Change in fair value | | — | Fair valueValue at February 23, 2021March 31, 2023 – public and private warrants | | | $—560,000 | InitialChange in fair value of the warrants
| | | 16,571,000
| Public Warrants reclassified to level 1(1)
| | | (5,980,000)
| Change in fair value
| | | (4,767,000)224,000
| Fair Value at December 31, 2021June 30, 2023 – private warrants | | | $5,824,000784,000 |
(1)
Change in fair value
| Assumes the Public Warrants were reclassified on December 31, 2021. | | 112,000 | Fair Value at September 30, 2023 – private warrants | | | $896,000 |
TABLE OF CONTENTS Note 8 - Stockholders’ Deficit Preferred Stock The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. At September 30, 2023 and December 31, 2022, and 2021, there were no shares of preferred stock issued or outstanding. Class A Common Stock The Company is authorized to issue 500,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of Class A common stock are entitled to one vote for each share. As of September 30, 2023 and December 31, 2022, there were no shares of Class A common stock issued or outstanding, excluding 5,702,791 and 23,000,000 shares subject to possible redemption. Class B Common Stock The Company is authorized to issue 50,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders of the Company’s Class B common stock are entitled to one vote for each common stock. At September 30, 2023 and December 31, 2022, there were 5,750,000 shares of Class B common stock issued and outstanding. Other than with regard to the election of directors prior to the consummation of a Business Combination, holders of Class A common stock and Class B common stock will vote together as a single class on all matters submitted to a vote of stockholders, except as required by law. The shares of Class B common stock will automatically convert into shares of Class A common stock at the time of a Business Combination, or earlier at the option of the holder thereof, on a one-for-one basis (subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like), and subject to further adjustment. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts offered in the IPO and related to the closing of a Business Combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares of common stock outstanding upon completion of the IPO plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with a Business Combination (excluding any shares or equity-linked securities issued, or to be issued, to any seller in a Business Combination and any private placement-equivalent warrants issued to the Sponsor or its affiliates upon conversion of loans made to the Company). Note 9 - Subsequent Events Management has evaluated subsequent events to determine if events or transactions occurring through the date the unaudited condensed financial statements were issued, require potential adjustment to or disclosure in the unaudited condensed financial statements and did not identify any subsequent events that would have required adjustment or disclosure in the unaudited condensed financial statements other than as noted below. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard On October 16, 2023, the “Company”, received a written notice (the “Notice”) from the Listing Qualifications Department of the Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that it was no longer in compliance with Nasdaq Listing Rule 5450(a)(2), which requires a minimum of 400 total holders for continued listing on the Nasdaq Global Market (the “Minimum Public Holders Rule”). The Notice states that the Company has 45 calendar days from the date of the Notice to submit a plan to regain compliance with the Minimum Public Holders Rule. The Company intends to submit a compliance plan within the specified period and take all reasonable measures available to regain compliance under the Minimum Public Holders TABLE OF CONTENTS Rule. If Nasdaq accepts the compliance plan, the Company will be granted an extension of time to regain compliance with the Minimum Public Holders Rule. If Nasdaq does not accept the compliance plan, the Company will have the opportunity to appeal the decision to the Nasdaq Hearings Panel. The Notice has no immediate effect on the listing of the Company’s units, Class A common stock or warrants on the Nasdaq Global Market while the Company prepares and submits a compliance plan. There can be no assurance that the compliance plan will be accepted by Nasdaq or that the Company will be able to regain compliance with the minimum requirements of the Minimum Public Holders Rule or will otherwise be in compliance with other Nasdaq listing criteria. Second Extension Meeting On December 11, 2023, FIAC filed a definitive proxy statement in connection with a special meeting of stockholders (the “Second Extension Meeting”) to be held on December 29, 2023, to consider and act upon a proposal to extend the Termination Date from January 1, 2024 to April 1, 2024 (the “Charter Extension Date”) and to allow FIAC, without the need for another stockholder vote, to elect to extend the Termination Date to consummate a business combination on a monthly basis for up to seven times, by an additional one month each time, after the Charter Extension Date, by resolution of FIAC’s board of directors, if requested by Sponsor. In connection with the approval of the extension at the Second Extension Meeting, the holders of 3,985,213 shares of Class A Common Stock properly exercised their right to redeem their shares for cash at a redemption price of approximately $10.95 per share, for an aggregate redemption amount of approximately $43,638,082. In October 2023, FIAC deposited an additional $162,500 in the Trust Account, for an aggregate of $1,137,500, to extend the Termination Date to December 1, 2023, and in November 2023, FIAC deposited an additional $162,500 in the Trust Account, for an aggregate of $1,300,000, to extend the Termination Date to January 1, 2024. In connection with the Second Extension Meeting, FIAC’s Sponsor agreed that if the proposal to extend the Termination Date from January 1, 2024 to April 1, 2024 and to allow FIAC without another stockholder vote, to elect to extend the Termination Date to consummate a business combination on a monthly basis for up to seven times (until November 1, 2024) by an additional one month each time after the Charter Extension Date, by resolution of the Company’s board of directors if requested by Sponsor, unless the closing of the Company’s initial business combination shall have occurred prior to such date (the “Second Extension Proposal”) was approved, the Sponsor would deposit into the Trust Account the lesser of (a) $120,000 and (b) $0.06 per share of Class A Common Stock that was not redeemed in connection with the Second Extension Meeting. Because the Second Extension Proposal was approved, the Sponsor deposited $103,055 into the Trust Account, and the Termination Date was extended to April 1, 2024 (unless further extended). Promissory Notes On October 1, 2023, FIAC drew $162,500 pursuant to the Promissory Note, which funds were deposited into the Trust Account for FIAC’s public stockholders. This deposit enabled FIAC to extend the Termination Date from October 1, 2023 to November 1, 2023. On November 1, 2023, FIAC drew $162,500 pursuant to the Promissory Note, which funds were deposited into the Trust Account for FIAC’s public stockholders. This deposit enabled FIAC to extend the Termination Date from November 1, 2023 to December 1, 2023. On November 30, 2023, FIAC drew $162,500 pursuant to the promissory note underlying the Second Sponsor Working Capital Loan (the “Second Promissory Note”), which funds were deposited into the Trust Account for FIAC’s public stockholders. This deposit enabled FIAC to extend the Termination Date from December 1, 2023 to January 1, 2024. FIAC also drew $50,000, $100,000, $187,500 and $25,000 in September 2023, October 2023, November 2023 and December 2023, respectively, pursuant to the Promissory Note for working capital. Further, in December 2023 and January 2024, FIAC withdrew $205,000 and $170,000, respectively, pursuant to the Second Promissory Note for working capital. As of January 2024, the amounts outstanding under the Promissory Note and Second Promissory Note were $1,500,000 and 375,000, respectively. TABLE OF CONTENTS REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of
Focus Impact Acquisition Corp. Opinion on the Financial Statements We have audited the accompanying balance sheets of Focus Impact Acquisition Corp. (the “Company”) as of December 31, 2022 and 2021, the related statements of operations, stockholders’ deficit and cash flows for the year ended December 31, 2022 and for the period from February 23, 2021 (inception) through December 31, 2021, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the year ended December 31, 2022 and for the period from February 23, 2021 (inception) through December 31, 2021 in conformity with accounting principles generally accepted in the United States of America. Explanatory Paragraph – Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, if the Company is unable to complete a Business Combination, then the Company will cease all operations except for the purpose of liquidating. In addition, the Company has incurred negative cash used in operating activities and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provides a reasonable basis for our opinion. /s/ Marcum LLP
Marcum LLP
We have served as the Company’s auditor since 2021.
New York, NY
April 6, 2023 TABLE OF CONTENTS FOCUS IMPACT ACQUISITION CORP. BALANCE SHEETS Assets:
| | | | | | | Current assets:
| | | | | | | Cash | | | $1,426,006 | | | $1,393,939 | Prepaid expenses | | | 367,169 | | | 462,845 | Total current asset | | | 1,793,175 | | | 1,856,784 | | | | | | | | Prepaid expenses, non-current | | | — | | | 356,689 | Investment held in Trust Account | | | 237,038,010 | | | 234,603,156 | Total assets | | | $238,831,185 | | | $236,816,629 | | | | | | | | Liabilities and Stockholders’ Deficit
| | | | | | | Current liabilities:
| | | | | | | Accounts payable and accrued expenses | | | $1,001,990 | | | $656,314 | Due to Sponsor | | | 120,000 | | | — | Franchise taxes payable | | | 63,283 | | | 170,959 | Income taxes payable | | | 645,442 | | | — | Total current liabilities | | | 1,830,715 | | | 827,273 | | | | | | | | Warrant liability | | | 1,135,000 | | | 11,804,000 | Marketing agreement | | | 150,000 | | | — | Deferred underwriting commissions | | | 8,650,000 | | | 8,650,000 | Total liabilities | | | 11,765,715 | | | 21,281,273 | | | | | | | | Commitments and Contingencies (Note 6)
| | | | | | | Class A common stock subject to possible redemption, 23,000,000 shares at redemption value | | | 237,020,680 | | | 234,600,000 | | | | | | | | Stockholders’ Deficit:
| | | | | | | Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding | | | — | | | — | Class A common stock, $0.0001 par value; 500,000,000 shares authorized; none issued and outstanding, (excluding 23,000,000 shares subject to possible redemption) | | | — | | | — | Class B common stock, $0.0001 par value; 50,000,000 shares authorized; 5,750,000 shares issued and outstanding | | | 575 | | | 575 | Additional paid-in capital | | | — | | | — | Accumulated deficit | | | (9,955,785) | | | (19,065,219) | Total stockholders’ deficit | | | (9,955,210) | | | (19,064,644) | Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit | | | $238,831,185 | | | $236,816,629 |
The accompanying notes are an integral part of these financial statements.
TABLE OF CONTENTS FOCUS IMPACT ACQUISITION CORP. STATEMENTS OF OPERATIONS Formation and operating costs | | | $1,784,832 | | | $431,275 | Marketing service fee | | | 150,000 | | | — | Loss from operations | | | (1,934,832) | | | (431,275) | | | | | | | | Other income (expense):
| | | | | | | Warrant transaction costs | | | — | | | (509,712) | Change in fair value of warrant liabilities | | | 10,669,000 | | | 4,767,000 | Operating account interest income | | | 7,413 | | | — | Income from trust account | | | 3,433,975 | | | 3,156 | Total other income, net | | | 14,110,388 | | | 4,260,444 | | | | | | | | Income before provision for income taxes | | | 12,175,556 | | | 3,829,169 | Provision for income taxes | | | (645,442) | | | — | Net income | | | $11,530,114 | | | $3,829,169 | | | | | | | | Basic and diluted weighted average shares outstanding, Class A common stock subject to possible redemption | | | 23,000,000 | | | 3,843,836 | Basic and diluted net income per share, Class A common stock subject to possible redemption | | | $0.40 | | | $0.44 | Basic and diluted weighted average shares outstanding, common stock | | | 5,750,000 | | | 4,915,068 | Basic and diluted net income per share, common stock | | | $0.40 | | | $0.44 |
The accompanying notes are an integral part of these financial statements.
TABLE OF CONTENTS FOCUS IMPACT ACQUISITION CORP. STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 2022 AND FOR THE PERIOD FROM FEBRUARY 23, 2021
(INCEPTION) THROUGH DECEMBER 31, 2021 Balance as of February 23, 2021 (inception) | | | — | | | $— | | | $— | | | $— | | | $— | Issuance of Class B common stock to Sponsor | | | 5,750,000 | | | 575 | | | 24,425 | | | — | | | 25,000 | Sale of 23,000,000 Units through public offering | | | — | | | — | | | 229,997,700 | | | — | | | 229,997,700 | Sale of 11,200,000 Private Placement Warrants | | | — | | | — | | | 11,200,000 | | | — | | | 11,200,000 | Net offering costs | | | — | | | — | | | (12,947,813) | | | — | | | (12,947,813) | Initial fair value of warrant liability | | | — | | | — | | | (16,571,000) | | | — | | | (16,571,000) | Excess of cash received over fair value of private placement warrants | | | — | | | — | | | 3,024,000 | | | (3,024,000) | | | — | Net income | | | — | | | — | | | — | | | 3,829,169 | | | 3,829,169 | Class A common stock subject to possible redemption | | | — | | | — | | | (214,727,312) | | | (19,870,388) | | | (234,597,700) | Balance as of December 31, 2021 | | | 5,750,000 | | | 575 | | | — | | | (19,065,219) | | | (19,064,644) | Accretion for Class A common stock to redemption amount | | | — | | | — | | | — | | | (2,420,680) | | | (2,420,680) | Net income | | | — | | | — | | | — | | | 11,530,114 | | | 11,530,114 | Balance as of December 31, 2022 | | | 5,750,000 | | | $575 | | | $— | | | $(9,955,785) | | | $(9,955,210) |
The accompanying notes are an integral part of these financial statements.
TABLE OF CONTENTS FOCUS IMPACT ACQUISITION CORP. STATEMENTS OF CASH FLOWS Cash flows from operating activities:
| | | | | | | Net income | | | $11,530,114 | | | $3,829,169 | Adjustments to reconcile net income to net cash used in operating activities:
| | | | | | | Transaction costs allocated to warrant liabilities | | | — | | | 509,712 | Change in fair value of warrant liability | | | (10,669,000) | | | (4,767,000) | Income from investments held in Trust Account | | | (3,433,975) | | | (3,156) | Changes in assets and liabilities:
| | | | | | | Prepaid expenses | | | 452,365 | | | (819,534) | Accounts payable and accrued expenses | | | 345,676 | | | 656,314 | Due to Sponsor | | | 120,000 | | | — | Franchise tax payable | | | 645,442 | | | 170,959 | Marketing service fee | | | 150,000 | | | — | Income taxes payable | | | (107,676) | | | — | Net cash used in operating activities | | | (967,054) | | | (423,536) | | | | | | | | Cash flows from investing activities:
| | | | | | | Proceeds from Trust Account | | | 999,121 | | | — | Investments in Trust Account | | | — | | | (234,600,000) | Net cash provided by (used in) investing activities | | | 999,121 | | | (234,600,000) | | | | | | | | Cash flows from financing activities:
| | | | | | | Proceeds from sale of common stock to Sponsor | | | — | | | 25,000 | Proceeds from initial public offering, net of costs | | | — | | | 229,192,475 | Proceeds from private placement | | | — | | | 11,200,000 | Payment of underwriter discount | | | — | | | (4,000,000) | Net cash provided by financing activities | | | — | | | 236,417,475 | | | | | | | | Net change in cash | | | 32,067 | | | 1,393,939 | Cash, beginning of the period | | | 1,393,939 | | | — | Cash, end of the period | | | $1,426,006 | | | $1,393,939 | | | | | | | | Supplemental disclosure of cash flow information:
| | | | | | | Accretion for Class A common stock to redemption amount | | | $2,420,680 | | | $234,600,000 | Deferred underwriters’ discount changed to additional paid-in capital | | | $— | | | $8,650,000 | Initial classification of warrant liability | | | $— | | | $16,571,000 |
The accompanying notes are an integral part of these financial statements.
TABLE OF CONTENTS Note 1 - Organization and Business Operations Organization and General Focus Impact Acquisition Corp. (the “Company”) is a blank check company incorporated in Delaware on February 23, 2021. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies. As of December 31, 2022, the Company had not commenced any operations. All activity for the period from February 23, 2021 (inception) through December 31, 2022 relates to the Company’s formation and the Initial Public Offering (“IPO”) (as defined below), and since the closing of the IPO, the search for a prospective initial business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the IPO. Sponsor and Financing The Company’s sponsor is Focus Impact Sponsor, LLC, a Delaware limited liability company (the “Sponsor”). The registration statement for the Company’s IPO was declared effective on October 27, 2021 (the “Effective Date”). On November 1, 2021, the Company consummated its IPO of 23,000,000 units (the “Units”) which included the exercise of the underwriters’ option to purchase an additional 3,000,000 Units at the IPO price to cover over-allotments. Each Unit consists of one share of Class A common stock, $0.0001 par value per share (the “Class A common stock”), and one-half of one redeemable warrant (the “Public Warrants”), each whole Public Warrant entitling the holder thereof to purchase one share of Class A Common Stock at an exercise price of $11.50 per share, subject to adjustment. The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $230,000,000, which is discussed in Note 3. Simultaneously with the closing of IPO the Company completed the private sale of 11,200,000 warrants (the “Private Placement Warrants”) at a purchase price of $1.00 per Private Placement Warrant to the Sponsor, generating gross proceeds to the Company of $11,200,000. Offering costs amounted to $13,457,525 consisting of $4,000,000 of underwriting commissions, $8,650,000 of deferred underwriting commissions, and $807,525 of other offering costs. Of the offering costs, $509,712 is included within accumulated deficit and $12,947,813 is included in additional paid in capital. Upon the closing of the IPO (including the full exercise of the underwriters’ over-allotment option) and the private placement, $234,600,000 has been placed in a trust account (the “Trust Account”), representing the redemption value of the Class A common stock sold in the IPO, at their redemption value of $10.20 per share. Nasdaq rules provide that the Business Combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the value of the assets held in the Trust Account (as defined below) (excluding the deferred underwriting commissions and taxes payable) at the time of the Company signing a definitive agreement in connection with the Business Combination. The Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). There is no assurance that the Company will be able to successfully effect a Business Combination. Upon the closing of the IPO, $10.20 per Unit sold in the IPO (including the full exercise of the underwriters’ over-allotment option) and the proceeds of the sale of the Private Placement Warrants, are held in a trust account (“Trust Account”) and will be invested only in U.S. government securities with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. The trust account is intended as a holding place for funds pending the earliest to occur of: (a) the completion of the initial Business Combination, (b) the redemption of any public shares properly tendered in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation (i) to modify the substance or timing of the Company’s obligation to provide holders of the Company’s Class A common stock the right to have their shares redeemed in connection with the initial Business Combination or to redeem 100% of the Company’s public shares if the Company does do not complete the initial TABLE OF CONTENTS Business Combination within 18 months from the closing of this offering or (ii) with respect to any other provisions relating to the rights of holders of the Company’s Class A common stock, and (c) the redemption of the Company’s public shares if the Company has not consummated the initial Business Combination within 18 months from the closing of this offering, subject to applicable law. The Company will provide its public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon the completion of the initial Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a proposed Business Combination or conduct a tender offer will be made by the Company, solely in the Company’s discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would require the Company to seek stockholder approval under the law or stock exchange listing requirement. The public stockholders will be entitled to redeem their shares at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the initial Business Combination including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its franchise and income taxes, divided by the number of then outstanding public shares, subject to the limitations. The amount in the Trust Account is initially anticipated to be approximately $10.20 per public share. All of the Public Shares contain a redemption feature which allows for the redemption of such Public Shares in connection with the Company’s liquidation, if there is a stockholder vote or tender offer in connection with an initial Business Combination and in connection with certain amendments to the amended and restated certificate of incorporation. In accordance with SEC and its guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not solely within the control of a company require common stock subject to redemption to be classified outside of permanent equity. Given that the Public Shares will be issued with other freestanding instruments (i.e., public warrants), the initial carrying value of Class A common stock classified as temporary equity will be the allocated proceeds determined in accordance with ASC 470-20. The Class A common stock is subject to ASC 480-10-S99. If it is probable that the equity instrument will become redeemable, the Company has the option to either (i) accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument or (ii) recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period. The Company has elected to recognize the changes immediately. The accretion or remeasurement will be treated as a deemed dividend (i.e., a reduction to retained earnings, or in absence of retained earnings, additional paid-in capital). While redemptions cannot cause the Company’s net tangible assets to fall below $5,000,001, the Public Shares are redeemable and will be classified as such on the balance sheet until such date that a redemption event takes place. In such case, the Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the issued and outstanding shares voted are voted in favor of the Business Combination. The Company’s amended and restated certificate of incorporation provides that the Company will have only 18 months from the closing of the Proposed Public Offering (the “Combination Period”) to complete the initial Business Combination. If the Company is unable to complete the initial Business Combination within such 18-month period, the Company may seek an amendment to the Company’s amended and restated certificate of incorporation to extend the period of time the Company has to complete an initial Business Combination beyond 18 months. Our amended and restated certificate of incorporation requires that such an amendment be approved by holders of 65% of the Company’s outstanding common stock. If the Company does not complete the initial Business Combination within 18 months from the closing of this offering (or such extended period to complete an initial Business Combination), the Company will: (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 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 us to pay the Company’s franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law; and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. TABLE OF CONTENTS The Sponsor, officers and directors entered into a letter agreement with us, pursuant to which they have agreed (i) to waive their redemption rights with respect to any founder shares and public shares held by them in connection with the completion of the initial Business Combination and a stockholder vote to approve an amendment to the Company’s amended and restated certificate of incorporation (A) that would modify the substance or timing of the Company’s obligation to provide holders of shares of Class A common stock the right to have their shares redeemed in connection with the initial Business Combination or to redeem 100% of the Company’s public shares if the Company does not complete the initial Business Combination within 18 months from the closing of this offering or (B) with respect to any other provision relating to the rights of holders of the Company’s Class A commons stock and (ii) to waive their rights to liquidating distributions from the trust account with respect to any founder shares they hold if the Company fails to consummate an initial Business Combination within 18 months from the closing of this offering (although they will be entitled to liquidating distributions from the trust account with respect to any public shares they hold if the Company fails to complete the initial Business Combination within the prescribed time frame). Further, the Company has agreed not to enter into a definitive agreement regarding an initial Business Combination without the prior consent of the Sponsor. If the Company submits the initial Business Combination to the Company’s public stockholders for a vote, the Company will complete the initial Business Combination only if a majority of the outstanding shares of common stock voted are voted in favor of the initial Business Combination. The Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a vendor for services rendered or products sold to the Company, or by a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the trust account to below (i) $10.20 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay the Company’s franchise and income taxes. This liability will not apply with respect to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under the Company’s indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, then the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company has not independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and believes that the Sponsor’s only assets are securities of the Company. The Company has not asked the Sponsor to reserve for such indemnification obligations. None of the Company’s officers will indemnify the Company for claims by third parties including, without limitation, claims by vendors and prospective target businesses. Risks and Uncertainties Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statement. The financial statement do not include any adjustments that might result from the outcome of this uncertainty. The Company’s results of operations and ability to complete an initial business combination may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond the Company’s control. The Company’s business could be impacted by, among other things, downturns in the financial markets or in economic conditions, increases in oil prices, inflation, increases in interest rates, supply chain disruptions, declines in consumer confidence and spending, the ongoing effects of the COVID-19 pandemic, including resurgences and the emergence of new variants, and geopolitical instability, such as the military conflict in the Ukraine. The Company cannot at this time fully predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact our business and the Company’s ability to complete an initial business combination. Consideration of Inflation Reduction Act Excise Tax On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing TABLE OF CONTENTS corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax. Any redemption or other repurchase that occurs after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject to the excise tax. Whether and to what extent the Company would be subject to the excise tax in connection with a Business Combination, extension vote or otherwise would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the Business Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the nature and amount of any “PIPE” or other equity issuances in connection with a Business Combination (or otherwise issued not in connection with a Business Combination but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and other guidance from the Treasury. In addition, because the excise tax would be payable by the Company and not by the redeeming holder, the mechanics of any required payment of the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a Business Combination and in the Company’s ability to complete a Business Combination. Liquidity and Capital Resources, Going Concern In connection with the Company’s assessment of going concern considerations in accordance with Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management believes that the funds which the Company has available following the completion of the IPO may not enable it to sustain operations for a period of at least one-year from the issuance date of this financial statement. Based on the foregoing, management believes that the Company may not have sufficient working capital to meet its needs through the earlier of the consummation of a Business Combination or one year from this filing. Over this time period, the Company will be using these funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination. In connection with the Company’s assessment of going concern considerations in accordance with FASB’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that the mandatory liquidation, working capital deficiency, and subsequent dissolution, should the Company be unable to complete a Business Combination, raises substantial doubt about the Company’s ability to continue as a going concern. The Company has until May 1, 2023 to consummate a Business Combination. It is uncertain that the Company will be able to consummate a Business Combination by this time. If a Business Combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after May 1, 2023. Note 2 - Significant Accounting Policies Basis of Presentation The accompanying financial statement is presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. Emerging Growth Company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act, and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities TABLE OF CONTENTS Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. Use of Estimates The preparation of the financial statements in conformity with US GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Offering Costs associated with the Initial Public Offering The Company complies with the requirements of the ASC 340-10-S99-1. Offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the IPO that were directly related to the IPO. Offering costs will be allocated to the separable financial instruments issued in the IPO based on a relative fair value basis, compared to total proceeds received. Offering costs associated with warrant liabilities were expensed and presented as non-operating expenses in the statement of operations and offering costs associated with the Class A common stock were charged to temporary equity. Offering costs amounted to $13,457,525 consisting of $4,000,000 of underwriting commissions, $8,650,000 of deferred underwriting commissions, and $807,525 of other offering costs. Of the offering costs, $509,712 is included within the statement of operations and $12,947,813 is included in temporary equity. Cash and Cash Equivalents The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. As of December 31, 2022 and 2021, the Company had cash of $1,426,006 and $1,393,939, respectively, and no cash equivalents. Investment Held in Trust Account Investments held in the Trust Account are held in a money market fund characterized as Level 1 investments within the fair value hierarchy under ASC 820 (as defined below). Concentration of credit risk Financial instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution which, at times may exceed the Federal depository insurance coverage of $250,000. As of December 31, 2022 and 2021, the Company had not experienced losses on this account and management believes the Company was not exposed to significant risks on such account. Fair Value of Financial Instruments The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet, primarily due to its short-term nature. The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually. TABLE OF CONTENTS The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities: Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not being applied. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment. Level 2—Valuations based on (i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that are not active for identical or similar assets, (iii) inputs other than quoted prices for the assets or liabilities, or (iv) inputs that are derived principally from or corroborated by market through correlation or other means. Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement. Net Income Per Common Stock The Company has two classes of common stock, which are referred to as Class A common stock and Class B common stock. Earnings and losses are shared pro rata between the two classes of stockholders. Private and public warrants to purchase 22,700,000 Class A common stock at $11.50 per share were issued on November 1, 2021. No warrants were exercised during the year ended December 31, 2022 and the period from February 23, 2021 (inception) through December 31, 2021. The calculation of diluted income per common stock does not consider the effect of the warrants issued in connection with (i) the Initial Public Offering, (ii) the exercise of the over-allotment and (iii) the Private Placement since the exercise of the warrants is contingent upon the occurrence of future events. As a result, diluted net income per common stock is the same as basic net income per common stock for the periods. Accretion associated with the redeemable Class A common stock is excluded from earnings per common stock as the redemption value approximates fair value. Basic and diluted net income per share
| | | | | | | | | | | | | Numerator:
| | | | | | | | | | | | | Allocation of net income | | | $9,224,091 | | | $2,306,023 | | | $1,684,834 | | | $2,144,335 | Denominator:
| | | | | | | | | | | | | Weighted average shares outstanding | | | 23,000,000 | | | 5,750,000 | | | 3,843,836 | | | 4,915,068 | Basic and diluted net income per share, redeemable common stock | | | $0.40 | | | $0.40 | | | $0.44 | | | $0.44 |
Derivative Financial Instruments The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”. Derivative instruments are initially recorded at fair value on the grant date and re-valued at each reporting date, with changes in the fair value reported in the statement of operations. Derivative assets and liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. Warrant Liability The Company accounted for the 22,700,000 warrants issued in connection with the IPO and Private Placement in accordance with the guidance contained in FASB ASC 815 “Derivatives and Hedging” whereby under that provision the warrants do not meet the criteria for equity treatment and must be recorded as a liability. Accordingly, the TABLE OF CONTENTS Company classified the warrant instrument as a liability at fair value and will adjust the instrument to fair value at each reporting period. This liability will be re-measured at each balance sheet date until the warrants are exercised or expire, and any change in fair value will be recognized in the Company’s statement of operations. The fair value of warrants was estimated using an internal valuation model. Our valuation model utilized inputs such as assumed share prices, volatility, discount factors and other assumptions and may not be reflective of the price at which they can be settled. Such warrant classification is also subject to re-evaluation at each reporting period. Income Taxes The Company accounts for income taxes under ASC 740, “Income Taxes.” ASC 740, Income Taxes, requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized. As of December 31, 2022 and 2021, the Company’s deferred tax asset had a full valuation allowance recorded against it. ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2022. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company has identified the United States as its only “major” tax jurisdiction. The Company is subject to income taxation by major taxing authorities since inception. These examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months. Common Stock Subject to Possible Redemption All of the 23,000,000 common stock sold as part of the FIAC Units in the IPO contain a redemption feature which allows for the redemption of such Public Shares in connection with the Company’s liquidation, if there is a stockholder vote or tender offer in connection with the Business Combination and in connection with certain amendments to the Company’s amended and restated certificate of incorporation. In accordance with SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not solely within the control of the Company require common stock subject to redemption to be classified outside of permanent equity. Therefore, all shares of Class A common stock have been classified outside of permanent equity. The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid in capital and accumulated deficit. TABLE OF CONTENTS As of December 31, 2022 and 2021, the Class A common stock subject to possible redemption reflected on the balance sheet are reconciled in the following table: As of beginning of the period | | | $234,600,000 | | | $— | Gross proceeds from IPO | | | — | | | 230,000,000 | Less:
| | | | | | | Proceeds allocated to Public Warrants | | | — | | | (8,395,000) | Class A common stock issuance costs | | | — | | | (12,947,813) | Plus:
| | | | | | | Remeasurement adjustment of carrying value to redemption value | | | 2,420,680 | | | 25,942,813 | Class A common stock subject to possible redemption | | | $237,020,680 | | | $234,600,000 |
Recent Accounting Pronouncements In August 2020, FASB issued Accounting Standards Update (“ASU”) 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. The Company adopted ASU 2020-06 on January 1, 2022 and the standard was applied on a full retrospective basis. There was no material impact on the Company’s financial position, results of operations or cash flows. The Company’s management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements. Note 3 - Initial Public Offering On November 1, 2021, the Company sold 23,000,000 Units at a purchase price of $10.00 per Unit which included the exercise of the underwriters’ option to purchase an additional 3,000,000 Units at the initial public offering price to cover over-allotments. Each Unit had an offering price of $10.00 and consists of one share of Class A common stock of the Company, par value $0.0001 per share, and one-half of one warrant of the Company. Each full Warrant entitles the holder thereof to purchase one share of Class A Common Stock at a price of $11.50 per share. Following the closing of the IPO on November 1, 2021, $234,600,000 ($10.20 per Unit) from the net proceeds of the sale of the FIAC Units in the IPO and the sale of the Private Placement Warrants was deposited into the Trust Account. The net proceeds deposited into the Trust Account will be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations. Public Warrants Each whole warrant entitles the registered holder to purchase one whole share of the Class A common stock at a price of $11.50 per share, subject to adjustment, at any time commencing on the later of twelve months from the closing of the IPO and 30 days after the completion of the initial Business Combination. The warrants will expire five years after the completion of the initial Business Combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation. The Company has agreed that as soon as practicable, but in no event later than twenty business days after the closing of the initial Business Combination, the Company will use commercially reasonable efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the shares of Class A common stock issuable upon exercise of the warrants, and the Company will use commercially reasonable efforts to cause the same to become effective within 60 business days after the closing of the initial Business Combination, and to maintain the TABLE OF CONTENTS effectiveness of such registration statement and a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed, as specified in the warrant agreement; provided that if the Company’s Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at the Company’s option, require holders of public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, will not be required to file or maintain in effect a registration statement, but will use commercially reasonably efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the 60th day after the closing of the initial Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption, but will use commercially reasonably efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of Class A common stock equal to the lesser of (A) the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the excess of the “fair market value” (defined below) less the exercise price of the warrants by (y) the fair market value and (B) the product of 0.361 and the number of whole warrants being exercised by such holder. The “fair market value” as used in this paragraph shall mean the volume weighted average price of the Class A common stock for the 10 trading days ending on the trading day prior to the date on which the notice of exercise is received by the warrant agent. Redemption of warrants when the price per share of Class A common stock equals or exceeds $18.00. Once the warrants become exercisable, the Company may redeem the outstanding warrants (except as described herein with respect to the private placement warrants): in whole and not in part; at a price of $0.01 per warrant; upon a minimum of 30 days’ prior written notice of redemption to each warrant holder; and if, and only if, the closing price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant) for any 20 trading days within a 30-trading day period ending three trading days before the Company sends the notice of redemption to the warrant holders. The Company will not redeem the warrants as described above unless a registration statement under the Securities Act covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants is then effective and a current prospectus relating to those shares of Class A common stock is available throughout the 30-day redemption period. If and when the warrants become redeemable by the Company, the Company may exercise the Company’s redemption right even if the Company are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of warrants when the price per share of Class A common stock equals or exceeds $10.00. Once the warrants become exercisable, we may redeem the outstanding warrants: in whole and not in part; at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption; if, and only if, the closing price of the Company’s Class A common stock equals or exceeds $10.00 per public share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant) for any 20 trading days within the 30-trading day period ending three trading days before the Company sends the notice of redemption to the warrant holders; and if the closing price of the Class A common stock for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders is less than $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant), the private placement warrants must also be concurrently called for redemption on the same terms as the outstanding public warrants, as described above. TABLE OF CONTENTS Note 4 - Private Placement On November 1, 2021, simultaneously with the closing of the IPO, the Company completed the private sale of 11,200,000 warrants (the “Private Placement Warrants”) at a purchase price of $1.00 per Private Placement Warrant to the Sponsor, generating gross proceeds to the Company of $11,200,000. A portion of the proceeds from the Private Placement Warrants has been added to the proceeds from the IPO to be held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds of the sale of the Private Placement Warrants will be used to fund the redemption of the public shares (subject to the requirements of applicable law), and the Private Placement Warrants will expire worthless. The Private Placement Warrants (including the Class A common stock issuable upon exercise of the Private Placement Warrants) will not be transferable, assignable or salable until 30 days after the completion of the initial Business Combination and they will not be redeemable by the Company so long as they are held by the Sponsor or its permitted transferees. The Sponsor, or its permitted transferees, has the option to exercise the Private Placement Warrants on a cashless basis. The Sponsor, officers and directors have entered into a letter agreement with the Company, pursuant to which they have agreed (i) to waive their redemption rights with respect to any founder shares and public shares held by them in connection with the completion of the initial Business Combination and a stockholder vote to approve an amendment to the Company’s amended and restated certificate of incorporation (A) that would modify the substance or timing of the Company’s obligation to provide holders of shares of Class A common stock the right to have their shares redeemed in connection with the initial Business Combination or to redeem 100% of the Company’s public shares if the Company does not complete the initial Business Combination within 18 months from the closing of the IPO or (B) with respect to any other provision relating to the rights of holders of the Company’s Class A commons stock and (ii) to waive their rights to liquidating distributions from the trust account with respect to any founder shares they hold if the Company fails to consummate an initial Business Combination within 18 months from the closing of this offering (although they will be entitled to liquidating distributions from the trust account with respect to any public shares they hold if the Company fails to complete the initial Business Combination within the prescribed time frame). Further, the Company has agreed not to enter into a definitive agreement regarding an initial Business Combination without the prior consent of the Sponsor. Note 5 - Related Party Transactions Founder Shares On March 15, 2021, the Sponsor paid $25,000 to the Company in consideration for 7,187,500 shares of Class B common stock. The number of founder shares issued was determined based on the expectation that the founder shares would represent 20% of the outstanding shares of common stock upon completion of the IPO. On October 6, 2021, the Sponsor surrendered 1,437,500 shares of Class B common stock for no consideration resulting in the Sponsor holding 5,750,000 shares of Class B common stock. The 5,750,000 founder shares include an aggregate of up to 750,000 shares subject to forfeiture to the extent that the underwriters’ over-allotment option is not exercised in full or in part, so that the Sponsor will own, on an as-converted basis, 20% of the Company’s issued and outstanding shares after the IPO (assuming the Sponsor does not purchase any public shares in the IPO). With the exercise of the over-allotment option by the underwriters, no founder shares are subject to forfeiture. The founder shares will automatically convert into shares of Class A common stock upon consummation of a Business Combination on a one-for-one basis, subject to certain adjustments, as described in Note 8. The initial stockholders have agreed not to transfer, assign or sell any of their founder shares until the earlier to occur of: (A) one year after the completion of the initial Business Combination; or (B) subsequent to the initial Business Combination, (x) if the closing price of the Company’s Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination, or (y) the date on which the Company completes a liquidation, merger, stock 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 Company refers to such transfer restrictions as the lock-up. TABLE OF CONTENTS Promissory Note — Related Party The Sponsor agreed to loan the Company an aggregate of up to $300,000 to be used for a portion of the expenses of the IPO. The loan was non-interest bearing, unsecured and due at the earlier of (i) December 31, 2021, (ii) the date on which the Company consummates the IPO, or (iii) the date on the Company determines to not proceed with such IPO. The Company had borrowed $79,991 under the promissory note and fully repaid it on November 4, 2021. Borrowings under the promissory note are no longer available to the Company. Related Party Loans In order to finance transaction costs in connection with an intended initial Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (the “Working Capital Loans”). If the Company completes an initial Business Combination, the Company would repay such loaned amounts out of the proceeds of the Trust Account released to the Company. Otherwise, such loans would be repaid only out of funds held outside the Trust Account. In the event that the initial Business Combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from the Trust Account would be used to repay such loaned amounts. Up to $1,500,000 of such loans may be convertible into warrants, at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the Private Placement Warrants, including as to exercise price, exercisability and exercise period. At December 31, 2022 and 2021, no such Working Capital Loans were outstanding. Administrative Fees Commencing on the date that the Company’s securities are first listed on the Nasdaq, the Company agreed to pay the Sponsor a total of $10,000 per month for office space, utilities and secretarial and administrative support provided to the Company. Upon completion of the initial Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees. For the year ended December 31, 2022 and for the period from February 23, 2021 (inception) through December 31, 2021 the Company incurred $120,000 and $0, respectively, in administrative support fees. Since inception to December 31, 2022, no amounts have been paid under this agreement. Note 6 - Commitments and Contingencies Registration and Stockholder Rights The holders of the founder shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the founder shares) will be entitled to registration rights pursuant to a registration rights and stockholder agreement to be signed prior to the consummation of the IPO, requiring the Company to register such securities for resale (in the case of the founder shares, only after conversion to the Class A common stock). The holders of the majority of these securities are entitled to make up to three demands, excluding short form demands, that the Company registers such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of the initial Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. Underwriter Agreement On November 1, 2021, the Company paid a cash underwriting commission of $4,000,000 or approximately $0.17 per Unit, including the over-allotment option. The underwriters are entitled to deferred underwriting commissions of approximately $0.376 per unit, or $8,650,000 in the aggregate (including the commission related to the underwriters’ exercise of the over-allotment option). The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes an Initial Business Combination, subject to the terms of the underwriting agreement for the offering. Marketing Fee Agreement The Company engaged advisors to assist the Company in validating existing acquisition strategies and providing recommendations or potential amendments and refinements to said strategy. The fee structure is set as a minimum TABLE OF CONTENTS of $150,000 due upon a Business Combination for advisory services. If the advisors provide lead information of a potential target company in a Business Combination, the Company will pay the advisors between $2,000,000 and $6,000,000 upon successful close of the Business Combination. Note 7 - Recurring Fair Value Measurements Under the guidance in ASC 815-40 the warrants do not meet the criteria for equity classification. As such, these financial instruments must be recorded on the balance sheet at fair value. This valuation is subject to re-measurement at each balance sheet date. With each re-measurement, these financial instruments valuations will be adjusted to fair value, with the change in fair value recognized in the Company’s statement of operations. The Company’s warrant liability for the Private Placement Warrants is based on valuation models utilizing inputs from observable and unobservable markets with less volume and transaction frequency than active markets. The inputs used to determine the fair value of the Private Warrant liability, is classified within Level 3 of the fair value hierarchy. On December 20, 2021, the Company’s Public Warrants began trading on the Nasdaq Stock Market LLC (“NASDAQ”). The Company’s warrant liability at December 31, 2021 for the Public Warrants was based on unadjusted quoted prices in an active market (NASDAQ) for identical assets or liabilities that the Company has the ability to access. The fair value of the Public Warrant liability is classified within Level 1 of the fair value hierarchy. The Company’s warrant liability as of December 31, 2022 for the public warrants is based on unadjusted quoted prices in an active market (the NASDAQ Stock Market LLC) for identical assets or liabilities that the Company has the ability to access. The fair value of the Public Warrant liability is classified within Level 1 of the fair value hierarchy. Substantially all of the Company’s trust assets on the balance sheet consist of U. S. Money Market funds which are classified as cash equivalents. Fair values of these investments are determined by Level 1 inputs utilizing quoted prices (unadjusted) in active markets for identical assets. The following table presents information about the Company’s assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2022 and 2021, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. Assets
| | | | | | | | | | Investments held in Trust Account | | | $237,038,010 | | | $— | | | $— | Liabilities
| | | | | | | | | | Public Warrants | | | $575,000 | | | $— | | | $— | Private Warrants | | | $— | | | $— | | | $560,000 |
Assets
| | | | | | | | | | Investments held in Trust Account | | | $234,603,156 | | | $— | | | $— | Liabilities
| | | | | | | | | | Public Warrants | | | $5,980,000 | | | $— | | | $— | Private Warrants | | | $— | | | $— | | | $5,824,000 |
TABLE OF CONTENTS Measurement The Private Warrants were valued using a binomial lattice model, which is considered to be a Level 3 fair value measurement. The key inputs into the binomial lattice model were as follows at December 31, 2022 and 2021: Input
| | | | | | | Risk-free interest rate | | | 3.95% | | | 1.33% | Expected term to initial Business Combination (years) | | | 0.25 | | | 0.84 | Expected volatility | | | de minimis% | | | 8.6% | Common stock price | | | $10.18 | | | $9.87 | Dividend yield | | | 0.0% | | | 0.0% |
The following table provides a reconciliation of changes in fair value of the beginning and ending balances for the Company’s warrants classified as Level 3 for the year ended December 31, 2022 and 2021: Fair Value at December 31, 2021 – private warrants | | | $5,824,000 | Change in fair value | | | (5,264,000) | Fair Value at December 31, 2022 – private warrants | | | $560,000 |
Fair value at February 23, 2021 – public and private warrants | | | $— | Initial fair value of the warrants | | | 16,571,000 | Public Warrants reclassified to level 1(1) | | | (5,980,000) | Change in fair value | | | (4,767,000) | Fair Value at December 31, 2021 – private warrants | | | $5,824,000 |
(1)
| Assumes the Public Warrants were reclassified on December 31, 2021. |
Note 8 - Stockholders’ Deficit Preferred Stock The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. At December 31, 2022 and 2021, there were no shares of preferred stock issued or outstanding. Class A Common Stock The Company is authorized to issue 500,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of Class A common stock are entitled to one vote for each share. As of December 31, 2022 and 2021, there were no shares of Class A common stock issued or outstanding, excluding 23,000,000 shares subject to possible redemption Class B Common Stock The Company is authorized to issue 50,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders of the Company’s Class B common stock are entitled to one vote for each common stock. At December 31, 2022 and 2021, there were 5,750,000 shares of Class B common stock issued and outstanding. On March 15, 2021, the Sponsor paid $25,000 to the Company in consideration for 7,187,500 shares of Class B common stock. The number of founder shares issued was determined based on the expectation that the founder shares would represent 20% of the outstanding shares of common stock upon completion of the IPO. On October 6, 2021, the Sponsor surrendered 1,437,500 shares of Class B common stock for no consideration resulting in the Sponsor holding 5,750,000 shares of Class B common stock. Holders of Class A common stock and Class B common stock will vote together as a single class on all matters submitted to a vote of stockholders, except as required by law. TABLE OF CONTENTS The shares of Class B common stock will automatically convert into shares of Class A common stock at the time of a Business Combination on a one-for-one basis (subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like), and subject to further adjustment. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts offered in the IPO and related to the closing of a Business Combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares of common stock outstanding upon completion of the IPO plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with a Business Combination (excluding any shares or equity-linked securities issued, or to be issued, to any seller in a Business Combination and any private placement-equivalent warrants issued to the Sponsor or its affiliates upon conversion of loans made to the Company). Note 9 - Income Tax The Company’s net deferred tax assets at December 31, 2022 and 2021 are as follows:
Deferred tax asset
| | | | | | | Federal net operating loss | | | $— | | | $35,239 | Organizational costs/Startup expenses | | | 418,972 | | | 54,666 | Total deferred tax asset | | | 418,972 | | | 89,905 | Valuation allowance | | | (418,972) | | | (89,905) | Deferred tax asset, net of allowance | | | $— | | | $— |
The income tax provision for the year ended December 31, 2022 and 2021 consists of the following:
Federal
| | | | | | | Current | | | $645,442 | | | $— | Deferred | | | (329,066) | | | (89,905) | State and Local
| | | | | | | Current | | | — | | | — | Deferred | | | — | | | — | Change in valuation allowance | | | 329,066 | | | 89,905 | Income tax provision | | | $645,442 | | | $— |
As of December 31, 2022 and 2021, the Company had $0 and $167,803 of U.S. federal net operating loss carryovers, respectively, which do not expire, and no state net operating loss carryovers available to offset future taxable income. In assessing the realization of the deferred tax assets, management considers whether it is more likely than not that some portion of all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance. For the year ended December 31, 2022, the change in the valuation allowance was $329,066. For the period from February 23 2021 (inception) through December 31, 2021, the change in the valuation allowance was $89,905. TABLE OF CONTENTS A reconciliation of the federal income tax rate to the Company’s effective tax rate at December 31, 2022 and 2021 is as follows:
Statutory federal income tax rate | | | 21.0% | | | 21.0% | State taxes, net of federal tax benefit | | | 0.0% | | | 0.0% | Change in fair value of warrant liability | | | (18.4)% | | | (26.1)% | Warrant transaction costs | | | 0.0% | | | 2.8% | Change in valuation allowance | | | 2.7% | | | 2.3% | Other | | | 0.0% | | | 0.0% | Income tax provision | | | 5.3% | | | 0.0% |
The Company files income tax returns in the U.S. federal jurisdiction and is subject to examination since inception. The Company’s effective tax rates for the period presented differ from the expected (statutory) rates due to the recording of full valuation allowances on deferred tax assets and changes in fair value of warrants. Note 10 - Subsequent Events Management has evaluated subsequent events to determine if events or transactions occurring through the date the financial statements were issued, require potential adjustment to or disclosure in the financial statements and did not identify any subsequent events that would have required adjustment or disclosure in the financial statements other than noted below. Extension of Combination Period On April 5, 2023, the Company filed a definitive proxy statement with the SEC (the “Proxy Statement”) relating to an extraordinary meeting of shareholders (the “Extension Meeting”) at which the Company will propose to extend to amend the amended and restated memorandum and articles of association (the “Articles Amendment”) to extend the date (the “Termination Date”) by which the Company has to consummate a Business Combination from May 1, 2023 (the “Original Termination Date”) to August 1, 2023 (the “Articles Extension Date”) and to allow the Company, without another shareholder vote, to elect to extend the Termination Date to consummate a Business Combination on a monthly basis for up to nine times by an additional one month each time after the Articles Extension Date, by resolution of the Company’s board of directors if requested by the Sponsor, and upon five days’ advance notice prior to the applicable Termination Date, until May 1, 2024, or a total of up to twelve months after the Original Termination Date, unless the closing of the initial Business Combination shall have occurred prior to such date (the “Extension Amendment Proposal”). As disclosed in the Proxy Statement, relating to the extraordinary general meeting of shareholders (the “Extension Meeting”), the Sponsor agreed that if the Extension Amendment Proposal is approved, it or one or more of its affiliates, members or third-party designees (the “Lender”) will contribute to the Company as a loan, within five (5) business days of the date of the Extension Meeting, of the lesser of (a) an aggregate of $487,500 or (b) $0.0975 per share that is not redeemed in connection with the Extension Meeting, to be deposited into the Trust Account established in connection with the IPO. In addition, in the event the Company does not consummate an initial Business Combination by the Articles Extension Date, the Lender will contribute to the Company as a loan up to the lesser of (a) $1,462,500 or (b) $0.2925 per each share that is not redeemed in connection with the Extension Meeting in nine equal installments to be deposited into the Trust Account for each of nine one-month extensions following the Articles Extension Date. The Extension Meeting will be held on April 24, 2023. TABLE OF CONTENTS CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS
(Unaudited — Expressed in United States dollars) ASSETS
| | | | | | | | | | Current assets
| | | | | | | | | | Cash | | | | | | $10,559 | | | $489,971 | GST receivable | | | | | | 53,896 | | | 49,408 | Prepaid expenses | | | | | | 147,378 | | | 311,690 | Total current assets | | | | | | 211,833 | | | 851,069 | | | | | | | | | Equipment | | | | | | 2,238 | | | 2,821 | Total assets | | | | | | $214,071 | | | $853,890 | | | | | | | | | | | LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIENCY)
| | | | | | | | | | Current liabilities
| | | | | | | | | | Accounts payable and accrued liabilities | | | 4 | | | $2,895,537 | | | $908,652 | Short-term loans | | | 5 | | | 100,000 | | | — | Total current liabilities | | | | | | 2,995,537 | | | 908,652 | | | | | | | | | Shareholders’ equity (deficiency)
| | | | | | | | | | Common shares
(No par value, unlimited common shares authorized; 29,603,123 SVS and 4,650,000 MVS issued and outstanding) (July 31, 2023 – 28,419,790 SVS and 4,650,000 MVS) | | | 6 | | | — | | | — | Additional paid in capital | | | 6 | | | 12,472,594 | | | 11,883,289 | Accumulated other comprehensive loss | | | | | | (27,505) | | | (83,570) | Deficit | | | | | | (15,226,555) | | | (11,854,481) | Total shareholders’ equity (deficiency) | | | | | | (2,781,466) | | | (54,762) | Total liabilities and shareholders’ equity (deficiency) | | | | | | $214,071 | | | $853,890 | | | | | | | | | | | Going concern | | | 1 | | | | | | | Commitments | | | 10 | | | | | | | Subsequent events | | | 11 | | | | | | |
See accompanying notes to the condensed consolidated interim financial statements.
