy (which shall not constitute notice) to:
Xxxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxxxxx; Xxxx X. Xxxxx
Email: xxxx.xxxxxxxx@xx.xxx; xxxx.xxxxx@xx.xxx
If to a Holder, to the address or email address set forth for Holder on the signature page hereof.
Section 4.2 Severability. Whenever possible, each provision of this Agreement will be interpreted in such a manner as to be effective and valid under applicable law, but if any term or other provision of this Agreement is held to be invalid, illegal or unenforceable under applicable law, all other provisions of this Agreement shall remain in full force and effect so long as the economic or legal substance of the subject matter hereof is not affected in any manner materially adverse to any party hereto. Upon such determination that any term or other provision of this Agreement is invalid, illegal or unenforceable under applicable law, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties hereto as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
Section 4.3 Entire Agreement; Assignment. This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. This Agreement may not be assigned (whether by operation of law or otherwise) by any party without the prior express written consent of the Company.
Section 4.4 Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each party hereto (and its respective permitted assigns), and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
Section 4.5 Governing Law. This Agreement, and any rights or claims arising from or relating to this Agreement or the transactions contemplated hereby, shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the law of any jurisdiction other than the State of Delaware.
Section 4.6 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH OF THE PARTIES HERETO (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THAT FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 4.6.
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Section 4.7 Submission to Jurisdiction. Each of the parties hereto irrevocably and unconditionally submits to the exclusive jurisdiction of the Chancery Court of the State of Delaware (or, if the Chancery Court of the State of Delaware lacks or declines to accept jurisdiction, the Superior Court of the State of Delaware, or the United States District Court for the District of Delaware), for the purposes of any proceeding, claim, demand, action or cause of action arising under, for enforcement or breach of, or relating to this Agreement or any of the transactions contemplated hereby, and irrevocably and unconditionally waives any objection to the laying of jurisdiction and venue of any such proceeding in any such court, and further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such proceeding has been brought in an inconvenient forum. Each party hereto hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any proceeding claim, demand, action or cause of action against such party arising under, for enforcement or breach of, or relating to this Agreement or any of the transactions contemplated hereby, (a) any claim that such party is not personally subject to the jurisdiction of the courts as described in this Section 4.7 for any reason, (b) that such party or such party’s property is exempt or immune from the jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) that (i) the proceeding, claim, demand, action or cause of action in any such court is brought against such party in an inconvenient forum, (ii) the venue of such proceeding, claim, demand, action or cause of action against such party is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced against such party in or by such courts. Each party agrees that service of any process, summons, notice or document by registered mail to such party’s respective address set forth in Section 4.1 shall be effective service of process for any such proceeding, claim, demand, action or cause of action.
Section 4.8 Construction; Interpretation. The headings set forth in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. No party, nor its respective counsel, shall be deemed the drafter of this Agreement for purposes of construing the provisions hereof, and all provisions of this Agreement shall be construed according to their fair meaning and not strictly for or against any party. Unless otherwise indicated to the contrary herein by the context or use thereof: (a) the words, “herein,” “hereto,” “hereof” and words of similar import refer to this Agreement as a whole, including the Schedules, and not to any particular section, subsection, paragraph, subparagraph or clause set forth in this Agreement; (b) masculine gender shall also include the feminine and neutral genders, and vice versa; (c) words importing the singular shall also include the plural, and vice versa; (d) the words “include,” “includes” or “including” shall be deemed to be followed by the words “without limitation”; (e) references to “$” or “dollar” or “US$” shall be references to United States dollars; (f) the word “or” is disjunctive but not necessarily exclusive; (g) the words “writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form; (h) the word “day” means calendar day unless business day is expressly specified; (i) the word “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”; (j) all references to Sections or Schedules are to Sections and Schedules of this Agreement; and (k) all references to any law will be to such law as amended, supplemented or otherwise modified or re-enacted from time to time.
Section 4.9 Counterparts; Electronic Signatures. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by e-mail, electronic signature or scanned pages shall be effective as delivery of a manually executed counterpart to this Agreement.
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Section 4.10 Specific Performance. The parties hereto agree that irreparable damage would occur in the event any provision of this Agreement was not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or in equity. Each of the parties hereby further waives (a) any defense in any action for specific performance that a remedy at law would be adequate and (b) any requirement under any law to post security or a bond as a prerequisite to obtaining equitable relief.
Section 4.11 Amendment. This Agreement may not be amended except by an instrument in writing signed by (i) the Company, (ii) the Sponsor, and (iii) Holders holding at least a majority in interest of the then-outstanding number of shares held by all Holders (provided the Holders or their Permitted Transferees hold such shares at the time of such amendment).
Section 4.12 Extension; Waiver. At any time, (i) the Company may (a) extend the time for the performance of any obligation or other act of any Holder, (b) waive any inaccuracy in the representations and warranties of any Holder contained herein or in any document delivered by such Holder pursuant hereto and (c) waive compliance with any agreement of such Holder or any condition to its own obligations contained herein. At any time, (i) the Holders may (a) extend the time for the performance of any obligation or other act of the Company, (b) waive any inaccuracy in the representations and warranties of the Company contained herein or in any document delivered by the Company pursuant hereto and (c) waive compliance with any agreement of the Company or any condition to their own obligations contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the party or parties to be bound thereby. Any waiver or extension of a term by a party shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term, or a waiver of any other term.
Section 4.13 Liability. The liability of any Holder under this Agreement is several (and not joint). Notwithstanding any other provision of this Agreement, in no event will any Holder be liable for any other Holder’s breach of such other Holder’s obligations under this Agreement.
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IN WITNESS WHEREOF, each of the parties has executed this Agreement as of the date first written above.
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| Title: | ||
[Signature Page to Lock-up Agreement]
| HOLDER: |
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| Name: |
| Address for Notice: |
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| Telephone Number: |
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| Email Address: |
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[Signature Page to Lock-up Agreement]
SCHEDULE A
HOLDERS
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SCHEDULE B
ANCHOR INVESTORS
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