Item 8.01 Other Information.
Merger Between ALPP Acquisition Corporation 2, Inc., and Vayu (US), Inc.
On Tuesday December 29, 2020, the Company and a newly formed and wholly owned subsidiary of the Company named ALPP Acquisition Corporation 2, Inc. a Delaware corporation (“Merger Sub”), entered into a merger agreement (the “Agreement”) with Vayu (US), Inc., a Delaware corporation (“VAYU”), pursuant to which VAYU merged with and into Merger Sub (the “Merger”).
Background of the Merger
On December 29, 2020, the Company created Merger Sub and became its sole shareholder. Merger Sub was created solely for the purpose of the Merger.
Merger Agreement
Pursuant to the Agreement, the Merger of Merger Sub with and into VAYU was structured as a reverse triangular merger and was intended to qualify as a tax-free reorganization. Under the Agreement, VAYU would be the surviving entity (the “Surviving Corporation”).
The Board of Directors of the Company and of Merger Sub determined that the Merger would be in the best interests of the Company and Merger Sub and their respective shareholders.
The Board of Directors of VAYU determined it to be in the best interests of VAYU and its shareholders to enter into the Agreement and recommended the Merger to the VAYU shareholders.
To close the Merger, VAYU was required to seek and receive approval from its shareholders, and the holders of outstanding promissory notes (the “Convertible Notes”) that were convertible into shares of VAYU common stock (the “Noteholders”) had to agree to accept shares of the Company’s Series D Preferred Stock in lieu of shares of VAYU common stock . Pursuant to the Agreement, one of the closing conditions was that VAYU was required to receive approval from the holders of at least 80% of the VAYU Shares, defined in the Agreement as VAYU’s outstanding shares of common stock as well as the shares of VAYU common stock issuable to the Noteholders on conversion of the Convertible Notes (the “VAYU Shares”). VAYU obtained the approval of the required holders of the VAYU Shares on December 29, 2020. An additional closing condition was that VAYU was required to establish an escrow account and that the account be funded with $72,000, representing the amount of the PPP loan received by VAYU,
The Company and Merger Sub are not required to consummate the Merger and close the transaction until all of the closing conditions set forth in the Agreement are satisfied or waived.
Pursuant to the Agreement, the Merger will become effective when all of the closing conditions set forth in the Agreement have been met or waived by the applicable party and the Certificate of Merger has been filed with the Delaware Secretary of State (the “Effective Time”). The specific effects of the Merger include but are not limited to the following:
-All property, rights, privileges, immunities, powers, franchises, licenses and authority of VAYU and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities, obligations, restrictions and duties of each of VAYU and Merger Sub shall become the debts, liabilities, obligations, restrictions and duties of the Surviving Corporation.
-The Certificate of Incorporation of VAYU will be the Certificate of Incorporation of the Surviving Corporation, and the Bylaws of VAYU will be the Bylaws of the Surviving Corporation.
-At the Closing, the officers and directors of VAYU immediately prior to the Effective Time will resign, and the officers and directors of the Company immediately prior to the Closing will be appointed as officers and directors of Surviving Corporation, in each case until their respective successors are duly elected or appointed and qualified.
Additionally, as of the Effective Time, as a result of the Merger, the outstanding securities of VAYU will be converted as follows:
-Shares of VAYU’s common stock that are owned by the Company, Merger Sub, or VAYU (as treasury stock or otherwise) will be cancelled and retired automatically and will cease to exist, and no consideration shall be delivered in exchange therefor.
-The VAYU Noteholders with rights of conversion into VAYU Common Stock (“Contingent Common Stock”) will receive their portion of the Company’s Series D Convertible Preferred Stock with those rights, preferences and limitations under the Designation on a dollar-for-dollar basis using the following formula: Amount of outstanding indebtedness under the respective Notes divided by $3.50.
Additionally, the Company agreed to enter into an Employment Agreement (the “Employment Agreement”) with Daniel Pepper, the President and CEO of VAYU, discussed in more detail below, and to issue 200,000 Series D Preferred Stock Restricted Stock Units (“RSUs”) to Mr. Pepper pursuant to an RSU Agreement (the “RSU Agreement”), discussed in more detail below.
Pursuant to the Agreement, the shares of the Company’s Series D Preferred Stock issuable in connection with the Merger and pursuant to the RSU Agreement and the Additional RSU Agreement (collectively, the “Merger Preferred Stock”) are subject to the following terms and restrictions:
-As noted above in connection with the description of the Designation for the Series D Preferred Stock, each share of Series D Preferred Stock will automatically convert into shares of the Company’s Class A Common Stock on the earlier to occur of (a) the fifth day after the twenty-four month anniversary
of the original issue date or (b) the fifth day after the date on which the Company’s Class A Common Stock first trades on a national securities exchange (including but not limited to NASDAQ, NYSE, or NYSE American but excluding OTCQX Market) (such date, the “Automatic Conversion Date”)
-The sale of the shares of the Company’s Class A Common Stock issued on the Automatic Conversion Date (the “Conversion Shares”) into the market or to any private purchaser shall be limited to not more than twenty-five percent (25%) of all Conversion Shares received by the holder of the Company’s Series D Preferred Stock at the time of the automatic conversion in a 90-day period, and this restriction on resale may be evidenced by legend placed on any certificate representing the Conversion Shares.
-No fractional shares of the Company’s Class A Common Stock will be issued in connection with the Automatic Conversion, and any fraction of a share that would be issuable will be paid by the Company in cash to the holder of the Series D Preferred Stock.
-At any time prior to the Conversion Date, the Company has the right but not the obligation to redeem the Company’s Series D Preferred Stock by paying to the holder(s) of the Series D Preferred Stock $3.50 for each share of Series D Preferred Stock held by such holder.
The completion and closing of the Merger are subject to the satisfaction or waiver of customary closing conditions, including, among other things, the approval of the holders of at least 80% of the VAYU shares, as described above. The Company currently anticipates that the Merger will be close on or before January 10, 2021.
The foregoing summary of the Merger Agreement and the transactions contemplated by the Merger Agreement does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Merger Agreement, which is filed as Exhibit 2.1 to this Current Report on Form 8-K.
Employment Agreement
In connection with the Merger Agreement, and the Company, entered into the Employment Agreement, pursuant to which Mr. Pepper agreed to remain as CEO of the Surviving Corporation (the “Services”).
RSU Agreement
Additionally, in connection with the Agreement, the Company agreed to grant to Mr. Pepper a total of 200,000 Series D Preferred Stock Restricted Stock Units (the “Pepper RSUs”) pursuant to the terms of the RSU Agreement.
The foregoing summaries of the Employment Agreement and the RSU Agreement and the transactions contemplated by the Employment Agreement and the RSU Agreement do not purport to be complete and are subject to, and qualified in their entirety by reference to, the full texts of the Employment Agreement and the RSU Agreement, which are filed as Exhibits 10.1 and 10.2 to this Current Report on Form 8-K.
Item 8.01Other Events
On December 30, 2020, the Company filed an Amendment to a Preliminary Information Statement (the “Amendment”), to amend the Preliminary Information Statement filed on December 28, 2020 (the “Prior Information Statement”), which disclosed the Company’s plans to amend its certificate of incorporation to effectuate a reverse stock split and change the name of the Company. In the Amendment, the Company clarified that it was withdrawing and terminating the prior Preliminary Information Statement and that the Board of Directors of the Company would not take the corporate actions outlined in the Prior Information Statement, and that instead, the Company planned to hold a shareholder meeting to present these matters to a vote of the shareholders of the Company.