TABLE OF CONTENTS CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS
(Unaudited — Expressed in United States dollars) Operating expenses
| | | | | | | | | | Sales and marketing | | | | | | $196,921 | | | $80,419 | Depreciation | | | | | | 460 | | | 462 | General and administrative | | | | | | 212,330 | | | 69,121 | Professional fees | | | 7 | | | 2,297,182 | | | 267,932 | Salaries and wages | | | 7 | | | 208,354 | | | 192,947 | Share-based compensation | | | 6, 7 | | | 413,192 | | | 321,117 | Total operating expenses | | | | | | (3,328,439) | | | (931,998) | | | | | | | | | | | Other income/expenses
| | | | | | | | Other income | | | | | | — | | | 3,597 | Foreign exchange gain (loss) | | | | | | (43,635) | | | 98,874 | | | | | | | | | | | Net loss | | | | | | $(3,372,074) | | | $(829,527) | | | | | | | | | | | Other comprehensive loss
| | | | | | | | | | Foreign currency translation | | | | | | 56,065 | | | (38,771) | Net loss and comprehensive loss | | | | | | (3,316,009) | | | (868,298) | | | | | | | | | | | Weighted average number of shares – Basic and diluted | | | | | | 34,022,326 | | | 25,193,751 | | | ��� | | | | | | | | Loss per share – Basic and diluted | | | | | | $(0.10) | | | $(0.03) |
See accompanying notes to the condensed consolidated interim financial statements.
TABLE OF CONTENTS CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIENCY)
(Unaudited — Expressed in United States dollars) Balance, July 31, 2022 | | | | | | 20,543,751 | | | 4,650,000 | | | $6,818,147 | | | $(5,949,828) | | | $(84,448) | | | $783,871 | Share based compensation – RSUs | | | 6 | | | — | | | — | | | 240,074 | | | — | | | — | | | 240,074 | Share based compensation – Options | | | 6 | | | — | | | — | | | 81,043 | | | — | | | — | | | 81,043 | Foreign currency translation | | | | | | — | | | — | | | — | | | — | | | (38,771) | | | (38,771) | Net loss | | | | | | — | | | — | | | — | | | (829,527) | | | — | | | (829,527) | Balance, October 31, 2022 | | | | | | 20,543,751 | | | 4,650,000 | | | $7,139,264 | | | $(6,779,355) | | | $(123,219) | | | $236,690 | Balance, July 31, 2023 | | | | | | 28,419,790 | | | 4,650,000 | | | 11,883,289 | | | (11,854,481) | | | (83,570) | | | (54,762) | Share based compensation – RSUs | | | 6 | | | — | | | — | | | 179,544 | | | — | | | — | | | 179,544 | Share based compensation – Options | | | 6 | | | — | | | — | | | 233,648 | | | — | | | — | | | 233,648 | Shares issued for warrant exercises | | | | | | 1,183,333 | | | — | | | 176,113 | | | — | | | — | | | 176,113 | Foreign currency translation | | | | | | | | | | | | | | | | | | 56,065 | | | 56,065 | Net loss and comprehensive loss | | | | | | | | | | | | | | | (3,372,074) | | | | | | (3,372,074) | Balance, October 31, 2023 | | | | | | 29,603,123 | | | 4,650,000 | | | $12,472,594 | | | $(15,226,555) | | | $(27,505) | | | $(2,781,466) |
See accompanying notes to the condensed consolidated interim financial statements.
TABLE OF CONTENTS CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(Unaudited — Expressed in United States dollars) Operating activities
| | | | | | | Net loss for the period | | | $(3,372,074) | | | $(829,527) | Items not affecting cash:
| | | | | | | Depreciation | | | 460 | | | 462 | Non-cash general and administrative expenses | | | 50,000 | | | — | Share based compensation | | | 413,192 | | | 321,117 | | | | | | | | Changes in non-cash working capital items:
| | | | | | | GST receivables | | | (6,914) | | | (11,974) | Prepaid expenses | | | 152,913 | | | 31,866 | Accounts payable and accrued liabilities | | | 2,070,102 | | | 124,328 | Net cash used in operating activities | | | (692,321) | | | (363,728) | | | | | | | | Financing activities
| | | | | | | Proceeds from issuance of short-term loans | | | 50,000 | | | — | Proceeds from warrant exercise | | | 176,113 | | | — | Net cash provided by financing activities | | | 226,113 | | | — | | | | | | | | Effect of exchange rate changes on cash | | | (13,204) | | | (220,848) | | | | | | | | Net decrease in cash | | | (479,412) | | | (584,576) | Cash, Beginning | | | 489,971 | | | 3,755,655 | Cash, Ending | | | $10,559 | | | $3,171,079 |
See accompanying notes to the condensed consolidated interim financial statements.
TABLE OF CONTENTS DevvStream Holdings Inc.
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited — Expressed in United States dollars)
For the three months ended October 31, 2023 and 2022 1. Nature of operations and going concern DevvStream Holdings Inc. (the “Company” or “Devv Holdings”) was incorporated under the British Columbia Business Corporations Act on August 13, 2021. The head office is located at 2133 – 1177 West Hastings Street, Vancouver, BC V6E 2K3 and records and registered office is located at 1500 – 1055 West Georgia Street, Vancouver, British Columbia, V6E 4N7. On November 4, 2022, the Company completed a reverse takeover (“RTO”) with DevvStream Inc. (“DESG”) and DevvESG Streaming Finco Ltd. (“Finco”), (the “Transaction”). DESG is an Environmental Social and Governance (“ESG”) principled, high-tech, impact investing company focused on high quality and high return carbon credit generating projects. DESG is deemed as the acquirer for accounting purposes, and therefore its assets, liabilities and operations are included in the condensed consolidated interim financial statements at their historical carrying value. The Company’s operations are considered to be a continuance of the business and operations of DESG from its date of incorporation on August 27, 2021, with the Company and Finco’s operations being included from November 4, 2022, the closing date of the Transaction, onwards. The Company is a public company which is listed on the Cboe Exchange under the symbol “DESG”. On September 12, 2023, the Company entered into a business combination agreement (“BCA”) with Focus Impact Acquisition Corp. (“Focus Impact”). Focus Impact is a special purpose acquisition corporation focused on amplifying social impact through the pursuit of a merger or business combination with socially forward companies. The transaction is structured as an amalgamation of the Company into a wholly owned subsidiary of Focus Impact, following Focus Impact’s redomiciling as an Alberta company. Focus Impact will be renamed “DevvStream Corp.” (the “Combined Company”) and continue the business of the Company following the amalgamation. It is a condition of the transaction that the securities of the Combined Company will be listed on the Nasdaq Stock Exchange (“NASDAQ”). The aggregate transaction consideration deliverable to the Company’s shareholders shall be a number of newly issued shares of common stock (or shares of common stock issuable upon the exercise or conversion of other outstanding securities of the Company that are converted as a part of the transaction) of the Combined Company equal to $145 million plus the aggregate exercise price of the outstanding options and warrants of the Company, with each share of common stock of the Combined Company valued at US$10.20 per share for the purposes of the transaction. Based on the aggregate transaction consideration, assuming full dilution and a US dollar to Canadian Dollar exchange rate of 1.34, this implies a deemed per share value of CAD$2.16 for the Company’s SVS. Completion of the transaction is subject to customary closing conditions, including all requisite approvals by the shareholders of the Company and Focus Impact, the listing approval of NASDAQ and the effectiveness of the registration statement with the SEC. The Company is expected to delist from the Cboe Canada stock exchange on closing. The proposed transaction has not closed as at the date of these financial statements. These condensed consolidated interim financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assume that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations. As at October 31, 2023, the Company has a working capital deficit, incurred negative cash flows and losses since inception and has generated no revenue to date. These matters are indicators of material uncertainty that raise substantial doubt about the Company’s ability to continue as a going concern for at least twelve months from the issuance of these condensed consolidated interim financial statements. The Company’s ability to continue its operations and to realize assets at their carrying values is dependent upon its ability to raise adequate financing from external sources and generate profits and positive cash flows from operations in order to carry out its business objectives. The Company will require additional capital for to fund its operations, to evaluate strategic opportunities, and for working capital purposes. However, there is no assurance that the Company will be able to secure such financing on favourable terms. Subsequent to the three TABLE OF CONTENTS DevvStream Holdings Inc.
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited — Expressed in United States dollars)
For the three months ended October 31, 2023 and 2022
1. Nature of operations and going concern(continued)
months ended October 31, 2023, the Company obtained additional cash through the issuance of convertible notes (Note 11). These condensed consolidated interim financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should the Company not continue as a going concern. Such adjustments could be material. 2. Basis of preparation (a) Statement of compliance These condensed consolidated interim financial statements have been prepared on a going concern basis in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions in Article 10 of Regulation S-X promulgated by the U.S. Securities and Exchange Commission (the “SEC”), effective for the three months ended October 31, 2023. Certain information or footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying condensed consolidated interim financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The accompanying condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended July 31, 2023. The interim period results do not necessary indicate the results that may be expected for any other interim period or for the full fiscal year. These condensed consolidated interim financial statements have been prepared on a historical cost basis. In addition, these condensed consolidated interim financial statements have been prepared using the accrual basis of accounting, except for the cash flow information. (b) Basis of consolidation These condensed consolidated interim financial statements include the accounts of the Company and entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. All intercompany balances and transactions, income and expenses have been eliminated upon consolidation. As of October 31, 2023, the Company’s subsidiaries were: DESG | | | Delaware, USA | | | 100% | Finco | | | British Columbia, Canada | | | 100% |
On November 10, 2022, the Company made an investment into Marmota Solutions Incorporated (“Marmota”). On the date of the initial investment, the Company owned 50% of Marmota and accounted for the investment as an equity investment. On October 16, 2023, the Company reduced its interest in Marmota to 10% by returning common shares to Marmota for cancellation in consideration of $19. (c) Variable interest entities (“VIE”) A VIE is an entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support or is structured such that equity investors lack the ability to control the entity's activities or do not substantially participate in the gains and losses of the entity. Upon inception of a contractual TABLE OF CONTENTS DevvStream Holdings Inc.
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited — Expressed in United States dollars)
For the three months ended October 31, 2023 and 2022
2. Basis of preparation (continued)
agreement, and thereafter, if a reconsideration event occurs, the Company performs an assessment to determine whether the arrangement contains a variable interest in an entity and whether that entity is a VIE. The primary beneficiary of a VIE is the party that has both the power to direct the activities that most significantly impact the VIE's economic performance and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. Where the Company concludes that it is the primary beneficiary of a VIE, the Company consolidates the accounts of that VIE. (d) Functional and presentation currencies The condensed consolidated interim financial statements of the Company are presented in United States dollars, while the functional currency of the Company and its subsidiaries is the Canadian dollar. (e) Use of estimates and judgments In preparing these condensed consolidated interim financial statements, management has made judgements, estimates and assumptions that affect the applicability of the Company’s accounting policies. In preparing these condensed consolidated interim financial statements, the significant estimates and critical judgments were the same as those applied to the audited consolidated financial statements as at and for the year ended July 31, 2023. (f) Emerging growth company The Company is an “Emerging Growth Company”, as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it has taken advantage of certain exemptions that are not applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b) (1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial reporting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public and private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. 3. Significant accounting policies The significant accounting policies applied in the preparation of these condensed consolidated interim financial statements are consistent with the accounting policies disclosed in the Company’s audited consolidated financial statements for the year ended July 31, 2023. 4. Accounts payable and accrued liabilities Accounts payable | | | $2,283,467 | | | $490,287 | Accrued liabilities | | | 612,070 | | | 418,365 | | | | $2,895,537 | | | $908,652 |
TABLE OF CONTENTS DevvStream Holdings Inc.
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited — Expressed in United States dollars)
For the three months ended October 31, 2023 and 2022
5. Short-term loans On September 13, 2023, the Company announced that it would be undertaking a bridge financing non-brokered private placement of unsecured convertible notes for gross proceeds of up to $7,500,000. The convertible notes shall bear interest at 15% per annum and shall automatically convert into equity on the earlier to occur of the following: In the event that the Company completes the de-SPAC Transaction, the principal amount and all accrued interest on the notes will automatically convert into a number of shares (the “Initial Conversion Shares”) equal to the quotient obtained by dividing (A) (I) the principal amount and all accrued interest divided by (II) US$7.65 by (B) the Common Conversion Ratio (“CCR”). The CCR, as defined by the BCA, is equal to the quotient obtained by dividing (A) (I) the sum of US$145,000,000 and the aggregate exercise price of all in-the-money options two business days prior to the completion of the de-SPAC Transaction, all outstanding warrants immediately prior to the completion of the de-SPAC Transaction, and all warrants exercised for cash, divided by (II) US$10.20 by (B) the fully diluted common shares outstanding. Thereafter, the Initial Conversion Shares will be exchanged for shares of Focus Impact Acquisition Corp. at the CCR. In the event that the de-SPAC Transaction is not completed by the later of (A) 270 days from the closing date (the “Anniversary Date”), and (B) the termination date of the BCA, the principal amount and all accrued interest will automatically convert into units at a conversion price per unit equal to the greater of (I) the 30-day volume weight average trading price (“VWAP”) of the shares on the Cboe Canada stock exchange (“Exchange”) leading up to the Anniversary Date, and (II) CAD$1.03. Each unit will consist of one share and one-half of a share purchase warrant. Each warrant carries an exercise price equal to the greater of (a) a 20% premium to the 30-day VWAP, and (b) CAD$1.03, and will expire two years from the Anniversary Date. In the event of any liquidation, dissolution, or winding up of the Company prior to the conversion or repayment of the convertible notes, the holders will be entitled to receive, in preference to the shareholders of the Company, an amount equal to the greater of (a) the amount that would be paid if the convertible notes were converted to shares immediately prior to such liquidation, dissolution or winding up, or (b) a 1.25 multiple on invested capital on the principal invested in the convertible notes plus any declared but unpaid interest. The Company reserves the right, in its absolute discretion, to reject any subscriptions related to the private placement, in whole or in part, at any time prior to the closing date (“Closing”). If the subscription is rejected, or Closing fails to occur, the subscribed funds shall be repayable to the Subscriber on demand without interest or deduction. On September 27, 2023, the Company received $50,000 in subscription funds in relation to the private placement. On September 28, 2023, the Company entered into an additional subscription agreement for $50,000. The private placement has not closed as at the date of these financial statements and all related subscribed funds received have been recognized as interest-free loans due on demand. 6. Share capital (a) Authorized The Company is authorized to issue an unlimited number of subordinate voting shares (“SVS”) without par value and an unlimited number of multiple voting shares (“MVS”) without par value. Each MVS can be converted into SVS at a rate of one MVS to 10 SVS and carries 10 voting rights per MVS. TABLE OF CONTENTS DevvStream Holdings Inc.
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited — Expressed in United States dollars)
For the three months ended October 31, 2023 and 2022
6. Share capital (continued)
(b) Shares issued Shares issued during the three months ended October 31, 2023 On August 4, 2023, the Company issued 600,00 shares for the exercise of 600,000 share purchase warrants, at an exercise price of CAD$0.20 per share. On August 22, 2023, the Company issued 416,667 shares for the exercise of 416,667 share purchase warrants, at an exercise price of CAD$0.20 per share. On September 22, 2023, the Company issued 166,666 shares for the exercise of 166,666 share purchase warrants, at an exercise price of CAD$0.20 per share. Shares issued during the three months ended October 31, 2022 No shares were issued by the Company during the three months ended October 31, 2022. (c) Share purchase warrants The continuity of share purchase warrants is as follows: Balance, July 31, 2022 | | | 7,959,376 | | | CAD$0.70 | | | 1.80 | Replacement Finco Warrants | | | 2,997,975 | | | CAD$1.20 | | | 1.27 | Issued | | | 85,000 | | | CAD$2.00 | | | 1.92 | Exercised | | | (1,170,000) | | | CAD$0.35 | | | — | Balance, July 31, 2023 | | | 9,872,351 | | | CAD$0.90 | | | 1.85 | Exercised | | | (1,183,333) | | | CAD$0.20 | | | — | Balance, October 31, 2023 | | | 8,689,018 | | | CAD$1.00 | | | 1.42 |
As at October 31, 2023, the following share purchase warrants were outstanding (October 31, 2022 – 7,959,376 warrants outstanding): 6,787,351 | | | CAD$1.20 | | | November 7, 2024 | 85,000 | | | CAD$2.00 | | | June 30, 2025 | 1,816,667 | | | CAD$0.20 | | | September 29, 2026 | 8,689,018
| | | | | | |
(d) Options The continuity of the Company’s stock options is as follows: Outstanding, July 31, 2022 | | | 1,980,000 | | | CAD$0.80 | Granted | | | 2,125,000 | | | CAD$0.89 | Outstanding, July 31, 2023 and October 31, 2023 | | | 4,105,000 | | | CAD$0.85 | Exercisable, July 31, 2023 | | | 693,750 | | | CAD$0.81 | Exercisable, October 31, 2023 | | | 906,250 | | | CAD$0.81 |
TABLE OF CONTENTS DevvStream Holdings Inc.
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited — Expressed in United States dollars)
For the three months ended October 31, 2023 and 2022
6. Share capital (continued)
As at October 31, 2023, the weighted average remaining contractual life of outstanding options is 7.84 years (July 31, 2023 – 8.09 years). As at October 31, 2023, the following stock options were outstanding and exercisable: 175,000 | | | CAD$0.80 | | | January 17, 2028 | | | 43,750 | 550,000 | | | CAD$1.11 | | | May 15, 2028 | | | 30,000 | 50,000 | | | CAD$1.18 | | | June 26, 2028 | | | — | 1,500,000 | | | CAD$0.80 | | | January 17, 2032 | | | 375,000 | 360,000 | | | CAD$0.80 | | | March 1, 2032 | | | 90,000 | 60,000 | | | CAD$0.80 | | | March 14, 2032 | | | 15,000 | 60,000 | | | CAD$0.80 | | | April 13, 2032 | | | 15,000 | 500,000 | | | CAD$0.80 | | | October 12, 2032 | | | 125,000 | 850,000 | | | CAD$0.80 | | | February 6, 2033 | | | 212,500 | 4,105,000
| | | | | | | | | 906,250 |
Stock options issued during the three months ended October 31, 2023 No stock options were issued during the three months ended October 31, 2023. Stock options issued during the three months ended October 31, 2022 On October 19, 2022, the Company granted 500,000 options with an exercise price of CAD$0.80 and a grant date fair value of $212,144. 10% of the options vest upon the Company’s listing on a recognized stock exchange which occurred on January 17, 2023 (the “Listing Date”), and 15% of the options vest every six months thereafter. The fair value of stock options granted were estimated using the Black-Scholes Option Pricing Model with the following assumptions: Risk-free interest rate | | | 3.52% | Expected volatility | | | 150% | Fair value of underlying share | | | CAD$0.60 | Exercise price | | | CAD$0.80 | Dividend yield | | | 0% | Expected life (years) | | | 10.00 |
Expected volatility was estimated by using the annualized historical volatility of publicly traded companies that the Company considers to be comparable. The expected option life represents the period of time that options granted are expected to be outstanding. The risk-free interest rate is based on Canadian government bonds with a remaining term equal to the expected life of the options. Share-based compensation – Options Share-based payments relating to the vesting of options for the three months ended October 31, 2023 was $233,648 (three months ended October 31, 2022 - $81,043. (e) Restricted stock units (“RSUs”) No RSUs were granted during the three months ended October 31, 2023 or the three months ended October 31, 2022. TABLE OF CONTENTS DevvStream Holdings Inc.
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited — Expressed in United States dollars)
For the three months ended October 31, 2023 and 2022
6. Share capital (continued)
As at October 31, 2023, the Company had 6,780,000 (October 31, 2022 – 6,780,000) restricted stock units (“RSUs”) outstanding, of which 1,700,000 (October 31, 2022 – Nil) had vested. All vested RSU’s are to be settled by December 31st of the calendar year in which the RSUs vest. As at October 31, 2023, the following RSUs were outstanding and vested: 60,000 | | | November 30, 2021 | | | 20,000 | 2,500,000 | | | December 24, 2021 | | | 625,000 | 120,000 | | | March 1, 2022 | | | 30,000 | 4,100,000 | | | March 14, 2022 | | | 1,025,000 | 6,780,000
| | | | | | 1,700,000 |
Stock-based compensation – RSU’s Share-based payments relating to the vesting of RSUs for the three months ended October 31, 2023 was $179,544 (three months ended October 31, 2022 - $240,074). 7. Related party transactions and balances Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. The Company has identified its directors and senior officers as its key management personnel and the compensation costs for key management personnel and companies related to them are recorded at their exchange amounts as agreed upon by transacting parties. The compensation awarded to key management personnel during the three months ended October 31, 2023 and 2022 are as follows: Salaries and wages | | | $152,500 | | | $162,224 | Professional fees | | | 38,268 | | | 47,597 | Share based compensation | | | 282,289 | | | 307,332 | | | | $473,057 | | | $517,153 |
At October 31, 2023, the Company had amounts owing and accrued liabilities of $62,643 (July 31, 2023 - $23,534) payable to directors and officers of the Company for salaries, expense reimbursements and professional fees. These amounts are non-interest bearing and have no terms of repayment. 8. Financial instruments As at October 31, 2023, the Company’s financial instruments consist of cash, GST receivable, accounts payable and accrued liabilities and short-term loans. The Company classifies cash and GST receivable as financial assets held at amortized cost. The Company classifies accounts payable and accrued liabilities as financial liabilities which are held at amortized cost. The fair value of all of the Company’s financial instruments approximates their carrying value due to the short-term nature of the financial instruments. TABLE OF CONTENTS DevvStream Holdings Inc.
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited — Expressed in United States dollars)
For the three months ended October 31, 2023 and 2022
8. Financial instruments (continued)
The risk exposure arising from these financial instruments is summarized as follows: (a) Credit risk The Company’s financial assets are cash and GST receivable. The Company’s maximum exposure to credit risk, as at period end, is the carrying value of its financial assets, being $64,455. The Company holds its cash with major financial institutions and with a publicly traded payment processing company therefore minimizing the Company’s credit risk. (b) Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages liquidity by maintaining adequate cash balances and by raising equity financings. The Company has no assurance that such financings will be available on favorable terms. In general, the Company attempts to avoid exposure to liquidity risk by obtaining corporate financing through the issuance of shares. As at October 31, 2023, the Company had cash of $10,559 to settle current liabilities of $2,995,537 which fall due for payment within twelve months of the statement of financial position. All of the Company’s contractual obligations are current and due within one year. (c) Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company’s income or value of its holdings or financial instruments. At October 31, 2023, the Company has cash of $5,959 denominated in US dollars that is exposed to foreign exchange risk. A 10% strengthening or weakening in the Canadian dollar against the US dollar with all other variables held constant would have an unfavorable or favorable impact of approximately $430. 9. Segmented information The Company operates in one reportable operating segment – the development and monetization of environmental assets. The Company has not generated revenue to date and as such has no reportable segment revenues. The Company’s assets are located in Canada. 10. Commitments and contingencies On March 7, 2023, the Company entered into a carbon credit streaming agreement with BC Road Builders and Heavy Construction Association (“BCRB”) pursuant to which the Company will pre-purchase 25,000 carbon credits generated by BCRB's greenhouse gas reduction program (the “BCRB Agreement”). The BCRB Agreement requires the Company to pay an initial contribution of $140,000 subject to certain conditions being met by BCRB. As of October 31, 2023, these conditions had not been met and no payments had been made pursuant to the BCRB Agreement. A further payment of $210,000 becomes due one year subsequent to the initial contribution. On September 12, 2023, the Company amended their existing strategic partnership agreement with Devvio, Inc. (a related party). As part of this amendment, the Company has committed to making specific payments to Devvio. They will provide a minimum advance of $1,000,000 by August 1, 2024, followed by $1,270,000 by August 1, 2025 and August 1, 2026. Additionally, starting from 2027, if advance royalty payments fall below $1,000,000 in any year, Devvio has the right to terminate the Strategic Partnership Agreement. From time to time, the Company may be involved in litigation relating to claims arising out of operations in the normal course of business. At October 31, 2023 and 2022, there were no pending or TABLE OF CONTENTS DevvStream Holdings Inc.
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited — Expressed in United States dollars)
For the three months ended October 31, 2023 and 2022
10. Commitments and contingencies (continued)
threatened lawsuits that could reasonably be expected to have a material effect on the results of the Company’s operations. There are also no proceedings in which any of the Company’s directors, officers or affiliates is an adverse party or has a material interest adverse to the Company’s interest. 11. Subsequent events On November 6, 2023, the Company received proceeds of $100,000 in conjunction with a bridge financing of convertible debt (the “Bridge Financing”). The convertible debt bears interest at 5.30% per annum and is due on November 6, 2024. The convertible debt and any accrued interest, is convertible at the option of the holder based on the following terms: ○ | In the event that the Company completes the de-SPAC Transaction, the principal amount and all accrued interest will be convertible into the Initial Conversion Shares at the option of the holder. Thereafter, the Initial Conversion Shares will be exchanged for shares of Focus Impact Acquisition Corp. at the CCR; or |
○ | In the event that the de-SPAC Transaction is not completed by the later of (A) 270 days from November 6, 2023, or (B) the termination date, the amounts outstanding will be convertible into units at a conversion price per unit equal to the greater of (I) the 30 day VWAP on the date of delivery of a notice of conversion, and (II) CAD$1.03. Each unit will consist of one share and one-half of a share purchase warrant. Each warrant will be exercisable at a price equal to the greater of (a) a 20% premium to such VWAP, and (b) CAD$1.03, and will expire two years from the conversion date. |
The convertible debt also has an acceleration clause; in the event the de-SPAC Transaction closes, the outstanding amounts under the convertible debt are repayable within 10 business days after the closing of the de-SPAC Transaction. On November 6, 2023, the Company entered into a subscription agreement with Focus Impact Partners, LLC (“FIAC”) for $150,000 under the same terms as the Bridge Financing, the proceeds of which were received on November 6, 2023. On January 2, 2024, the Company and FIAC agreed to amend the terms of the subscription agreement (“Amended Subscription Agreement) in which the principal loan amount was increased to $300,000 and may be increased further up to a maximum of $1,000,000. On January 9, 2023, the Company received proceeds of $150,000 in conjunction with the Amended Subscription Agreement. Under the terms of the Amended Subscription Agreement, the convertible debt bears interest at 5.30% per annum and is due on November 6, 2024. The convertible debt, and any accrued interest, is convertible at the option of the holder based on the following terms: ○ | In the event that the Company completes the de-SPAC Transaction, the principal amount and all accrued interest will be convertible into a number of shares equal to the quotient obtained by dividing (A) the principal loan amount and all accrued interest by (B) the price that is a 25% discount to the 20-day VWAP calculated on the date of the de-SPAC Transaction; or |
○ | In the event that the de-SPAC Transaction is not completed by the later of (A) the Anniversary Date or (B) the termination date, the principal loan amount and all accrued interest will be convertible at the option of FIAC into units at a conversion price per unit equal to the greater of (I) a 25% discount to the 20-day VWAP calculated on the date of delivery of a notice of conversion (the “Conversion Date”), and (II) the closing market price of the shares on the Conversion Date (the “Floor Price”). Each unit will consist of one share and one-half of a share purchase warrant. Each warrant will be exercisable at a price equal to the greater of (a) a 20% premium to such 20-day VWAP, and (b) the Floor Price, and will expire two years from the Anniversary Date. |
TABLE OF CONTENTS REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of DevvStream Holdings Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of DevvStream Holdings Inc. (the “Company”) as of July 31, 2023 and 2022 and the related consolidated statements of operations and comprehensive loss, changes in shareholders’ equity (deficiency), and cash flows for the year ended July 31, 2023 and the period from incorporation on August 27, 2021 to July 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of July 31, 2023 and 2022, and the results of its consolidated operations and its consolidated cash flows for the year ended July 31, 2023 and the period from incorporation on August 27, 2021 to July 31, 2022, in conformity with accounting principles generally accepted in the United States of America. Material Uncertainty Related to Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has a working capital deficit, negative cash flows and losses since inception and requires additional capital to fund its operations, which raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ MNP LLP Toronto, Ontario | | | Chartered Professional Accountants | December 1, 2023 | | | Licensed Public Accountants |
We have served as the Company’s auditor since 2022 TABLE OF CONTENTS CONSOLIDATED BALANCE SHEETS
(Expressed in United States dollars) ASSETS
| | | | | | | | | | Current assets
| | | | | | | | | | Cash | | | | | | $489,971 | | | $3,755,655 | GST receivable | | | | | | 49,408 | | | 4,704 | Prepaid expenses | | | | | | 311,690 | | | 442,256 | Total current assets | | | | | | 851,069 | | | 4,202,615 | | | | | | | | | | | Equipment | | | | | | 2,821 | | | 4,839 | Total assets | | | | | | $853,890 | | | $4,207,454 | | | | | | | | | | | LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIENCY)
| | | | | | | | | | Current liabilities
| | | | | | | | | | Accounts payable and accrued liabilities | | | 7 | | | $908,652 | | | $200,743 | Due to DevvESG Streaming Finco Ltd. | | | 4 | | | — | | | 3,222,840 | Total current liabilities | | | | | | 908,652 | | | 3,423,583 | | | | | | | | | | | Shareholders’ equity (deficiency)
| | | | | | | | | | Common shares
(No par value, unlimited common shares authorized; 28,419,790 SVS and 4,650,000 MVS issued and outstanding) (2022 – 20,543,751 SVS and 4,650,000 MVS) | | | 8 | | | — | | | — | Additional paid in capital | | | 8 | | | 11,883,289 | | | 6,818,147 | Accumulated other comprehensive loss | | | | | | (83,570) | | | (84,448) | Deficit | | | | | | (11,854,481) | | | (5,949,828) | Total shareholders’ equity (deficiency) | | | | | | (54,762) | | | 783,871 | Total liabilities and shareholders’ equity (deficiency) | | | | | | $853,890 | | | $4,207,454 | | | | | | | | | | | Nature of operations and going concern | | | 1 | | | | | | | Commitments | | | 13 | | | | | | | Subsequent events | | | 14 | | | | | | |
See accompanying notes to the consolidated financial statements.
TABLE OF CONTENTS CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Expressed in United States dollars) Operating expenses
| | | | | | | | | | Sales and marketing | | | | | | $914,409 | | | $214,446 | Depreciation | | | | | | 1,849 | | | 973 | General and administrative | | | | | | 443,549 | | | 194,001 | License fee | | | 5 | | | — | | | 1,574,854 | Professional fees | | | 9 | | | 1,994,826 | | | 681,987 | Salaries and wages | | | 9 | | | 777,112 | | | 506,617 | Share – based compensation | | | 8, 9 | | | 1,838,811 | | | 946,007 | Total operating expenses | | | | | | (5,970,556) | | | (4,118,885) | Other income/expenses
| | | | | | | | | | Other income | | | | | | 10,139 | | | — | Foreign exchange gain (loss) | | | | | | 55,764 | | | (49,119) | Loss on impairment | | | 5, 6 | | | — | | | (1,781,824) | | | | | | | | | | | Net loss | | | | | | $(5,904,653) | | | $(5,949,828) | | | | | | | | | | | Other comprehensive loss | | | | | | | | | | Foreign currency translation | | | | | | 878 | | | (84,448) | Net loss and comprehensive loss | | | | | | (5,903,775) | | | (6,034,276) | | | | | | | | | | | Weighted average number of shares – Basic and diluted | | | | | | 30,398,859 | | | 19,024,798 | | | | | | | | | | | Loss per share – Basic and diluted | | | | | | $(0.19) | | | $(0.32) |
See accompanying notes to the consolidated financial statements.
TABLE OF CONTENTS CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIENCY)
(Expressed in United States dollars) Balance, August 27, 2021 | | | | | | — | | | — | | | $— | | | $— | | | $— | | | $— | Shares and units issued for cash net of issuance costs | | | 8 | | | 20,543,751 | | | — | | | 5,356,193 | | | — | | | — | | | 5,356,193 | Shares issued for intangible asset | | | 8 | | | — | | | 4,650,000 | | | 515,947 | | | — | | | — | | | 515,947 | Share based compensation – RSUs | | | 8 | | | — | | | — | | | 696,716 | | | — | | | — | | | 696,716 | Share based compensation – Options | | | 8 | | | — | | | — | | | 249,291 | | | — | | | — | | | 249,291 | Foreign currency translation | | | | | | — | | | — | | | — | | | — | | | (84,448) | | | (84,448) | Net loss | | | | | | — | | | — | | | — | | | (5,949,828) | | | — | | | (5,949,828) | Balance, July 31, 2022 | | | | | | 20,543,751 | | | 4,650,000 | | | $6,818,147 | | | $(5,949,828) | | | $(84,448) | | | $783,871 | Share based compensation – RSUs | | | 8 | | | — | | | — | | | 1,036,325 | | | — | | | — | | | 1,036,325 | Share based compensation – Options | | | 8 | | | — | | | — | | | 778,742 | | | — | | | — | | | 778,742 | Shares issued for warrant exercises | | | 8 | | | 1,170,000 | | | — | | | 301,984 | | | — | | | — | | | 301,984 | Shares and warrants issued on RTO | | | 4 | | | 6,706,039 | | | — | | | 3,721,852 | | | — | | | — | | | 3,721,852 | Recapitalization on RTO | | | 4 | | | | | | | | | (797,505) | | | | | | | | | (797,505) | Warrant fair value modification | | | 8 | | | — | | | — | | | 23,744 | | | — | | | — | | | 23,744 | Foreign currency translation | | | | | | — | | | — | | | — | | | — | | | 878 | | | 878 | Net loss | | | | | | — | | | — | | | — | | | (5,904,653) | | | — | | | (5,904,653) | Balance, July 31, 2023 | | | | | | 28,419,790 | | | 4,650,000 | | | $11,883,289 | | | $(11,854,481) | | | $(83,570) | | | $(54,762) |
See accompanying notes to the consolidated financial statements.
TABLE OF CONTENTS CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in United States dollars) Operating activities
| | | | | | | Net loss for the period | | | $(5,904,653) | | | $(5,949,828) | Items not affecting cash: | | | | | | | Depreciation | | | 1,849 | | | 973 | Share based compensation | | | 1,838,811 | | | 946,007 | Loss on impairment | | | — | | | 1,781,824 | Gain on forgiveness of accounts payable | | | (6,542) | | | — | | | | | | | | Changes in non-cash working capital items: | | | | | | | Other receivables | | | (44,147) | | | (4,750) | Prepaid expenses | | | 115,817 | | | (446,588) | Accounts payable and accrued liabilities | | | 590,721 | | | 202,709 | Net cash used in operating activities | | | (3,408,144) | | | (3,469,653) | | | | | | | | Investing activities
| | | | | | | Cash assumed on RTO | | | 10 | | | — | Purchase of intangible assets | | | — | | | (1,281,848) | Purchase of property and equipment | | | — | | | (5,860) | Net cash provided by (used in) financing activities | | | 10 | | | (1,287,708) | | | | | | | | Financing activities
| | | | | | | Proceeds from issuance of shares | | | — | | | 5,356,194 | Proceeds from warrant exercise | | | 301,984 | | | — | Amounts due to DevvESG Streaming Finco Ltd. | | | — | | | 3,254,412 | Net cash provided by financing activities | | | 301,984 | | | 8,610,606 | | | | | | | | Effect of exchange rate changes on cash | | | (159,534) | | | (97,590) | | | | | | | | Net increase (decrease) in cash | | | (3,265,684) | | | 3,755,655 | Cash, Beginning | | | 3,755,655 | | | — | Cash, Ending | | | $489,971 | | | $3,755,655 | | | | | | | | Supplemental information:
| | | | | | | Taxes paid | | | $— | | | $— | Interest paid | | | $— | | | $— | Fair value of securities issued for the acquisition of DevvStream Inc. (Note 4) | | | $3,721,852 | | | $— | Amounts reclassified from additional paid in capital to share capital upon exercise of warrants (Note 9) | | | $22,407 | | | $— | Shares issued for intangible assets (Notes 6 and 9) | | | — | | | 515,947 | Share issuance costs in accounts payable and accrued liabilities | | | $— | | | $6,593 |
See accompanying notes to the consolidated financial statements.
TABLE OF CONTENTS Notes to Consolidated Financial Statements
(Expressed in United States dollars)
For the year ended July 31, 2023 and period from incorporation on August 27, 2021 to July 31, 2022 1. Nature of operations and going concern DevvStream Holdings Inc. (the “Company” or “Devv Holdings”) was incorporated under the British Columbia Business Corporations Act on August 13, 2021. The head office is located at 2133 – 1177 West Hastings Street, Vancouver, BC V6E 2K3 and records and registered office is located at 1500 – 1055 West Georgia Street, Vancouver, British Columbia, V6E 4N7. On November 4, 2022, the Company completed a reverse takeover (“RTO”) with DevvStream Inc. (“DESG”) and DevvESG Streaming Finco Ltd. (“Finco”), (the “Transaction”) (Note 4). DESG is an Environmental Social and Governance (“ESG”) principled, high-tech, impact investing company focused on high quality and high return carbon credit generating projects. DESG is deemed as the acquirer for accounting purposes, and therefore its assets, liabilities and operations are included in the consolidated financial statements at their historical carrying value. The Company’s operations are considered to be a continuance of the business and operations of DESG from its date of incorporation on August 27, 2021, with the Company and Finco’s operations being included from November 4, 2022, the closing date of the Transaction, onwards. The Company is a public company which is listed on the Cboe Exchange under the symbol “DESG”. These consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assume that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations. As at July 31, 2023, the Company has a working capital deficit, incurred negative cash flows and losses since inception and has generated no revenue to date. These matters, when considered in the aggregate raise substantial doubt about the Company’s ability to continue as a going concern for at least twelve months from the issuance of these consolidated financial statements. The Company’s ability to continue its operations and to realize assets at their carrying values is dependent upon its ability to raise adequate financing from external sources and generate profits and positive cash flows from operations in order to carry out its business objectives. The Company will require additional capital for to fund its operations, to evaluate strategic opportunities, and for working capital purposes. However, there is no assurance that the Company will be able to secure such financing on favourable terms. Subsequent to the year ended July 31, 2023, the Company obtained additional cash through the exercise of warrants and has entered into a business combination agreement. These consolidated financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should the Company not continue as a going concern. Such adjustments could be material. 2. Basis of preparation (a) Statement of compliance These consolidated financial statements reflect the accounts of the Company and have been prepared in accordance with generally accepted accounting principles in the United States (“US GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for financial information. These consolidated financial statements have been prepared on a going concern basis, under the historical cost convention. (c) Basis of consolidation These consolidated financial statements include the accounts of the Company and entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. All intercompany balances and transactions, income and expenses have been eliminated upon consolidation. As of July 31, 2023, the Company’s subsidiaries were: DESG | | | Delaware, USA | | | 100% | Finco | | | British Columbia, Canada | | | 100% |
TABLE OF CONTENTS 2. Basis of preparation (continued)
On November 10, 2022, the Company made an investment into Marmota Solutions Incorporated (“Marmota”). On the date of the initial investment, the Company owned 50% of Marmota and accounted for the investment as an equity investment. As at July 31, 2023, the Company held a 32% interest in Marmota. Subsequent to the year ended July 31, 2023, the Company’s interest in Marmota was reduced to 10% (Note 15). (d) Variable interest entities (“VIE”) A VIE is an entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support or is structured such that equity investors lack the ability to control the entity's activities or do not substantially participate in the gains and losses of the entity. Upon inception of a contractual agreement, and thereafter, if a reconsideration event occurs, the Company performs an assessment to determine whether the arrangement contains a variable interest in an entity and whether that entity is a VIE. The primary beneficiary of a VIE is the party that has both the power to direct the activities that most significantly impact the VIE's economic performance and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. Where the Company concludes that it is the primary beneficiary of a VIE, the Company consolidates the accounts of that VIE. (e) Functional and presentation currencies The consolidated financial statements of the Company are presented in United States dollars, while the functional currency of the Company and its subsidiaries is the Canadian dollar. (f) Use of estimates and judgments The preparation of consolidated financial statements in conformity with US GAAP requires the Company’s management to make judgments, estimates and assumptions about future events that the amounts reported in the consolidated financial statements. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are made prospectively. Key estimates made by management with respect to the areas noted have been disclosed in the notes to these consolidated financial statements. Fair value of consideration in RTO The fair value of consideration to acquire the Company in the RTO comprised of common shares and replacement warrants. The share price of DESG as at the date of issuance is a significant estimate. In determining the estimate, management considered recent financings. The replacement warrants were valued using the Black-Scholes option pricing model which utilizes subjective assumptions such as fair value of the underlying share, expected price volatility, expected life and estimated forfeitures. Equity-settled share-based payments Share-based payments are measured at fair value. Options and warrants are measured using the Black-Scholes option pricing model based on estimated fair values of all share-based awards at the date of grant. The Black-Scholes option pricing model utilizes subjective assumptions such as fair value of the underlying share, expected price volatility, expected life and estimated forfeitures. Non-market vesting conditions are estimated initially and re-assessed every reporting period. Changes in these input assumptions can significantly affect the fair value estimate. Functional currency The Company and its subsidiaries are required to determine their functional currencies based on the primary economic environment in which each entity operates. In order to do that, management has to analyze several factors, including which currency mainly influences the cost of undertaking the business activities, in which currency the entity has received financing, and in which currency it keeps its receipts from operating activities. Management uses its judgment to determine which factors are most important when the above indicators are mixed and the functional currency is not obvious. TABLE OF CONTENTS 2. Basis of preparation (continued)
Going concern The assessment of the Company’s ability to continue as a going concern and to raise sufficient funds to pay its ongoing operating expenditures and to meet its liabilities for the ensuing year, involves significant judgment based on historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances. Valuation of intangible assets To value the acquired intangible asset, the Company engaged a third-party valuation firm to perform a valuation as of the date of acquisition. In determining the fair value of the intangible asset, the total development cost including the developer premium that had been incurred in developing the intangible asset was utilized as a proxy for the fair market value of the intangible asset. Changes in the input assumptions around the developer premium and the value of the work conducted by Devvio can significantly impact the fair value estimate. The Company estimates the recoverable amount of the acquired intangible assets to be $Nil as at July 31, 2022. As such, the entire cost of the intangible assets was impaired to $Nil at July 31, 2022. (g) Emerging growth company The Company is an “Emerging Growth Company”, as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it has taken advantage of certain exemptions that are not applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. Further, Section 102(b) (1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial reporting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public and private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. 3. Significant accounting policies The accounting policies set out below have been applied in the preparation of these consolidated financial statements. These policies have been applied consistently in the period unless otherwise stated. (a) Additional paid in capital Additional paid in capital is presented at the value of the shares issued as the Company’s shares have no stated par value. Transaction costs directly attributable to the issuance of common shares are recognized as a deduction from equity. Transactions with shareholders are disclosed separately in equity. The proceeds from the exercise of stock options or warrants together with amounts previously recorded in additional paid in capital over the vesting periods are recorded as additional paid in capital. Share units The Company uses the relative fair value method with respect to the measurement of shares and warrants issued as private placement units. Under the relative fair value method, the Company first determines the fair value of the common shares and warrants issued in a private placement, calculates the total fair value of the issued units, and then allocates the proceeds received between the common shares and warrants based on their respective percent of the total fair value. TABLE OF CONTENTS 3. Significant accounting policies(continued)
Warrants modification The modification of warrants is accounted for as a cancellation of the old warrants, and the issuance of post-modification warrants as the new warrants. The fair value incremental calculated on the modification would be considered an additional cost of issuing equity as part of the exchange of the old instrument for the new instrument. The impact of modifications to warrants previously issued for services is recognized as share based compensation n the consolidated statements of operations and comprehensive loss. (b) Share-based payments The Company records stock-based compensation in accordance with ASC 718 (“Compensation – Stock Compensation”) using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The Company uses the Black-Scholes option pricing model to calculate the fair value of stock-based awards. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to, the Company’s expected stock price volatility over the term of the awards, and actual and projected stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the statement of operations over the requisite service period. The Company records restricted stock units based on their fair value at grant date and recognizes compensation expense on a graded basis over the vesting period. In circumstances where the restricted stock units vest on the date of grant, the expense would be immediately recognized on grant. The cumulative expense is recognized for equity-settled transactions at each reporting date until the vesting date reflects the Company’s best estimate of the number of equity instruments that will ultimately vest. At the end of each reporting period, the Company re-assesses its estimates of the number of awards that are expected to vest and recognizes the impact of the revisions in the consolidated statements of loss and comprehensive loss. No expense is recognized for awards that do not ultimately vest. Where the terms of an equity settled award are modified, the minimum expense recognized is the grant date fair value of the unmodified award, provided the original terms of the award are met. An additional expense or its reduction is recognized for any modification which increases or decreases the total fair value of the share-based payment arrangement or is otherwise beneficial to the employee as measured at the date of modification. Where an award is cancelled by the Company or the counterparty, any remaining element of the fair value of the award is expensed immediately or reversed through profit or loss, depending on the type of cancellation. (c) Equipment Equipment is stated at cost and depreciated using the straight-line method over the estimated useful life of the asset using the following annual rates: Computer equipment | | | 3 years |
(d) Impairment of non-financial assets The Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances that could trigger a review include, but are not limited to: significant decreases in the market price of the assets; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the assets; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the assets; and current expectation that the assets will more likely than not be sold or disposed significantly before the end of their estimated useful life. When indicators of potential impairment are present the Company prepares a projected undiscounted cash flow analysis for the respective asset or asset group. If the sum of the undiscounted cash flows is less than the carrying TABLE OF CONTENTS 3. Significant accounting policies(continued)
value of the asset or asset group, an impairment loss is recognized equal to the excess of the carrying value over the fair value, if any. Fair value can be determined using a market approach, income approach or cost approach. Recognized impairment losses are not reversed. (e) Foreign currency translation Foreign currency transactions and balances Foreign currency transactions are translated into the functional currency of the Company, using the exchange rates prevailing at the dates of the transactions, with the resulting foreign exchange gains and losses recognized in the consolidated statements of loss and comprehensive loss. The foreign exchange gains and losses resulting from the remeasurement of monetary items denominated in foreign currency at year end exchange rates are recognized in the consolidated statements operations and comprehensive loss. Non-monetary items are not retranslated at year end and are measured at historical cost (translated using the exchange rates at the transaction date), except for non-monetary items measured at fair value which are translated using the exchange rates at the date when fair value was determined. Translation to presentation currency The Company has a functional currency of the Canadian dollar and a presentation currency of the US dollar. For presentation, assets and liabilities have been translated into US Dollar at the closing rate at the reporting date and income and expenses are translated at average exchange rates prevailing during the period. Foreign currency translation gains and losses are recognized in other comprehensive loss. (f) Investment in associate The Company accounts for its investment in Marmota as an equity investment. Management has assessed that the Company has significant influence for the following reasons: (i)
| The Company held 33.25% of the voting rights (Notes 2 and 14); and |
(ii)
| The Company has representation on Marmota’s Board of Directors. |
As a result, the Company includes the results of Marmota in its consolidated financial statements through equity accounting. Under equity accounting, the investment is initially recognized at cost, and the carrying amount is increased or decreased to recognize the investor’s shares of profit or loss of the associate. The Company’s share of income or loss of associates is recognized in the consolidated statement of loss and comprehensive loss prior to the date that it became an investment entity. Dilution gains and losses arising from changes in interest in investments in associates where significant influence is retained are recognized in the consolidated statements of loss and comprehensive loss. The initial equity investment in Marmota was $25. During the year ended July 31, 2023, the Company’s share of Marmota’s loss exceeded the Company’s total investment in Marmota, resulting in a carrying value of the investment of $Nil as of July 31, 2023. (g) Financial Instruments A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. At initial recognition, the Company classifies and measures its financial instruments as one of the following: held to maturity (amortized cost); available for sale (fair value through other comprehensive income); otherwise, they are classified as trading (fair value through net income). TABLE OF CONTENTS 3. Significant accounting policies(continued)
Financial assets are classified and measured at fair value with subsequent changes in fair value recognized in either profit and loss as they arise unless restrictive criteria are met for classifying and measuring the asset at either amortized cost or FVOCI. Financial liabilities are measured at amortized costs unless they are elected to be or required to be measured at fair value through profit and loss. Financial assets are derecognized when the rights to receive cash flows from the assets have expired or have been transferred, and the Company has transferred all risks and rewards of ownership. Financial liabilities are derecognized when the obligations specified in the contract are discharged, cancelled, or expire. Fair value is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. Fair value measurements for invested assets are categorized into levels within a fair value hierarchy based on the nature of the valuation inputs (Levels 1, 2 or 3). The three levels are defined based on the observability of significant inputs to the measurement, as follows: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3: one or more significant inputs used in a valuation technique are unobservable in determining fair values of the asset or liability. Determination of fair value and the resulting hierarchy requires the use of observable market data whenever available. The classification of an asset or liability in the hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The Company's cash, GST receivable, accounts payable and accrued liabilities and amounts due to DevvESG Streaming Finco Ltd. approximate fair value due to their short-term nature. (h) Intangible assets Intangible assets are recognized when it is probable that the use of the asset will generate future economic benefits, the economic benefits can be controlled by the Company and the costs of the asset can be determined reliably. Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognized in net loss as incurred. Intangible assets that have finite useful lives are measured at cost less accumulated amortization and any accumulated impairment losses. Amortization is recognized in the statements of loss and comprehensive loss on a straight-line basis over the estimated useful lives of the finite life of intangible assets. Intangible assets in development are not amortized and reflect the cost of developing the intangible asset, which are not yet available for their intended use. Intangible assets in development will start to be amortized when they are available for their intended use. At July 31, 2023 and 2022, the Company has indefinite life intangible assets with a carrying value of $Nil (Note 5). (i) Income taxes The Company's tax provision consists of taxes currently payable or receivable, plus any change during the period in deferred tax assets and liabilities. The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settles. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In addition, a valuation allowance is established to reduce any deferred tax asset for which it is determined that is it more likely than note that some portion of the deferred tax asset will not be realized. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. Accounting for income taxes requires a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if available TABLE OF CONTENTS 3. Significant accounting policies(continued)
evidence indicates it is more likely than not that the tax position will be fully sustained upon review by taxing authorities, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount with a greater than 50 percent likelihood of being realized upon ultimate settlement. For tax positions that are 50 percent or less likely of being sustained upon audit, the Company does not recognize any portion of that benefit in the financial statements. (j) Loss per share Basic loss per share is calculated by dividing the net loss attributable to the common shareholders of the Company by the weighted average number of subordinate voting stock outstanding and reduced by any shares held in escrow during the reporting period. Diluted loss per share is calculated by dividing the net loss applicable to subordinate voting stock by the sum of the weighted average number of subordinate voting stock issued and outstanding, all additional subordinate voting stock that would have been outstanding if potentially dilutive instruments were converted and reduced by any shares held in escrow. If these computations prove to be anti-dilutive, diluted loss per share is the same as basic loss per share. (k) Advertising The Company expenses advertising costs when the advertising first takes place. Advertising expense was approximately $914,409 for the year ended July 31, 2023 (2022 – $214,446). (l) Operating segments Operating segments are components of the Company that engage in business activities which generate revenues and incur expenses. The operations of an operating segment are distinct, and the operating results are regularly reviewed by the CODM for the purposes of resource allocation decisions and assessing its performance. The Company has assessed the above criteria and has determined that the entity as a whole is one operating segment comprising of a single operating segment. (l) Standards issued but not yet effective Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06) In August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40),” which simplifies the accounting for convertible instruments, reduces complexity for preparers and practitioners and improves the decision usefulness and relevance of the information provided to financial statement users. ASU 2020-06 also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. The Company has determined that there will not be any significant impact on its consolidated financial statements from adopting this standard. 4. Reverse takeover On December 17, 2021, (and as amended on March 30, 2022, May 18, 2022, August 11, 2022, and October 24, 2022), the Company, a wholly-owned Canadian subsidiary of the Company (“BC Subco”), a wholly-owned Delaware subsidiary of the company (“Delaware Subco”), DESG and Finco, a related party of the Company, entered into an amalgamation agreement (the “Amalgamation Agreement”). Under the Amalgamation Agreement, the Company consolidated all of its issued and outstanding common shares on a 28.09:1 basis and amended its articles to redesignate the common shares as subordinate voting shares (“Subordinate Voting Shares”) and create a new class of multiple voting shares (“Multiple Voting Shares”). Under the Amalgamation Agreement, Delaware Subco amalgamated with DESG and BC Subco amalgamated with Finco. All the outstanding DESG Subordinate Voting Shares and Finco common shares were exchanged for Subordinate Voting Shares of the Company on a one for one basis. All the outstanding DESG Multiple Voting Shares were TABLE OF CONTENTS 4. Reverse takeover(continued)
exchanged for Multiple Voting Shares of the Company on a one for one basis. In addition, all of the outstanding convertible securities of DESG and Finco were exchanged for securities of the Company on a one for one basis and on substantially the same economic terms and conditions. The Transaction was completed on November 4, 2022. In consideration for the Transaction, the Company issued 20,543,751 Subordinate Voting Shares to former holders of subordinate voting shares of DESG, 5,456,250 Subordinate Voting Shares to former holders of common shares of Finco and 4,650,000 Multiple Voting Shares the former holder of multiple voting shares of DESG. The former shareholders of the Company retained 1,249,789 Subordinate Voting Shares. The fair value per share was estimated to be CAD$0.60 ($0.44) based on DESG’s recent financings. As at November 4, 2022, Finco had 2,997,975 warrants outstanding exercisable at CAD$1.50 expiring on November 4, 2024. The fair value of the warrants was estimated to be $760,932 based on the Black-Scholes Option Pricing Model using the following assumptions: share price – CAD $0.60, expected dividend yield - 0%, expected–volatility - 150%, risk-free interest rate – 4.08% and an expected remaining life – 2 years. Expected volatility was estimated by using the annualized historical volatility of publicly traded companies that the Company considers to be comparable. The expected warrant life represents the period of time that warrants granted are expected to be outstanding. The risk-free interest rate is based on Canadian government bonds with a remaining term equal to the expected life of the warrants. Immediately after the completion of the Transaction, the former holders of DESG’s shares owned 91% of the shares of the combined entity. As a result of the Transaction, the former shareholders of DESG acquired control of the Company, thereby constituting a reverse takeover (“RTO”) of the Company. The RTO was determined to be a purchase of the Company and Finco’s net assets by the shareholders of DESG. The Transaction is accounted for as a capital transaction of DESG and equivalent to the issuance of shares by DESG for the net assets of the Company and Finco accompanied by a recapitalization as the Company did not qualify as a business according to the definition in ASC 805 “Business Combinations” and met the definition of a non-operating public shell. As a result, the transaction has been accounted for as an asset acquisition with DESG being identified as the acquirer and the Company and Finco being treated as the accounting acquiree with the transaction being measured at the fair value of the equity consideration issued to the Company and Finco shareholders. DESG is the continuing entity from the date of its incorporation on August 27, 2021. The excess of the fair value of the shares issued over the value of the net monetary assets acquired has been recognized as a reduction of equity. The purchase price is allocated as follows: Fair value of shares retained by former shareholders of the Company (1,249,789 post 28.09:1 consolidation shares at CAD$0.60 ($0.44)) | | | $551,820 | Fair value of shares issued to former shareholders of Finco (5,456,250 shares at CAD$0.60 ($0.44)) | | | 2,409,100 | Fair value of replacement Finco warrants | | | 760,932 | Amounts due to Finco | | | (3,014,157) | Amounts due from the Company | | | 14,425 | Total consideration | | | 722,120 | | | | | Net Assets (Liabilities) Acquired of PubCo and Finco: | | | | Cash | | | $10 | Accounts payable and accrued liabilities | | | (75,396) | Total net assets (liabilities) | | | $(75,386) | | | | | Reduction to additional paid-in capital as a result of the recapitalization | | | $797,506 |
Transaction costs of $114,930 were incurred as part of the Transaction and recorded within professional fees in the statements of operations and comprehensive loss. TABLE OF CONTENTS 5. Intangible assets On November 30, 2021, the Company entered into a strategic partnership agreement with Devvio, a related party of the Company, whereby, the Company issued 4,650,000 MVS (Note 8) to acquire a license valued at $515,947 to access Devvio Inc.’s in process online platform where ESG data is tracked under Devvio’s platform. The platform will provide affiliated services through various partnerships to improve ESG ratings. The strategic partnership agreement provides the Company a perpetual first right of refusal (“ROFR”) for any opportunity to pursue a potential financing of a green project in North America referred from the Devvio platform. The ROFR is related to green projects in North America which the Company could support via financing. Furthermore, the Company has a right to participate in a pro-rata share of 20% of the economics in any Global Opportunity related to green projects identified from the Devvio platform outside of North America. Two of Devvio’s officers are directors of the Company. For the eventual and continued use of the Devvio platform, the Company will pay to Devvio a sale fee of 5% of all sale revenue related to the sale of Carbon Credits which will be stored on Devvio’s platform (the “Fee”). The Fee is in consideration for the Company’s eventual use of Devvio’s platform to process, manipulate, copy, aggregate or otherwise use any data created, owned, produced or provided by the Company and compiled by or through the Devvio platform, of which the Company has paid CAD$2,000,000 ($1,574,854) which was impaired at July 31, 2022. The Company determined that the intangible asset has an indefinite useful life as the strategic partnership agreement will continue in perpetuity and the Devvio platform will be maintained and continuously upgraded by Devvio into the foreseeable future. The fair value of the share issuance was determined to be to be CAD$0.14 (approximately $0.11) per MVS, based on the valuation performed by a third-party valuation firm on the intangible asset acquired. The Company also capitalized legal and professional fees of $12,122 to the intangible asset during the period from incorporation on August 27, 2021 to July 31, 2022. As at July 31, 2022, the Company assessed that the recoverable amount of the intangible asset to be $Nil. As such, during the period from incorporation on August 27, 2021 to July 31, 2022, the Company fully impaired the intangible asset, resulting in a net book value of $Nil as at July 31, 2022 and recognized an impairment loss of $531,824 during the period ended July 31, 2022. 6. Streaming rights On April 22, 2022, the Company, Devvio and TS-Nano, both related parties, entered into a carbon credit streaming agreement. The Company and TS-Nano have two directors in common (Note 9). As part of the agreement, the Company provided TS-Nano funding of $1,250,000 to develop, produce and install the polymer nanocomposite sealants (the “Capping Technology”). In return, the Company will have the exclusive right to the carbon credits relating to any of the projects undertaken by TS-Nano from the effective date of the agreement until the cost of the all projects undertaken by TS-Nano from that period is equal to or greater than $1,250,000. During the period from incorporation on August 27, 2021 to July 31, 2022, the exclusive rights to the carbon credits were initially recognized as intangible assets and subsequently fully impaired for an amount of $1,250,000. 7. Accounts payable and accrued liabilities Accounts payable | | | $490,287 | | | $177,560 | Accrued liabilities | | | 418,365 | | | 23,183 | | | | $908,652 | | | $200,743 |
8. Share capital (a) Authorized The Company is authorized to issue an unlimited number of SVS with no par value and an unlimited number of MVS with no par value. Each MVS can be converted into SVS at a rate of one MVS to 10 SVS and carries 10 voting rights per MVS. TABLE OF CONTENTS 8. Share capital(continued)
(b) Shares issued During the year ended July 31, 2023: On November 4, 2022, the Company closed the Transaction and issued 6,706,039 SVS to former shareholders of Devv Holdings and Finco for consideration of $2,960,920 (Note 4). On May 10, 2023 the Company issued 1,170,000 shares for the exercise of 1,170,000 share purchase warrants, 1,000,000 of which were exercised at CAD$0.20 per share, and 170,000 of which were exercised at CAD$1.20, for total cash proceeds of CAD$404,000 ($301,984). During the period from incorporation on August 27, 2021 to July 31, 2022: On September 29, 2021, the Company issued 8,000,001 units of the Company for gross proceeds of CAD$160,000 ($125,579). Each unit consists of one SVS and one-half SVS purchase warrant. Each whole warrant is exercisable at CAD$0.20 for a period of 60 months. The warrants were valued at CAD$42,597 (approximately $33,433) using the relative fair value method. The fair value of the warrants was estimated using the Black-Scholes option pricing model using the following assumptions: Risk-free interest rate | | | 1.09% | Expected volatility | | | 150% | Fair value of underlying share | | | CAD$0.02 | Dividend yield | | | 0% | Expected life | | | 5 years |
On October 20, 2021, the Company issued 1,950,000 SVS of the Company for gross proceeds of CAD$117,000 ($93,893). On October 22, 2021, the Company issued 1,050,000 SVS of the Company for gross proceeds of CAD$210,000 ($169,944). On November 26, 2021, the Company issued 2,500,000 SVS of the Company for gross proceeds of CAD$1,000,000 ($783,024). On November 30, 2021, the Company issued 4,650,000 MVS for the acquisition of licenses (Note 5). Each MVS can be converted into SVS at a rate of one MVS to 10 SVS and carries 10 voting rights per MVS. On January 17, 2022, in relation to the Transaction, the Company completed private placements for gross proceeds of CAD$5,635,000 ($4,500,798) through the issuance of 7,043,750 units at CAD$0.80 ($0.64) per unit. Each unit consists of one SVS and one half SVS purchase warrant exercisable at a price of CAD$1.50 per share for a period of 24 months from the closing date of the Transaction. The warrants were valued at $1,147,030 using the relative fair value method. In relation to the private placement, the Company paid CAD$350,000 ($279,553) in cash finder’s fees and granted 437,500 finder’s warrants with a fair value of $106,174. The finder’s warrants have the same terms as the warrants attached to the units. The fair value of the warrants and finders’ warrants was estimated using the Black-Scholes option pricing model using the following assumptions: Risk-free interest rate | | | 1.27% | Expected volatility | | | 150% | Fair value of underlying share | | | CAD$0.60 | Dividend yield | | | 0% | Expected life | | | 2.79 years |
TABLE OF CONTENTS 8. Share capital(continued)
Expected volatility was estimated by using the annualized historical volatility of publicly traded companies that the Company considers to be comparable. The expected warrant life represents the period of time that warrants granted are expected to be outstanding. The risk-free interest rate is based on Canadian government bonds with a remaining term equal to the expected life of the warrants. During the period from incorporation on August 27, 2021 to July 31, 2022, the Company paid $37,491 in legal fees recognized as share issuance costs. (c) Share purchase warrants The continuity of share purchase warrants is as follows: Balance, August 27, 2021 | | | | | | — | | | — | Issued pursuant to private placement | | | 7,521,876 | | | CAD$0.67 | | | 2.28 | Finder’s warrants | | | 437,500 | | | CAD$1.20 | | | 1.27 | Balance, July 31, 2022 | | | 7,959,376 | | | CAD$0.70 | | | 1.80 | Replacement Finco Warrants (Note 4) | | | 2,997,975 | | | CAD$1.20 | | | 1.27 | Issued | | | 85,000 | | | CAD$2.00 | | | 1.92 | Exercised | | | (1,170,000) | | | CAD$0.35 | | | — | Balance, July 31, 2023 | | | 9,872,351 | | | CAD$0.90 | | | 1.85 |
As at July 31, 2023, the following share purchase warrants were outstanding: 6,787,351 | | | CAD$1.20 | | | November 7, 2024 | 85,000 | | | CAD$2.00 | | | June 30, 2025 | 3,000,000 | | | CAD$0.20 | | | September 29, 2026 | 9,872,351
| | | | | | |
On May 1, 2023, the Company announced the implementation of a Warrant Exercise Incentive Program (the “Incentive Program”), to reduce the exercise price of warrants priced at CAD$1.50 per share to CAD$1.20 per share, (the “Eligible Warrants”). Under the Incentive Program, the Company offered holders of Eligible Warrants the right to receive one new share purchase warrant (a “New Warrant”) for each two Eligible Warrants exercised between May 1, 2023 and June 30, 2023, and subsequently extended to August 30, 2023. Each New Warrant will entitle the holder to acquire one additional share of the Company at an exercise price of CAD$2.00 per share until June 30, 2025. On May 10, 2023, 170,000 Eligible Warrants were exercised, and 85,000 New Warrants were subsequently issued. As part of the issuances, $37,379 was assigned to the value of the New Warrants using the relative fair value method. The modification of warrants resulting from the Incentive Program resulted in $23,744 being recorded to share-based compensation from the modification of previously granted finder’s warrants. TABLE OF CONTENTS 8. Share capital(continued)
(d) Options The continuity of the Company’s stock options is as follows: Outstanding, August 27, 2021 | | | — | | | — | Granted | | | 1,980,000 | | | CAD$0.80 | Outstanding, July 31, 2022 | | | 1,980,000 | | | CAD$0.80 | Granted | | | 2,125,000 | | | CAD$0.89 | Outstanding, July 31, 2023 | | | 4,105,000 | | | CAD$0.85 | Exercisable, July 31, 2023 | | | 693,750 | | | CAD$0.81 |
As at July 31, 2023, the weighted average remaining contractual life of outstanding options is 8.09 years (2022 – 9.51 years). As at July 31, 2023, the following stock options were outstanding and exercisable: 175,000 | | | CAD$0.80 | | | January 17, 2028 | | | 43,750 | 550,000 | | | CAD$1.11 | | | May 15, 2028 | | | 30,000 | 50,000 | | | CAD$1.18 | | | June 26, 2028 | | | — | 1,500,000 | | | CAD$0.80 | | | January 17, 2032 | | | 375,000 | 360,000 | | | CAD$0.80 | | | March 1, 2032 | | | 90,000 | 60,000 | | | CAD$0.80 | | | March 14, 2032 | | | 15,000 | 60,000 | | | CAD$0.80 | | | April 13, 2032 | | | 15,000 | 500,000 | | | CAD$0.80 | | | October 12, 2032 | | | 125,000 | 850,000 | | | CAD$0.80 | | | February 6, 2033 | | | — | 4,105,000
| | | | | | | | | 693,750 |
On October 19, 2022, the Company granted 500,000 options with an exercise price of CAD$0.80 and a grant date fair value of $212,144. 10% of the options vest upon the Company’s listing on a recognized stock exchange which occurred on January 17, 2023 (the “Listing Date”), and 15% of the options vest every six months thereafter. On January 17, 2023, the Company granted 175,000 options with an exercise price of CAD$0.80 and a grant date fair value of $79,180. 25% of the options vest every six months from their date of grant. On February 6, 2023, the Company granted 850,000 options with an exercise price of CAD$0.80 and a grant date fair value of $393,786. 25% of the options vest every six months from their date of grant. On May 15, 2023, the Company granted 300,000 options with an exercise price of CAD$1.11 and a grant date fair value of $203,989. 10% of the options vest one month from their date of grant, and 15% vest every six months thereafter. On May 15, 2023, the Company granted 250,000 options with an exercise price of CAD$1.11 and a grant date fair value of $169,991. 25% of the options vest every six months from their date of grant. On June 26, 2023, the Company granted 50,000 options with an exercise price of CAD$1.18 and a grant date fair value of $41,026. 25% of the options vest every six months from their date of grant. During the period from incorporation on August 27, 2021 to July 31, 2022, the Company granted 1,500,000 options on January 17, 2022 with a grant date fair value of $700,270, 360,000 options on March 1, 2022 with a grant date fair value of $165,846, 60,000 options on March 14, 2022 with a grant date fair value of $27,465, and a further 60,000 options on April 13, 2022 with a grant date fair value of $27,836, for a total of 1,980,000 options, at an exercise price of CAD$0.80 per option. TABLE OF CONTENTS 8. Share capital(continued)
Share-based payments relating to the vesting of options for the year ended July 31, 2023 was $778,742 (2022 - $249,291). The fair value of stock options granted during the year ended July 31, 2023 and the period from incorporation on August 27, 2021 to July 31, 2022 was estimated using the Black-Scholes Option Pricing Model with the following assumptions: Risk-free interest rate | | | 2.93 – 3.70% | | | 1.76 – 2.66% | Expected volatility | | | 150% | | | 150% | Fair value of underlying share | | | CAD$0.60 – CAD$1.18 | | | CAD$0.60 | Exercise price | | | CAD$0.80 – CAD$1.18 | | | CAD$0.80 | Dividend yield | | | 0% | | | 0% | Expected life (years) | | | 5.00 – 10.00 | | | 10.00 |
Expected volatility was estimated by using the annualized historical volatility of publicly traded companies that the Company considers to be comparable. The expected option life represents the period of time that options granted are expected to be outstanding. The risk-free interest rate is based on Canadian government bonds with a remaining term equal to the expected life of the options. (e) Restricted stock units (“RSUs”) No RSUs were granted during the year ended July 31, 2023. During the period from incorporation on August 27, 2021 to July 31, 2022, the Company granted the following RSUs: On November 30, 2021, the Company granted 60,000 RSUs with a grant date fair value of $24,000 to a consultant of the Company. Each vested RSU can be exchanged for one SVS of the Company for no additional consideration. The RSUs will vest as follows: 20,000 on the first anniversary of the grant date 20,000 on the second anniversary of the grant date 20,000 on the third anniversary of the grant date On December 24, 2021, the Company granted 2,500,000 RSUs with a grant date fair value of $1,000,000 to certain officers of the Company. Each vested RSU can be exchanged for one SVS of the Company for no additional consideration. The RSUs will vest as follows: 250,000 on the Listing Date 375,000 six months from the Listing Date 375,000 12 months from the Listing Date 375,000 18 months from the Listing Date 375,000 24 months from the Listing Date 375,000 30 months from the Listing Date 375,000 36 months from the Listing Date On March 1, 2022, the Company granted 120,000 RSUs with a grant date fair value of $48,000 to a consultant of the Company. Each vested RSU can be exchanged for one SVS of the Company for no additional consideration. The RSUs will vest as follows: 12,000 on the Listing Date 18,000 six months from the Listing Date TABLE OF CONTENTS 8. Share capital(continued)
18,000 12 months from the Listing Date 18,000 18 months from the Listing Date 18,000 24 months from the Listing Date 18,000 30 months from the Listing Date 18,000 36 months from the Listing Date On March 14, 2022, the Company granted 4,100,000 RSUs with a grant date fair value of $2,443,325 to certain officers of the Company. Each vested RSU can be exchanged for one SVS of the Company for no additional consideration. The RSUs will vest as follows: 410,000 on the Listing Date 615,000 six months from the Listing Date 615,000 12 months from the Listing Date 615,000 18 months from the Listing Date 615,000 24 months from the Listing Date 615,000 30 months from the Listing Date 615,000 36 months from the Listing Date Share-based payments relating to the vesting of RSUs for the year ended July 31, 2023 was $1,036,325 (Period from incorporation on August 27, 2021 to July 31, 2022 - $696,716). As at July 31, 2023, the Company had 6,780,000 (2022 – 6,780,000) restricted stock units (“RSUs”) outstanding, of which 1,700,000 (2022 – Nil) had vested. All vested RSU’s are to be settled by December 31st of the calendar year in which the RSUs vest. As at July 31, 2023, the following RSUs were outstanding and vested: 60,000 | | | November 30, 2021 | | | 20,000 | 2,500,000 | | | December 24, 2021 | | | 625,000 | 120,000 | | | March 1, 2022 | | | 30,000 | 4,100,000 | | | March 14, 2022 | | | 1,025,000 | 6,780,000
| | | | | | 1,700,000 |
9. Related party transactions and balances Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. The Company has identified its directors and senior officers as its key management personnel and the compensation costs for key management personnel and companies related to them are recorded at their exchange amounts as agreed upon by transacting parties. The compensation recorded to management personnel during the year ended July 31, 2023 and from the period of incorporation on August 27, 2021 to July 31, 2022 is as follows: TABLE OF CONTENTS 9. Related party transactions and balances(continued)
Salaries and wages | | | $610,000 | | | $436,392 | Professional fees | | | 231,252 | | | 106,221 | Share based compensation | | | 1,472,342 | | | 910,743 | | | | $2,313,594 | | | $1,453,356 |
During the period from incorporation on August 27, 2021 to July 31, 2022, a director of the Company subscribed to 2,666,667 shares for proceeds of CAD$53,333 ($41,996). During the period from incorporation on August 27, 2021 to July 31, 2022, the Company and Devvio entered into a strategic partnership agreement (Note 5). In September 2023, the agreement was amended (Note 15). During the period from incorporation on August 27, 2021 to July 31, 2022, the Company, Devvio and TS-Nano entered into a carbon credit streaming agreement (Note 6). During the year ended July 31, 2023, a related party of the Company was issued 180,000 shares from the exercise of 180,000 share purchase warrants, for proceeds of CAD$36,000 ($26,910). At July 31, 2023, the Company had amounts owing and accrued liabilities of $23,534 (July 31, 2022 - $6,437) payable to directors and officers of the Company for salaries and professional fees. These amounts are non-interest bearing and have no terms of repayment. At July 31, 2022, the Company had amounts owing to Finco, a corporation controlled by a director, of $3,222,840 for funds provided as financing to the Company in connection with the Amalgamation Agreement (Note 4). At July 31, 2023, Finco is a wholly owned subsidiary of the Company and intercompany balances have been eliminated on consolidation (Note 2). The amount is non-interest bearing and has no terms or repayment. 10. Financial instruments As at July 31, 2023, the Company’s financial instruments consist of cash, GST receivable and accounts payable and accrued liabilities. The Company classifies cash and GST receivable as financial assets held at amortized cost. The Company classifies accounts payable and accrued liabilities as financial liabilities which are held at amortized cost. The fair value of all of the Company’s financial instruments approximates their carrying value due to the short-term nature of the financial instruments. The risk exposure arising from these financial instruments is summarized as follows: (a) Credit risk The Company’s financial assets are cash and GST receivable. The Company’s maximum exposure to credit risk, as at period end, is the carrying value of its financial assets, being $539,379. The Company holds its cash with major financial institutions and with a publicly traded payment processing company therefore minimizing the Company’s credit risk. (b) Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages liquidity by maintaining adequate cash balances and by raising equity financings. The Company has no assurance that such financings will be available on favorable terms. In general, the Company attempts to avoid exposure to liquidity risk by obtaining corporate financing through the issuance of shares. As at July 31, 2023, the Company had cash of $489,971 to settle current liabilities of $908,652 which fall due for payment within twelve months of the statement of financial position. All of the Company’s contractual obligations are current and due within one year. (c) Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company’s income or value of its holdings or financial instruments. At July 31, 2023, the Company TABLE OF CONTENTS 10. Financial instruments(continued)
has cash of $395,336 denominated in US dollars that is exposed to foreign exchange risk. A 10% strengthening or weakening in the Canadian dollar against the US dollar with all other variables held constant would have an unfavorable or favorable impact of approximately $30,000. 11. Income taxes A reconciliation between the effective income tax rate and the federal statutory income tax rate is as follows: Domestic | | | $ (5,090,737) | | | $ (5,949,828) | International | | | (813,916) | | | — | Earnings/(Loss) before income taxes | | | $(5,904,653) | | | $ (5,949,828) |
Expected recovery at statutory rate | | | (1,239,977) | | | (1,254,678) | Permanent book/tax differences | | | 21,517 | | | 18,592 | Change in valuation allowance | | | 1,267,017 | | | 1,236,086 | Tax rate differential | | | (48,835) | | | — | Impact of foreign currency translation | | | 278 | | | — | Total tax benefit | | | $— | | | $— |
The effective tax rate for 2023 is materially consistent with the prior year comparable period due to the continued full valuation allowance recorded against net deferred tax assets: Deferred Income Tax The significant components of the deferred tax assets and liabilities consisted of the following: Deferred tax assets
| | | | | | | Net operating loss carryforwards | | | $5,436,464 | | | $850,788 | Unexercised share-based compensation | | | 2,777,205 | | | 946,815 | Capital start-up costs | | | 3,370,274 | | | 4,046,896 | Unrealized foreign exchange gain/loss | | | — | | | 46,512 | Total gross deferred tax assets | | | 11,583,943 | | | 5,891,011 | | | | | | | | Valuation allowance | | | (11,580,807) | | | (5,889,984) | | | | | | | | Total deferred tax assets, net of valuation allowance | | | 3,136 | | | 1,027 | | | | | | | | Deferred tax liability
| | | | | | | Depreciation | | | (592) | | | (1,027) | Unrealized foreign exchange gain/loss | | | (2,544) | | | — | Total gross deferred tax liabilities | | | (3,136) | | | (1,027) | | | | | | | | Net deferred tax asset | | | $— | | | $— |
In assessing the realizability of deferred tax assets, management considers all positive and negative evidence to determine whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Due to the uncertainty of the Company’s ability to realize the benefit of the deferred tax assets, primarily related to the history of cumulative operating losses, the net TABLE OF CONTENTS 11. Income taxes(continued)
deferred tax assets are fully offset by a valuation allowance at July 31, 2023 and 2022. As of July 31, 2023, the Company recorded a valuation allowance of $11,580,807 compared to $5,889,984 as of July 31, 2022. As of July 31, 2023, the Company had $Nil of unrecognized tax benefits. The Company's policy is to recognize interest and penalties related to income tax matters in income tax expense. As of both July 31, 2023 and July 31, 2022 the Company had accrued $Nil for net interest and penalties. As of July 31, 2023, the Company had Canadian federal net operating loss carryforwards ("NOLs"(“NOLs”) of $746,271 which have a 20-year expiration period and will begin to expire in 2040, and U.S. federal NOLs of $4,690,192 which can be carried forward indefinitely. DevvStream Holdings Inc. is subject to U.S. federal tax, as well as various foreign jurisdictions including Canadian federal and provincial tax that impose an income tax. The years that remain subject to examination are 2021 and onwards. U.S. Income Tax Status U.S. federal tax legislation was enacted in 2004 to address perceived U.S. tax concerns in “corporate inversion” transactions. A “corporate inversion” generally occurs when a non-U.S. corporation acquires “substantially all” of the equity interests in, or the assets of, a U.S. corporation or partnership, if, after the acquisition, former equity holders of the U.S. corporation or partnership own a specified level of stock in the non-U.S. corporation. The tax consequences of these rules depend upon the percentage identity of stock ownership that results. Generally, in the “80-percent identity” transactions, i.e. former equity holders of the U.S. corporation owns 80% or more of the equity of the non-U.S. acquiring entity (excluding certain equity interests), the tax benefits of the inversion are limited by treating the non-U.S. acquiring entity as a domestic entity for U.S. tax purposes, DevvStream Holdings Inc. is subject to both Canadian and US tax. Note, the ownership percentage is computed under section 7874 which varies from legal ownership. Management is of the view that a corporate inversion has resulted from the RTO transaction completed on November 4, 2022. Management has determined that DevvStream Holdings Inc. is subject to the "80 percent"“80 percent” identity with respect to the transactions undertaken. The tax implication resulting from this transaction would be annual filing of US corporate income tax return and additional withholding tax payment to IRS on future distribution to minority shareholders. 12. Segmented information The Company operates in one reportable operating segment – the development and monetization of environmental assets. The Company has not generated revenue to date and as such has no reportable segment revenues. The Company’s assets are located in Canada. 13. Commitments and contingencies On March 7, 2023, the Company entered into a carbon credit streaming agreement with BC Road Builders and Heavy Construction Association (“BCRB”) pursuant to which the Company will pre-purchase 25,000 carbon credits generated by BCRB'sBCRB’s green house gas reduction program (the “BCRB Agreement”). The BCRB Agreement requires the Company to pay an initial contribution of $140,000 subject to certain conditions being met by BCRB. As of July 31, 2023, these conditions had not been met and no payments had been made pursuant to the BCRB Agreement. A further payment of $210,000 becomes due one year subsequent to the initial contribution. On September 12, 2023, the Company amended their existing strategic partnership agreement with Devvio, Inc. (Note 5). As part of this amendment, the Company has committed to making specific payments to Devvio. They will provide a minimum advance of $1,000,000 by August 1, 2024, followed by $1,270,000 by August 1, 2025 and August 1, 2026. Additionally, starting from 2027, if advance royalty payments fall below $1,000,000 in any year, Devvio has the right to terminate the Strategic Partnership Agreement. TABLE OF CONTENTS 13. Commitments and contingencies(continued)
From time to time, the Company may be involved in litigation relating to claims arising out of operations in the normal course of business. At July 31, 2023 and 2022, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of the Company’s operations. There are also no proceedings in which any of the Company’s directors, officers or affiliates is an adverse party or has a material interest adverse to the Company’s interest. 14. Subsequent events On August 4, 2023, the Company issued 600,000 shares for the exercise of 600,000 share purchase warrants for cash proceeds of CAD$120,000 ($89,807). On August 22, 2023, the Company issued 416,667 shares for the exercise of 416,667 share purchase warrants for cash proceeds of CAD$83,333 ($61,526). On September 12, 2023, the Company entered into a business combination agreement with Focus Impact Acquisition Corp. (“Focus Impact”). Focus Impact is a special purpose acquisition corporation focused on amplifying social impact through the pursuit of a merger or business combination with socially forward companies. The transaction is structured as an amalgamation of the Company into a wholly owned subsidiary of Focus Impact, following Focus Impact’s redomiciling as an Alberta company. Focus Impact will be renamed “DevvStream Corp.” (the “Combined Company”) and continue the business of the Company following the amalgamation. It is a condition of the transaction that the securities of the Combined Company will be listed on the Nasdaq Stock Exchange (“NASDAQ”). The aggregate transaction consideration deliverable to the Company’s shareholders shall be a number of newly issued shares of common stock (or shares of common stock issuable upon the exercise or conversion of other outstanding securities of the Company that are converted as a part of the transaction) of the Combined Company equal to $145 million plus the aggregate exercise price of the outstanding options and warrants of the Company, with each share of common stock of the Combined Company valued at US$10.20 per share for the purposes of the transaction. Based on the aggregate transaction consideration, assuming full dilution and a US dollar to Canadian Dollar exchange rate of 1.34, this implies a deemed per share value of CAD$2.16 for the Company’s SVS. Completion of the transaction is subject to customary closing conditions, including all requisite approvals by the shareholders of the Company and Focus Impact, the listing approval of NASDAQ and the effectiveness of the registration statement with the U.S. Securities and Exchange Commission (“SEC”). The Company is expected to delist from the Cboe Canada stock exchange on closing. On September 12, 2023, the Company amended their existing strategic partnership agreement with Devvio, Inc. (Note 5). As part of this amendment, the Company has committed to making specific payments to Devvio. They will provide a minimum advance of $1,000,000 by August 1, 2024, followed by $1,270,000 by August 1, 2025 and August 1, 2026. Additionally, starting from 2027, if advance royalty payments fall below $1,000,000 in any year, Devvio has the right to terminate the Strategic Partnership Agreement. On September 27, 2023, the Company issued 166,666 shares for the exercise of 166,666 share purchase warrants for cash proceeds of CAD$33,200 ($24,644). On October 16, 2023, the Company reduced its interest in Marmota to 10% by returning common shares to Marmota for cancellation in consideration of $19 (Note 2). On November 6, 2023, the Company received proceeds of $250,000 in conjunction with a financing of convertible debt. The convertible debt bears interest at 5.30% per annum and is due on November 6, 2024. The convertible debt and any accrued interest is convertible at the option of the holder based on the following terms: ° | In the event that the Transaction is completed, into a number of SVS equal to the quotient obtained by dividing (A) the amount outstanding divided by $7.65 by (B) $10.20; or |
° | In the event that the Transaction is not completed by the later of (A) 270 days from November 6, 2023 or (B) the termination date, the amounts outstanding will be convertible into units (“Units”) at a conversion price per Unit equal to the greater of (I) the 30 day volume weighted average trading price of the Company’s shares on the Cboe Exchange (“VWAP”) on the date of delivery of a notice of conversion, |
TABLE OF CONTENTS 14. Subsequent events(continued)
converted into United States dollars based on the Bank of Canada daily exchange rate on the last business day prior to the conversion date, and (II) CA$1.03. Each Unit will consist of one share and one-half of a warrant. Each warrant will be exercisable at a price the greater of (a) a 20% premium to such VWAP, and (b) CA$1.03, and will expire two years from the conversion date. The convertible debt also has an acceleration clause; in the event the Transaction closes, the outstanding amounts under the convertible debt are repayable within 10 business days after the closing of the Transaction. TABLE OF CONTENTS BUSINESS COMBINATION AGREEMENT
by and among
Focus Impact Acquisition Corp.,
Focus Impact Amalco Sub Ltd.
and
DevvStream Holdings Inc.
Dated as of September 12, 2023 TABLE OF CONTENTS TABLE OF CONTENTS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
TABLE OF CONTENTS TABLE OF CONTENTS (cont’d) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
TABLE OF CONTENTS TABLE OF CONTENTS (cont’d)
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TABLE OF CONTENTS TABLE OF CONTENTS (cont’d)
EXHIBITS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | SCHEDULESSCHEDULES
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TABLE OF CONTENTS BUSINESS COMBINATION AGREEMENT THIS BUSINESS COMBINATION AGREEMENT (this “Agreement”) is made and entered into as of September 12, 2023 by and among: A. Focus Impact Acquisition Corp., a Delaware corporation (the “SPAC”); B. Focus Impact Amalco Sub Ltd., a company existing under the Laws of the Province of British Columbia (“Amalco Sub”); and C. DevvStream Holdings Inc., a company existing under the Laws of the Province of British Columbia (the “Company”). The SPAC, Amalco Sub and the Company are sometimes referred to herein individually as a “Party” and, collectively, as the “Parties.” Capitalized terms used and not otherwise defined herein have the meaning set forth in Article XII. RECITALS: WHEREAS, the SPAC is a blank check company incorporated in Delaware and formed for the sole purpose of consummating an initial business combination, as such term is used in the final prospectus of the SPAC, dated as of October 27, 2021 (the “IPO Prospectus,” and such initial business combination, the “Business Combination”); WHEREAS, Amalco Sub is a wholly-owned, direct Subsidiary of the SPAC, and was newly formed for the sole purpose of consummating the transactions contemplated by this Agreement, including the Amalgamation; WHEREAS,the Parties intend to carry out the Business Combination, which shall include the Amalgamation, by way of an arrangement on the terms and subject to the conditions set forth in a plan of arrangement under Section 288 of the Business Corporations Act (British Columbia) (the “BCBCA”), substantially in the form attached hereto as Exhibit A (the “Plan of Arrangement”), and in accordance with the terms of this Agreement, subject to any amendments or variations to the Plan of Arrangement made in accordance with the terms of this Agreement and the Plan of Arrangement, or made at the direction of the Court in the Final Order with the prior written consent of the Company and the SPAC, each acting reasonably (such arrangement, the “Arrangement”); WHEREAS, on the terms and subject to the conditions of this Agreement and the Plan of Arrangement: A. Prior to the Closing (on the Closing Date), the SPAC will continue (the “SPAC Continuance”) from the State of Delaware under the Delaware General Corporation Law (“DGCL”) to the Province of Alberta under the Business Corporations Act (Alberta) (the “ABCA”) (the SPAC is referred to herein for the periods following the effectiveness of the SPAC Continuance as the “New PubCo”); and B. following the SPAC Continuance, on the Closing Date, and in accordance with the applicable provisions of the BCBCA and the Plan of Arrangement, Amalco Sub and the Company will amalgamate (the “Amalgamation”) in accordance with the terms of the BCBCA to form one corporate entity (“Amalco”), and, in connection with the Arrangement, (i) each Company Share issued and outstanding immediately prior to the Effective Time will be automatically exchanged for that certain number of New PubCo Common Shares equal to the applicable Per Common Share Amalgamation Consideration, (ii) each Company Option and Company RSU issued and outstanding immediately prior to the Effective Time will be assumed by New PubCo and shall be converted into Converted Options and Converted RSUs, respectively, in an amount as set forth herein, respectively, (iii) each Company Warrant will be assumed by New PubCo representing the right to receive, in respect of each Converted Warrant upon the exercise thereof, New PubCo Common Shares as provided for hereunder, (iv) each holder of Company Convertible Notes will first receive Company Shares (which, for the avoidance of doubt, shall not be included in the Fully Diluted Common Shares Outstanding) and then New PubCo Common Shares in accordance with the terms of such Company Convertible Notes, and (v) each common share of Amalco Sub will be automatically exchanged for a common share of Amalco; WHEREAS, in accordance with the terms hereof, the SPAC shall provide an opportunity for the SPAC Shareholders to have their issued and outstanding SPAC Shares redeemed effective prior to the SPAC Continuance on the terms and subject to the conditions set forth in this Agreement and the SPAC’s Organizational Documents in connection with obtaining the Required SPAC Shareholder Approval; WHEREAS, for U.S. federal and state income tax purposes, each of the Parties hereby intends that, to the greatest extent permitted by Law, (i) as a result of, and following, the SPAC Continuance, New PubCo will, in TABLE OF CONTENTS addition to being a taxable Canadian corporation for purposes of the ITA, be treated as a U.S. domestic corporation for U.S. federal income tax purposes pursuant to Section 7874(b) of the Code (the “Inversion”), (ii) the SPAC Continuance will be treated as a “reorganization” within the meaning of Section 368(a)(1)(F) of the Code (the “Intended SPAC Tax Treatment”), and further intends that, to the greatest extent permitted by Law, (iii) the Arrangement will qualify as a “reorganization” within the meaning of Section 368(a) of the Code and the U.S. Treasury Regulations promulgated thereunder (the “Intended Company Tax Treatment”, and together with the Intended SPAC Tax Treatment and the Inversion, the “Intended Tax Treatment”), (iv) each of the Parties will be a party to the reorganization under Section 368(b) of the Code, and (v) this Agreement be, and hereby is, adopted as a “plan of reorganization” for the purposes of Sections 354 and 361 of the Code and U.S. Treasury Regulations Sections 1.368-2(g) and 1.368-3(a); WHEREAS, the SPAC Board has unanimously (i) determined that the Business Combination is in the best interests of the SPAC and its stockholders, and declared it advisable, to enter into this Agreement and the Ancillary Documents to which it is a party, (ii) approved, among other things, this Agreement and the Ancillary Documents to which it is a party and the transactions contemplated hereunder and thereby, including the SPAC Continuance and the Arrangement, on the terms and subject to the conditions of this Agreement, and (iii) adopted a resolution recommending that this Agreement and the transactions contemplated hereunder be submitted to the SPAC Shareholders for their approval; WHEREAS, the disinterested members of the Company Board have unanimously (i) determined that the Arrangement is fair to the Company Shareholders, (ii) determined that the Arrangement is in the best interests of the Company, (iii) approved this Agreement, the Ancillary Documents to which it is a party, and the transactions contemplated hereunder and thereunder, including the Arrangement, on the terms and subject to the conditions of this Agreement, and (iv) resolved to recommend that the Company Shareholders vote in favor of the Arrangement Resolution; WHEREAS, as a condition and inducement to the Company’s willingness to enter into this Agreement, simultaneously with the entry into this Agreement, Focus Impact Sponsor, LLC (the “Sponsor”), the SPAC and the other individual parties thereto entered into that certain Sponsor Side Letter, in the form attached hereto as Exhibit C (the “Sponsor Side Letter”); WHEREAS, as a condition and inducement to the SPAC’s willingness to enter into this Agreement, simultaneously with the execution and delivery of this Agreement, the Company Securityholders set forth on Schedule A (the “Core Company Securityholders”) have executed and delivered to the SPAC and the Company a Support & Lock-Up Agreement, substantially in the form attached hereto as Exhibit D (the “Company Support & Lock-Up Agreement”), pursuant to which, among other things, (i) each of the Core Company Securityholders has agreed to vote any Company Shares held by him or her in favor of (A) the Arrangement Resolution, and (B) the proposed transactions contemplated by this Agreement, and (ii) each of the Core Company Securityholder has agreed to certain lock-up restrictions with respect to the New PubCo Common Shares to be received by him, her or it hereunder; and WHEREAS, simultaneously with the Closing, New PubCo, the Sponsor (and certain members of the Sponsor) and the Company Securityholders set forth on Schedule B shall enter into the Registration Rights Agreement (as defined herein). NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth in this Agreement, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the Parties hereby agree as follows:
CLOSING 1.1 Closing. Subject to the satisfaction or waiver of the conditions set forth in Article VIII or unless this Agreement is earlier terminated in accordance with Article IX, the consummation of the transactions contemplated by this Agreement (the “Closing”) shall take place by electronic exchange of executed documents on a date and at a time to be agreed upon by the Parties, which date shall be no later than the second (2nd) Business Day after all the Closing conditions to this Agreement have been satisfied or, if permissible, waived (other than those conditions that by theirTABLE OF CONTENTS nature are required to be satisfied at the Closing, it being understood that the occurrence of the Closing shall remain subject to the satisfaction, or if permissible, waiver of such conditions at the Closing), or at such other date, time or place (including remotely) as the Parties may mutually agree (the date and time at which the Closing is actually held being the “Closing Date”).
PLAN OF ARRANGEMENT 2.1 Plan of Arrangement. The Company and the SPAC agree that the Arrangement will be implemented in accordance with and subject to the terms and conditions of this Agreement and the Plan of Arrangement. In the event of any conflict between the terms of this Agreement and the Plan of Arrangement, the Plan of Arrangement shall govern. The Parties shall each effect and carry out the steps, actions and/or transactions to be carried out by them pursuant to the Plan of Arrangement.2.2 Interim Order. The Company shall apply in a manner reasonably acceptable to the SPAC, and by such date as necessary in order to comply with the timeline for the Company Meeting provided in Section 2.3, pursuant to Section 288 of the BCBCA and, in cooperation with the SPAC, prepare, file and pursue a motion for the Interim Order, which must provide, among other things:(a) for the classes of Persons to whom notice is to be provided in respect of the Arrangement and the Company Meeting and for the manner in which such notice is to be provided; (b) that the required level of approval for the Arrangement Resolution shall be: (i) two-thirds of the votes cast on such resolution by the Company Shareholders present in person or represented by proxy at the Company Meeting; (ii) if required under MI 61-101, a simple majority of the votes cast on such resolution by the Company Shareholders (other than the Company Shareholders excluded for purpose of such vote under MI 61-101) present in person or represented by proxy at the Company Meeting, voting in accordance with Part 8 of MI 61-101 or any exemption therefrom; (c) that the record date for the Company Shareholders entitled to receive notice of and to vote at the Company Meeting will not change in respect or as a consequence of any adjournment(s) or postponement(s) of the Company Meeting, unless required by Law; (d) that, in all other respects, the terms, restrictions and conditions of the Company’s Organizational Documents, including quorum requirements and all other matters, shall apply in respect of the Company Meeting; (e) for the grant of Dissent Rights to those Company Shareholders who are registered Company Shareholders as contemplated in the Plan of Arrangement; (f) for the notice requirements with respect to the presentation of the application to the Court for the Final Order; (g) that the Company Meeting may be adjourned or postponed from time to time by the Company in accordance with the terms of this Agreement without the need for additional approval of the Court; and (h) for such other matters as the Parties may agree are required to complete the Arrangement. The Company shall: (a) subject to and in accordance with the terms of this Agreement, the Interim Order, the Company’s Organizational Documents and Law, file a notice of meeting and record date as soon as reasonably practicable after the Registration Statement has been declared effective by the SEC (and no later than three (3) Business Days thereafter) to set the record date for the Company Shareholders entitled to vote at the Company Meeting and will conduct the Company Meeting as soon as reasonably practicable thereafter (and no later than forty-five (45) days after filing the notice of meeting and record date), and not adjourn, postpone or cancel (or TABLE OF CONTENTS propose the adjournment, postponement or cancellation of) the Company Meeting without the prior written consent of the SPAC, acting reasonably, or as required by Law or by a Governmental Authority; provided, that the Company shall not change the record date without the prior written consent of the SPAC (such consent not to be unreasonably withheld, conditioned or delayed); (b) subject to the terms of this Agreement, use reasonable best efforts to solicit proxies in favor of the approval of the Arrangement Resolution and against any resolution submitted by any Person that is inconsistent with the Arrangement Resolution and the completion of any of the transactions contemplated by this Agreement, including, if so requested by the SPAC and at the Company’s sole expense, using proxy solicitation services firms to solicit proxies in favor of the approval of the Arrangement Resolution; provided, however, that the Company shall not be obligated to solicit proxies in favor of the Arrangement Resolution in the event that the Company Board withdraws or modifies the Company Board Recommendation in accordance with Section 6.6; (c) give notice to the SPAC of the Company Meeting and allow the SPAC’s representatives and legal counsel to attend the Company Meeting; (d) as promptly as reasonably practicable, advise the SPAC, at such times as the SPAC may reasonably request and at least on a daily basis on each of the last ten (10) Business Days prior to the date of the Company Meeting, and promptly following receipt of proxy tallies over the last three (3) Business Days prior to the date of the Company Meeting, as to the aggregate tally of the proxies received by the Company in respect of the Arrangement Resolution and provide the right to the SPAC to demand up to one postponement or adjournment of the Company Meeting if, based on the tally of proxies, the Company will not receive the Required Company Shareholder Approval; provided, that the Company Meeting, so postponed or adjourned, shall not be later than ten (10) Business Days prior to the Outside Date (without the consent of the SPAC, not to be unreasonably withheld, conditioned or delayed); (e) promptly advise the SPAC of any material communication (written or oral) from or claims brought by (or threatened to be brought by) any Person in opposition to the Arrangement and any purported exercise or withdrawal of Dissent Rights by Company Shareholders; and (f) not make any payment or settlement offer, or agree to any payment or settlement with respect to Dissent Rights, without the prior written consent of the SPAC, acting reasonably. 2.4 The Company Circular.(a) Subject to the SPAC’s compliance with Section 2.4(d), the Company shall as promptly as reasonably practicable prepare and complete, in consultation with the SPAC as contemplated by this Section 2.4(a), the Company Circular together with any other documents required by applicable Law in connection with the Company Meeting, and the Company shall, promptly after obtaining the Interim Order, cause the Company Circular and such other documents to be filed and sent to each Company Shareholder and other Persons as required by the Interim Order and Law, in each case so as to permit the Company Meeting to be held by the date specified in Section 2.3. (b) The Company shall ensure that the Company Circular complies in all material respects with applicable Law, does not contain any misrepresentation (as that term is defined in the Securities Act (British Columbia)) (provided, that the Company shall not be responsible for the accuracy of any information furnished by the SPAC for purposes of inclusion in the Company Circular pursuant to Section 2.4(d)) and provides the Company Shareholders with sufficient information to permit them to form a reasoned judgement concerning the matters to be placed before the Company Meeting. Without limiting the generality of the foregoing, the Company Circular must include: (i) a copy of the Company Fairness Opinion; (ii) a statement that the Company Board has determined that the Arrangement is in the best interests of the Company and is fair from a financial perspective to the Company Shareholders and the disinterested members of the Company Board unanimously recommend that Company Shareholders vote in favor of the Arrangement Resolution (the “Company Board Recommendation”); and (iii) a statement that each executive officer and director of the Company who owns Company Shares or holds Company Options, Company RSUs or Company Warrants intends to vote all of such Person’s Company Shares (including any Company Shares issued upon the exercise of any Company Options or Company Warrants or settlement of Company RSUs, if any) in favor of the TABLE OF CONTENTS Arrangement Resolution and the transactions contemplated hereby. The Company Circular shall advise the Company’s securityholders of the applicable resale restrictions under National Instrument 45-102, if any, that will apply to the securities received in connection with the Arrangement. (c) The Company shall give the SPAC and its legal counsel a reasonable opportunity to review and comment on drafts of the Company Circular and other related documents, and shall accept the reasonable comments made by the SPAC and its legal counsel, and agrees that all information relating solely to the SPAC or any of its affiliates included in the Company Circular must be in a form consistent in all material respects with the information provided to the Company by the SPAC. The Company shall provide the SPAC with a final copy of the Company Circular in connection with its mailing to Company Shareholders. For the avoidance of doubt, the information about the Company in the Company Circular shall be materially consistent with the information supplied by the Company for inclusion in the Registration Statement. (d) The SPAC shall provide to the Company all information regarding the SPAC and its affiliates as required by the Interim Order or Laws for inclusion in the Company Circular or in any amendments or supplements to such Company Circular. The SPAC shall ensure that such information does not include any misrepresentation (as that term is defined in the Securities Act (British Columbia)) concerning the SPAC or its affiliates. (e) Each Party shall promptly notify the other Parties if it becomes aware that the Company Circular contains a misrepresentation (as that term is defined in the Securities Act (British Columbia)), or otherwise requires an amendment or supplement. The Parties shall cooperate in the preparation of any such amendment or supplement as required or appropriate, and the Company shall promptly mail, file or otherwise publicly disseminate any such amendment or supplement to the Company Shareholders and, if required by the Court or by Law, file the same with any other Governmental Authority. 2.5 Final Order. If the Interim Order is obtained and the Arrangement Resolution is passed at the Company Meeting as provided for in the Interim Order, the Company shall take all steps necessary or desirable to submit the Arrangement to the Court and diligently pursue an application for the Final Order pursuant to Section 291 of the BCBCA, as soon as reasonably practicable, but in any event not later than the later of: (a) three (3) Business Days after the date on which the Arrangement Resolution is passed at the Company Meeting as provided for in the Interim Order; and (b) three (3) Business Days after the receipt of the Required SPAC Shareholder Approval.(a) In connection with all Court proceedings relating to obtaining the Interim Order and the Final Order, the Company shall diligently pursue, and cooperate with the SPAC in diligently pursuing, the Interim Order and the Final Order, and the Company will provide the SPAC and its legal counsel with reasonable opportunity to review and comment upon drafts of all materials to be filed with the Court in connection with the Arrangement, prior to the service and filing of such materials, and will accept the reasonable comments of the SPAC and its legal counsel with respect to any information required to be supplied by the SPAC and included in such materials. The Company will not file any material with the Court in connection with the Plan of Arrangement or serve any such material, and will not agree to modify or amend any materials so filed or served, except as contemplated by this Agreement or with the SPAC’s prior written consent, such consent not to be unreasonably withheld, conditioned or delayed; provided, that the SPAC is not required to agree or consent to any increase or variation in the form of the consideration payable hereunder or other modification or amendment to such filed or served materials that expands or increases its obligations, or diminishes or limits its rights, set forth in any such filed or served materials or under this Agreement or the Plan of Arrangement. In addition, the Company will not object to legal counsel to the SPAC making such submissions on the motion for the Interim Order and the application for the Final Order as such counsel considers appropriate, acting reasonably; provided, that the SPAC advises the Company of the nature of any such submissions prior to the hearing and such submissions are consistent with this Agreement and the Plan of Arrangement. The Company will also provide legal counsel to the SPAC with copies of any notice and evidence served on the Company or its legal counsel in respect of the application for the Final Order or any appeal therefrom, and any notice, written or oral, indicating the intention of any Person to appeal, or oppose the granting of, the Interim Order or Final Order. The Company shall also oppose any proposal from any party that the Final Order contain any provision inconsistent with this Agreement TABLE OF CONTENTS and the Plan of Arrangement and, if at any time after the issuance of the Final Order and prior to the Effective Date, the Company is required by the terms of the Final Order or by Law to return to Court with respect to the Final Order, it shall do so after notice to, and in consultation and cooperation with, the SPAC. 2.7 SPAC Continuance; Plan of Arrangement Steps.The following shall occur on the terms and subject to the conditions of this Agreement and (in the case of clause (c) below) the Plan of Arrangement. (a) In accordance with its Organizational Documents, on the Closing Date after all the conditions set forth in Article VIII have been satisfied or, if permissible, waived (other than those conditions that by their nature are required to be satisfied at the Closing, it being understood that the occurrence of the Closing shall remain subject to the satisfaction, or if permissible, waiver of such conditions at the Closing), prior to the SPAC Continuance, the SPAC shall effect the Redemption (including making the required payments in respect thereof or irrevocably directing such payments to occur). (b) On the Closing Date, but prior to the Closing, after all the conditions set forth in Article VIII have been satisfied or, if permissible, waived (other than those conditions that by their nature are required to be satisfied at the Closing, it being understood that the occurrence of the Closing shall remain subject to the satisfaction, or if permissible, waiver of such conditions at the Closing), following the Redemption as contemplated in clause (a) above, the SPAC will effect the SPAC Continuance, thereby continuing from the State of Delaware to the Province of Alberta under the applicable provisions of the DGCL and the ABCA. Pursuant to the SPAC Continuance, (i) the articles of continuance and by-laws of New PubcoPubCo shall be amended and restated in substantially the form attached hereto as Exhibit B (the “New PubCo Organizational Documents”), (ii) all of the issued and outstanding SPAC Securities that are SPAC Class A Shares and that have not been redeemed shall remain outstanding and automatically convert into New PubCo Common Shares on a one-for-one basis, except that each issued and outstanding SPAC Unit that has not been previously separated into SPAC Class A Shares and SPAC Public Warrants prior to the SPAC Continuance shall be converted into securities of New PubCo as a corporation existing under the Laws of the Province of Alberta identical to one (1) New PubCo Common Share and one-half (1/2) of one New PubCo Public Warrant; provided, however, that no such fractional warrants will be issued, and only whole warrants will be issued and each Person who would otherwise be entitled to a fractional warrant (after aggregating all fractional warrants that otherwise would be received by such Person) shall instead have the number of warrants issued to such Person rounded down in the aggregate to the nearest whole warrant, pursuant to the SPAC Continuance, (iii) the SPAC Securities that are SPAC Class B Shares shall convert into New PubCo Common Shares on a one-for-one basis or be forfeited in accordance with the Sponsor Side Letter and (iv) the SPAC Public Warrants and the SPAC Private Placement Warrants will be assumed by New PubCo and converted into the right to exercise such warrants for New PubCo Common Shares. Prior to consummating the SPAC Continuance, the SPAC will allow the Company reasonable time to review and comment on the documents needed to effectuate the SPAC Continuance. For the avoidance of doubt, the Parties agree that references in this Agreement to the “SPAC” shall refer to the SPAC before giving effect to the SPAC Continuance, and references in this Agreement to “New PubCo” shall refer to such entity after giving effect to the SPAC Continuance. (c) In accordance with the applicable provisions of the BCBCA, at the Closing, Amalco Sub and the Company will, as part of the Plan of Arrangement, consummate the Amalgamation, pursuant to which Amalco Sub and the Company will amalgamate in accordance with the provisions of the BCBCA. 2.8 Arrangement; Effective Time. From and after the Effective Time, the steps to be carried out pursuant to the Arrangement shall become effective in accordance with the Plan of Arrangement. The Arrangement shall become effective on the Closing Date. Each of the Parties, on or before the Effective Date, will proceed to file any documents as required pursuant to Section 292 of the BCBCA, and such other documents as may be required to give effect to the Arrangement pursuant to Division 5 of Part 9 of the BCBCA, whereupon at the Effective Time on the Effective Date, the transactions comprising the Arrangement will be deemed to occur in the order set out in the Plan of Arrangement without any further act or formality. From and after the Effective Time, the Plan of Arrangement will have all of the effects provided by applicable Law, including the BCBCA.2.9 Organizational Documents. At the Effective Time, by virtue of the Amalgamation, the notice of articles and articles of Amalco shall be in the form agreed by the Company and the SPAC promptly following the date hereof.TABLE OF CONTENTS 2.10 Directors and Officers.(a) As part of the Plan of Arrangement, (i) the chief executive officer and chief financial officer of the Company immediately prior to the Effective Time shall be the directors of Amalco, with each such director to hold office in accordance with the Organizational Documents of Amalco, and (ii) the officers of the Company immediately prior to the Effective Time shall be the officers of Amalco, with each such officer to hold office in accordance with the Organizational Documents of Amalco. (b) The Parties shall cause (i) the board of directors of New PubCo as of immediately following the Closing to consist of those individuals contemplated by Section 6.15(a), and (ii) the officers of New PubCo as of immediately following the Closing to consist of those individuals contemplated by Section 6.15(b), each to hold office in accordance with the ABCA and the New PubCo Organizational Documents until their respective successors are, in the case of the directors, duly elected or appointed and qualified and, in the case of the officers, duly appointed. 2.11 Amalgamation Consideration. Pursuant to the Amalgamation, New PubCo shall issue, and the Company Shareholders collectively shall be entitled to receive, in accordance with Section 2.12 and the Plan of Arrangement, New PubCo Securities consisting of the Common Amalgamation Consideration.2.12 Effect of Arrangement on Company Securities.(a) Pursuant to the Plan of Arrangement and without any action on the part of any Person, each Company Share issued and outstanding immediately prior to the Effective Time (the “Effective Time Outstanding Company Shares”) will, subject to the terms and conditions of this Agreement, the Ancillary Documents and the Plan of Arrangement and the transactions contemplated hereby and thereby, be automatically exchanged for a number of New PubCo Common Shares equal to the applicable Per Common Share Amalgamation Consideration in respect of each Company Share. (b) Such exchange shall be effectuated in accordance with Section 2.14. (c) At or prior to the Effective Time, the Company’s Board (or, if appropriate, any committee thereof administering the Company Equity Incentive Plan) shall adopt such resolutions, the form and substance of which the Company will allow the SPAC reasonable time to review and comment on, and take such other actions as may be required to adjust the terms of all Company Equity Awards as necessary to provide that, unless otherwise agreed between the Company, the SPAC and the Company Option or Company RSU holder, at the Effective Time, pursuant to the Plan of Arrangement, each outstanding Company Equity Award issued and outstanding immediately prior to the Effective Time will automatically, without any action on the part of the Parties or the holder thereof, be cancelled and converted as follows: (i) Each outstanding Company Option, whether vested or unvested, will automatically, without any action on the part of the Parties or the holder thereof, be cancelled and converted into an option to purchase (A) a number of New PubCo Common Shares (rounded down to the nearest whole share) equal to the product of (I) the number of Company Shares underlying such Company Option, multiplied by (II) the applicable Common Conversion Ratio, (B) at an exercise price per share (rounded up to the nearest whole cent) equal to the (I) exercise price per share of such Company Option immediately prior to the Effective Time divided by (II) the applicable Common Conversion Ratio (each, a “Converted Option”); provided, however, that such conversion shall occur in a manner intended to comply with the requirements of Section 409A of the Code and subsection 7(1.4) of the ITA, and therefore, notwithstanding the foregoing, in the event that: (I) the excess of the aggregate fair market value of the New PubCo Common Shares subject to a Converted Option, determined immediately after the Effective Time, over the aggregate option exercise price for such New PubCo Common Shares pursuant to such Converted Option (such excess referred to as the “Converted Option ITM Amount”) would otherwise exceed (II) the excess of the aggregate fair market value of the Company Shares subject to the Company Option in exchange for which the Converted Option was granted, determined immediately prior to the Effective Time, over the aggregate option exercise price for the Company Shares pursuant to such Company Option (such excess referred to as the “Company Option ITM Amount”), the previous provisions shall be adjusted with effect at and from the Effective Time so that the Converted Option ITM Amount of the Converted Option does not exceed the Company Option ITM Amount of the Company Option in accordance with subsection 7(1.4) of the ITA and, to the extent applicable, Section 409A of the Code, but only to the extent necessary and in a manner TABLE OF CONTENTS that does not otherwise (except to the extent necessary to comply with subsection 7(1.4) of the ITA and Section 409A of the Code) adversely affect the holder of the Converted Option. Each Converted Option shall be subject to substantially the same terms and conditions as were applicable under such Company Option and the Company Equity Incentive Plan immediately prior to the Effective Time (including with respect to vesting and restrictions on transfer), except for (1) terms rendered inoperative by reason of the transactions contemplated by this Agreement or (2) such other immaterial administrative or ministerial changes as the New PubCo Board (or the compensation committee of the New PubCo Board) may determine in good faith are appropriate to effectuate the administration of the Converted Options; and (ii) Each outstanding Company RSU will automatically, without any action on the part of the Parties or the holder thereof, be cancelled and converted into a New PubCo restricted stock unit (a “Converted RSU”) representing the right to receive a number of New PubCo Common Shares (rounded to the nearest whole share), equal to the product of (A) the number of Company Shares underlying such Company RSU, multiplied by (B) the Common Conversion Ratio. Each Converted RSU shall be subject to substantially the same terms and conditions as were applicable under such Company RSU immediately prior to the Effective Time (including with respect to vesting and restrictions on transfer), except for (1) terms rendered inoperative by reason of the transactions contemplated by this Agreement or (2) such other immaterial administrative or ministerial changes as the New PubCo Board (or the compensation committee of the New PubCo Board) may determine in good faith are appropriate to effectuate the administration of the Converted RSUs. (d) As part of the Plan of Arrangement, each Company Warrant issued and outstanding immediately prior to the Effective Time will, in accordance with its terms, become exercisable for New PubCo Common Shares (a “Converted Warrant”) and will provide the holder the right to acquire, subject to substantially the same terms and conditions as were applicable under such Company Warrant, (i) a number of New PubCo Common Shares (rounded down to the nearest whole share) equal to the product of (A) the number of Company Shares underlying such Company Warrant, multiplied by (B) the Common Conversion Ratio, (ii) at an exercise price per share (rounded up to the nearest whole cent) equal to (A) the exercise price per share of such Company Warrant immediately prior to the Effective Time divided by (B) the Common Conversion Ratio. (e) As soon as practicable after the Closing Date, New PubCo shall deliver to the holders of Converted Options, Converted RSUs and Converted Warrants appropriate notices (the form and substance of which notices shall be subject to review and approval of the SPAC and the Company) setting forth such holders’ rights, and the agreements evidencing the grants of such Converted Options, Converted RSUs and Converted Warrants shall continue in accordance with the terms and conditions of this Agreement, including this Section 2.12. For the avoidance of doubt, all Converted Options and Converted RSUs shall continue to be held subject to the vesting and other terms that were subject to the related Company Options and Company RSUs prior to the Effective Time. (f) As part of the Plan of Arrangement, at the Effective Time, each Company Convertible Note outstanding at the Effective Time shall be fully and finally settled in accordance with its terms and converted first into Company Shares (for the avoidance of doubt, which shall not be included in the Fully Diluted Common Shares Outstanding) and then into a number of New PubCo Common Shares as set forth in the terms of the Convertible Note (the “Convertible Note Shares”), which Convertible Note Shares shall be held in accordance with the terms of such Company Convertible Note and the applicable Company Convertible Note Subscription Agreement. (g) As part of the Plan of Arrangement, each share of Amalco Sub issued and outstanding immediately prior to the Effective Time shall be exchanged for one newly issued, fully paid and non-assessable common share of Amalco. (h) Prior to the Effective Time, the Company shall take all necessary actions to terminate the Company Equity Incentive Plan, effective as of immediately prior to the Effective Time; provided, that the Converted Options and Converted RSUs shall continue to be governed by the terms of the Company Equity Incentive Plan, subject to the adjustments in this Section 2.12. 2.13 Treasury Stock. At the Effective Time, if there are any Company Securities that are owned by the Company as treasury securities, such securities shall be canceled without any conversion or exchange thereof, and no payment or distribution shall be made with respect thereto.TABLE OF CONTENTS 2.14 Surrender of Company Securities and Payment of Amalgamation Consideration.(a) At or prior to the Effective Time, New PubCo shall (i) appoint Odyssey Trust Company as Canadian co-transfer agent (to the extent required) and as an agent (or other agents reasonably acceptable to the SPAC and the Company) (collectively, the “Exchange Agent”) for the purposes set forth in this Section 2.14 and (ii) deposit, or cause to be deposited, with the Exchange Agent, (A) the Common Amalgamation Consideration to be issued pursuant to the Amalgamation and (B) the Convertible Note Shares to be issued pursuant to conversion of the Company Convertible Notes. (b) At or prior to the Effective Time, New PubCo shall send, or shall cause the Exchange Agent to send, to each Company Shareholder holding Company Securities evidenced by Certificates (the “Certificates”) or represented by book-entry (the “Book-Entry Shares”) and not held by the Depository Trust Company (“DTC”) or the Canadian Depository for Securities (“CDS”), a letter of transmittal for use in such exchange, in a form to be mutually agreed upon by the Parties (the “Letter of Transmittal”) (which shall specify that the delivery of the exchanged New PubCo Common Shares shall be effected, and risk of loss and title shall pass, only upon proper delivery of a properly completed and duly executed Letter of Transmittal and, if applicable, the appropriate Certificates, if any (or a Lost Certificate Affidavit)), to the Exchange Agent for use in such exchange. (c) With respect to Book-Entry Shares, including the New PubCo Common Shares, held through the DTC or CDS, the SPAC and the Company shall cooperate to establish procedures with the Exchange Agent, DTC or CDS to ensure that the Exchange Agent will transmit to DTC or CDS, as the case may be (or their respective nominees) as soon as reasonably practicable on or after the Closing Date, upon surrender of Book-Entry Shares held of record by DTC or CDS (or their respective nominees) in accordance with customary surrender procedures, the applicable New PubCo Common Shares to be exchanged for such Book-Entry Shares held through the DTC or CDS, as applicable. (d) Each Company Shareholder shall be entitled to receive the applicable Common Amalgamation Consideration in respect of the Company Shares tendered for exchange within thirty (30) days after the Effective Time, but subject to the delivery to the Exchange Agent of the following items prior thereto (collectively, the “Transmittal Documents”): (i) the Company Certificate(s), if any, for its Company Shares (each, a “Company Certificate”) (or a Lost Certificate Affidavit), (ii) a properly completed and duly executed Letter of Transmittal and (iii) such other documents as may be reasonably requested by the Exchange Agent or New PubCo. Until so surrendered, each Company Certificate shall represent after the Effective Time for all purposes only the right to receive the Common Amalgamation Consideration attributable to such Company Shareholder. (e) If any portion of the Common Amalgamation Consideration is to be delivered or issued to a Person other than the Person in whose name the surrendered Company Certificate is registered immediately prior to the Effective Time, it shall be a condition to such delivery that: (i) the transfer of such Company Shares shall have been permitted in accordance with the terms of the Company’s Organizational Documents, each as in effect immediately prior to the Effective Time, (ii) such Company Certificate shall be properly endorsed or shall otherwise be in proper form for transfer, (iii) the recipient of such portion of the Common Amalgamation Consideration, or the Person in whose name such portion of the Common Amalgamation Consideration is delivered or issued, shall have already executed and delivered such other Transmittal Documents as are reasonably deemed necessary by the Exchange Agent or New PubCo, and (iv) the Person requesting such delivery shall pay to the Exchange Agent any transfer or other Taxes required as a result of such delivery to a Person other than the registered holder of such Company Certificate or establish to the satisfaction of the Exchange Agent that such Tax has been paid or is not payable. (f) Notwithstanding anything to the contrary contained herein, in the event that any Company Certificate shall have been lost, stolen or destroyed, in lieu of delivery of a Certificate to the Exchange Agent, the Company Shareholder may instead deliver to the Exchange Agent an affidavit of lost certificate and indemnity of loss in form and substance reasonably acceptable to New PubCo (a “Lost Certificate Affidavit”), which at the reasonable discretion of New PubCo may include a requirement that the owner of such lost, stolen or destroyed Company Certificate deliver a bond in such sum as it may reasonably direct as indemnity against any claim that may be made against New PubCo or the Company or their respective agents with respect to the Company Shares represented by the Certificates alleged to have been lost, stolen or destroyed. Any Lost Certificate Affidavit properly delivered in accordance with this Section 2.14(f) shall be treated as a Company Certificate for all purposes of this Agreement. TABLE OF CONTENTS (g) After the Effective Time, there shall be no further registration of transfers of Company Shares. If, after the Effective Time, the Transmittal Documents are presented to New PubCo or the Exchange Agent, the Company Shares and any Company Certificates representing such Company Shares shall be exchanged for the applicable portion of the Common Amalgamation Consideration and in accordance with the procedures set forth in this Section 2.14. No dividends or other distributions declared or made after the date of this Agreement with respect to New PubCo Common Shares with a record date after the Effective Time will be paid to the holders of any Company Shares that have not yet been surrendered with respect to the New PubCo Common Shares to be issued upon surrender thereof until the holders of record of such Company Shares shall surrender the Company Certificates, if any (or provide a Lost Certificate Affidavit), or provide the other Transmittal Documents. Subject to applicable Law, following surrender of any such Company Certificates, if any (or delivery of a Lost Certificate Affidavit) and delivery of the other Transmittal Documents, New PubCo shall promptly deliver to the record holders thereof, without interest, the certificates (if any) or Direct Registration System advices representing the New PubCo Common Shares issued in exchange therefor and the amount of any such dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such New PubCo Common Shares. (h) All securities issued upon the surrender of Company Securities in accordance with the terms hereof shall be deemed to have been issued in full satisfaction of all rights pertaining to such Company Securities. (i) Notwithstanding anything to the contrary contained herein, no fraction of a New PubCo Common Share will be issued by virtue of the Amalgamation or the other transactions contemplated by this Agreement, and each Person who would otherwise be entitled to a fraction of a New PubCo Common Share (after aggregating all fractional New PubCo Common Shares that otherwise would be received by such holder) shall instead have the number of New PubCo Common Shares issued to such Person rounded down in the aggregate to the nearest whole New PubCo Common Share. 2.15 Withholding. The SPAC, New PubCo and the Exchange Agent shall be entitled to deduct and withhold from the Common Amalgamation Consideration and any other amounts issuable or payable hereunder (whether in cash or kind) such amounts as the applicable party may be required to deduct and withhold therefrom under any applicable Law in respect of Taxes; provided, however, that before making any deduction or withholding pursuant to this Section 2.15 (other than with respect to compensatory payments or as a result of the Company failing to deliver the certification required by Section 8.3(d)(vi)), SPAC and New PubCo shall use commercially reasonable efforts to give the Company at least five (5) Business Days prior written notice of any anticipated deduction or withholding (together with any legal basis thereof) to provide the Company with sufficient opportunity to provide any forms or other documentation from the applicable equity holders or take such other steps in order to avoid such deduction or withholding. SPAC and New PubCo shall reasonably consult and cooperate with the Company or the applicable Company Shareholder in good faith to minimize or eliminate, to the extent permissible under applicable Law, the amount of any such deduction or withholding, including by cooperating with the submission of any certificates or forms to establish an exemption from, reduction in or refund of any such deduction or withholding. To the extent that any amounts are so deducted, withheld and remitted to the appropriate Governmental Authority, such amounts shall be treated for all purposes under this Agreement as having been paid to the Person to whom such amounts would otherwise have been paid. The SPAC, New PubCo and the Exchange Agent, as applicable, may sell or otherwise dispose of such portion of the Common Amalgamation Consideration or other consideration otherwise payable to such holder or former holder in the form of New PubCo Common Shares as is necessary to provide sufficient funds to enable the withholding party to comply with such deduction or withholding requirements, and none of the SPAC, New PubCo or the Exchange Agent, as applicable, shall be liable to any Person for any deficiency in respect of any proceeds received (whether in cash or kind), and New PubCo or the Exchange Agent, as applicable, shall notify the holder thereof and remit to the holder thereof any unapplied balance of the net proceeds of such sale.2.16 Taking of Necessary Action; Further Action. If, at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement, including to vest Amalco with full right, title and possession to all assets, property, rights, privileges, powers and franchises of the Company, the officers and directors of New PubCo, Amalco Sub and the Company are fully authorized in the name of their respective corporations or otherwise to take, and will use their best efforts to take, all such lawful and necessary action, so long as such action is not inconsistent with this Agreement.TABLE OF CONTENTS
REPRESENTATIONS AND WARRANTIES OF THE SPAC Except as set forth in (a) the disclosure schedules delivered by the SPAC to the Company on the date hereof (the “SPAC Disclosure Schedules”), the Section numbers of which are numbered to correspond to the Section numbers of this Agreement to which they refer, or (b) the SEC Reports that are available on the SEC’s website through EDGAR, the SPAC represents and warrants to the Company that each of the following representations are true and correct as of the date of this Agreement and as of the Closing Date (except as to any representations and warranties that specifically relate to an earlier date, in which case such representations and warranties were true and correct as of such earlier date): 3.1 Organization and Standing. The SPAC is a corporation duly organized, validly existing and in good standing under the laws of the state of the State of Delaware, and has the requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. After giving effect to the SPAC Continuance, as of the Closing, New PubCo will be a corporation duly incorporated, validly existing and in good standing under the Laws of the Province of Alberta and will have all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. The SPAC is duly qualified or licensed and in good standing to do business in each jurisdiction in which the character of the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so qualified or licensed or in good standing has not and would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the SPAC to enter into this Agreement or consummate the transactions contemplated hereby (a “SPAC Material Adverse Effect”). The SPAC has heretofore made available (including via the SEC’s EDGAR System) to the Company accurate and complete copies of its Organizational Documents, as currently in effect as of the date hereof. The SPAC is not in violation of any provision of its Organizational Documents in any material respect. The SPAC is not the subject of any bankruptcy, dissolution, liquidation, reorganization or similar proceeding.3.2 Authorization; Binding Agreement. The SPAC has all requisite corporate power and authority to execute and deliver this Agreement and each Ancillary Document to which it is a party, to perform the SPAC’s obligations hereunder and thereunder and, subject to obtaining the Required SPAC Shareholder Approval, to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and each Ancillary Document to which the SPAC is a party and the consummation of the transactions contemplated hereby and thereby (a) have been duly and validly authorized by the SPAC Board, and (b) other than the Required SPAC Shareholder Approval, no other corporate proceedings, other than as set forth elsewhere in this Agreement, on the part of the SPAC are necessary to authorize the execution and delivery of this Agreement and each Ancillary Document to which it is a party or to consummate the transactions contemplated hereby and thereby. This Agreement has been, and each Ancillary Document to which the SPAC is a party shall be when delivered, duly and validly executed and delivered by the SPAC and, assuming the due authorization, execution and delivery of this Agreement and such Ancillary Documents by the other parties hereto and thereto, constitutes, or when delivered shall constitute, the valid and binding obligation of the SPAC, enforceable against the SPAC in accordance with its terms, except to the extent that enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization and moratorium Laws and other Laws of general application affecting the enforcement of creditors’ rights generally or by any applicable statute of limitation or by any valid defense of set-off or counterclaim, and the fact that equitable remedies or relief (including the remedy of specific performance) are subject to the discretion of the court from which such relief may be sought (collectively, the “Enforceability Exceptions”). The SPAC’s Board has by resolutions duly adopted at a meeting duly called and held, as of the date of this Agreement, (i) determined that this Agreement, the Amalgamation and the other transactions contemplated hereby are advisable, fair to, and in the best interests of, the SPAC Shareholders, (ii) approved and adopted this Agreement and the Ancillary Documents to which it is a party and approved the Arrangement, the Amalgamation and the other transactions contemplated hereby and thereby, and (iii) recommended the approval and adoption of this Agreement, the Ancillary Documents to which it is a party, the Arrangement, the Amalgamation, and the other transactions contemplated hereby and thereby by the SPAC Shareholders.3.3 Governmental Approvals. Except as otherwise described in Section 3.3 of the SPAC Disclosure Schedules, no Consent of or with any Governmental Authority on the part of the SPAC is required to be obtained or made in connection with the execution, delivery or performance by the SPAC of this Agreement and each Ancillary Document to which it is a party or the consummation by the SPAC of the transactions contemplated hereby and thereby, otherTABLE OF CONTENTS than (a) such filings as are contemplated by this Agreement, (b) any filings required with Nasdaq or the SEC with respect to the transactions contemplated by this Agreement, (c) applicable requirements, if any, of the Securities Act, the Exchange Act, or any state “blue sky” securities laws, and the rules and regulations thereunder, (d) such filings required in connection with the SPAC Continuance, (e) a post-closing notification pursuant to the Investment Canada Act, and (f) where the failure to obtain or make such Consents or to make such filings or notifications, would not, individually or in the aggregate, reasonably be expected to have a SPAC Material Adverse Effect. 3.4 Non-Contravention. Except as otherwise described in Section 3.4 of the SPAC Disclosure Schedules, the execution and delivery by the SPAC of this Agreement and each Ancillary Document to which it is a party, the consummation by the SPAC of the transactions contemplated hereby and thereby, and compliance by the SPAC with any of the provisions hereof and thereof, will not (a) contravene or conflict with or violate any provision of the SPAC’s Organizational Documents, (b) contravene or conflict with or constitute a violation of any provisions of Law or Order binding upon or applicable to the SPAC, (c) subject to obtaining the Consents from Governmental Authorities referred to in Section 3.3 hereof, and the waiting periods referred to therein having expired, and any condition precedent to such Consent or waiver having been satisfied, conflict with or violate in any material respect any Law, Order or Consent applicable to the SPAC, Amalco Sub, or any of their properties or assets, except for violations which would not prevent or delay the consummation of the transactions contemplated hereby, or (d) (i) violate, conflict with or result in a breach of, (ii) result in a default (or an event which, with notice or lapse of time or both, would constitute a material default) under, (iii) give rise to any right of termination, cancellation or acceleration under, (iv) give rise to any obligation to make material payments or provide material compensation under, (v) result in the creation of any Lien (other than Permitted Liens) upon any of the properties or assets of the SPAC under, (vi) give rise to any obligation to obtain any material third party Consent or provide any notice to any Person, or (vii) give any Person the right to declare a default, exercise any remedy, claim a rebate, chargeback, penalty or change in delivery schedule, accelerate the maturity or performance, cancel, terminate or modify any right, benefit, obligation or other term under, any of the terms, conditions or provisions of, any SPAC Material Contract, except, in each case, where such conflict, violation, breach, default, termination, cancellation, modification, acceleration, obligation, creation, or default would not, individually or in the aggregate, reasonably be expected to have a SPAC Material Adverse Effect.(a) The SPAC is authorized to issue up to 551,000,000 shares of capital stock, consisting of 550,000,000 SPAC Shares, including (i) 500,000,000 SPAC Class A Shares and 50,000,000SPAC Class B Shares and (ii) 1,000,000 undesignated shares of preferred stock. As of the date of this Agreement (and for the avoidance of doubt, without giving effect to the Amalgamation, the Sponsor Side Letter or any Financing), assuming the separation of all SPAC Units, the SPAC has 11,452,791 shares of common stock issued and outstanding, including 5,702,791 Class A Shares and 5,750,000 Class B Shares, and no SPAC Preferred Shares issued or outstanding. The SPAC has 11,500,000 SPAC Public Warrants with a strike price of $11.50 and 11,200,000 SPAC Private Warrants outstanding with a strike price of $11.50. The issued and outstanding SPAC Securities as of the date of this Agreement are set forth on Section 3.5(a) of the SPAC Disclosure Schedules. All outstanding SPAC Shares are duly authorized, validly issued, fully paid and non-assessable and are not subject to or issued in violation of any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the DGCL, the SPAC’s Organizational Documents or any Contract to which the SPAC is a party. None of the outstanding SPAC Securities have been issued in violation of any applicable securities Laws. All outstanding New PubCo Common Shares following the consummation of the SPAC Continuance will be duly authorized, validly issued, fully paid and non-assessable. Except for the SPAC Securities set forth on Section 3.5(a) of the SPAC Disclosure Schedules (taking into account, for the avoidance of doubt, any changes or adjustments to the SPAC Securities pursuant to the SPAC Continuance) and any equity securities of the SPAC issued after the date of this Agreement in compliance with Section 6.3 (including pursuant to any Financing), there shall be no other equity securities of the SPAC issued and outstanding immediately prior to Closing (but before giving effect to the Redemption). (b) Except as set forth in Section 3.5(b) of the SPAC Disclosure Schedules, as of the date hereof, there are no (i) outstanding options, warrants, puts, calls, convertible securities, preemptive or similar rights, (ii) bonds, debentures, notes or other Indebtedness having general voting rights or that are convertible or exchangeable into securities having such rights or (iii) subscriptions or other rights, agreements, arrangements, Contracts or commitments of any character (other than this Agreement and the Ancillary Documents), TABLE OF CONTENTS (A) relating to the issued or unissued shares of the SPAC, (B) obligating the SPAC to issue, transfer, deliver or sell or cause to be issued, transferred, delivered, sold or repurchased any options or shares or securities convertible into or exchangeable for such shares, or (C) obligating the SPAC to grant, extend or enter into any such option, warrant, call, subscription or other right, agreement, arrangement or commitment for such capital shares. Other than the Redemption or as expressly set forth in this Agreement (including the replacement SPAC Securities to be issued as New PubCo Securities pursuant to the SPAC Continuance), there are no outstanding obligations of the SPAC to repurchase, redeem or otherwise acquire any shares of the SPAC or to provide funds to make any investment (in the form of a loan, capital contribution or otherwise) in any Person. Except as set forth in Section 3.5(b) of the SPAC Disclosure Schedules, there are no shareholders agreements, voting trusts or other agreements or understandings to which the SPAC is a party with respect to the voting of any shares of the SPAC. (c) All Indebtedness of the SPAC as of the date of this Agreement is disclosed on Section 3.5(c) of the SPAC Disclosure Schedules, including all cash commissions and advisory fees payable by the SPAC in connection with the closing of the Business Combination. No Indebtedness of the SPAC contains any material restriction upon (i) the prepayment of any of such Indebtedness, (ii) the incurrence of Indebtedness by the SPAC or (iii) the ability of the SPAC to grant any Lien on its properties or assets. (d) Since the date of incorporation of the SPAC, and except as contemplated by this Agreement, the SPAC has not declared or paid any distribution or dividend in respect of its shares and has not repurchased, redeemed, or otherwise acquired any of its shares, and the SPAC’s Board has not authorized any of the foregoing. (a) As of the date of this Agreement, the SPAC does not have any Subsidiaries, except for Amalco Sub. (b) As of the date of this Agreement, the SPAC is not a participant in any joint venture, partnership or similar arrangement. (c) As of the date of this Agreement, there are no outstanding contractual obligations of the SPAC to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any other Person. 3.7 SEC Filings and SPAC Financials.(a) The SPAC, since the IPO, has filed all forms, reports, schedules, statements, registration statements, prospectuses and other documents required to be filed or furnished by the SPAC with the SEC under the Exchange Act or the Securities Act, as the case may be, together with any material amendments, restatements or supplements thereto (the “SEC Reports”). The SEC Reports (I) were prepared in all material respects in accordance with the requirements of the Exchange Act and the rules and regulations thereunder and (II) did not, as of their respective effective date (in the case of SEC Reports that are registration statements filed pursuant to the requirements of the Securities Act) or at the time they were filed with the SEC (in the case of all other SEC Reports), or if amended or supplemented, as of the date of such amendment or supplement, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. As of the date of this Agreement, to the Knowledge of SPAC, there are no outstanding or unresolved comments in comment letters received from the SEC with respect to any SEC Reports. To the Knowledge of the SPAC, none of the SEC Reports filed on or prior to the date of this Agreement is subject to ongoing SEC review or investigation as of the date of this Agreement. The Public Certifications are each true as of their respective dates of filing. As of the date of this Agreement, (A) the SPAC Units, the SPAC Class A Shares and the SPAC Public Warrants are listed on Nasdaq, (B) the SPAC has not received any written deficiency notice from Nasdaq relating to the continued listing requirements of such SPAC Securities that has not been resolved, and (C) there are no Actions pending or, to the Knowledge of the SPAC, threatened against the SPAC by the Financial Industry Regulatory Authority with respect to any intention by such entity to suspend, prohibit or terminate the quoting of such SPAC Securities on Nasdaq. (b) Except as not required in reliance on exemptions from various reporting requirements by virtue of the SPAC’s status as an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, or “smaller reporting company” within the meaning of the Exchange Act, the SPAC maintains disclosure controls and procedures required by Rule 13a-15 or Rule 15d-15 under the Exchange Act; such TABLE OF CONTENTS controls and procedures are reasonably designed to ensure that all material information concerning the SPAC required to be disclosed by the SPAC in the SPAC SEC Reports is made known on a timely basis to the individuals responsible for the preparation of the SPAC’s SEC Reports. Such disclosure controls and procedures are effective in timely alerting the SPAC’s principal executive officer and principal financial officer to material information required to be included in the SPAC’s periodic reports required under the Exchange Act in all material respects. (c) The SPAC maintains a standard system of accounting established and administered in accordance with GAAP. The SPAC has designed and maintains a system of internal controls over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act, that are sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. The SPAC maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Except as set forth in the SEC Reports, since the date of the SPAC’s inception, there have been no material changes in the SPAC’s internal control over financial reporting. The SPAC has no knowledge of any fraud or whistleblower allegations with respect to SPAC that have not yet been investigated and determined in good faith and upon the advice of legal counsel to be meritless (provided that SPAC shall promptly and in good faith investigate any such allegations with legal counsel upon becoming aware of the same), whether or not material, that involve management or employees who have or had a significant role in the SPAC’s internal control over financial reporting. (d) The financial statements and notes of the SPAC contained or incorporated by reference in the SEC Reports (the “SPAC Financials”) fairly present in all material respects the financial position and the results of operations, changes in shareholders’ equity and cash flows of the SPAC at the respective dates of and for the respective periods referred to in such financial statements, all in accordance with (i) GAAP applied on a consistent basis throughout the periods involved and (ii) Regulation S-X or Regulation S-K, as applicable (except as may be indicated in the notes thereto and for the omission of notes and audit adjustments in the case of unaudited quarterly financial statements to the extent permitted by Regulation S-X or Regulation S-K, as applicable). (e) Except as and to the extent reflected or reserved against in the SPAC Financials or as incurred in connection with this Agreement, the SPAC has not incurred any Liabilities or obligations of the type required to be reflected on a balance sheet in accordance with GAAP that are not adequately reflected or reserved on or provided for in the SPAC Financials, other than (i) Liabilities of the type required to be reflected on a balance sheet in accordance with GAAP that have been incurred since the Latest Balance Sheet Date in the ordinary course of business, (ii) Liabilities that are not, individually or in the aggregate, material in amount or (iii) Liabilities incurred in connection with the entry into this Agreement. The SPAC has no material off-balance sheet arrangements that are not disclosed in the SEC Reports. No financial statements other than those included or incorporated by reference in the SEC Reports is or was required to be included in the SEC Reports. 3.8 Absence of Certain Changes. Since its incorporation, the SPAC has conducted no business other than its incorporation, the public offering of its securities (and the related private offerings), public reporting and its search for an initial Business Combination as described in the IPO Prospectus (including the investigation of the Company and the negotiation and execution of this Agreement) and related activities.3.9 Compliance with Laws. The SPAC is not, and since the date of its formation, has not been, in material conflict or material non-compliance with, or in material default or violation of, any Laws applicable to it. The SPAC has not, since the date of its formation, received any written notice of, or, to its Knowledge, is under investigation with respect to, any material non-compliance with, or material default or violation of, any applicable Laws by which it is or was bound.3.10 Actions; Orders; Permits. As of the date hereof, there is no pending or, to the Knowledge of the SPAC, threatened material Action to which the SPAC or any of its directors, officers or employees (in each case, in their respective capacities as such) are subject that would, individually or in the aggregate, reasonably be expected to haveTABLE OF CONTENTS a SPAC Material Adverse Effect, and there is no material Action that the SPAC has pending against any other Person. As of the date hereof, the SPAC is not subject to any material Orders of any Governmental Authority, nor are any such Orders pending. Except as set forth on Section 3.10 of the SPAC Disclosure Schedules, no Permits are required for the conduct of the SPAC’s activities as of the date hereof and through the Closing Date. (a) Except as set forth on Section 3.11 of the SPAC Disclosure Schedules, the SPAC has timely filed, or caused to be timely filed, all material Tax Returns required to be filed by it (taking into account all available extensions), which such Tax Returns are accurate and complete in all material respects, and has paid, collected or withheld, or caused to be paid, collected or withheld, all material Taxes required to be paid, collected or withheld, other than such Taxes for which adequate reserves in the SPAC Financials have been established in accordance with GAAP. The SPAC has complied in all material respects with all applicable Laws relating to Taxes. (b) There are no claims, assessments, audits, examinations, investigations or other Actions pending against the SPAC in respect of any Tax, and the SPAC has not been notified in writing of any proposed Tax claims or assessments against the SPAC (other than, in each case, claims or assessments for which adequate reserves in the SPAC Financials have been established in accordance with GAAP or are immaterial in amount). (c) There are no Liens with respect to any Taxes upon any of the SPAC’s assets, other than Liens described in clause (a) of the definition of Permitted Liens. (d) The SPAC has no outstanding waivers or extensions of any applicable statute of limitations to assess any material amount of Taxes. There are no outstanding requests by the SPAC for any extension of time within which to file any Tax Return or within which to pay any Taxes shown to be due on any Tax Return. (e) The SPAC is, and has been since its incorporation, treated as a corporation for U.S. federal (and applicable state and local) income Tax purposes and, through the date of this Agreement, is a Tax resident only in its jurisdiction of formation. (f) The SPAC has not taken or agreed to take any action, and does not intend to or plan to take any action, or has any knowledge of any fact or circumstance that could reasonably be expected to prevent the transactions contemplated by this Agreement from qualifying for the Intended Tax Treatment (with the exception of any actions specifically contemplated by this Agreement). 3.12 Employee and Employee Benefit Plans. The SPAC does not have any paid employees and does not maintain, sponsor, contribute to or otherwise have any Liability under any Benefit Plans.(a) The SPAC does not own, license or otherwise have any right, title or interest in any material Intellectual Property. (b) The SPAC does not own or lease any material real property or material Personal Property. (a) Except as set forth on Section 3.14 of the SPAC Disclosure Schedules or as disclosed in the SEC Reports, other than this Agreement and the Ancillary Documents, there are no Contracts to which the SPAC is a party or by which any of its properties or assets may be bound, subject or affected, which (i) creates or imposes a Liability greater than $100,000, (ii) may not be cancelled by the SPAC on less than sixty (60) days’ prior notice without payment of a material penalty or termination fee or (iii) prohibits, prevents, restricts or impairs in any material respect any business practice of the SPAC as its business is currently conducted, any acquisition of material property by the SPAC, or restricts in any material respect the ability of the SPAC to engage in business as currently conducted by it or compete with any other Person (each, a “SPAC Material Contract”). All SPAC Material Contracts as of the date hereof have been made available to the Company other than those that are exhibits to the SEC Reports. (b) With respect to each SPAC Material Contract: (i) the SPAC Material Contract was entered into in the ordinary course of business; (ii) the SPAC Material Contract is legal, valid, binding and enforceable in all material respects against the SPAC and, to the Knowledge of the SPAC, the other parties thereto, and is in full TABLE OF CONTENTS force and effect (except, in each case, as such enforcement may be limited by the Enforceability Exceptions); (iii) the SPAC is not in breach or default in any material respect, and no event has occurred that with the passage of time or giving of notice or both would constitute such a breach or default in any material respect by the SPAC, or permit termination or acceleration by the other party, under such SPAC Material Contract; (iv) to the Knowledge of the SPAC, no other party to any SPAC Material Contract is in breach or default in any material respect, and no event has occurred that with the passage of time or giving of notice or both would constitute such a breach or default by such other party, or permit termination or acceleration by the SPAC under any SPAC Material Contract, in each case other than as would not have a SPAC Material Adverse Effect; (v) the SPAC has received neither written nor, to the SPAC’s Knowledge, oral notice of an intention by any party to any such SPAC Material Contract that provides for a continuing obligation by any party thereto to terminate such SPAC Material Contract or amend the terms thereof, other than modifications in the ordinary course of business that, individually or in aggregate, are not reasonably expected to have a SPAC Material Adverse Effect; and (vi) the SPAC has not waived any of its material rights under any such SPAC Material Contract. 3.15 Transactions with Related Persons. Section 3.15 of the SPAC Disclosure Schedules sets forth a true, correct and complete list of the Contracts and arrangements that are in existence as of the date of this Agreement under which there are any existing or future Liabilities or obligations in an amount in excess of $200,000 between the SPAC and any (a) present or former director, officer or employee or Affiliate of the SPAC, or any immediate family member of any of the foregoing, or (b) record or beneficial owner of more than five percent (5%) of the SPAC’s outstanding capital stock as of the date of this Agreement.3.16 Investment Company Act; Emerging Growth Company. The SPAC is not an “investment company” within the meaning of the Investment Company Act of 1940, as amended (the “Investment Company Act”). The SPAC constitutes an “emerging growth company” within the meaning of Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).3.17 Finders and Brokers. Except as set forth on Section 3.17 of the SPAC Disclosure Schedules and the deferred underwriting commissions payable at Closing by New PubCo, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission from the SPAC, the Company or any of their respective Affiliates in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the SPAC.3.18 SPAC Trust Account. As of the date of this Agreement, the Trust Account has a balance of no less than $60,000,000. Such monies are invested solely in U.S. “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act, money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act or cash and held in trust by Continental Stock Transfer & Trust Company pursuant to the Trust Agreement. To the Knowledge of the SPAC, the Trust Agreement is valid and in full force and effect and enforceable in accordance with its terms (subject to the Enforceability Exceptions) and has not been amended or modified. The SPAC has complied in all respects with the terms of the Trust Agreement and is not in breach thereof or default thereunder and there does not exist under the Trust Agreement any event which, with the giving of notice or the lapse of time, would constitute such a breach or default by the SPAC or, to the Knowledge of the SPAC, by the Trustee. There are no separate agreements, side letters or other agreements that would cause the description of the Trust Agreement in the SEC Reports to be inaccurate in any material respect or that would entitle any Person (other than the IPO Underwriters, SPAC Public Shareholders who shall have elected to redeem their SPAC Shares pursuant to the SPAC’s Certificate of Incorporation (or, in connection with an extension, in accordance with the SPAC’s Organizational Documents and the IPO Prospectus, of the SPAC’s deadline to consummate a Business Combination), or Governmental Authorities for Taxes) to any portion of the proceeds in the Trust Account. Prior to the Closing, none of the funds held in the Trust Account may be released except as described in the Trust Agreement.3.19 Fairness Opinion. The SPAC Board has received the oral opinion of Houlihan Capital (which Houlihan Capital would follow with a written opinion) that, among other matters as determined by the SPAC Board in its sole discretion, the transactions contemplated by this Agreement are fair to the SPAC Shareholders holding Class A shares from a financial point of view.3.20 Ownership of Amalgamation Consideration. All New PubCo Common Shares and Convertible Note Shares to be issued to the Company Securityholders in accordance with Article I and Article II shall be, upon issuance and delivery of such New PubCo Common Shares and Convertible Note Shares, fully paid and non-assessable, free and clear of all Liens, other than restrictions arising from applicable securities Laws or lock-up obligations to which eachTABLE OF CONTENTS of the Core Company Securityholders has agreed with respect to the New PubCo Common Shares and Convertible Note Shares to be received by him, her or it hereunder, and the issuance and sale of such New PubCo Common Shares and Convertible Note Shares pursuant hereto will not be subject to or give rise to any preemptive rights or rights of first refusal. 3.21 Independent Investigation. The SPAC has conducted its own independent investigation, review and analysis of the business, results of operations, prospects, condition (financial or otherwise) or assets of the Company and acknowledges that it has been provided access certain personnel, properties, assets, premises, books and records, and other documents and data of the Company for such purpose. The SPAC acknowledges and agrees that: (a) in making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, it has relied solely upon its own investigation and the express representations and warranties of the Company set forth in this Agreement (including the related portions of the Company Disclosure Schedules), and in any certificate delivered to the SPAC pursuant hereto, and the information provided by or on behalf of the Company for the Registration Statement; and (b) none of the Company nor its respective Representatives has made any representation or warranty as to this Agreement, except as expressly set forth in this Agreement (including the related portions of the Company Disclosure Schedules) or in any certificate delivered to the SPAC pursuant hereto, or with respect to the information provided by or on behalf of the Company for the Registration Statement.
REPRESENTATIONS AND WARRANTIES OF AMALCO SUB The SPAC, as the parent company of Amalco Sub, represents and warrants to the Company with respect to Amalco Sub that each of the following representations are true and correct as of the date of this Agreement and as of the Closing Date (except as to any representations and warranties that specifically relate to an earlier date, in which case such representations and warranties were true and correct as of such earlier date): 4.1 Organization and Standing. Amalco Sub is a corporation duly incorporated, validly existing and in good standing under the Laws of the Province of British Columbia. Amalco Sub has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Amalco Sub is duly qualified or licensed and in good standing to do business in each jurisdiction in which the character of the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary. Amalco Sub has heretofore made available to the Company accurate and complete copies of the Organizational Documents of Amalco Sub, as currently in effect as of the date hereof. Amalco Sub is not in violation of any provision of its Organizational Documents in any material respect.4.2 Authorization; Binding Agreement. Amalco Sub has all requisite corporate power and authority to execute and deliver this Agreement and each Ancillary Document to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and each Ancillary Document to which it is a party and the consummation of the transactions contemplated hereby and thereby, (a) have been duly and validly authorized by Amalco Sub’s Board and, as applicable, shareholders of Amalco Sub in accordance with Amalco Sub’s Organizational Documents and any other applicable Law, and (b) no other corporate proceedings, other than as expressly set forth elsewhere in this Agreement, on the part of Amalco Sub are necessary to authorize the execution and delivery of this Agreement and each Ancillary Document to which it is a party, or to consummate the transactions contemplated hereby and thereby. This Agreement has been, and each Ancillary Document to which Amalco Sub is a party has been or shall be when delivered, duly and validly executed and delivered and, assuming the due authorization, execution and delivery of this Agreement and such Ancillary Documents by the other parties hereto and thereto, constitutes, or when delivered shall constitute, the valid and binding obligation of Amalco Sub, enforceable against Amalco Sub in accordance with its terms, subject to the Enforceability Exceptions.4.3 Governmental Approvals. No Consent of or with any Governmental Authority, on the part of Amalco Sub is required to be obtained or made in connection with the execution, delivery or performance by Amalco Sub of this Agreement and each Ancillary Document to which it is a party or the consummation by Amalco Sub of the transactions contemplated hereby and thereby, other than (a) such filings as expressly contemplated by this Agreement, (b) any filings required with Nasdaq or the SEC with respect to the transactions contemplated by this Agreement, (c) applicable requirements, if any, of the Securities Act, the Exchange Act, or any state “blue sky” securities Laws, and the rules and regulations thereunder, and (d) where the failure to obtain or make such Consents or to make such filings or notifications has not and would not, individually or in the aggregate, reasonably beTABLE OF CONTENTS expected to have a material adverse effect on the ability of Amalco Sub to enter into this Agreement or consummate the transactions contemplated hereby (an “Amalco Sub Material Adverse Effect”). 4.4 Non-Contravention. The execution and delivery by Amalco Sub of this Agreement and each Ancillary Document to which it is a party, the consummation by Amalco Sub of the transactions contemplated hereby and thereby, and compliance by Amalco Sub with any of the provisions hereof and thereof, will not (a) contravene, conflict with or violate any provision of Amalco Sub’s Organizational Documents, (b) subject to obtaining the Consents from Governmental Authorities referred to in Section 4.3 hereof, and the waiting periods referred to therein having expired, and any condition precedent to such Consent or waiver having been satisfied, conflict with or violate in any respect any Law, Order or Consent applicable to Amalco Sub, or any of its properties or assets, except for violations that would not prevent or delay the consummation of the transactions contemplated hereby or (c) (i) violate, conflict with or result in a material breach of, (ii) result in a default (or an event which, with notice or lapse of time or both, would constitute a default) under, (iii) give rise to any right of termination, cancellation or acceleration under, (iv) give rise to any obligation to make payments or provide compensation under, or (v) result in the creation of any Lien (other than Permitted Liens) upon any of the properties or assets of Amalco Sub under, any of the terms, conditions or provisions of any Contract to which AmalCo Sub is a party or by which AmalCo Sub or any of its assets may be bound, except in each case which would not, individually or in the aggregate, reasonably be expected to have a Amalco Sub Material Adverse Effect.(a) Prior to giving effect to the Amalgamation, Amalco Sub is authorized to issue an unlimited number of common shares, of which one common share is issued and outstanding in the name of the SPAC. Prior to giving effect to the transactions contemplated by this Agreement, Amalco Sub has never had any Subsidiaries or owned any equity interests in any other Person. (b) Except as set forth in its Organizational Documents, Amalco Sub (i) has no obligation to issue, sell or transfer any equity securities of Amalco Sub, (ii) is not party or subject to any contract that affects or relates to voting or giving of written consents with respect to, or the right to cause the redemption, or repurchase of, any equity interests of Amalco Sub, (iii) has not granted any registration rights or information rights to any other Person, (iv) has not granted any phantom shares and there are no voting or similar agreements entered into by Amalco Sub that relate to its capital or equity interests, (v) has no outstanding bonds, debentures, notes or other obligations the holders of which have the right to vote (or convertible into or exercisable for voting interests of Amalco Sub or equity interests of Amalco Sub) with the owners or holders of Amalco Sub on any matter or any agreements to issues such bonds, debentures, notes or other obligations and (vi) has no outstanding contractual obligations to provide funds to, or make any investment (other than in connection with the transactions contemplated hereby) in, any other Person. 4.6 Amalco Sub Activities.(a) Since its incorporation, Amalco Sub has not engaged in any business activities other than as contemplated by this Agreement, does not own directly or indirectly any ownership, equity, profits or voting interest in any Person and has no assets or Liabilities except those incurred in connection with this Agreement and the Ancillary Documents to which it is a party and the Arrangement and the Amalgamation. (b) Amalco Sub was formed solely for the purpose of effecting the transactions contemplated by this Agreement and the Ancillary Documents. (c) Other than this Agreement and the Ancillary Documents to which it is a party, Amalco Sub is not party to or bound by any Contract or any agreement or understanding whereby it would have material interests, rights, obligations or Liabilities with respect to another transaction that is, or would reasonably be interpreted as constituting, a Business Combination. Except for the transactions contemplated by this Agreement and the Ancillary Documents, Amalco Sub does not own or have a right to acquire, directly or indirectly, any interest or investment (whether equity or debt) in any Person. 4.7 Compliance with Laws. Amalco Sub is not, and since the date of its formation, has not been, in conflict or non-compliance with, or in default or violation of, any Laws applicable to it. Amalco Sub, has not, since the date of its formation, received any written or oral notice of, or, to its knowledge, is under investigation with respect to, any material conflict or non-compliance with, or material default or violation of, any applicable Laws by which it is or was bound.TABLE OF CONTENTS 4.8 Actions; Orders. There is no material Action pending or, to the Knowledge of Amalco Sub, threatened against or affecting Amalco Sub, and there is no Action that Amalco Sub has pending against any other Person. Amalco Sub is not subject to any Orders of any Governmental Authority, nor, to the Knowledge of Amalco Sub, are any such Orders pending.4.9 Transactions with Related Parties. There are no transactions, Contracts or understandings between Amalco Sub, on the one hand, and any (a) present or former director, officer or employee or Affiliate of Amalco Sub or the Sponsor, or any immediate family member of any of the foregoing, or (b) record or beneficial owner of more than five percent (5%) of Amalco Sub outstanding capital stock as of the date hereof, on the other hand.4.10 Finders and Brokers. Except for the deferred underwriting commission to be paid by New PubCo at the Closing, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission from Amalco Sub or any of its respective Affiliates in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of Amalco Sub.4.11 Investment Company Act. Amalco Sub is not an “investment company” or a Person directly or indirectly controlled by or acting on behalf of a person subject to registration and regulation as an “investment company,” in each case within the meanings of the Investment Company Act.4.12 Taxes. Amalco Sub has not taken or agreed to take any action, and does not intend to or plan to take any action, or has any knowledge of any fact or circumstance that could reasonably be expected to prevent the transactions contemplated by this Agreement from qualifying for the Intended Tax Treatment (with the exception of any actions specifically contemplated by this Agreement).
REPRESENTATIONS AND WARRANTIES OF THE COMPANY Except as set forth in (a) the disclosure schedules delivered by the Company to the SPAC on the date hereof (the “Company Disclosure Schedules”), the Section numbers of which are numbered to correspond to the Section numbers of this Agreement to which they refer or (b) the SEDAR+ Reports that are available on SEDAR+, the Company hereby represents and warrants to the SPAC and Amalco Sub that each of the following representations are true and correct as of the date of this Agreement and as of the Closing Date (except, as to any representations and warranties that specifically relate to an earlier date, in which case such representations and warranties were true and correct as of such earlier date): 5.1 Organization and Standing. The Company is a corporation duly incorporated and validly existing under the Laws of the Province of British Columbia, is duly qualified to do business and has all requisite corporate power and capacity to own, make use of, lease and operate its assets and properties and to carry on its business as now being conducted. The Company has heretofore made available (including via SEDAR+) to the SPAC accurate and complete copies of its Organizational Documents, as currently in effect as of the date hereof. The Company is not in violation of any provision of its Organizational Documents in any material respect. The Company is not the subject of any bankruptcy, dissolution, liquidation, reorganization or similar proceeding.5.2 Authorization; Binding Agreement.(a) The Company has all requisite corporate power and authority to execute and deliver this Agreement and each Ancillary Document to which it is a party, to perform its obligations hereunder and thereunder and to consummate the Arrangement, the Amalgamation and the other transactions contemplated hereby and thereby, subject to the receipt of the Required Company Shareholder Approval and the approval of the Arrangement by the Court. The execution and delivery of this Agreement and each Ancillary Document to which the Company is or is required to be a party and the consummation of the transactions contemplated hereby and thereby (i) have been duly and validly authorized by the Company’s Board and, where applicable, its shareholders, in accordance with the Company’s Organizational Documents, any applicable Law or any Contract to which the Company or any of its shareholders is a party or by which it or its securities are bound and (ii) no other corporate proceedings on the part of the Company are necessary to authorize the execution and delivery of this Agreement and each Ancillary Document to which it is a party or to consummate the transactions contemplated hereby and thereby except for obtaining Required Company Shareholder Approval and the approval of the Arrangement by the Court. TABLE OF CONTENTS (b) The Company’s Board, by resolutions duly adopted at a meeting duly called and held or by action by unanimous written consent in accordance with its Organizational Documents, has (i) determined that this Agreement, and thereby the Ancillary Documents, and the Arrangement, the Amalgamation and the other transactions contemplated hereby and thereby are fair to the Company Shareholders and in the best interests of the Company, (ii) approved and adopted this Agreement, the Ancillary Documents, and approved the Arrangement, the Amalgamation and the other transactions contemplated hereby and thereby in accordance with applicable Law and (iii) recommended that the Company’s Shareholders vote in favor of the Arrangement Resolution. Except for the Required Company Shareholder Approval and approval of the Arrangement by the Court, no additional approval or vote of any holders of voting or other equity interests of the Company would then be necessary to approve and adopt this Agreement and the Ancillary Documents and approve the transactions contemplated hereby and thereby. (c) This Agreement has been, and each Ancillary Document to which the Company is a party shall be, when delivered, duly and validly executed and delivered by the Company and assuming the due authorization, execution and delivery of this Agreement and any such Ancillary Document by the other parties hereto and thereto, constitutes, or when delivered shall constitute, the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to the Enforceability Exceptions. 5.3 Governmental Approvals. Except for approval of the Arrangement by the Court, no Consent of or with any Governmental Authority on the part of the Company is required to be obtained or made in connection with the execution, delivery or performance by the Company of this Agreement or any Ancillary Documents or the consummation by the Company of the transactions contemplated hereby or thereby other than (a) such filings and approvals as expressly contemplated by this Agreement, (b) any filings and approvals required with Cboe Canada or the British Columbia Securities Commission or other applicable Canadian securities regulatory authorities with respect to the transactions contemplated by this Agreementand (c) where the failure to obtain or make such Consents or to make such filings or notifications, would not, individually or in the aggregate, reasonably be expected to have (i) a Material Adverse Effect on the Company or (ii) a material adverse effect on the ability of the Company to enter into this Agreement or consummate the transactions contemplated hereby (clause (i) or (ii), a “Company Material Adverse Effect”).5.4 Non-Contravention. The execution and delivery of this Agreement and the Ancillary Documents by the Company and of the transactions contemplated hereby and thereby, consummation by the Company of the transactions contemplated hereby and thereby and compliance by the Company with any of the provisions hereof and thereof, will not (a) contravene or conflict with or violate any provision of the Company’s Organizational Documents, (b) contravene or conflict with or constitute a violation of any provisions of Law or Order binding upon or applicable to the Company or (c) subject to obtaining the Consents from Governmental Authorities referred to in Section 5.3 hereof, and the waiting periods referred to therein having expired, and any condition precedent to such Consent or waiver having been satisfied, conflict with or violate in any material respect any Law, Order or Consent applicable to the Company, or any of its properties or assets, except for violations that would not prevent or delay the consummation of the transactions contemplated hereby, or (d)(i) violate, conflict with or result in a breach of, (ii) result in a default (or an event which, with notice or lapse of time or both, would constitute a material default) under, (iii) give rise to any right of termination, cancellation or acceleration under, (iv) give rise to any obligation to make material payments or provide material compensation under, (v) result in the creation of any Lien (other than Permitted Liens) upon any of the properties or assets of the Company under, (vi) give rise to any obligation to obtain any material third party Consent or provide any notice to any Person or (vii) give any Person the right to declare a default, exercise any remedy, claim a rebate, chargeback, penalty or change in delivery schedule, accelerate the maturity or performance, cancel, terminate or modify any right, benefit, obligation or other term under, any of the terms, conditions or provisions of any Company Material Contracts, in each case except where such conflict, violation, breach, default, termination, cancellation, modification, acceleration, obligation, creation, or default would not, individually or in the aggregate, be reasonably expected to have a Company Material Adverse Effect.(a) The Company is authorized to issue an unlimited number of Multiple Voting Company Shares and an unlimited number of Subordinate Voting Company Shares, of which 4,650,000 Multiple Voting Company Shares and 29,436,461 Subordinate Voting Company Shares are issued and outstanding as at the date hereof. The equity securities set forth on Section 5.5(a) of the Company Disclosure Schedules comprise all of the authorized equity securities of the Company that are issued and outstanding, in each case, as of the date of this Agreement. All TABLE OF CONTENTS outstanding Company Shares are duly authorized, are fully paid and non-assessable and are not subject to or issued in violation of any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision of any applicable Law, or any Contract to which the Company is a party or by which it or its securities are bound. The Company does not hold any shares or other equity interests of another Company in its treasury. None of the outstanding Company Securities have been issued in violation of any applicable securities Law. (b) Section 5.5(b) of the Company Disclosure Schedules contains a complete and correct list, as of the date hereof, of (i) the name of the holder of each Company Equity Award, (ii) the type and total number of Company Shares underlying each such Company Equity Award, (iii) the date on which each such Company Equity Award was granted, (iv) the exercise price of each Company Option and (v) the expiration date of each Company Equity Award. Except as set forth on Section 5.5(b) of the Company Disclosure Schedules, there are no outstanding or authorized options, warrants, puts, calls, restricted stock, restricted stock units, phantom stock, profit participation rights, equity appreciation rights, phantom equity rights, other equity or equity-based awards or other similar rights with respect to the Company other than the Company Equity Incentive Plan. Each Company Option was granted in accordance with the terms of the Company Equity Incentive Plan and in compliance with applicable Law and Section 409A of the Code, and each Company Option’s per share exercise price is equal to or greater than the fair market value of a Company Share on the date of grant of such Company Option. (c) Section 5.5(c) of the Company Disclosure Schedules contains a complete and correct list, as of the date hereof, of (i) the name of the holder of each such Company Warrant, (ii) the number of Company Shares underlying each such Company Warrant, (iii) the date on which each such Company Warrant was granted, (iv) the exercise price of each Company Warrant and (v) the expiration date of each Company Warrant. (d) Other than as set forth on Section 5.5(b), Section 5.5(c) and Section 5.5(d) of the Company Disclosure Schedules, as of the date hereof, there are no other equity or voting interests in, or any Company Convertible Securities, or preemptive rights or other outstanding rights, options, warrants, subscriptions, puts, calls, restricted stock, restricted stock units, phantom stock, stock appreciation, profit participation, conversion rights or similar equity or equity-based rights, interests, agreements or commitments of any rights of first refusal or first offer, nor are there any Contracts, commitments, arrangements or restrictions to which the Company or, to the Knowledge of the Company, any of its shareholders is a party or bound relating to any equity securities of the Company, whether or not outstanding. (e) There are no voting trusts, proxies, shareholder agreements or any other agreements or understandings with respect to the voting of the Company’s equity interests. Except as set forth in the Company’s Certificate of Incorporation or as expressly set forth in this Agreement, there are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any equity interests or securities of the Company, nor has the Company granted any registration rights to any Person with respect to the Company’s equity securities. All of the Company Securities have been granted, offered, sold and issued in compliance with all applicable securities Laws. (f) No equity interests of the Company are issuable, and no rights in connection with any interests, warrants, rights, options or other securities of the Company accelerate or otherwise become triggered (whether as to vesting, exercisability, convertibility or otherwise) as a result of the transactions contemplated hereby. (g) Except as disclosed in the Company Financial Statements, the Company has not declared or paid any distribution or dividend in respect of its equity interests and has not repurchased, redeemed or otherwise acquired any equity interests of the Company, and the Company Board has not authorized any of the foregoing. (a) Section 5.6(a) of the Company Disclosure Schedules sets forth a true and complete list of the Subsidiaries of the Company, listing for each Subsidiary its name, the jurisdiction of its formation or organization (as applicable) and its parent company (if wholly-owned) or its owners (if not-wholly owned). Except as set forth on Section 5.6(a) of the Company Disclosure Schedules, all of the outstanding voting or other equity securities, as applicable, of each Subsidiary of the Company are duly authorized, validly issued, free of TABLE OF CONTENTS preemptive rights, restrictions on transfer (other than restrictions under applicable federal, state and other securities Laws) and, if applicable, fully paid and non-assessable, and are owned by the Company, whether directly or indirectly, free and clear of all Liens (other than Permitted Liens). (b) Except as set forth on Section 5.6(b) of the Company Disclosure Schedules, there are no options, warrants, convertible securities, stock appreciation, phantom stock, stock-based performance unit, profit participation, restricted stock, restricted stock unit, other equity-based compensation award or similar rights with respect to any Subsidiary of the Company and no rights, exchangeable securities, securities, “phantom” rights, appreciation rights, performance units, commitments or other agreements obligating any Subsidiary of the Company to issue or sell, or cause to be issued or sold, any equity securities of, or any other interest in, any Subsidiary of the Company, including any security convertible or exercisable into equity securities of any Subsidiary of the Company. There are no Contracts to which any Subsidiary of the Company is a party that require such Subsidiary of the Company to repurchase, redeem or otherwise acquire any equity interests or securities convertible into or exchangeable for such equity securities or to make any investment in any other Person. (c) The Company is not a participant in any joint venture, partnership or similar arrangement, except as set forth on Section 5.6(c) of the Company Disclosure Schedules. (d) There are no outstanding contractual obligations of the Company to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any other Person. 5.7 Financial Statements.(a) Attached as Section 5.7(a) of the Company Disclosure Schedules are true and complete copies of the following financial statements (such financial statements, the “Company Financial Statements”): (i) (A) the comparative audited consolidated balance sheet of the Company and its Subsidiaries as of July 31, 2022 and the related comparative audited consolidated statements of comprehensive loss, cash flows and members’ equity, together with all related notes and schedules thereto, accompanied by the reports thereon of the Company’s independent auditors; (B) the comparative audited consolidated balance sheet of DevvESG Streaming Finco Ltd. as of July 31, 2022 and the related comparative audited consolidated statements of comprehensive loss, cash flows and members’ equity for the fiscal year ended on such date, together with all related notes and schedules thereto, accompanied by the reports thereon of DevvESG Streaming Finco Ltd. independent auditors; and (C) the comparative audited consolidated balance sheet of 1319738 B.C. Ltd. as of July 31, 2022 and the related comparative audited consolidated statements of comprehensive loss, cash flows and members’ equity for the fiscal year ended on such date, together with all related notes and schedules thereto, accompanied by the reports thereon of 1319738 B.C. Ltd. independent auditors; and (ii) the unaudited consolidated balance sheet of the Company and its Subsidiaries as of April 30, 2023 (the “Unaudited Balance Sheet”) and the related unaudited consolidated statements of comprehensive loss, cash flows for the nine (9)-month period then ended, together with all related notes and schedules thereto, (collectively, together with the Unaudited Balance Sheet, the “Unaudited Financial Statements”), which, for the avoidance of doubt, have not been reviewed or audited by any independent auditors. (b) Except as set forth on Section 5.7(a) of the Company Disclosure Schedules, the Company Financial Statements and the Required Financial Statements, when delivered to the SPAC, (i) shall have been prepared from the books and records of the Company and its Subsidiaries or their respective predecessors; (ii) shall have been prepared in accordance with IFRS methodologies in the case of the Company Financial Statements delivered as of the date hereof and U.S. GAAP in the case of the Required Financial Statements delivered after the date hereof, in each case applied on a consistent basis throughout the periods involved, except as may be indicated in the notes thereto and subject, in the case of the Unaudited Financial Statements, to the absence of footnotes and year-end adjustments; and (iii) fairly present, in all material respects, the consolidated financial position of the Company and its Subsidiaries as of the dates thereof and their consolidated results of operations and cash flows for the periods then ended (subject, in the case of the Unaudited Financial Statements, to the absence of footnotes and year-end adjustments, none of which would be expected to be material individually or in the aggregate). TABLE OF CONTENTS (c) The books of account and other financial records of the Company and its Subsidiaries have been kept accurately in all material respects in the ordinary course of business, the transactions entered therein represent bona fide transactions, and the revenues, expenses, assets and liabilities of the Company and its Subsidiaries have been properly recorded therein in all material respects. (d) The Company and its Subsidiaries have devised and maintained a system of internal accounting policies and controls sufficient to provide reasonable assurances that (i) transactions are executed in all material respects in accordance with management’s authorization; (ii) the transactions are recorded as necessary to permit the preparation of financial statements in conformity with IFRS and, when delivered to the SPAC, with GAAP and to maintain accountability for assets; and (iii) the amount recorded for assets on the books and records of the Company and each of its Subsidiaries is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any difference (collectively, “Internal Controls”). (e) The Company has not identified and has not received written notice from an independent auditor of (i) any significant deficiency or material weakness in the system of Internal Controls utilized by the Company or any of its Subsidiaries; (ii) any fraud that involves the Company’s or any of its Subsidiaries’ management or other employees who have a role in the preparation of financial statements or the Internal Controls utilized by the Company or any of its Subsidiaries; or (iii) any claim or allegation regarding any of the foregoing. There are no significant deficiencies or material weaknesses in the design or operation of the Internal Controls over financial reporting that would reasonably be expected to materially and adversely affect the Company’s, or any of its Subsidiaries’, ability to record, process, summarize and report financial information. (f) Except as set forth on Section 5.7(f) of the Company Disclosure Schedules, neither the Company nor any of its Subsidiaries has incurred any Liabilities or obligations of the type required to be reflected on a balance sheet in accordance with IFRS, with respect to Company Financial Statements delivered as of the date hereof, and with U.S. GAAP, with respect to the Required Financial Statements delivered after the date hereof, that are not adequately reflected or reserved on or provided for in the Company Financial Statements or Required Financial Statements, as applicable, other than (i) Liabilities of the type required to be reflected on a balance sheet in accordance with IFRS or U.S. GAAP, as applicable, that have been incurred since the Balance Sheet Date in the ordinary course of business or (ii) Liabilities that are not, individually or in the aggregate, material in amount. All debts and Liabilities, fixed or contingent, (1) which should be included under IFRS on a balance sheet are included in all material respects in the Company Financial Statements as of the date of such Company Financial Statements and (2) which should be included under U.S. GAAP on a balance sheet are included in all material respects in the Required Financial Statements as of the date of such Required Financial Statements. The Company has no off-balance sheet arrangements. 5.8 Absence of Certain Changes. Except as set forth on Section 5.8 of the Company Disclosure Schedules, since the Latest Balance Sheet Date, (a) the Company and each of its Subsidiaries have conducted their respective business in the ordinary course and consistent with past practice in all material respects and (b) neither the Company nor any of its Subsidiaries has taken any action that, if taken after the date of this Agreement and prior to the Closing, would require the consent of the SPAC pursuant to Section 6.2.5.9 Compliance with Laws and Carbon Standards. Except as set forth on Section 5.9 of the Company Disclosure Schedules, neither the Company nor any of its Subsidiaries is, and since its incorporation has ever been, in material conflict or material non-compliance with, or in material default or violation of any applicable Laws or applicable Carbon Standards. Since their respective formation, neither the Company nor any of its Subsidiaries, (i) has received any written or, to the Knowledge of the Company or any of its Subsidiaries, oral notice of any material conflict or non-compliance with, or material default or violation of, any applicable Laws by which it or any of its respective properties, assets, employees or other individual service providers (solely in such individuals’ capacity as service providers to the Company), business, products or operations are or were bound or affected, (ii) has been subjected to any investigation by a Governmental Authority regarding any actual or alleged violation of or failure on the part of the Company or any of its Subsidiaries to comply with any applicable Law, (iii) has had claims filed against it or any of its Subsidiaries with (A) any Governmental Authority alleging any failure by the Company or any of its Subsidiaries to comply with applicable Law or (B) any Registry alleging any failure with respect to the Carbon Credits transacted by the Company or any of its Subsidiaries to comply with applicable Carbon Standards, (iv) has not had its access or Registry Account suspended in respect of any relevant Registry and (v) has not made a voluntary,TABLE OF CONTENTS directed, or involuntary disclosure to any Governmental Authority regarding any alleged act or omission arising under or relating to any noncompliance with any applicable Law, in the case of clauses (i) through (iii), except as would not, or would not reasonably be expected to, be material to the Company or any of its Subsidiaries. 5.10 Company Permits and Registry Accounts. The Company and its Subsidiaries hold all material licenses and Permits necessary to lawfully own, lease and conduct in all material respects their respective business as presently conducted, including necessary Registry Accounts on any relevant Registry, and to own, lease and operate their respective assets and properties (collectively, the “Company Permits”). All the Company Permits and Registry Accounts are in full force and effect and not subject to, or, to the Knowledge of the Company, threatened to be subject to, any revocation or modification Proceeding, or any suspension or termination, as a result of, or in connection with, the consummation of the transactions contemplated hereby, and the Company and its Subsidiaries are conducting business in compliance in all material respects with the Company Permits, any Carbon Standard under which any of the Carbon Credits that are transacted by the Company or its Subsidiaries are certified, and the requirements of each relevant Registry. Neither the Company nor its Subsidiaries is in violation in any material respect of the terms of the Company Permits, and no Proceeding is pending or, to the Knowledge of the Company or any of its Subsidiaries, threatened, to suspend, revoke, withdraw, modify or limit any such Company Permit in a manner that has had or would reasonably be expected to have a material impact on the ability of the Company or any of its Subsidiaries, as applicable, to use such Company Permit or conduct its business, as applicable.5.11 Carbon Credits. Neither the Company nor any of its Subsidiaries have, as of the date hereof, created any security interest or encumbrance in any Carbon Credits that are presently owned, or in the future will be owned, by the Company or such Subsidiary, in favor of any third party.5.12 Litigation. Except as set forth on Section 5.12 of the Company Disclosure Schedules, since the Company’s incorporation, there have been, and there are, no Actions or Orders of any nature currently pending or, to the Company’s Knowledge, threatened against the Company or any of its Subsidiaries, and no such Action or Order has been brought against the Company or any of its Subsidiaries, or any of their respective current or former directors, officers or securityholders, business, equity securities, or assets, or employees or other individual service providers in their capacities as such that would, individually or in the aggregate, be material to the Company or any of its Subsidiaries, taken as a whole.(a) Section 5.13(a) of the Company Disclosure Schedules sets forth a true, correct and complete list of the Company Material Contracts, as of the date hereof, a true, correct and complete copy (including written summaries of oral Contracts) of which, in each case, has been made available to the SPAC. For purposes of this Agreement, “Company Material Contract” means any contract, together with each Company Benefit Plan that is a Contract, to which the Company is a party or by which the Company, any of its Subsidiaries, or any of its properties or assets are bound or affected that: (i) contains covenants that limit or restrict the ability of the Company or any of its Subsidiaries (A) to compete in any line of business or with any Person or in any geographic area or to sell, receive or provide any service or product or solicit any Person, including any non-competition covenants, non-solicit covenants, exclusivity restrictions, rights of first refusal or most-favored pricing clauses or similar provision with respect to any Person or (B) to purchase or acquire an interest in any other Person; (ii) involves any joint venture, partnership or similar agreement; (iii) relates to the voting or control of the equity interests of the Company or any of its Subsidiaries or the election of directors of the Company or any of its Subsidiaries (other than the Organizational Documents of the Company and any of its Subsidiaries); (iv) evidences Indebtedness (whether incurred, assumed, guaranteed or secured by any asset) of the Company having an outstanding principal amount in excess of $50,000; (v) involves the acquisition or disposition, directly or indirectly (by merger or otherwise), of assets with an aggregate value in excess of $100,000 or shares or other equity interests of the Company or another Person; TABLE OF CONTENTS (vi) relates to any merger, consolidation or other business combination with any other Person or the acquisition or disposition of any other entity or its business or material assets or the sale of the Company, its business or material assets; (vii) by its terms, individually or with all related Contracts, is reasonably expected to call for aggregate payments or receipts by the Company or any of its Subsidiaries under such Contract or Contracts of at least $200,000 per year or $1,000,000 in the aggregate; (viii) is any carbon streaming agreement; (ix) is any strategic partnership agreement; (x) is with (A) any Governmental Authority or (B) any Related Person; (xi) is a settlement, conciliation or similar agreement pursuant to which the Company or any of its Subsidiaries will have any material outstanding obligation after the date of this Agreement; (xii) provides for any severance, retention, transaction or change in control bonus or equity, equity-based or phantom equity arrangement; (xiii) obligates the Company or any of its Subsidiaries to provide continuing indemnification or a guarantee of obligations that would be expected to result in payments to a third party after the date hereof in excess of $100,000; (xiv) provides for the employment or engagement of any director, officer, employee or individual service provider, excluding offer letters providing for at-will employment that can be terminated without any post-termination Liabilities; (xv) is a Labor Agreement; (xvi) obligates the Company or any of its Subsidiaries to make any capital commitment or expenditure in excess of $100,000 (including pursuant to any joint venture); (xvii) (A) entered into with any third-party broker, distributor, dealer, manufacturer’s representative, franchise, agency, sales promotion, market research, marketing consulting and advertising partner or service provider and (B) are material to the business of the Company or any of its Subsidiaries; (xviii) provides for any guaranty, direct or indirect, of any obligation of a third party (other than the Company); (xix) constitutes a lease or master lease of personal property reasonably likely to result in annual payments of $25,000 or more in a 12-month period; (xx) constitutes any contract providing for (A) the grant of any preferential rights of first offer or first refusal to purchase or lease any material asset of the Company or any of its Subsidiaries or (B) any exclusive right to sell or distribute, or otherwise relating to the sale or distribution of, any product or service of the Company or any of its Subsidiaries; (xxi) establishes any joint venture, partnership or limited liability company agreement or other similar Contract relating to the formation, creation, operation, management or control of any joint venture, partnership or limited liability company; (xxii) constitutes any Contract that obligates the Company or any of its Subsidiaries to make any loans, advances or capital contributions to, or investments in, any Person other than any loan or capital contribution to, or investment in, (A) the Company or one of its wholly owned Subsidiaries, (B) any Person (other than an officer, director or employee of the Company or any of its Subsidiaries) that is less than $1,000,000 to such Person or (C) any officer, director or employee of the Company or any of its Subsidiaries that is less than $50,000 to such person; (xxiii) constitutes any obligation to make payments, contingent or otherwise, arising out of the prior acquisition of the business, all or substantially all of the assets or stock of other persons; (xxiv) constitutes any Company IP Agreements (other than agreements for Off-the-Shelf Software); (xxv) provides any third party a power of attorney; TABLE OF CONTENTS (xxvi) relates to the future disposition or acquisition by the Company or any of its Subsidiaries of (A) any business (whether by merger, consolidation or other business combination, sale of securities, sale of assets or otherwise) or (B) any material assets or properties, except for any agreement related to the transactions contemplated hereby; (xxvii) involves the payment of any earnout or similar contingent payment on or after the date of this Agreement; or (xxviii) is otherwise required to be filed on SEDAR+ as a “Material Contract.” (b) With respect to the Company Material Contracts: (i) each Company Material Contract is valid and binding and enforceable in all respects against the Company and, to the Knowledge of the Company, each other party thereto, and is in full force and effect (except, in each case, as such enforcement may be limited by the Enforceability Exceptions); (ii) the consummation of the transactions contemplated by this Agreement and the Ancillary Documents will not affect the validity or enforceability of the Company Material Contracts; (iii) neither the Company nor any of its Subsidiaries is in breach or default in any material respect, and to the Knowledge of the Company, no condition or event has occurred that with the passage of time or giving of notice or both would constitute a material breach or default by the Company or any of its Subsidiaries, or permit termination or acceleration by the other party thereto, under such Company Material Contract; (iv) to the Knowledge of the Company, no other party to such Company Material Contract is in breach or default in any material respect, and no event has occurred that with the passage of time or giving of notice or both would constitute such a material breach or default by such other party, or permit termination or acceleration by the Company or any of its Subsidiaries, under such Company Material Contract; (v) the Company and its Subsidiaries have received neither written nor, to the Company’s Knowledge, oral notice of an intention by any party to any such Company Material Contract that provides for a continuing obligation by any party thereto to terminate such Company Material Contract or amend the terms thereof, other than modifications in the ordinary course of business that, individually or in aggregate, are not reasonably expected to adversely affect the Company or any of its Subsidiaries in any material respect; and (vi) neither the Company nor any of its Subsidiaries has waived any their respective material rights under any such Company Material Contract. 5.14 Intellectual Property.(a) Section 5.14(a) of the Company Disclosure Schedules sets forth: (i) all registered Patents, Trademarks, Copyrights and Internet Assets and applications owned by the Company or otherwise used or held for use by the Company or any of its Subsidiaries in which the Company or any of its Subsidiaries is the owner, applicant or assignee (“Company Registered IP”); and (ii) all material unregistered Intellectual Property, including proprietary Software, owned or purported to be owned by the Company or any of its Subsidiaries (for material Trade Secrets, only a general description shall be disclosed). (b) Section 5.14(b) of the Company Disclosure Schedules sets forth all material Intellectual Property licenses, sublicenses and other agreements or permissions (“Company IP Licenses”) (other than “shrink wrap,” “click wrap,” and “off the shelf” software agreements and other agreements for Software commercially available on reasonable terms to the public generally with license, maintenance, support and other fees of less than $50,000 per year (collectively, “Off-the-Shelf Software”), which are not required to be listed, although such licenses are “Company IP Licenses” as that term is used herein), under which the Company or any of its Subsidiaries is a licensee or otherwise is authorized to use or practice or have rights to any Intellectual Property of any Person that is (i) incorporated into, or used in the authorship, invention, development, delivery, hosting or distribution of, the Company Products; or (ii) used or held for use by the Company in the conduct of its business. (c) The Company and its Subsidiaries either own or have valid and enforceable rights under a Company IP License to use all Intellectual Property that is necessary and sufficient for, or used or held for use by the Company in, the conduct of its business, in each case free and clear of any Liens (other than Permitted Liens). All of the Company Registered IP is in full force and effect, subsisting, valid and enforceable. The Company or its Subsidiaries, as applicable, (i) is the sole and exclusive owner of all right, title and interest in and to the Owned IP, in each case free and clear of any Liens (other than Permitted Liens); and (ii) has a valid and enforceable license or other rights to use all Licensed IP. Neither the Company nor any of its Subsidiaries has dedicated to the public or otherwise allowed to fall into the public domain any material Owned IP. TABLE OF CONTENTS (d) The Company and its Subsidiaries have provided the SPAC with true and complete copies of all material Company IP Agreements, including all modifications, amendments and supplements thereto and waivers thereunder. Neither the Company, any of its Subsidiaries nor, to the Knowledge of the Company, any other party thereto is, or is alleged to be, in breach of or default under, or has provided or received any notice of breach of, default under, or intention to terminate (including by non-renewal), any Company IP Agreement. The Company or its Subsidiaries, as applicable, have entered into binding, valid and enforceable, written Contracts with each current and former employee and independent contractor who is or was involved in or has contributed to the invention, creation, or development of any Intellectual Property during the course of employment or engagement with the Company or any of its Subsidiaries, as applicable, whereby such employee or independent contractor (i) acknowledges the Company’s exclusive ownership of all Intellectual Property invented, created, or developed by such employee or independent contractor within the scope of his or her employment or engagement with the Company or any of its Subsidiaries, as applicable; (ii) grants to the Company or any of its Subsidiaries, as applicable, a present, irrevocable assignment of any ownership interest such employee or independent contractor may have in or to such Intellectual Property, to the extent such Intellectual Property does not constitute a “work made for hire” under applicable Law; and (iii) irrevocably waives any right or interest, including any moral rights, regarding any such Intellectual Property, to the extent permitted by applicable Law. All material assignments and other instruments necessary to establish, record and perfect the Company’s ownership interest in the Company Registered IP have been validly executed, delivered and filed with the relevant Governmental Authorities and authorized registrars. Neither the execution, delivery or performance of this Agreement, nor the consummation of the transactions contemplated hereunder, will result in the loss or impairment of, or require the consent of any other Person in respect of, the Company’s right to own or use any Intellectual Property. (e) The Company IP Licenses include all of the material licenses, sublicenses and other agreements or permissions necessary to operate the Company and its Subsidiaries as presently conducted. (f) No Action is pending or, to the Company’s Knowledge, threatened against the Company or any of its Subsidiaries that challenges the validity, enforceability, ownership or right to use, sell, license or sublicense, or that otherwise relates to, any Intellectual Property currently licensed, used or held for use by the Company or any of its Subsidiaries, nor, to the Knowledge of the Company, is there any reasonable basis for any such Action. Since incorporation, neither the Company nor any of its Subsidiaries has received any written or, to the Knowledge of the Company, notice or claim asserting or suggesting that any infringement, misappropriation, violation, dilution or unauthorized use of the Intellectual Property of any other Person is or may be occurring or has or may have occurred, as a consequence of the business activities of the Company or any of its Subsidiaries, nor to the Knowledge of the Company is there any reasonable basis therefor. There are no Orders to which the Company or any of its Subsidiaries is a party or its otherwise bound that (i) restrict the rights of the Company or any of its Subsidiaries to use, transfer, license or enforce any Intellectual Property owned by the Company, (ii) restrict the conduct of the business of the Company or any of its Subsidiaries in order to accommodate a third Person’s Intellectual Property or (iii) grant any third Person any right with respect to any Intellectual Property owned by the Company or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries is currently infringing, or has, since incorporation, infringed, misappropriated or violated any Intellectual Property of any other Person in connection with the ownership, use or license of any Intellectual Property owned or purported to be owned by the Company or any of its Subsidiaries or, to the Knowledge of the Company, otherwise in connection with the conduct of the respective businesses of the Company and its Subsidiaries. To the Company’s Knowledge, no third party is currently, or in the past five (5) years has been, infringing upon, misappropriating or otherwise violating any Intellectual Property owned, licensed by, licensed to or otherwise used or held for use by the Company or any of its Subsidiaries. (g) No funding from any Governmental Authority or facilities of a university, college, other educational institution or non-profit organization was used in the development of the Owned IP, and no Governmental Authority, university, college, other educational institution or non-profit organization has a claim or right to claim title to any Owned IP. (h) (i) The Company and its Subsidiaries have taken steps consistent with generally accepted industry standards, and in any event no less than all commercially reasonable steps, to safeguard and maintain the secrecy and confidentiality of all Trade Secrets included in the Owned IP. TABLE OF CONTENTS (ii) Neither the Company nor any of its Subsidiaries has authorized the disclosure of any Trade Secret included in the Owned IP, nor has any such Trade Secret been disclosed, in each case other than pursuant to a written and enforceable non-disclosure agreement. (iii) There has been no misappropriation of any Trade Secret included in the Owned IP or breach of any obligations of confidentiality with respect to such Trade Secrets. (i) Neither the execution, delivery nor performance of this Agreement or any other agreements referred to in this Agreement nor the consummation of any of the transactions contemplated by this Agreement or any such other agreement entered into in connection herewith or therewith will, with or without notice or lapse of time, directly result in: (i) a loss of or an Lien on any Owned IP; (ii) a breach of or default under, or right to terminate or suspend performance of, any Company IP Agreement; (iii) the release, disclosure or delivery of any Trade Secrets within the Owned IP by or to any escrow agent or other Person; (iv) the grant, assignment or transfer to any other Person of any license or other right or interest under, to or in any Owned IP. The SPAC will own all right, title and interest in and to, or otherwise have a license to, all Owned IP and Licensed IP on identical terms and conditions as the Company enjoyed immediately prior to the Closing. (j) The Source Code for Software within the Owned IP and the Source Code for Software included in all Company Products (A) has at all times been maintained in confidence, and has been disclosed only to employees and consultants having a “need to know” the contents thereof in connection with the performance of their duties and who are bound by confidentiality obligations of customary scope with respect to Source Code; and (B) has not been delivered, licensed or made available to any escrow agent or other Person, and neither the Company nor any of its Subsidiaries has any duty or obligation to deliver, license or make available such Source Code to any escrow agent or other Person. (k) Neither the Company nor any of its Subsidiaries has (i) used any Open Source Software in such a way that (A) obligates the Company to make any Software within the Owned IP available free of charge, available in source code form, or reverse engineerable, (B) grants or purports to grant to any third Person any rights or immunities under any Intellectual Property within the Owned IP, or (C) requires any Company Products or any portion thereof, to be subject to a Copyleft License; or (ii) contributed any Software within the Owned IP to an open source project or made any such Software available to any other Person under an open source license. (l) The Company Products do not contain any malicious or surreptitious code or device, such as a virus, worm, time or logic bomb, disabling device, Trojan horse or other malicious or surreptitious code designed to: (i) disrupt or damage any licensee’s use of the Company Products or related computer systems; (ii) erase, destroy or corrupt any licensee’s files or data; or (iii) bypass any technical security measure, or masquerade as compliant, so as to obtain access to any of licensee’s hardware or software in contravention of such technical security measures. (m) The Company and its Subsidiaries own or have a valid license in all of the Company Systems necessary to operate the business of the Company and its Subsidiaries as currently conducted. The Company and its Subsidiaries have taken commercially reasonable measures to protect and maintain the security of the Company Systems and all information stored or contained therein from any unauthorized use, access, interruption or modification by any Person. The Company Systems (i) operate and perform in all material respects in accordance with their documentation and as required by the business of the Company and its Subsidiaries as currently conducted; (ii) have not suffered any material persistent substandard performance, breakdown or failure since the Company’s incorporation; (iii) are free from any material defects; (iv) do not contain any virus, Software or hardware component designed to permit unauthorized access or to disable or otherwise harm or disable any System whether automatically with the passage of time or under the positive control of a Person; (v) are in good repair and operating condition and are adequate and suitable (including with respect to working condition, license seats, performance and capacity) for the purposes for which they are currently being used; and (vi) are sufficient to operate the business of the Company and its Subsidiaries after the Closing in substantially the same manner as conducted in the twelve (12) months prior to the Closing and constitute all of the Systems reasonably necessary to conduct the business of the Company and its Subsidiaries as currently conducted. TABLE OF CONTENTS (a) The Company and each of its Subsidiaries have or will have timely filed, or caused to be timely filed, all material Tax Returns required to be filed by them (taking into account all available extensions), which Tax Returns are true, accurate, correct and complete in all material respects, and has paid, collected or withheld, or caused to be paid, collected or withheld, all material Taxes required to be paid, collected or withheld, other than such Taxes being contested in good faith for which adequate reserves in the Company Financial Statements have been established in accordance with IFRS. The Company and each of its Subsidiaries have complied in all material respects with all applicable Laws relating to Tax. (b) There is no Action currently pending or threatened in writing against the Company or any of its Subsidiaries by a Governmental Authority in a jurisdiction where the Company or such Subsidiary does not file Tax Returns that it is or may be subject to taxation by that jurisdiction. (c) There are no claims, assessments, audits, examinations, investigations or other Actions by any Tax authority in progress or pending against the Company or any of its Subsidiaries in respect of any Tax, and neither the Company nor any of its Subsidiaries has been notified in writing, or to the Knowledge of the Company, orally, of any proposed Tax claims or assessments against it (other than, in each case, claims or assessments for which adequate reserves (i) in the Company Financial Statements have been established in accordance with IFRS methodologies for Company Financial Statements delivered as of the date hereof and (ii) adequate reserves in the Required Financial Statements have been established in accordance with U.S. GAAP for Company Financial Statements delivered after the date hereof, or are immaterial in amount) or that any such audit, examination, investigation or other Action is contemplated. (d) Neither the Company nor any of its Subsidiaries has any liability for Taxes of any Person (other than the Company and its Subsidiaries) (i) under any Tax indemnity, Tax sharing or Tax allocation agreement or any other contractual obligation (excluding for this purpose, agreements entered into in the ordinary course of business the primary purpose of which is not related to Taxes, such as leases, licenses or credit agreements), (ii) arising from the application of U.S. Treasury Regulations Section 1.1502-6 or any analogous provision of state, local or non-U.S. Law or (iii) as a transferee or successor, by Contract (excluding for this purpose, Contracts entered into in the ordinary course of business the primary purpose of which is not related to Taxes, such as leases, licenses or credit agreements) or by operation of Law. (e) There are no Liens with respect to any Taxes upon the Company’s or any of its Subsidiaries’ assets, other than Liens described in clause (a) of the definition of Permitted Liens. (f) The Company and each of its Subsidiaries have collected or withheld all material Taxes currently required to be collected or withheld by them, and all such Taxes have been paid to the appropriate Governmental Authorities or set aside in appropriate accounts for future payment when due. (g) Neither the Company nor any of its Subsidiaries has any outstanding waivers or extensions of any applicable statute of limitations to assess any material amount of Taxes. There are no outstanding requests by the Company of any of its Subsidiaries for any extension of time within which to file any Tax Return or within which to pay any Taxes shown to be due on any Tax Return. (h) Neither the Company nor any of its Subsidiaries has made any change in accounting methods (except as required by a change in Law) or received a ruling from, or signed an agreement with, any taxing authority that would reasonably be expected to have a material impact on its Taxes following the Closing. (i) Neither the Company nor any of its Subsidiaries is, or has ever been, a member of an “affiliated group” as defined in Section 1504(a) of the Code or any affiliated, combined, unitary, consolidated or similar group under state, local or foreign Law (other than a group all of the members of which consisted of the Company and its Subsidiaries). (j) The Company is, and since its inception has been, properly characterized as a corporation for U.S. federal income tax purposes. The Company is treated as a U.S. domestic corporation for U.S. federal income tax purposes pursuant to Section 7874(b) of the Code. Each Subsidiary of the Company is, and since its inception has been, properly treated for U.S. federal income tax purposes in the manner set forth in Section 5.15(j) of the Company Disclosure Schedules. TABLE OF CONTENTS (k) The Company has not constituted either a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying (or intended to qualify) in whole or in part for tax-free treatment under Section 355 of the Code (or so much of Section 356 of the Code as relates to Section 355 of the Code) or Section 361 of the Code. (l) Neither the Company nor any of its Subsidiaries has taken or agreed to take any action, nor does it intend to or plan to take any action, or have any knowledge of any fact or circumstance that could reasonably be expected to prevent the transactions contemplated by this Agreement from qualifying for the Intended Tax Treatment (with the exception of any actions specifically contemplated by this Agreement). (m) There are no circumstances existing which could result in the application to the Company or any of its Subsidiaries of Sections 17, 78, 80, 80.01, 80.02, 80.03, 80.04 or Subsection 160(1) of the ITA or any analogous provision of any comparable Law of any province or territory of Canada. (n) The terms and conditions made or imposed in respect of every transaction (or series of transactions) between the Company or any of its Subsidiaries and any Person that is (i) a non-resident of Canada for purposes of the ITA, and (ii) not dealing at arm’s length with the Company or any of its Subsidiaries, as applicable, for purposes of the ITA, do not differ from those that would have been made between persons dealing at arm’s length for purposes of the ITA, and all documentation or records as required by applicable Law have been made or obtained in respect of such transactions (or series of transactions). (a) The leases set forth on Section 5.16(a) of the Company Disclosure Schedule (the “Leases”) are the only Contracts pursuant to which the Company leases any real property. Neither the Company nor any of its Subsidiaries is a party to, or under any agreement to become a party to, any lease with respect to real property other than the Leases, copies of which have been provided to the SPAC. Each Lease is in good standing, creates a good and valid leasehold estate in the leased properties thereby demised and is in full force and effect without amendment, except as set forth on Section 5.16(a) of the Company Disclosure Schedules. With respect to each Lease, (a) the Lease (or a notice in respect of the Lease) has been properly registered in the appropriate land registry office, (b) all rents and additional rents have been paid, (c) no waiver, indulgence or postponement of the lessee’s obligations has been granted by the lessor, (d) there exists no event of default or event, occurrence, condition or act (including the purchase of the Company Securities) which, with the giving of notice, the lapse of time or the happening of any other event or condition, would become a default under the Lease and (e) to the knowledge of the Company, all of the covenants to be performed by any other party under the Lease have been fully performed. (b) Each of the leased properties is adequate and suitable for the purposes for which it is presently being used and the Company or its Subsidiaries, as applicable, has adequate rights of ingress and egress into each of the leased properties for the operation of the business in the ordinary course. Section 5.16(b) of the Company Disclosure Schedules sets forth all of the Leases setting out, in respect of each Lease, a description of the leased premises (by municipal address and proper legal description), the term of the Lease, the rental payments under the Lease (specifying any breakdown of base rent and additional rents), any rights of renewal and the term thereof, and any restrictions on assignment, change of control of the Company or amalgamation. 5.17 Personal Property. Each item of Personal Property that is currently owned, used or leased by the Company or any of its Subsidiaries, as applicable, with a book value or fair market value of greater than Twenty-Five Thousand Dollars ($25,000) is set forth on Section 5.17 of the Company Disclosure Schedules, along with, to the extent applicable, a list of lease agreements, lease guarantees, security agreements and other agreements related thereto, including all amendments, terminations and modifications thereof or waivers thereto (“Company Personal Property Leases”). Except as would not be material to the Company or any of its Subsidiaries, or as set forth in Section 5.17 of the Company Disclosure Schedules, all such items of Personal Property are in good operating condition and repair (reasonable wear and tear excepted consistent with the age of such items) and are suitable for their intended use in the business of the Company. The operation of the Company’s business as it is now conducted or presently proposed to be conducted is not in any material respect dependent upon the right to use the Personal Property of Persons other than the Company, except for such Personal Property that is owned, leased or licensed by or otherwise contracted to the Company. The Company Personal Property Leases are valid, binding and enforceable in accordance with their terms and are in full force and effect. No event has occurred that (whetherTABLE OF CONTENTS with or without notice, lapse of time or both or the happening or occurrence of any other event) would constitute a material default on the part of the Company or, to the Knowledge of the Company, any other party under any of the Company Personal Property Leases, and neither the Company nor any of its Subsidiaries has received notice of any such condition. 5.18 Title to and Sufficiency of Assets. The Company and its Subsidiaries have good and marketable title to, or, in the case of leased or subleased assets, a valid leasehold interest in or right to use, all of their respective material assets, free and clear of all Liens other than (a) Permitted Liens, (b) the rights of lessors under leasehold interests and (c) Liens set forth in the Company Financial Statements (collectively, the “Assets”). The Assets (including Intellectual Property rights and contractual rights) of the Company and its Subsidiaries, taken as a whole, constitute all of the material assets, rights and properties that are used in the operation of the businesses of the Company and its Subsidiaries as they are now conducted or that are used or held by the Company or any of its Subsidiaries for use in the operation of the business of the Company or any of its Subsidiaries.(a) The Company is not party to, or bound by, any Labor Agreement, and has never been party to, or bound by, any such Contract. There are no unfair labor practice charges, material labor grievances, labor arbitrations, labor strikes, slowdowns, work stoppages, boycotts, picketing, handbilling, lockouts, or other material labor disputes, or to the Company’s Knowledge threat of any of the foregoing, or, to the Company’s Knowledge, union organizing activity or demand or petition for representation or certification, by or with respect to any of the employees of the Company, and no such activities or disputes have occurred (including any representation or certification proceedings brought or filed with the National Labor Relations Board or any other labor relations tribunal or authority) since the Company’s incorporation. No employees of the Company are represented by any labor organization, labor or trade union, or works council with respect to their employment with the Company. The Company has not engaged in any unfair labor practices since its incorporation. With respect to the transactions contemplated by this Agreement, the Company has satisfied in all material respects any pre-signing or, as of the Closing, pre-Closing notice, consultation or other obligations owed to its employees or their representatives under applicable Law or Labor Agreement. (b) The Company is and since its incorporation has been in compliance in all material respects with all applicable Laws respecting labor, employment and employment practices, including Laws regarding terms and conditions of employment, health and safety, wages and hours, discrimination, harassment, retaliation, whistleblowing, disability, labor relations, worker classification, Tax withholding, hours of work, payment of wages and overtime wages, pay equity, immigration (including the completion of Forms I-9 and confirmation of visas), workers’ compensation, unemployment insurance, working conditions, equal opportunity, affirmative action, employee leave and other time off, COVID-19, and employee terminations (including plant closures and layoffs), and has not received written or, to the Knowledge of the Company, oral notice that there is any instance of noncompliance in any of the foregoing respects. Except as would not result in material liability to the Company, the Company (i) has since its incorporation correctly classified all current and former exempt and non-exempt employees, individual independent contractors, leased employees, and other non-employee service providers for all applicable purposes, (ii) is not liable for any past due arrears of wages, salaries, premiums, commissions, bonuses, severance, termination payments, fees, or other compensation due to current or former employees, independent contractors or other individual service providers of the Company since its incorporation or any fine, Tax, interest or penalty for failure or delinquency to pay the foregoing and (iii) is not liable for any material payment to any Governmental Authority with respect to unemployment or workers’ compensation benefits, social security or other benefits, insurance, Taxes or obligations for employees, independent contractors or other individual service providers due since the Company’s incorporation (other than routine payments to be made in the ordinary course of business and consistent with past practice). There are no Actions pending or, to the Company’s Knowledge, threatened, and there have been no such Actions since the Company’s incorporation, by or against the Company brought by or against any applicant for employment, any current or former employee, consultant, independent contractor or other individual service provider, any Person alleging to be a current or former employee, contractor or individual service provider, or any Governmental Authority or any other Person relating to violations of labor or employment Laws, or making any other allegation relating to the employment of or services rendered by such Person including alleging breach of any express or implied contract of employment or engagement, wrongful termination of employment or engagement, or alleging any other discriminatory, wrongful or tortious conduct in connection with the employment or service relationship. To the Company’s Knowledge, (A) no employee or individual service provider intends to terminate his or her TABLE OF CONTENTS employment with or services to the Company, and (B) no current or former employee or individual service provider is in any material respect in violation of any employment agreement, nondisclosure obligation, fiduciary duty, restrictive covenant or other obligation (I) owed to the Company or (II) owed to any third party with respect to such person’s right to be employed or engaged by the Company. (c) Section 5.19(c) of the Company Disclosure Schedules sets forth a complete and accurate list of all employees and individual service providers of the Company, as of the date hereof, including each such individual’s (i) name, (ii) job title or services description, (iii) employing or engaging entity, (iv) work location, (v) compensation rate and method, (vi) hire or engagement date, (vii) status as exempt or non-exempt from overtime requirements (for employees), (viii) leave status and (ix) accrued vacation or paid time off. (d) There has not at any time since the Company’s incorporation been any, and there is no pending or, to the Knowledge of the Company, threatened, any allegation, investigation (including any internal investigation), complaint, lawsuit or Action concerning any Misconduct with respect to any Company employee, contractor, or other service provider (and, where required, the Company has taken corrective action in response to). For purposes of this Section 5.19(d), “Misconduct” shall mean (i) any unlawful, illegal, fraudulent or deceptive conduct, (ii) harassment or discrimination, (iii) other acts of a similar nature that could reasonably be expected to bring the Company into public contempt, ridicule or disrepute or be materially injurious to the business, reputation or finances of the Company or any officer of the Company, (iv) unwanted or unlawful sexual advances, lewd or sexually explicit comments, the sending of sexually explicit images or messages or other sexual harassment or (vi) any retaliatory act for refusing or opposing any of the above. (a) “Company Benefit Plan” means each Benefit Plan that is sponsored, maintained, contributed to or required to be contributed by the Company or any of its Subsidiaries or under which the Company or any of its Subsidiaries has any liability or obligation (including any contingent liability or obligation). (b) Set forth on Section 5.20(b) of the Company Disclosure Schedules is a true and complete list of each material Company Benefit Plan (other than any at-will offer letter that does not provide for equity-based or phantom equity awards, retention, change in control, severance or termination benefits and is on the standard form of offer letter set forth on Section 5.20(b) of the Company Disclosure Schedules). With respect to each material Company Benefit Plan, the Company and its Subsidiaries have provided to the SPAC or its counsel true and complete copies, to the extent applicable, of (i) each writing constituting a part of such Company Benefit Plan, including all plan documents and amendments thereto, or if not in writing, a summary of such Company Benefit Plan, (ii) the most recent annual report (IRS Forms 5500 series), (iii) any related trust documents and the most recent summary plan description distributed to participants (and any summaries of material modifications thereto), and (iv) any non-routine correspondence with any Governmental Authority. Each Company Benefit Plan that is intended to be qualified within the meaning of Section 401(a) of the Code timely received a current, favorable determination, advisory or opinion letter from the IRS, and, to the Company’s Knowledge, nothing has occurred that could reasonably be expected to adversely affect the qualified status of any such Company Benefit Plan. (c) No Company Benefit Plan is, and neither the Company nor any of its Subsidiaries sponsors, maintains or contributes to (or have any obligation to contribute to), or has any liability under or with respect to any: (i) “defined benefit plan” (as defined in Section 3(35) of ERISA) or any plan that is or was subject to Title IV of ERISA or Section 412 or 430 of the Code, (ii) “multiemployer plan,” as defined in Section 3(37) of ERISA, (iii) “multiple employer plan” within the meaning of Section 413(c) of the Code or Section 210 of ERISA, or (iv) “multiple employer welfare arrangement” (as defined in Section 3(40) of ERISA). Neither the Company nor any of its Subsidiaries has any Liability on account of being considered a single employer under Section 414 of the Code with any other Person. No Company Benefit Plan provides, and neither the Company nor any of its Subsidiaries has any obligation to provide, retiree or post-employment health or life insurance or any other retiree or post-employment welfare-type benefits to any Person other than as required under Section 4980B of the Code or any similar state Law and for which the covered Person pays the full cost of coverage. (d) With respect to each Company Benefit Plan: (i) such Company Benefit Plan is and has at all times been operated, maintained, funded and administered in all material respects in accordance with its terms, and applicable Laws; (ii) there have been no “prohibited transactions” within the meaning of Section 4975 of the Code or Section 406 or 407 of ERISA that are not otherwise exempt under Section 408 of ERISA and no TABLE OF CONTENTS breaches of fiduciary duty; (iii) no Action is pending, or to the Company’s Knowledge, threatened (other than routine claims for benefits arising in the ordinary course of administration); and (iv) all contributions, distributions, reimbursements and premiums due through the Closing Date have been timely made and all such amounts for any period ending on or before the Closing Date that are not yet due have been made or properly accrued on the Company Financial Statements. Neither the Company nor any of its Subsidiaries has incurred (whether or not assessed) or is reasonably expected to incur or to be subject to, any material Tax or other penalty with respect to the reporting requirements under Sections 6055 and 6056 of the Code, as applicable, or under Section 4980B, 4980D or 4980H of the Code. (e) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby could (either alone or in combination with another event) (i) result in any payment or benefit, or increase in the amount of any compensation or benefits due, to any current or former employee, officer, director or other individual service provider of the Company or any of its Subsidiaries; (ii) result in the acceleration of the time of payment or vesting, or trigger any payment or funding of any compensation or benefits due to any current or former employee, officer, director or other individual service provider of the Company or any of its Subsidiaries; (iii) except as required under the terms of this Agreement or by applicable Law, restrict the ability of the Company to merge, amend or terminate any material Company Benefit Plan; (iv) result in the forgiveness of any employee or service provider loan; or (v) result in the payment of any amount (whether in cash or property or the vesting of property) that could, individually or in combination with any other such payment, constitute an “excess parachute payment” (within the meaning of Section 280G(b)(1) of the Code). No person is entitled to receive, and neither the Company nor any of its Subsidiaries has any current or contingent obligation to provide, any payment (including any tax gross-up or other payment), indemnification, reimbursement or otherwise be made whole from the Company as a result of the imposition of any excise taxes required by any applicable Laws, including under Section 4999 or Section 409A of the Code (or any corresponding provisions of state, local or foreign Tax law). (f) Each Company Benefit Plan that constitutes in any part a “nonqualified deferred compensation plan” (as defined under Section 409A(d)(1) of the Code) subject to Section 409A of the Code has been operated and administered in all respects in operational compliance with, and is in all respects in documentary compliance with, Section 409A of the Code and all IRS guidance promulgated thereunder, and no amount under any such plan, agreement or arrangement is, has been or could reasonably be expected to be subject to any additional Tax, interest or penalties under Section 409A of the Code. 5.21 Environmental Matters.(a) The Company and its Subsidiaries have, since incorporation have been, in compliance in all material respects with all applicable Environmental Laws, including obtaining, maintaining, and complying in all material respects with all Permits required under Environmental Laws for the operation of its business and the occupation of its properties and facilities. (b) Neither the Company nor any of its Subsidiaries has received any Order, notice or written report from any Governmental Authority regarding any actual or alleged material violation of, or material Liability under, Environmental Laws. (c) Neither the Company nor any of its Subsidiaries have treated, stored, arranged for or permitted the disposal of, transported, handled, distributed, exposed any person to or Released Hazardous Materials, including on any property owned, or operated on, by the Company or any of its Subsidiaries and no such property owned or operated on by the Company or any of its Subsidiaries is contaminated by Hazardous Materials, in each case so as to give rise to any Environmental Liabilities of the Company. (d) Neither the Company nor any of its Subsidiaries is party to any Contract pursuant to which the Company or such Subsidiary provided an indemnity with respect to, or has otherwise become subject to (either by Contract or operation of Law), any Environmental Liability of any other Person under Environmental Laws or relating to Hazardous Materials. (e) The Company has provided to the SPAC all environmental audits, assessments and reports and other material environmental, health or safety documents relating to the Company’s past or current properties, facilities or operations on the Company’s properties and facilities that are in the Company and its Subsidiaries’ possession or, to the Knowledge of the Company, under its reasonable control. TABLE OF CONTENTS 5.22 Related Person Transactions. Except as set forth on Section 5.22 of the Company Disclosure Schedules, neither the Company nor any of its Affiliates, nor any officer, director, manager, employee, trustee or beneficiary of the Company or any of its Affiliates, nor any immediate family member of any of the foregoing (whether directly or indirectly through an Affiliate of such Person) (each of the foregoing, a “Related Person”) is presently, or since the Company’s incorporation, has been, a party to any transaction with the Company, including any Contract or other arrangement (a) providing for the furnishing of services by (other than as officers, directors or employees of the Company), (b) providing for the rental of real property or Personal Property from or (c) otherwise requiring payments to (other than for services or expenses as directors, officers or employees of the Company in the ordinary course of business consistent with past practice) any Related Person or any Person in which any Related Person has an interest as an owner, officer, manager, director, trustee or partner or in which any Related Person has any direct or indirect interest. (such foregoing transactions or arrangements, “Related Party Transactions”).(a) A list of all insurance policies (by policy number, insurer, coverage period, coverage amount, annual premium and type of policy) held by the Company, as of the date hereof, relating to the Company or its business, properties, assets, directors, officers and employees, copies of which have previously been made available to the Company is set forth on Section 5.23 of the Company Disclosure Schedules. All premiums due and payable under all such insurance policies have been timely paid and the Company is otherwise in material compliance with the terms of such insurance policies and each such insurance policy (i) is legal, valid, binding, enforceable and in full force and effect and (ii) will continue to be legal, valid, binding, enforceable, and in full force and effect on identical terms following the Closing. Neither the Company nor any of its Subsidiaries has any self-insurance or co-insurance programs. Since the date of the Company’s incorporation, neither the Company nor any of its Subsidiaries has received any notice from, or on behalf of, any insurance carrier relating to or involving any adverse change or any change other than in the ordinary course of business, in the conditions of insurance, any refusal to issue an insurance policy or non-renewal of a policy. (b) The Company and its Subsidiaries have reported to its insurers all claims and pending circumstances that would reasonably be expected to result in a claim, except where such failure to report such a claim would not be reasonably likely to be material to the Company or any of its Subsidiaries. To the Knowledge of the Company, no event has occurred, and no condition or circumstance exists, that would reasonably be expected to (with or without notice or lapse of time) give rise to or serve as a basis for the denial of any such material insurance claim. Since incorporation, neither the Company nor any of its Subsidiaries has made any claim against an insurance policy as to which the insurer is denying or has denied coverage. 5.24 Books and Records. All of the financial books and records of the Company and its Subsidiaries are complete and accurate in all material respects and have been maintained in the ordinary course of business consistent with past practice and in accordance with applicable Laws.5.25 Certain Business Practices.(a) Neither the Company or any of its Subsidiaries nor any of their respective officers, directors, employees or other individual service providers, nor to the Knowledge of the Company, any agent or other third party representative acting on behalf of the Company or any of its Subsidiaries, (a) is currently, or has been since incorporation: (i) a Sanctioned Person; (ii) engaging in any dealings or transactions with or for the benefit of any Sanctioned Person or in any Sanctioned Country; (iii) engaging in any export, reexport, transfer or provision of any goods, software, technology, data or service without, or exceeding the scope of, any required or applicable licenses or authorizations under all applicable Ex-Im Laws; or (iv) otherwise in violation of Sanctions, Ex-Im Laws, or U.S. anti-boycott Laws (collectively, “Trade Controls”); or (b) has at any time (i) made or accepted any unlawful payment or given, received, offered, promised, or authorized or agreed to give or receive, any money, advantage or thing of value, directly or indirectly, to or from any employee or official of any Governmental Authority or any other Person in violation of Anti-Corruption Laws; or (ii) otherwise been in violation of any Anti-Corruption Laws. (b) Neither the Company nor any of its Subsidiaries has received from any Governmental Authority or any Person any notice, inquiry, or internal or external allegation; made any voluntary or involuntary disclosure to a Governmental Authority; or conducted any internal investigation or audit concerning any actual or potential violation or wrongdoing in each case, related to Trade Controls or Anti-Corruption Laws. (c) Neither the Company nor any of its Subsidiaries is a “TID U.S. Business,” as such term is defined in 31 C.F.R. § 800.248. TABLE OF CONTENTS 5.26 Compliance with Privacy Laws, Privacy Policies and Certain Contracts.(a) The Company and its Subsidiaries, and to the Knowledge of the Company, their respective officers, directors, employees, agents, subcontractors, vendors and other individual service providers to whom the Company or any of its Subsidiaries, as applicable, has given access to Personal Data, are and have been at all times, in compliance in all material respects with (i) all applicable Privacy Laws, (ii) the Company’s and its Subsidiaries’ privacy policies, (iii) all industry and self-regulatory standards governing Personal Data, privacy, data security, and data protection to which the Company or any of its Subsidiaries are bound or to which they purport to adhere (including, as applicable, the Payment Card Industry Data Security Standard), and (iv) the Company’s and its Subsidiaries’ contractual obligations concerning Personal Data, privacy, data protection, cybersecurity, data security and the security of the Company’s and each of its Subsidiaries’ information technology systems, and neither the execution, delivery nor performance of this Agreement or any other agreements referred to in this Agreement nor the consummation of any of the transactions contemplated by this Agreement or any such other agreement entered into in connection herewith or therewith will, with or without notice or lapse of time, directly result in any violation of the foregoing clauses (i)–(iv) in any material respect; (b) To the Knowledge of the Company, neither the Company nor any of its Subsidiaries has experienced any material loss, damage or unauthorized access, use, disclosure, modification or breach of security of Personal Data maintained by or on behalf of the Company (including, to the Knowledge of the Company, by any agent, subcontractor or vendor of the Company); and (c) To the Knowledge of the Company, (i) no Person, including any Governmental Authority, has made any written claim or commenced any Proceeding with respect to any violation of any Privacy Law by the Company or any of its Subsidiaries; and (ii) the Company has not been given written notice of any criminal, civil or administrative violation of any Privacy Law, in any case including any claim or Action with respect to any loss, damage or unauthorized access, use, disclosure, modification or breach of security, of Personal Data maintained by or on behalf of the Company or any of its Subsidiaries (including by any agent, subcontractor or vendor of the Company). 5.27 Investment Company Act. Neither the Company nor any of its Subsidiaries is an “investment company” or a Person directly or indirectly “controlled” by or acting on behalf of an “investment company,” or required to register as an “investment company,” in each case within the meaning of the Investment Company Act.5.28 Finders and Brokers. Except for the deferred underwriting commission payable by the Company at Closing or as set forth on Section 5.28 of the Company Disclosure Schedules, neither the Company nor any of its Subsidiaries has any Liability in connection with this Agreement or the Ancillary Documents, or the transactions contemplated hereby or thereby, that would result in the obligation of the Company or any of its Subsidiaries, or any of their respective Affiliates, to pay any finder’s fee, brokerage or agent’s commissions or other like payments.5.29 Independent Investigation. The Company has conducted its own independent investigation, review and analysis of the business, results of operations, prospects, condition (financial or otherwise) or assets of the SPAC and acknowledges that it has been provided adequate access to the personnel, properties, assets, premises, books and records, and other documents and data of the SPAC for such purpose. The Company acknowledges and agrees that: (a) in making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, it has relied solely upon its own investigation and the express representations and warranties of the SPAC set forth in this Agreement (including the related portions of the SPAC Disclosure Schedules) and in any certificate delivered to the Company pursuant hereto; and (b) neither the SPAC nor any of its Representatives have made any representation or warranty as to the SPAC or this Agreement, except as expressly set forth in this Agreement (including the related portions of the SPAC Disclosure Schedules) or in any certificate delivered to the Company pursuant hereto.5.30 Information Supplied. None of the information supplied or to be supplied by the Company expressly for inclusion or incorporation by reference: (a) in any current report on Form 8-K, and any exhibits thereto or any other report, form, registration or other filing made with any Governmental Authority or stock exchange with respect to the transactions contemplated by this Agreement or any Ancillary Documents; (b) in the Registration Statement; or (c) in the Proxy Statement or Company Circular and other mailings or other distributions to the SPAC Shareholders or prospective investors with respect to the consummation of the transactions contemplated by this Agreement or in any amendment to any of documents identified in (a) through (c), will, when filed, made available, mailed or distributed, as the case may be, including on the Closing Date, contain or will contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make theTABLE OF CONTENTS statements therein, other than in the case of the Registration Statement, in light of the circumstances under which they are made, not misleading. None of the information supplied or to be supplied by the Company expressly for inclusion or incorporation by reference in any of the Signing Press Release, the Signing Filing, the Closing Press Release and the Closing Filing will, when filed or distributed, as applicable, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. Notwithstanding the foregoing, neither the Company nor any of its Subsidiaries makes any representation, warranty or covenant with respect to any information supplied by or on behalf of the SPAC or its Affiliates. 5.31 SEDAR+ Filings. The Company has filed all forms, reports, schedules, statements, registration statements, prospectuses and other documents required to be filed or furnished by the Company with the Canadian Securities Administrators under the Securities Act (British Columbia) and other applicable Canadian securities laws (the “Canadian Securities Laws”) together with any amendments, restatements or supplements thereto, except in each case where the failure to make such filings would not reasonably be expected to have a Material Adverse Effect. Except to the extent available on SEDAR+, the Company has delivered to the SPAC copies in the form filed on SEDAR+ all of the following: (i) the Company’s annual information forms, (ii) the Company’s annual and interim financial statements and management’s discussion and analysis, (iii) all other forms, reports, prospectuses, management information circulars and other documents (other than preliminary materials) filed by the Company on SEDAR+ since January 1, 2023 (the forms, reports, prospectuses and other documents referred to in clauses (i), (ii) and (iii) above, whether or not available through SEDAR+, together with any amendments, restatements, or supplements thereto, are, collectively, the “SEDAR+ Reports”) and (iv) all certifications and statements required with respect to any report referred to in clause (i) above (collectively, the “Canadian Certifications”). The SEDAR+ Reports (A) were prepared in all material respects in accordance with the requirements of Canadian Securities Laws, and the rules and regulations thereunder and (B) did not, as of their respective filing dates contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. As of the date of this Agreement, there are no outstanding or unresolved comments received from the British Columbia Securities Commission or other applicable Canadian securities regulatory authorities with respect to any SEDAR+ Reports. To the Knowledge of the Company, none of the SEDAR+ Reports filed on or prior to the date of this Agreement is subject to ongoing review or investigation by the British Columbia Securities Commission or other applicable Canadian securities regulatory authorities as of the date of this Agreement. The Canadian Certifications are each true as of their respective dates of filing. As of the date of this Agreement, (I) the Company Shares are listed on Cboe Canada, (II) the Company has not received any written deficiency notice from Cboe Canada relating to the continued listing requirements of such Company Shares, and (III) the Company is in compliance in all material respects with all of the applicable corporate governance rules of Cboe Canada.5.32 Fairness Opinion. The Company Board has received the oral opinion of Evans & Evans, Inc. (which Evans & Evans, Inc. would follow with a written opinion) to the effect that, among other matters as determined by the Company Board in its sole discretion, the transactions contemplated by this Agreement are fair to the Company Shareholders from a financial point of view (the “Company Fairness Opinion”), which shall be included in the Company Circular.5.33 HSR Act. The person, as defined in Section 801.1(a)(1) of the rules (the “Rules”) promulgated under the HSR Act, within which the Company is included does not have annual net sales or total assets of $22.3 million or more, as determined in accordance with the HSR Act and the Rules.
COVENANTS 6.1 Access and Information. During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement in accordance with Section 9.1 or the Closing (the “Interim Period”), subject to Section 6.14, the Company shall give, and shall cause its Representatives to give, the SPAC and its Representatives, at reasonable times during normal business hours and upon reasonable intervals and notice, reasonable access to all offices and other facilities and to all employees, properties, Contracts, agreements, commitments, books and records, financial and operating data and other information (including Tax Returns, internal working papers, client files, client Contracts and director service agreements), of or pertaining to the Company, as the SPAC or its Representatives may reasonably request regarding the Company and its businesses, assets, Liabilities,TABLE OF CONTENTS financial condition, prospects, operations, management, employees and other aspects (including unaudited quarterly financial statements, including a consolidated quarterly balance sheet and income statement, a copy of each material report, Schedule and other document filed with or received by a Governmental Authority pursuant to the requirements of applicable securities Laws, and independent public accountants’ work papers (subject to the consent or any other conditions required by such accountants, if any)) and cause the Company’s Representatives to reasonably cooperate with the SPAC and its Representatives in their investigation; provided, however, that the SPAC and its Representatives shall conduct any such activities in such a manner as not to unreasonably interfere with the business or operations of the Company. During the Interim Period, subject to Section 6.14, the SPAC shall give, and shall cause its Representatives to give, the Company and its Representatives, at reasonable times during normal business hours and upon reasonable intervals and notice, reasonable access to all offices and other facilities and to all employees, properties, Contracts, agreements, commitments, books and records, financial and operating data and other information (including Tax Returns, internal working papers, client files, client Contracts and director service agreements), of or pertaining to the SPAC, as the Company or its Representatives may reasonably request regarding the SPAC, its respective business, assets, Liabilities, financial condition, prospects, operations, management, employees and other aspects (including unaudited quarterly financial statements, including a consolidated quarterly balance sheet and income statement, a copy of each material report, Schedule and other document filed with or received by a Governmental Authority pursuant to the requirements of applicable securities Laws, and independent public accountants’ work papers (subject to the consent or any other conditions required by such accountants, if any)) and cause each of the SPAC’s Representatives to reasonably cooperate with the Company and its Representatives in their investigation; provided, however, that the Company and its Representatives shall conduct any such activities in such a manner as not to unreasonably interfere with the business or operations of the SPAC. 6.2 Conduct of Business of the Company and its Subsidiaries.Unless the SPAC shall otherwise consents in writing (such consent not to be unreasonably withheld, conditioned or delayed), during the Interim Period, except as expressly contemplated by this Agreement or the Ancillary Documents, the Company and its Subsidiaries shall (i) conduct their business, in all material respects, in the ordinary course of business consistent with past practice, (ii) comply in all material respects with all Laws applicable to the Company and its business, assets and employees, and (iii) take all commercially reasonable measures necessary or appropriate to preserve intact, in all material respects, its business organization, to keep available the services of their managers, directors, officers, employees and individual service providers, and to preserve the possession, control and condition of their assets. Except as expressly contemplated by the terms of this Agreement or the Ancillary Documents, during the Interim Period, without the prior written consent of the SPAC (such consent not to be unreasonably withheld, conditioned or delayed), the Company and its Subsidiaries shall not, unless required by applicable Law: (a) amend, waive or otherwise change, in any respect, its Organizational Documents, except as required by applicable Law; (b) authorize for issuance, issue, grant, sell, pledge, dispose of or propose to issue, grant, sell, pledge or dispose of any of its equity securities or any options, restricted stock units, restricted stock, phantom stock, stock appreciation, profit participation, warrants, commitments, subscriptions or rights of any kind to acquire or sell any of its equity securities, or other securities, including any securities convertible into or exchangeable for any of its shares or other equity securities or securities of any class and any other equity-based or phantom equity awards, or engage in any hedging transaction with a third Person with respect to such securities; (c) split, combine, recapitalize or reclassify any of its shares or other equity interests or issue any other securities in respect thereof or declare, pay or set aside any dividend or other distribution (whether in cash, equity or property or any combination thereof) in respect of its equity interests, or directly or indirectly redeem, purchase or otherwise acquire or offer to acquire any of its securities (except for the repurchase of Company Shares from former employees, non-employee directors and consultants in accordance with agreements as in effect on the date hereof that are set forth on the Company Disclosure Schedules providing for the repurchase of shares in connection with any termination of service); (d) incur, create, assume, prepay, commit to, or otherwise become liable for any Indebtedness (directly, contingently or otherwise) in excess of $250,000 individually or $750,000 in the aggregate, make a loan or TABLE OF CONTENTS advance to or investment in any third party (other than advancement of expenses to employees in the ordinary course of business), or guarantee or endorse any Indebtedness, Liability or obligation of any Person in excess of $250,000 individually or $750,000 in the aggregate; (e) except as required by the terms in existence as of the date hereof of any Company Benefit Plan set forth on Section 5.20(b) of the Company Disclosure Schedules or applicable Law, (i) increase or decrease the wages, salaries or any other compensation or benefits provided to any of its current or former employees, officers, directors or other individual service providers, including under any Company Benefit Plan or any other benefit or compensation plan, agreement, contract, program, policy or arrangement that would be a Company Benefit Plan if in effect as of the date hereof (other than ordinary course increases in the annual base salary (and corresponding increases in any annual target bonus linked to a percentage of base salary) to employees whose annual base salary is below $100,000 (prior to such increase)), (ii) make, announce or commit to make any retention, change in control, transaction, severance or similar payment (whether cash, properties or securities) to any employee, officer, director or other individual service provider of the Company or (iii) enter into, establish, amend, modify, commence participation in or terminate any Company Benefit Plan, including any benefit or compensation plan, policy, program, contract, agreement or arrangement that would be a Company Benefit Plan if in effect on the date hereof; (f) take any action to (i) hire, engage, or otherwise enter into any employment or consulting agreement or other service agreement with, or terminate (other than for “cause”) any officer, director, or, other than in the ordinary course consistent with past practice, any employee or other individual service provider of the Company, (ii) grant, promise or announce any cash, equity, equity-based or phantom equity awards, other than in the ordinary course and consistent with past practice, (iii) accelerate, or commit to accelerate, the payment, funding, right to payment or vesting of any compensation or benefits, (iv) enter into, amend, negotiate or terminate any Labor Agreement or recognize or certify any labor union, works council or labor organization as the bargaining representative for any employees of the Company, or (v) knowingly or through conduct waive or release any noncompetition, nonsolicitation, or other restrictive covenant obligation of any current or former employee or other individual service provider; (g) make, change or rescind any material election relating to Taxes, settle or compromise any Action, arbitration, investigation, audit or controversy relating to Taxes, enter into any closing agreement with respect to Taxes, file any amended Tax Return or claim for refund, or make any material change in its accounting or Tax policies or procedures, in each case except as required by applicable Law or in compliance with IFRS; (h) sell, assign, transfer, license or sublicense to any Person or otherwise extend, materially amend or modify, abandon, permit to lapse or expire, subject to any Lien, otherwise dispose of, or fail to preserve any material Owned IP or Company IP Licenses (excluding non-exclusive licenses granted to customers in the ordinary course of business consistent with past practice), disclose to any Person who has not entered into a confidentiality agreement any Trade Secrets, or disclose, license, escrow, or otherwise make available, or grant any rights to, any Source Code owned or purported to be owned by the Company; (i) other than in the ordinary course and consistent with past practice with respect to customers and suppliers, (i) enter into any amendment of any Company Material Contract or enter into any Contract that if entered into prior to the Effective Date would be a Company Material Contract, (ii) voluntarily terminate any Company Material Contract, except for any termination at the end of the term of such Company Material Contract pursuant to the terms of such Company Material Contract, or (iii) waive any material benefit or right under any Company Material Contract; (j) fail to maintain its books, accounts and records in all material respects in the ordinary course of business consistent with past practice; (k) establish any Subsidiary or enter into any new line of business; (l) voluntarily terminate, cancel, materially modify or amend, permit to lapse, or fail to keep in force any insurance policies maintained for the benefit of the Company or providing insurance coverage with respect to its assets, operations and activities, without replacing or revising such policies with a comparable amount of insurance coverage with substantially similar coverage to that which is currently in effect; TABLE OF CONTENTS (m) revalue any of its material assets or make any material change in accounting methods, principles or practices, except to the extent required to comply with IFRS and after consulting with the Company’s outside auditors; (n) waive, release, assign, commence, initiate, satisfy, settle or compromise any Action, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages (and not the imposition of equitable relief on, or the admission of wrongdoing by, the Company or its Affiliates) not in excess of $100,000 individually or $500,000 in the aggregate; (o) close or materially reduce its activities, effect any group layoff or effect any other group personnel reduction, at any of its facilities, provided that the Company shall have the right to terminate personnel in accordance with the terms of Section 6.2(f); (p) acquire, including by merger, consolidation, acquisition of equity interests or assets, or any other form of business combination, any corporation, partnership, limited liability company, other business organization or any division thereof, or any material amount of assets outside the ordinary course of business consistent with past practice; (q) other than as contemplated by the Company’s capital expenditures budget attached hereto as Schedule C, make capital expenditures in excess of $100,000 (individually for any project (or set of related projects) or $500,000 in the aggregate); (r) authorize, recommend, propose or announce an intention to adopt, or otherwise effect a plan of complete or partial liquidation, rehabilitation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization or similar transaction; (s) purchase, sell, lease, license, transfer, exchange or swap, pledge, mortgage or otherwise pledge or encumber (including securitizations), or transfer or otherwise dispose of any material portion of its properties, assets or rights (including equity interests of the Company); or (t) enter into any agreement, understanding or arrangement with respect to the voting of equity securities of the Company. Nothing contained in this Section 6.2 shall be deemed to give the SPAC or AmalCo Sub, directly or indirectly, the right to control or direct the Company prior to the Closing. Prior to the Closing, the Company shall exercise, consistent with the terms and conditions hereof, control over its business and operations. 6.3 Conduct of Business of the SPAC.Unless the Company shall otherwise consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), during the Interim Period, except as expressly contemplated by this Agreement or the Ancillary Documents, the SPAC shall comply with all Laws applicable to the SPAC. Notwithstanding anything to the contrary in this Section 6.3, nothing in this Agreement shall prohibit or restrict the SPAC from extending, in accordance with the SPAC’s Organizational Documents and the IPO Prospectus, the deadline by which it must complete its Business Combination (an “Extension”), and no consent of any other Party shall be required in connection therewith. Without limiting the generality of this Section 6.3 and except as contemplated by the terms of this Agreement or the Ancillary Documents (including the SPAC Continuance), during the Interim Period, without the prior written consent of the Company (such consent not to be unreasonably withheld, conditioned or delayed), the SPAC shall not, unless required by applicable Law: (a) other than with respect to the SPAC Continuance, amend, waive or otherwise change, in any respect, its Organizational Documents or the Trust Agreement except as required by applicable Law; (b) other than in connection with a Financing (or in respect of Sponsor loans to fund SPAC working capital in accordance with clause (d) below), issue, grant, sell, pledge, dispose of or authorize to issue, grant, sell, pledge or dispose of any of its equity securities, or issue or sell, or authorize to issue or sell, any options, warrants, commitments, subscriptions or rights of any kind to acquire or sell any of its equity securities, or other securities, including any securities convertible into or exchangeable for any of its equity securities or other security interests of any class and any other equity-based awards; TABLE OF CONTENTS (c) (i) split, combine, recapitalize or reclassify any of its shares or other equity interests or issue any other securities in respect thereof or (ii) declare, pay or set aside any dividend or other distribution (whether in cash, equity or property or any combination thereof) in respect of its shares or other equity interests, or (iii) other than as permitted under its Organizational Documents and as required for the Redemption, directly or indirectly redeem, purchase or otherwise acquire or offer to acquire any of its securities; (d) (i) incur, assume, prepay or otherwise become liable or responsible (whether directly, contingently or otherwise) for any Indebtedness in excess of $100,000 individually or $500,000 in the aggregate, make a loan or advance to or investment in any third party, or guarantee or endorse any Indebtedness, Liability or obligations of any Person (provided, that this Section 6.3(d)(i) shall not prevent the SPAC from borrowing funds necessary to finance working capital needs (including to pay Expenses incurred in connection with the consummation of the Arrangement, the Amalgamation and the other transactions contemplated by this Agreement (including SPAC Extension Expenses) and any ordinary course operating expenses), which debt for borrowed money permits or allows all or any portion of such debt for borrowed money to be converted into the number of SPAC Warrants not to exceed $1,500,000 (with such SPAC Warrants issued at one dollar ($1.00) per SPAC Warrant with the same terms as the SPAC Private Warrants) or which may be otherwise repaid in cash); (e) make, change or rescind any material election relating to Taxes, settle or compromise any claim, Action, Proceeding, audit or controversy relating to Taxes, enter into any closing agreement with respect to Taxes, file any amended Tax Return or claim for refund, or make any material change in its accounting or Tax policies or procedures, in each case except as required by applicable Law or in compliance with GAAP or IFRS; (f) amend, waive or otherwise change the Trust Agreement in any manner adverse to the SPAC; (g) terminate, waive or assign any material right under any SPAC Material Contract; (h) fail to maintain its books, accounts and records in all material respects in the ordinary course of business consistent with past practice, other than (i) as required by GAAP or SEC rules or disclosure guidance or (ii) upon the advice of the SPAC’s counsel or auditors, changes to such practices generally applicable to special purpose acquisition companies; (i) establish any Subsidiary (other than Amalco Sub) or enter into any new line of business; (j) fail to use commercially reasonable efforts to keep in force insurance policies or replacement or revised policies providing insurance coverage with respect to its assets, operations and activities in such amount and scope of coverage substantially similar to that which is currently in effect as of the date of this Agreement; (k) waive, release, assign, initiate, settle or compromise any pending or threatened Action, other than which are not material to the SPAC and which do not relate to the transactions contemplated hereby; (l) buy, purchase or otherwise acquire (by merger, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, any material portion of assets, securities, properties, interests or businesses of any Person outside the ordinary course of business; (m) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization (other than with respect to the Arrangement and the Amalgamation); or (n) enter into any agreement, understanding or arrangement with respect to the voting of the SPAC Securities, other than in connection with the transactions contemplated hereby or a Financing. Nothing contained in this Section 6.3 shall be deemed to give the Company, directly or indirectly, the right to control or direct the SPAC prior to the Closing. Prior to the Closing, the SPAC shall exercise, consistent with the terms and conditions hereof, control over its business. 6.4 Annual and Interim Financial Statements.(a) During the Interim Period, as promptly as practicable after the date of this Agreement and in the case of Section 6.4(a)(x)(i) and Section 6.4(a)(x)(iii) below, in no event later than October 9, 2023 (“Financial Statements Delivery Date”), the Company shall deliver to the SPAC the following financial statements (such financial statements, the “Required Financial Statements”): (x) (i) audited consolidated balance sheet of the Company and its Subsidiaries as of July 31, 2022 and July 31, 2023, and the related audited consolidated statements of comprehensive loss, cash flows and securityholders equity for the fiscal years ended on such dates, together with all related notes and TABLE OF CONTENTS schedules thereto, accompanied by the reports thereon of the Company’s independent auditors (which reports shall be unqualified) in each case audited in accordance with the standards of the PCAOB (the “PCAOB Financial Statements”); (ii) all other audited and unaudited financial statements of the Company and its Subsidiaries and any company or business units acquired by the Company, as applicable, required under the applicable rules and regulations and guidance of the SEC to be included in the Registration Statement, the Proxy Statement or the Closing Form 8-K (including pro forma financial information); and (iii) management’s discussion and analysis of financial condition and results of operations prepared in accordance with Item 303 of Regulation S-K of the Securities Exchange Act (as if the Company and its Subsidiaries were subject thereto) with respect to the periods described in clauses (i) and (ii) above, as necessary for inclusion in the Registration Statement, the Proxy Statement or the Closing Form 8-K (including pro forma financial information) and (y) within forty-five (45) calendar days following the end of each three-month quarterly period and each fiscal year, an unaudited income statement and an unaudited balance sheet of the Company for the period from the Latest Balance Sheet Date through the end of such calendar month, quarterly period or fiscal year and the applicable comparative period in the preceding fiscal year, in each case accompanied by a certificate of the Chief Financial Officer of the Company to the effect that all such financial statements fairly present the financial position and results of operations of the Company as of the date or for the periods indicated, in accordance with GAAP, subject to year-end audit adjustments and excluding footnotes. (b) All Required Financial Statements delivered pursuant to this Section 6.4, together with all related notes and schedules thereto, (i) will be prepared from, and reflect in all material respects, the books and records of the Company, (ii) will be compliant with IFRS and prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby, (iii) will fairly present, in all material respects, the consolidated financial position of the Company, as of the dates thereof and their results of operations for the periods then ended, and (iv) will be audited in accordance with the standards of the PCAOB. All costs incurred in connection with preparing and obtaining such financial statements shall be Expenses of the Company. (c) The Company shall use reasonable best efforts (i) to assist the SPAC and its Representatives, upon advance written notice, during normal business hours and in a manner such as to not unreasonably interfere with the normal operation of the Company, in causing to be prepared in a timely manner any other financial information or statements (including customary pro forma financial statements) that is reasonably required to be included in the Registration Statement, the Proxy Statement and any other filings to be made by the SPAC with the SEC in connection with the transactions contemplated by this Agreement and the Ancillary Documents and (ii) to obtain the consents of the Company’s auditors with respect thereto as may be required by applicable Law. 6.5 SPAC Public Filings. During the Interim Period, the SPAC will keep current and timely file (giving effect to any applicable extensions available to the SPAC with respect to such filings) all of its public filings with the SEC and otherwise comply in all material respects with applicable securities Laws and shall use its reasonable best efforts prior to the Closing to maintain the listing of the SPAC Class A Shares on Nasdaq; provided, however, that the SPAC shall use its reasonable best efforts to obtain, and the Company will use its reasonable best efforts to cooperate with the SPAC to obtain, a listing of the New PubCo Common Shares on Nasdaq effective as of the Closing.(a) For purposes of this Agreement, (i) an “Acquisition Proposal” means any inquiry, proposal or offer, or any indication of interest in making an offer or proposal, from any Person or group at any time (other than, with respect to the Company, an existing shareholder of the Company, including a Core Company Shareholder or their respective Affiliates, or existing Company Affiliate or insider) relating to an Alternative Transaction, and (ii) an “Alternative Transaction” means (A) with respect to the Company and its Affiliates, a transaction (other than the transactions contemplated by this Agreement) concerning the sale of (I) all or any material part of the business or assets of the Company (other than a sale of immaterial assets in the ordinary course of business consistent with past practice) or (II) any of the shares or other equity interests or profits of the Company, in any case, whether such transaction takes the form of a sale of shares or other equity interests, assets, merger, consolidation, issuance of debt securities, management Contract, joint venture or partnership, or otherwise and (B) with respect to the SPAC and its Affiliates, a transaction (other than the transactions contemplated by this Agreement) concerning a Business Combination involving the SPAC. (b) During the Interim Period, in order to induce the other Parties to continue to commit to expend management time and financial resources in furtherance of the transactions contemplated hereby, each Party shall not, and shall cause its Representatives to not, without the prior written consent of the Company and the TABLE OF CONTENTS SPAC, directly or indirectly, (i) solicit, assist, initiate or facilitate the making, submission or announcement of, or intentionally encourage, any Acquisition Proposal, (ii) furnish any non-public information regarding such Party or its Affiliates or their respective businesses, operations, assets, Liabilities, financial condition, prospects or employees to any Person or group (other than a Party to this Agreement or their respective Representatives) in connection with or in response to an Acquisition Proposal, (iii) engage or participate in discussions or negotiations with any Person or group with respect to, or that could reasonably be expected to lead to, an Acquisition Proposal, (iv) approve, endorse or recommend, or publicly propose to approve, endorse or recommend, any Acquisition Proposal, or (v) negotiate or enter into any letter of intent, agreement in principle, acquisition agreement or other similar agreement related to any Acquisition Proposal. (c) Each Party shall notify the other Parties as promptly as practicable (and in any event within 48 hours) in writing of the receipt by such Party or any of its Representatives of (i) any bona fide inquiries, proposals or offers, requests for information or requests for discussions or negotiations regarding or constituting any Acquisition Proposal or any bona fide inquiries, proposals or offers, requests for information or requests for discussions or negotiations that could be expected to result in an Acquisition Proposal, and (ii) any request for non-public information relating to such Party or its Affiliates in connection with any Acquisition Proposal, specifying in each case, the material terms and conditions thereof. Each Party shall keep the others promptly informed of the status of any such inquiries, proposals, offers or requests for information. During the Interim Period, each Party shall, and shall cause its Representatives to, immediately cease and cause to be terminated any solicitations, discussions or negotiations with any Person with respect to any Acquisition Proposal and shall, and shall direct its Representatives to, cease and terminate any such solicitations, discussions or negotiations. (d) If the Company receives a bona fide unsolicited Acquisition Proposal that constitutes a Superior Proposal, the Company Board may, or may cause the Company to, make a Change in Recommendation and approve, recommend or enter into a definitive agreement with respect to such Superior Proposal, if and only if: (i) the Person making the Superior Proposal was not restricted from making such Superior Proposal pursuant to an existing standstill or similar restriction; (ii) the Company has been, and continues to be, in compliance with its obligations under this Section 6.6; (iii) the Company or its Representatives have delivered to the SPAC a written notice of the determination of the Company Board that it has received a Superior Proposal and of the intention to approve, recommend or enter into a definitive agreement with respect to such Superior Proposal, including a notice as to the value in financial terms that the Company Board has, in consultation with its financial advisors, determined should be ascribed to any non-cash consideration offered under the Superior Proposal (the “Superior Proposal Notice”); (iv) the Company or its Representatives have provided to the SPAC a copy of any proposed definitive agreement, LOI or term sheet for the Superior Proposal; (v) at least five Business Days (the “Matching Period”) have elapsed from the date that is the later of the date on which the SPAC received the Superior Proposal Notice and the date on which the SPAC received a copy of the definitive agreement for the Superior Proposal; (vi) after the Matching Period, the Company Board has determined in good faith, after consultation with its legal counsel and financial advisors, that such Acquisition Proposal continues to constitute a Superior Proposal (and, if applicable, compared to the terms of the Arrangement as proposed to be amended by the SPAC under Section 6.6(e)); (vii) the approval of the Arrangement Resolution by the Company Shareholders has not been obtained; and (viii) prior to or concurrently with making a Change in Recommendation or entering into such definitive agreement the Company terminates this Agreement. (e) During the Matching Period, or such longer period as the Company may approve in writing for such purpose: (a) the Company Board shall review any offer made by the SPAC to amend the terms of this Agreement and the Arrangement in good faith, after consultation with legal and financial advisors, in order to determine whether such proposal would, upon acceptance, result in the Acquisition Proposal previously constituting a TABLE OF CONTENTS Superior Proposal ceasing to be a Superior Proposal; and (b) the Company shall negotiate in good faith with the SPAC to make such amendments to the terms of this Agreement and the Arrangement as would enable the SPAC or its affiliates to proceed with the transactions contemplated by this Agreement on such amended terms. If as a consequence of the foregoing the Company Board determines that such Acquisition Proposal would cease to be a Superior Proposal, the Company shall promptly so advise the SPAC and the Company and the SPAC shall amend this Agreement to reflect such offer made by the SPAC, and shall take and cause to be taken all such actions as are necessary to give effect to the foregoing. (f) Each successive amendment to any Acquisition Proposal that results in an increase in, or modification of, the consideration (or value of such consideration) to be received by the Company Shareholders or other material terms or conditions thereof shall constitute a new Acquisition Proposal for the purposes of this Section 6.6(f). (g) Nothing in this Agreement shall prohibit the Company Board from responding through a directors’ circular or otherwise as required by applicable Laws to an Acquisition Proposal that it determines is not a Superior Proposal to inform them of such. Further, nothing in this Agreement shall prevent the Company Board from making any disclosure to the Company Shareholders if the Company Board, acting in good faith and upon the advice of its legal and financial advisors, shall have determined that the failure to make such disclosure would be inconsistent with the fiduciary duties of the Company Board or such disclosure is otherwise required under Law; provided, however, that, notwithstanding that the Company Board shall be permitted to make such disclosure, the Company Board shall not be permitted to make a Change in Recommendation, other than as permitted by Section 6.6(d). (h) If the Company provides a Superior Proposal Notice to the SPAC after a date that is less than five Business Days before the Company Meeting, the Company shall, upon request from the SPAC, postpone the Company Meeting to a date that is not more than 15 Business Days after the scheduled date of the Company Meeting (and, in any event, no less than five Business Days prior to the Outside Date); provided, however, that if the Company has fully complied with Section 6.6(d) through Section 6.6(e), and has determined that the Acquisition Proposal continues to be a Superior Proposal in accordance with Section 6.6(d), it may then cancel the Company Meeting only if prior to or concurrently therewith it makes a Change in Recommendation or enters into such definitive agreement and the Company terminates this Agreement immediately prior thereto. (a) The Company acknowledges and agrees that it is aware, and that the Company’s Affiliates are aware (and each of their respective Representatives is aware or, upon receipt of any material nonpublic information of the SPAC, will be advised) of the restrictions imposed by U.S. federal securities laws and the rules and regulations of the SEC and Nasdaq promulgated thereunder or otherwise (the “Federal Securities Laws”) and other applicable foreign and domestic Laws on a Person possessing material nonpublic information about a publicly traded company. The Company hereby agrees that, while it is in possession of such material nonpublic information, it shall not purchase or sell any securities of the SPAC (other than to engage in the Arrangement and the Amalgamation in accordance with Article I), communicate such information to any third party, take any other action with respect to the SPAC in violation of such Laws, or cause or encourage any third party to do any of the foregoing. (b) The SPAC acknowledges and agrees that it is aware, and that the SPAC’s Affiliates are aware (and each of their respective Representatives is aware or, upon receipt of any material nonpublic information of the Company, will be advised) of the restrictions imposed by Canadian securities Laws and the rules of Cboe Canada and other applicable foreign and domestic Laws on a Person possessing material nonpublic information about a publicly traded company. The SPAC hereby agrees that, while it is in possession of such material nonpublic information, it shall not purchase or sell any securities of the Company (other than to engage in the Arrangement and the Amalgamation in accordance with Article I), communicate such information to any third party, take any other action with respect to the Company in violation of such Laws, or cause or encourage any third party to do any of the foregoing. 6.8 Notification of Certain Matters. During the Interim Period, each Party shall give prompt notice to the other Parties if such Party or its Affiliates: (a) fails to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it or its Affiliates hereunder, in any material respect; (b) receives any notice or other communication in writing from any third party (including any Governmental Authority) alleging (i) that the ConsentTABLE OF CONTENTS of such third party is or may be required in connection with the transactions contemplated by this Agreement or (ii) any non-compliance with any Law by such Person or its Affiliates; (c) receives any notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement; (d) discovers any fact or circumstance that, or becomes aware of the occurrence or non-occurrence of any event the occurrence or non-occurrence of which, would make any representation or warranty contained in this Agreement, false or untrue, would reasonably be expected to constitute a breach of any covenant or agreement contained in this Agreement, or would reasonably be expected to cause or result in any of the conditions to the Closing set forth in this Agreement, not being satisfied or the satisfaction of those conditions being materially delayed; or (e) becomes aware of the commencement or threat, in writing, of any Action against such Person or any of its Affiliates, or any of their respective properties or assets, or, to the actual knowledge of such Person, any officer, director, partner, member or manager, in his, her or its capacity as such, of such Person or of its Affiliates with respect to the consummation of the transactions contemplated by this Agreement. No such notice shall constitute an acknowledgement or admission by the Party providing the notice regarding whether or not any of the conditions to the Closing have been satisfied or in determining whether or not any of the representations, warranties or covenants contained in this Agreement have been breached. 6.9 Efforts; Regulatory Filings.(a) Upon the terms and subject to the conditions of this Agreement, each Party shall use its reasonable best efforts, and shall cooperate fully with the other Parties, to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary, proper or advisable under applicable Laws and regulations to consummate the transactions contemplated by this Agreement (including obtaining all applicable Consents of Governmental Authorities) and to comply as promptly as practicable with all requirements of Governmental Authorities applicable to the transactions contemplated by this Agreement. (b) As soon as reasonably practicable following the date of this Agreement, the Parties shall reasonably cooperate with each other and use (and shall cause their respective Affiliates to use) their respective commercially reasonable efforts to prepare and file with Governmental Authorities requests for approval of the transactions contemplated by this Agreement and shall use all reasonable best efforts to have such Governmental Authorities approve the transactions contemplated by this Agreement. (c) Each Party shall give prompt written notice to the other Parties if such Party or any of its Representatives receives any notice from such Governmental Authorities in connection with the transactions contemplated by this Agreement and shall promptly furnish the other Parties with a copy of such Governmental Authority notice. Each Party shall give the other Party and its counsel a reasonable opportunity to review in advance, to the extent permissible, and consider in good faith the views and input of the other Party in connection with, any proposed material written communication to any Governmental Authority relating to the transactions contemplated hereby. If any Governmental Authority requires that a hearing or meeting be held in connection with its approval of the transactions contemplated hereby, whether prior to the Closing or after the Closing, each Party shall arrange for Representatives of such Party to be present for such hearing or meeting. (d) If any objections are asserted with respect to the transactions contemplated by this Agreement under any applicable Law or if any Action is instituted (or threatened to be instituted) by any applicable Governmental Authority or any private Person challenging any of the transactions contemplated by this Agreement or any Ancillary Document as violative of any applicable Law or which would otherwise prevent, materially impede or materially delay the consummation of the transactions contemplated hereby or thereby, the Parties shall use their commercially reasonable efforts to resolve any such objections or Actions so as to timely permit consummation of the transactions contemplated by this Agreement and the Ancillary Documents, including in order to resolve such objections or Actions which, in any case if not resolved, could reasonably be expected to prevent, materially impede or materially delay the consummation of the transactions contemplated hereby or thereby. In the event any Action is instituted (or threatened to be instituted) by a Governmental Authority or private Person challenging the transactions contemplated by this Agreement, or any Ancillary Document, the Parties shall, and shall cause their respective Representatives to, reasonably cooperate with each other and use their respective commercially reasonable efforts to contest and resist any such Action and to have vacated, lifted, reversed or overturned any Order, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or restricts consummation of the transactions contemplated by this Agreement or the Ancillary Documents. TABLE OF CONTENTS (e) Notwithstanding the immediately preceding paragraph, nothing contained herein shall be deemed to require the SPAC or the Company, and the SPAC and the Company shall not be permitted (without the written consent of the other party), to take any action, or commit to take any action, or agree to any condition, commitment or restriction, in connection with obtaining the foregoing Permits, consents, Orders, approvals, waivers, non-objections and authorizations of Governmental Authorities that would reasonably be expected to be materially financially burdensome to the business, operations, financial condition or results of operations on the business of the Company, or on the business of the SPAC (which restriction, commitment, or condition could include materially increasing capital, divesting or reducing lines of businesses or asset classes, entering into compliance or remediation programs, and making material lending or investment commitments). (f) Prior to the Closing, each Party shall use its commercially reasonable efforts to obtain any Consents of Governmental Authorities or other third Persons as may be necessary for the consummation by such Party or its Affiliates of the transactions contemplated by this Agreement or required as a result of the execution or performance of, or consummation of the transactions contemplated by, this Agreement by such Party or its Affiliates, and the other Parties shall provide reasonable cooperation in connection with such efforts. (a) Neither the holders of SPAC Securities nor the Company Securityholders shall have any obligation or Liability with respect to any Excise Tax imposed on the Company, the SPAC or New PubCo as a result of the Redemption or the Business Combination, and neither the holders of SPAC Securities nor the Company Securityholders shall be required to indemnify any Person for the payment of such Excise Tax. Following the Closing, the Company or New PubCo (as applicable) shall be responsible for the prompt payment of any Excise Tax if and when due. (b) New PubCo shall pay all transfer, documentary, sales, use, stamp, registration, value added or other similar Taxes incurred in connection with the transactions contemplated by this Agreement (collectively, the “Transfer Taxes”) and file all necessary Tax Returns with respect to all Transfer Taxes, and if required by applicable Law, the Parties shall, and shall cause their respective Affiliates to, join in the execution of any such Tax Returns and other document. Notwithstanding any other provision of this Agreement, the Parties shall (and shall cause their respective Affiliates to) cooperate in good faith to minimize, to the extent permissible under applicable Law, the amount of any such Transfer Taxes, which shall constitute “Expenses” hereunder. (c) The Parties agree and intend that, to the greatest extent permitted by Law, for U.S. federal (and applicable state and local) income tax purposes, the transactions contemplated by this Agreement are intended to be treated consistent with the Intended Tax Treatment. Provided the Arrangement, including the Amalgamation, satisfy the requirements applicable to the Intended Tax Treatment, the Parties will prepare and file all Tax Returns consistent with the Intended Tax Treatment and will not take any inconsistent position on any Tax Return; provided, however, that no Party shall be unreasonably impeded in its ability and discretion to negotiate, compromise or settle any Tax audit, claim or similar proceedings in connection with the Intended Tax Treatment. Notwithstanding the foregoing or anything herein to the contrary, none of the Parties makes any representation, warranty or covenant to any other Party (except to the extent expressly provided in Section 3.11(f), Section 4.12 and Section 5.15(l)) or holder of SPAC Securities or Company Securityholder regarding the tax treatment of the Arrangement, the SPAC Continuance, the Business Combination or any component of any of the foregoing. (d) This Agreement is and is hereby adopted as a “plan of reorganization” for purposes of Sections 354 and 361 of the Code and the U.S. Treasury Regulations promulgated thereunder with respect to the Amalgamation. (e) The Parties shall execute and deliver (i) officer’s certificates, in customary form, in a timely manner upon request by the other Party and (ii) any other representations reasonably requested by counsel to the SPAC or counsel to the Company, as applicable, for purposes of rendering opinions regarding the Intended Tax Treatment and other tax matters in connection with the transactions contemplated by this Agreement, at such time or times as may be requested by counsel to the SPAC or counsel to the Company, including in connection with the Closing and any filing with the SEC. In the event the SEC requests or requires a tax opinion on the Inversion or Intended SPAC Tax Treatment, the SPAC shall use reasonable best efforts to cause Kirkland & Ellis LLP (“K&E”) to deliver such opinion, and in the event the SEC requests or requires a tax opinion on the Inversion or Intended Company Tax Treatment, the Company shall use reasonable best efforts to cause Morrison & Foerster LLP (“MoFo”) to deliver such opinion, each such opinion being subject to the TABLE OF CONTENTS assumptions, qualifications, and reasoning as determined by the counsel delivering such opinion, and each party shall use reasonable best efforts to execute and deliver customary tax representation letters as the applicable tax advisor may reasonably request in form and substance reasonably satisfactory to such advisor and reasonably cooperate in the mutual exchange of information relevant to the delivery of such opinions and representation letters. Notwithstanding anything to the contrary in this Agreement, (x) K&E shall not be required to provide, nor shall the SPAC be required to seek, any opinion to any party regarding the Intended Company Tax Treatment, and (v) MoFo shall not be required to provide, nor shall the Company be required to seek, any opinion to any party regarding the Intended SPAC Tax Treatment. 6.11 Further Assurances. The Parties shall further cooperate with each other and use their respective commercially reasonable efforts to take or cause to be taken all actions, and do or cause to be done all things, necessary, proper or advisable on their part under this Agreement and applicable Laws to consummate the transactions contemplated by this Agreement as soon as reasonably practicable, including preparing and filing as soon as practicable all documentation to effect all necessary notices, reports and other filings.6.12 The Registration Statement.(a) As promptly as practicable after the date hereof, the SPAC shall prepare, with the reasonable assistance of the Company, and file with the SEC a registration statement on Form S-4 (as amended or supplemented from time to time, the “Registration Statement”) in connection with the registration under the Securities Act of (x) the New PubCo Common Shares to be issued under this Agreement as the Common Amalgamation Consideration, (y) the Convertible Note Shares to be issued in respect of the Company Shares issued pursuant to conversion of the Company Convertible Notes and (z) the replacement New PubCo Securities to be issued in the SPAC Continuance, which Registration Statement will also contain a proxy statement (as amended, the “Proxy Statement”) for the purpose of soliciting proxies from the SPAC Shareholders for the matters to be acted upon at the SPAC Special Meeting and providing the SPAC Public Shareholders an opportunity, in accordance with the SPAC’s Organizational Documents, to have their SPAC Shares redeemed (such rights to have their SPAC Shares redeemed, “Redemption Rights,” and such redemption thereof, the “Redemption”) in conjunction with the shareholder vote on the SPAC Shareholder Approval Matters. The Proxy Statement shall include proxy materials for the purpose of soliciting proxies from the SPAC Shareholders to vote, at a special meeting of the SPAC Shareholders to be called and held for such purpose (the “SPAC Special Meeting”), in favor of approving (i) the adoption and approval of this Agreement and the transactions contemplated hereby or referred to herein by the SPAC Shareholders in accordance with the SPAC’s Organizational Documents, (ii) the effecting of the SPAC Continuance, including the conversion of SPAC Class A Shares and SPAC Class B Shares contemplated hereby, (iii) the issuance of New PubCo Common Shares, including any New PubCo Common Shares to be issued in connection with the Financing, as may be required under Nasdaq’s listing requirements, (iv) a non-binding advisory vote on the adoption and approval of certain differences between the existing SPAC Charter and bylaws and the New PubCo Organizational Documents, (v) the adoption and approval of the New PubCo Organizational Documents, (vi) the adoption and approval of a new equity incentive plan, in a form reasonably acceptable to the Company and the SPAC, and which will provide for the reservation for future issuance of a number of New PubCo Common Shares equal to ten percent (10%) of the aggregate number of New PubCo Common Shares issued and outstanding immediately after the Closing (calculated after giving effect to the Redemption, assuming full exercise of the Converted Options and the Converted Warrants and settlement of the Converted RSUs), (vii) such other matters as the Company and the SPAC shall hereafter mutually determine to be necessary or appropriate in order to effect the Arrangement, the Amalgamation and the other transactions contemplated by this Agreement, (the approvals described in foregoing clauses (i) through (vii), collectively, the “SPAC Shareholder Approval Matters”), (viii) the adjournment of the SPAC Special Meeting, if necessary or desirable in the reasonable determination of the SPAC, and (ix) any other proposals as the SEC or Nasdaq may indicate are necessary in its comments to the Registration Statement or correspondence related thereto. (b) Notwithstanding anything to the contrary contained in this Agreement, the SPAC may (and, in the case of the following clause (ii), at the request of the Company, shall) adjourn the SPAC Special Meeting for a period of no longer than fifteen (15) calendar days (in each case): (i) after consultation with the Company, to the extent necessary to ensure that any supplement or amendment to the Registration Statement that the SPAC Board has determined in good faith is required by applicable Law be provided to the SPAC Public Shareholders; (ii), in each case, for one (1) or more periods, (x) if as of the time for which the SPAC Special Meeting is originally scheduled (as set forth in the Registration Statement), there are insufficient voting equity interests of the SPAC represented (either in person or by proxy) to constitute a quorum necessary to conduct the business TABLE OF CONTENTS of the SPAC Special Meeting or (y) in order to solicit additional proxies from the SPAC Public Shareholders for purposes of obtaining the requisite approval with respect to the SPAC Shareholder Approval Matters; (iii) to seek withdrawals of redemption requests from the SPAC Public Shareholders or (iv) if the Company Meeting has been adjourned or delayed; provided, that, in the event of any such adjournment, the SPAC Special Meeting shall be reconvened as promptly as practicable following such time as the matters described in such clauses have been resolved. The SPAC and the Company and their respective counsel shall cooperate and provide one another with a reasonable opportunity to review and comment on the Registration Statement and any amendment or supplement thereto prior to filing the same with the SEC, and any comments timely made shall be considered in good faith. The Company and the SPAC shall each provide the other with such information concerning the Company, the SPAC and their respective shareholders, officers, directors, employees, assets, Liabilities, condition (financial or otherwise), business and operations that may be required or appropriate for inclusion in the Registration Statement, or in any amendments or supplements thereto, which information provided by the Company or the SPAC, as applicable, shall be true and correct in all material respects and not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made not misleading. (c) The SPAC shall take all reasonable and necessary actions required to satisfy the requirements of the Securities Act, the Exchange Act and other applicable Laws in connection with the Registration Statement and the included Proxy Statement, the SPAC Special Meeting and the Redemption. Each of the SPAC and the Company shall make their respective directors, officers and employees, upon reasonable advance notice, available to the Company, the SPAC and their respective Representatives in connection with the drafting of the public filings with respect to the transactions contemplated by this Agreement, including the Registration Statement and the included Proxy Statement, and shall respond in a timely manner to comments from the SEC. Each Party shall promptly correct any information provided by it for use in the Registration Statement and the included Proxy Statement (and other related materials) if and to the extent that such information is determined to have become false or misleading in any material respect or as otherwise required by applicable Laws. The SPAC shall amend or supplement the Registration Statement and cause the Registration Statement, as so amended or supplemented, to be filed with the SEC and to be disseminated to the SPAC Shareholders, in each case as and to the extent required by applicable Laws and subject to the terms and conditions of this Agreement and the SPAC’s Organizational Documents; provided, however, that the SPAC shall not amend or supplement the Proxy Statement without prior written consent of the Company, not to be unreasonably withheld, conditioned, or delayed. (d) The SPAC, with the assistance of the other Parties, shall promptly respond to any SEC comments on the Registration Statement and shall otherwise use its commercially reasonable efforts to cause the Registration Statement to “clear” comments from the SEC and become effective. The SPAC shall provide the Company with copies of any written comments, and shall inform the Company of any material oral comments, that the SPAC or its Representatives receive from the SEC or its staff with respect to the Registration Statement, the SPAC Special Meeting and the Redemption promptly after the receipt of such comments and shall give the Company and its counsel a reasonable opportunity under the circumstances to review and comment on any proposed written or material oral responses to such comments, and the SPAC shall consider any such comments timely made in good faith under the circumstances. (e) As soon as practicable following the Registration Statement becoming effective, the SPAC shall distribute the Proxy Statement to the SPAC Shareholders, and pursuant thereto, shall call the SPAC Special Meeting in accordance with the Securities Act and applicable Delaware Law for a date no later than thirty (30) days following the commencement of mailing of the Proxy Statement to the SPAC Shareholders or if later, the date on which the Company Meeting is contemplated to occur pursuant to Section 2.3. (f) The SPAC shall comply with all applicable Laws, any applicable rules and regulations of Nasdaq, the SPAC’s Organizational Documents and this Agreement in the preparation, filing and distribution of the Registration Statement, any solicitation of proxies thereunder, the calling and holding of the SPAC Special Meeting and the Redemption. (g) All Expenses of, related to and incurred in connection with the preparation, filing, processing, and approval of the Registration Statement including, but not limited to, all auditing, accounting, legal, exchange listing fees, SEC and other filing fees, proxy fees, redemption fees, printing fees and mailing expenses shall constitute Expenses of the Company and shall be promptly paid by the Company as and when due. TABLE OF CONTENTS 6.13 Public Announcements.(a) The Parties agree that during the Interim Period no public release, filing or announcement concerning this Agreement or the Ancillary Documents or the transactions contemplated hereby or thereby shall be issued by any Party or any of their Affiliates without the prior written consent of the SPAC and the Company (which consent shall not be unreasonably withheld, conditioned or delayed), except as such release or announcement may be required by applicable Law or the rules or regulations of any securities exchange, in which case the applicable Party shall use commercially reasonable efforts to allow the other Parties reasonable time to comment on, and arrange for any required filing with respect to, such release or announcement in advance of such issuance; provided, however, that the foregoing shall not prohibit the SPAC, the Sponsor, and their respective Representatives from providing general publicly available information about the subject matter of this Agreement and the transactions contemplated hereby to any direct or indirect current or prospective investor, including in connection with the transactions contemplated hereby or a Financing, or in connection with normal fund raising or related marketing or informational or reporting activities; and provided, further, that subject to Section 6.2 and this Section 6.13, the foregoing shall not prohibit any Party from communicating with third parties to the extent necessary for the purpose of seeking any required third party consent. Notwithstanding the foregoing, the SPAC and the Company may make statements that are consistent with previous public releases made by such Party in compliance with this Section 6.13. (b) The Parties shall mutually agree upon and, as promptly as practicable after the execution of this Agreement, issue a press release announcing the execution of this Agreement (the “Signing Press Release”). Promptly after the issuance of the Signing Press Release, the SPAC shall file a current report on Form 8-K (the “Signing Filing”) with the Signing Press Release (which shall be “furnished” and not “filed”) and a description of this Agreement as required by Federal Securities Laws, upon which the Company shall have the opportunity to review and provide comments prior to filing and the SPAC shall consider any such comments in good faith, and the Company shall file a material change report as required by Canadian securities Laws, which the SPAC shall have the opportunity to review and comment prior to filing and the Company shall consider any such comments in good faith. The Parties shall mutually agree upon and, as promptly as practicable after the Closing, issue a press release announcing the consummation of the transactions contemplated by this Agreement (the “Closing Press Release”). Promptly after the issuance of the Closing Press Release, New PubCo shall file a current report on Form 8-K (the “Closing Filing”) with the Closing Press Release (which shall be “furnished” and not “filed”) and a description of the Closing as required by Federal Securities Laws, which the Sponsor shall have the opportunity to review and comment, and the Company shall file a material change report as required by Canadian securities laws, which the SPAC and the Sponsor shall have the opportunity to review and comment. In connection with the preparation of the Signing Press Release, the Signing Filing, the Closing Filing, the Closing Press Release, or any other report, statement, filing notice or application made by or on behalf of a Party to any Governmental Authority or other third party in connection with the transactions contemplated hereby, each Party shall, upon request by any other Party, furnish the Parties with all information concerning themselves, their respective directors, officers and securityholders, and such other matters as may be reasonably necessary or advisable in connection with the transactions contemplated hereby, or any other report, statement, filing, notice or application made by or on behalf of a Party to any third party or any Governmental Authority in connection with the transactions contemplated hereby. 6.14 Confidential Information. During the Interim Period until the Closing or the earlier termination of this Agreement in accordance with Article IX, each Party shall be bound by and comply with the provisions set forth in the Confidentiality Agreement as if such provisions were set forth herein, and such provisions are hereby incorporated herein by reference. Each Party acknowledges and agrees that each is aware, and each of their respective Affiliates and representatives is aware (or upon receipt of any material nonpublic information of the other Party, will be advised), of the restrictions imposed by the United States federal securities Laws and other applicable foreign and domestic Laws on Persons possessing material nonpublic information about a public company.6.15 Post-Closing Board of Directors and Executive Officers; Employment Agreements.(a) The Parties shall take all necessary action, including causing the directors of the SPAC to resign, such that (i) effective as of the Effective Time, the post-closing New PubCo Board will consist of up to nine (9) directors (the “Post-Closing New PubCo Board”), including: (A) five (5) directors set forth on Schedule 6.15(a)(i) or any other individuals designated by the Company in replacement of such designees prior to the Closing, who shall be reasonably acceptable to the SPAC, (B) two (2) directors set forth on TABLE OF CONTENTS Schedule 6.15(a)(ii) or any other individuals designated by the SPAC in replacement of such designees prior to the Closing, who shall be reasonably acceptable to the Company, and (C) up to two (2) directors who are independent in accordance with Nasdaq and SEC guidelines and mutually designated by the Company and the SPAC prior to the Closing, and (ii) the Post-Closing New PubCo Board will be elected effective as of the Effective Time in accordance with the New PubCo Organizational Documents, Nasdaq rules and National Instrument 52-110 for audit committee purposes; provided, however, that the Chairman of the Company immediately prior to the Effective Time shall be the Chairman of the Post-Closing New PubCo Board immediately after the Effective Time, unless the Parties mutually designate an alternative Chairman prior to the Effective Time. Prior to the effectiveness of the Registration Statement, the Sponsor and the Company shall mutually agree (such agreement not to be unreasonably withheld, conditioned, or delayed by either the Company or the Sponsor) on the directors to be appointed to the audit, compensation and nominating committees. (b) The Parties shall take all action necessary, including causing the executive officers of the SPAC to resign, such that the individuals serving as the Chief Executive Officer and Chief Financial Officer of the Company immediately prior to the Effective Time will serve in the same respective offices of New PubCo immediately after the Effective Time. (c) The SPAC and the Company shall obtain a background check and a completed directors & officers questionnaire with respect to any individual that will serve on the Post-Closing New PubCo Board at the Company’s expense. (d) At or prior to the Closing, New PubCo will provide each member of the Post-Closing New PubCo Board with a customary director indemnification agreement. (e) Prior to the Closing Date, each Key Employee shall enter into an employment agreement with New PubCo, each in a form mutually and reasonably agreed upon by the Company and the SPAC and shall become effective as of the Closing Date (each, a “Key Employment Agreement” and, collectively, the “Key Employment Agreements”). 6.16 Treatment of Related Party Transactions. On or before the Closing Date, except for this Agreement and any Ancillary Documents, the Company shall cause all Liabilities and obligations of the Company or any of its Subsidiaries under any Related Party Transaction (other than those set forth on Section 6.16 of the Company Disclosure Schedules) to be terminated in full without any further force and effect and without any costs to, Liabilities to or obligations of New PubCo, the SPAC, the Company, any Subsidiaries of the Company or any of their respective Affiliates (except as set forth on Section 6.16 of the Company Disclosure Schedules).6.17 Indemnification of Directors and Officers; Tail Insurance.(a) The Parties agree that all rights to exculpation, indemnification and advancement of expenses existing in favor of the current or former directors and officers of the Company, the SPAC or Amalco Sub and each Person who served as a director, officer, member, trustee or fiduciary of another corporation, partnership, joint venture, trust, pension or other employee benefit plan or enterprise at the request of, as applicable, the Company, the SPAC or Amalco Sub (the “D&O Indemnified Persons”) as provided in their respective Organizational Documents or under any indemnification, employment or other similar agreements between any D&O Indemnified Person and the Company, the SPAC or Amalco Sub, in each case as in effect on the date of this Agreement, shall survive the Closing and continue in full force and effect in accordance with their respective terms to the extent permitted by applicable Law. For a period of six (6) years after the Effective Time, New PubCo and the Company shall cause the Organizational Documents of New PubCo and the Company to contain provisions no less favorable with respect to exculpation and indemnification of and advancement of expenses to D&O Indemnified Persons than are set forth as of the date of this Agreement in the respective Organizational Documents of the Company, the SPAC and Amalco Sub to the extent permitted by applicable Law. The provisions of this Section 6.17 shall survive the consummation of the Arrangement and the Amalgamation and are intended to be for the benefit of, and shall be enforceable by, each of the D&O Indemnified Persons and their respective heirs and representatives. (b) At or prior to the Closing Date, the Company shall purchase and maintain in effect for a period of six (6) years thereafter, “run-off” coverage as provided by the Company’s and the SPAC’s fiduciary policies, in each case, covering those Persons who are covered by such policies on the Effective Date and with terms, conditions, retentions and limits of liability that are no less advantageous than the coverage provided under the TABLE OF CONTENTS Company’s or the SPAC’s existing policies (the “Tail Policy”); provided, that in no event shall the Company be required to expend on the premium thereof in excess of two hundred fifty percent (250%) of the aggregate annual premiums currently payable by the Company and the SPAC with respect to such current policies (the “Premium Cap”); provided, further, that if such minimum coverage under any such Tail Policy is or becomes not available at the Premium Cap, then any such Tail Policy shall contain the maximum coverage available at the Premium Cap. New PubCo and Amalco shall maintain the Tail Policy in full force and effect, and continue to honor the obligations thereunder, and New PubCo and Amalco shall be responsible for and shall timely pay or caused to be paid all premiums with respect to the Tail Policy. (c) If New PubCo, the Company or any of their respective successors or assigns (i) shall merge or consolidate with or merge into any other corporation or entity and shall not be the surviving or continuing corporation or entity of such consolidation or merger or (ii) shall transfer all or substantially all of their respective properties and assets as an entity in one or a series of related transactions to any Person, then in each such case, proper provisions shall be made so that the successors or assigns of new PubCo or the Company shall assume all of the obligations set forth in this Section 6.17. (d) The D&O Indemnified Persons entitled to the indemnification, liability limitation, exculpation and insurance set forth in this Section 6.17 are intended to be third party beneficiaries of this Section 6.17. This Section 6.17 shall survive the consummation of the transactions contemplated by this Agreement and shall be binding on all successors and assigns of the SPAC and the Company. 6.18 Trust Account Proceeds. Subject to the satisfaction or waiver of the conditions set forth in Article VIII (other than those conditions that by their nature are to be satisfied at Closing, but subject to the satisfaction or waiver of those conditions) and provision of notice thereof to the Trustee (which notice the SPAC shall provide to the Trustee in accordance with the terms of the Trust Agreement), in accordance with the Trust Agreement and SPAC Organizational Documents, at the Closing, the SPAC shall (a) cause the documents and notices required to be delivered to the Trustee pursuant to the Trust Agreement to be so delivered and (b) use its best efforts to cause the Trustee to pay as and when due all amounts payable to SPAC Shareholders who shall have validly elected to redeem their SPAC Class A Shares pursuant to the SPAC Organizational Documents and use its best efforts to cause the Trustee to pay as and when due the Deferred Discount (as defined in the Trust Agreement) pursuant to the terms of the Trust Agreement, except to the extent that such Deferred Discount is waived in whole or in part, and use its best efforts to cause the Trustee to make such other disbursements as instructed by the SPAC in accordance with this Agreement.(a) During the Interim Period, the SPAC may seek to obtain additional financing commitments from third-party investors (the “Financing Investors”) by entering into subscription agreements in form and substance and with terms reasonably satisfactory to the Company (the “Financing Agreements”), pursuant to which the Financing Investors may commit to make a private investment in New PubCo by way of subscribing for equity securities, debt securities or other equity-linked or convertible securities of New PubCo (collectively, a “Financing”). The obligations of the Parties to consummate the Closing shall not be conditioned upon the consummation of a specific minimum amount of Financing. In the event that one (1) or more Financing Agreements is entered into by the SPAC in connection with the Financing, (i) the SPAC may not modify or waive, or provide consent to modify or waive (including consent to termination, to the extent required), any provisions of any such Financing Agreement or any remedy thereunder, in each case, without the prior written consent of the Company, other than immaterial or ministerial modifications or waivers, (ii) the SPAC shall use its reasonable best efforts to take, or cause to be taken, all actions and take reasonable best efforts to do, or cause to be done, all things necessary, proper or advisable to consummate the transactions contemplated by each such Financing Agreement on the terms and subject to the conditions described therein, including satisfying on a timely basis all conditions and covenants applicable to the SPAC and otherwise complying with its obligations thereunder, (iii) if all conditions in any such Financing Agreement (other than those conditions that by their nature are to be satisfied at the Closing, but which conditions are then capable of being satisfied) have been satisfied, the SPAC shall consummate the transactions contemplated by each such Financing Agreement at or prior to the Closing, (iv) the SPAC shall deliver notices to counterparties to each such Financing Agreement as required by and in the manner set forth therein in order to cause timely funding in advance of the Closing, (v) the SPAC shall enforce its rights under each such Financing Agreement to cause the applicable Financing Investors to fund the amounts set forth therein and (vi) the SPAC shall provide prompt written notice to the Company if TABLE OF CONTENTS any counterparty to any Financing Agreement notifies the SPAC of any breach of any representation or other agreement contained in any such Financing Agreement by such counterparty. A Financing may also take the form of an agreement (a “Non-Redemption Agreement”) between the SPAC and/or the Sponsor and a Financing Investor pursuant to which such Financing Investor agrees to not redeem any SPAC Class A Shares it owns, or agrees to acquire, in connection with the Closing. In connection with any Financing, the SPAC may, at Closing (to the extent consented to by the Sponsor pursuant to the Sponsor Side Letter), in addition to any securities subscribed for in such Financing, issue (a) an aggregate number of New PubCo Common Shares not to exceed 1,725,000 shares (such total amount so issued as of Closing, the “Financing Incentive Shares”) and (b) an aggregate number of New PubCo Warrants not to exceed 3,360,000 warrants (such total amount so issued as of Closing, the “Financing Incentive Warrants”), and such issuance of Financing Incentive Shares and/or Financing Incentive Warrants in connection with any Financing shall be deemed reasonably acceptable to the Company; provided, that, Sponsor forfeits a number of New PubCo Common Shares and New PubCo Warrants equal to the number of Financing Incentive Shares and Financing Incentive Warrants, respectively, in accordance with the Sponsor Side Letter (in the alternative, the Sponsor may agree to transfer certain New PubCo Common Shares and/or New PubCo Warrants in connection with a Financing or a Non-Redemption Agreement); provided, further, that nothing set forth herein shall require New PubCo to issue or transfer Financing Incentive Shares or Financing Incentive Warrants. (b) Prior to the Closing, the Company shall use its reasonable best efforts to provide to the SPAC, and shall cause each of its Subsidiaries to use its reasonable best efforts to provide, and shall use its reasonable best efforts to cause its representatives to provide, all cooperation reasonably requested by the SPAC that is customary in connection with completing a Financing (provided, that such requested cooperation does not unreasonably interfere with the ongoing operations of the Company or any of its Subsidiaries), which reasonable best efforts shall include, among other things, the Company’s (i) furnishing, reasonably promptly following receipt of a request therefore, information regarding the Company (including information to be used in the preparation of one (1) or more information packages regarding the business, operations, financial projections and prospects of the Company) customary for such financing activities, to the extent reasonably available and subject to disclosure limitation for a public company, (ii) causing the Company’s senior management and other representatives with appropriate seniority and expertise to participate in a reasonable number of meetings, presentations, due diligence sessions and drafting sessions, (iii) taking all corporate actions, subject to the occurrence of the Closing, reasonably requested by the SPAC or any financing sources to permit the consummation of such financing activities, and (iv) cooperating with requests for due diligence to the extent customary and reasonable. 6.20 Registration Rights Agreement. At the Closing, New PubCo, the persons set forth on Exhibit B hereto, the Sponsor and certain Sponsor-related persons will enter into a registration rights agreement substantially in the form of the registration rights agreement attached hereto as Exhibit E (the “Registration Rights Agreement”).
NO SURVIVAL 7.1 No Survival. None of the representations, warranties, covenants or agreements set forth herein or in any certificate or instrument delivered by or on behalf of any Party pursuant to this Agreement including any rights arising out of any breach of such representations, warranties, covenants or agreements, shall survive the Closing (and there shall be no Liability after the Closing in respect thereof), in each case, except for those covenants and agreements that by their terms apply or are to be performed, in each case, 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). Notwithstanding anything to the contrary contained herein, none of the provisions set forth herein shall be deemed a waiver by any Party of any right or remedy which such Party may have at Law or in equity in the case of Fraud.TABLE OF CONTENTS
CLOSING CONDITIONS 8.1 Conditions to Each Party’s Obligations.The obligations of each Party to consummate the Arrangement, including the Amalgamation and the other transactions described herein, shall be subject to the satisfaction or written waiver (where permissible) by the Company and the SPAC of the following conditions: (a) Required SPAC Approvals. The SPAC Shareholder Approval Matters that are submitted to the vote of the SPAC Shareholders at the SPAC Special Meeting in accordance with the Proxy Statement shall have been approved by the requisite vote of the SPAC Shareholders at the SPAC Special Meeting in accordance with the SPAC’s Organizational Documents, applicable Law and the Proxy Statement (the “Required SPAC Shareholder Approval”). (b) Required Company Approvals. The Company Shareholder Approval Matters that are submitted to the vote of the Company Shareholders at the Company Meeting in accordance with the Company Circular shall have been approved by the requisite vote of Company Shareholders at the Company Meeting in accordance with the Company’s Organizational Documents, applicable Law and the Company Circular (the “Required Company Shareholder Approval”). (c) No Orders or Illegality. No Law is in effect that makes the consummation of the Arrangement illegal or otherwise prohibits or enjoins the Company or the SPAC or its affiliates from consummating the Arrangement and no Law or Order is in effect that makes the consummation of the Arrangement illegal or otherwise prohibits or enjoins the Company or the SPAC or its affiliates from consummating the Arrangement. (d) Registration Statement. The Registration Statement shall have been declared effective by the SEC and shall remain effective as of the Closing, and no stop order or similar order shall be in effect with respect to the Registration Statement. (e) Stock Exchange Listing. The New PubCo Common Shares shall have been approved for listing on Nasdaq, subject only to official notice of issuance. (f) Arrangement Resolution. The Arrangement Resolution has been approved and adopted by the Company Shareholders at the Company Meeting in accordance with the Interim Order. (g) Interim Order and Final Order. The Interim Order and the Final Order have each been obtained on terms consistent with this Agreement, and have not been set aside or modified in a manner unacceptable to either the Company or the SPAC, each acting reasonably, on appeal or otherwise. (h) SPAC Continuance. The SPAC Continuance shall have been consummated in accordance with Section 2.7. 8.2 Conditions to Obligations of the Company.In addition to the conditions specified in Section 8.1, the obligations of the Company to consummate the Arrangement, including the Amalgamation and the other transactions described herein, are subject to the satisfaction or written waiver (by the Company) of the following conditions: (a) Representations and Warranties. (i) Each of the representations and warranties of the SPAC and Amalco Sub, as applicable, contained in Section 3.1 (Organization and Standing), Section 3.2 (Authorization; Binding Agreement), Section 3.18 (Finders and Brokers), Section 4.1 (Organization and Standing), Section 4.2 (Authorization; Binding Agreement) and Section 4.10 (Finders and Brokers) (collectively, the “SPAC Specified Representations”) shall be true and correct (without giving any effect to any limitation as to “materiality” or “Material Adverse Effect” or any similar limitation set forth therein) in all material respects as of the date of this Agreement and on and as of the Closing Date as if made on the Closing Date (except to the extent such representations and warranties expressly relate to an earlier date, and in such case, shall be true and correct in all material respects on and as of such earlier date). TABLE OF CONTENTS (ii) Each of the representations and warranties of the SPAC and Amalco Sub, as applicable, contained in Article III and Article IV (other than the SPAC Specified Representations and the representations and warranties of the SPAC and Amalco Sub, as applicable, contained in Section 3.5 (Capitalization) and Section 4.5 (Capitalization)) shall be true and correct (without giving any effect to any limitation as to “materiality” or “Material Adverse Effect” or any similar limitation set forth therein) as of the date of this Agreement and on and as of the Closing Date as if made on the Closing Date (except to the extent such representations and warranties expressly relate to an earlier date, and in such case, shall be true and correct on and as of such earlier date), except, in each case, the failure of such representations and warranties to be so true and correct, has not had a SPAC Material Adverse Effect or Amalco Sub Material Adverse Effect. (iii) The representations and warranties of the SPAC and Amalco Sub, respectively, contained in Section 3.5 (Capitalization) and Section 4.5 (Capitalization) shall be true and correct, except for any de minimis failures to be so true and correct, as of the date of this Agreement and on and as of the Closing Date as if made on the Closing Date (except to the extent such representations and warranties expressly relate to an earlier date, and in such case, shall be true and correct, except for any de minimis failures to be so true and correct, on and as of such earlier date). (b)Agreements and Covenants. The SPAC and Amalco Sub shall have performed in all material respects all of their respective obligations and complied in all material respects with all of their respective agreements and covenants under this Agreement to be performed or complied with by it on or prior to the Closing Date, except where compliance with any such obligation, agreement or covenant has been waived in writing by the Company. (c) Closing Deliverables. (i) OFFICER CERTIFICATE. The SPAC shall have delivered to the Company a certificate, dated the Closing Date, signed by an executive officer of the SPAC in such capacity, certifying as to the satisfaction of the conditions specified in Section 8.2(a) and Section 8.2(b). (ii) SECRETARY CERTIFICATE. The SPAC shall have delivered to the Company a certificate from its secretary or other executive officer certifying as to the validity and effectiveness of, and attaching, (A) copies of the SPAC’s Organizational Documents as in effect as of the Closing Date (after giving effect to the SPAC Continuance) and (B) the resolutions of the SPAC’s Board authorizing and approving the execution, delivery and performance of this Agreement and each of the Ancillary Documents to which it is a party or by which it is bound, and the consummation of the transactions contemplated hereby and thereby. (iii) REGISTRATION RIGHTS AGREEMENT. The Company shall have received from New PubCo duly executed counterparts of the Registration Rights Agreement, executed by New PubCo. (iv) RESIGNATIONS. The Company shall have received written resignations, effective as of the Closing, of each of the directors and officers of the SPAC as necessary to give effect to the requirements of Section 6.15. 8.3 Conditions to Obligations of the SPAC.In addition to the conditions specified in Section 8.1, the obligations of the SPAC and Amalco Sub to consummate the Arrangement, the SPAC Continuance and the Arrangement, including the Amalgamation and the other transactions described herein, are subject to the satisfaction or written waiver (by the SPAC) of the following conditions: (a) Representations and Warranties. (i) Each of the representations and warranties of the Company contained in Section 5.1 (OrganizationOrganization and Standing), Section 5.2 (Authorization; Binding Agreement). and Section 5.28 (Finders and Brokers) (collectively, the “Company Specified Representations”) shall be true and correct (without giving any effect to any limitation as to “materiality” or “Material Adverse Effect” or any similar limitation set forth therein) in all material respects as of the date of this Agreement and on and as of the Closing Date TABLE OF CONTENTS immediately prior to the Effective Time as if made on the Closing Date immediately prior to the Effective Time (except to the extent such representations and warranties expressly relate to an earlier date, and in such case, shall be true and correct in all material respects on and as of such earlier date). (ii) Each of the representations and warranties of the Company contained in Article V (other than the Company Specified Representations and the representations and warranties of the Company contained in Section 5.5 (Capitalization)) shall be true and correct (without giving any effect to any limitation as to “materiality” or “Material Adverse Effect” or any similar limitation set forth therein) as of the date of this Agreement and on and as of the Closing Date immediately prior to the Effective Time as if made on the Closing Date immediately prior to the Effective Time (except to the extent such representations and warranties expressly relate to an earlier date, and in such case, shall be true and correct on and as of such earlier date), except, in each case, the failure of such representations and warranties to be so true and correct, has not had a Company Material Adverse Effect. (iii) The representations and warranties of the Company contained in Section 5.5 (Capitalization) shall be true and correct, except for any de minimis failures to be so true and correct, as of the date of this Agreement and on and as of the Closing Date as if made on the Closing Date (except to the extent such representations and warranties expressly relate to an earlier date, and in such case, shall be true and correct, except for any de minimis failures to be so true and correct, on and as of such earlier date). (b) Agreements and Covenants. The Company shall have performed in all material respects all of its obligations and complied in all material respects with all of its agreements and covenants under this Agreement, in each case to be performed or complied with by such person on or prior to the Closing Date, except where compliance with any such obligation, agreement or covenant has been waived in writing by the SPAC. (c) No Material Adverse Effect. No Company Material Adverse Effect shall have occurred since the date of this Agreement which is continuing and uncured. (d) Key Employees. Each of the Key Employees shall be actively employed (or, solely in the case of David Oliver, actively engaged as an individual independent contractor and anticipated to be converted to employee status) with the Company as of the Closing Date. (e) Closing Deliverables. (i) OFFICER CERTIFICATE. The SPAC shall have received a certificate from the Company, dated as the Closing Date, signed by an executive officer of the Company in such capacity, certifying as to the satisfaction of the conditions specified in Section 8.2(a), Section 8.2(b), and Section 8.2(c). (ii) SECRETARY CERTIFICATE. The Company shall have delivered to the SPAC a certificate executed by the Company’s secretary certifying as to the validity and effectiveness of, and attaching, (A) copies of the Company Organizational Documents as in effect as of the Closing Date (B) the requisite resolutions of the Company’s Board authorizing and approving the execution, delivery and performance of this Agreement and each Ancillary Document to which the Company is or is required to be a party or bound, and the consummation of the Amalgamation and the other transactions contemplated hereby and thereby. (iii) REGISTRATION RIGHTS AGREEMENT. The SPAC shall have received from the Company duly executed counterparts of the Registration Rights Agreement, executed by each Company Securityholder set forth on Schedule B. (iv) COMPANY SUPPORT & LOCK-UP AGREEMENT. The Core Company Securityholders shall be party to a Company Support & Lock-Up Agreement that remains in full force and effect. (v) KEY EMPLOYMENT AGREEMENTS. The SPAC shall have received from the Company duly executed counterparts of all Key Employment Agreements, each in full force and effect as of the Closing Date. (vi) FIRPTA TAX CERTIFICATE. Prior to the Closing, the Company shall deliver to New PubCo a properly executed certification, dated as of the Closing Date, that meets the requirements of U.S. Treasury Regulations Sections 1.897-2(h) and 1.1445-2(c)(3), certifying that the Company is not and has not been a “United States real property holding corporation” (as defined in Section 897(c)(2) of the Code) during TABLE OF CONTENTS the applicable period specified in Section 897(c)(1)(A)(ii) of the Code, together with the required notice to the IRS and written authorization for New PubCo to deliver such notice and a copy of such certification to the IRS on behalf of the Company upon the Closing. 8.4 Frustration of Conditions. Notwithstanding anything contained herein to the contrary, no Party may rely on the failure of any condition set forth in this Article VIII to be satisfied if such failure was caused by the failure of such Party or its Affiliates (or with respect to the Company or any Company Shareholder) to comply with or perform any of its covenants or obligations set forth in this Agreement.
TERMINATION AND EXPENSES This Agreement may be terminated, and the transactions contemplated hereby may be abandoned at any time prior to the Closing as follows: (a) by mutual written consent of the SPAC and the Company; (b) by written notice by either the SPAC or the Company, if: (i) the Company Meeting is duly convened and held (including any adjournment or postponement thereof), the Company Shareholders have duly voted, and the Required Company Shareholder Approval was not obtained; (ii) the SPAC Special Meeting is held (including any adjournment or postponement thereof) and has concluded, the SPAC Shareholders have duly voted, and the Required SPAC Shareholder Approval was not obtained; (iii) after the date of this Agreement, any Law is enacted, made, enforced or amended, as applicable, that makes the consummation of the Arrangement illegal or otherwise prohibits or enjoins the Company or the SPAC or its affiliates from consummating the Arrangement, and such Law has, if applicable, become final and non-appealable, provided, that the Party seeking to terminate this Agreement pursuant to this Section 9.1(b)(iii) has used its commercially reasonable efforts to, as applicable, appeal or overturn such Law or otherwise have it lifted or rendered non-applicable in respect of the Arrangement; or (iv) the Effective Time does not occur on or prior to June 12, 2024, subject to a one-time thirty (30)-day extension upon written agreement of the Parties (provided, that, if the Registration Statement shall not have been declared effective by the SEC as of the Outside Date, the SPAC shall be entitled to one sixty (60)-day extension upon notice to the Company) (the “Outside Date”), provided, that a Party may not terminate this Agreement pursuant to this Section 9.1(b)(iv) if the failure of the Effective Time to so occur has been caused by, or is a result of, a breach by such Party of any of its representations or warranties or the failure of such Party to perform any of its covenants or agreements under this Agreement; or (c) by written notice by the Company to the SPAC, if: (i) there has been a breach by the SPAC or Amalco Sub, or if any representation or warranty of the SPAC or Amalco Sub, shall have become untrue or inaccurate, in any case which would result in a failure of a condition set forth in Section 8.2(a) or Section��Section 8.2(b) to be satisfied (treating the Closing Date for such purposes as the date of this Agreement or, if later, the date of such breach), and the breach or inaccuracy is incapable of being cured or is not cured within the earlier of (A) thirty (30) Business Days after written notice of such breach or inaccuracy is provided to the SPAC or Amalco Sub or (B) the Outside Date; provided, that the Company shall not have the right to terminate this Agreement pursuant to this Section 9.1(c)(i) if at such time the Company is in material uncured breach of this Agreement; or (ii) prior to the approval by the Company Shareholders of the Arrangement Resolution, (A) the Company Board makes a Change in Recommendation in accordance with SectionSection 6.6(d); or (B) the Company enters into a written agreement with respect to a Superior Proposal in accordance with Section 6.6 and provided, that the Company is then in compliance with Section 6.6; or TABLE OF CONTENTS (d) by written notice by the SPAC to Company, if: (i) there has been a breach by the Company, or if any representation or warranty of the Company, shall have become untrue or inaccurate, in any case which would result in a failure of a condition set forth in Section 8.3(a) or Section 8.3(b) to be satisfied (treating the Closing Date for such purposes as the date of this Agreement or, if later, the date of such breach), and the breach or inaccuracy is incapable of being cured or is not cured within the earlier of (A) thirty (30) Business Days after written notice of such breach or inaccuracy is provided to the Company or (B) the Outside Date; provided, that the SPAC shall not have the right to terminate this Agreement pursuant to this Section 9.1(d)(i) if at such time the SPAC or Amalco Sub is in material uncured breach of this Agreement; (ii) prior to the approval by the Company Shareholders of the Arrangement Resolution, (A) the disinterested members of the Company Board fail to unanimously recommend, withdraws, amends, modifies or qualifies in a manner that has substantially the same effect, or fails to publicly reaffirm within five (5) Business Days after having been requested in writing to do so by the SPAC, acting reasonably, the approval or recommendation of the Arrangement or the Arrangement Resolution (a “Change in Recommendation”) (it being understood that publicly taking no position or a neutral position with respect to an Acquisition Proposal for a period of no more than five (5) Business Days after the formal announcement thereof shall not be considered a Change in Recommendation) unless the Company provides a Superior Proposal Notice to the SPAC within such timeframe, in which case the Company will have until the end of the Matching Period to reaffirm the Company Board Recommendation, or (B) the Company Board approves, recommends or authorizes the Company to enter into a written agreement concerning a Superior Proposal; or (iii) if there has been a Company Material Adverse Effect following the date of this Agreement which is uncured for at least thirty (30) Business Days after written notice of such Company Material Adverse Effect is provided by the SPAC to the Company. 9.2 Effect of Termination. This Agreement may only be terminated in the circumstances described in Section 9.1 and pursuant to a written notice delivered by the applicable Party to the other applicable Parties, which sets forth the basis for such termination, including the provision of Section 9.1 under which such termination is made. In the event of the valid termination of this Agreement pursuant to Section 9.1, this Agreement shall forthwith become void, and there shall be no Liability on the part of any Party or any of their respective Representatives, and all rights and obligations of each Party shall cease, except: (i) Section 6.13 (Public Announcements) this Section 9.2 (Effect of Termination), Section 9.3 (Fees and Expenses), Section 10.1 (Waiver of Claims Against Trust), Article XI (Miscellaneous) and Section 11.3 (Third Parties) shall survive the termination of this Agreement, and (ii) nothing herein shall relieve any Party from Liability following the termination of this Agreement for any willful breach of any representation, warranty, covenant or obligation under this Agreement or any Fraud Claim against such Party, in either case, prior to termination of this Agreement (in each case of clauses (i) and (ii) above, subject to Section 10.1). Without limiting the foregoing, and except as provided in Section 9.3 and this Section 9.2 (but subject to Section 10.1) and subject to the right to seek injunctions, specific performance or other equitable relief in accordance with Section 11.6, the Parties’ sole right prior to the Closing with respect to any breach of any representation, warranty, covenant or other agreement contained in this Agreement by another Party or with respect to the transactions contemplated by this Agreement shall be the right, if applicable, to terminate this Agreement pursuant to Section 9.1.All Expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Company; provided, however, that: (a) subject to Sections 9.3(b) through 9.3(d), the SPAC shall be responsible for (i) all Expenses relating to the SPAC’s ordinary course Exchange Act reporting, (ii) all Expenses relating to monthly payments of the Trust Account, and (iii) expenses related to the Extension (the “SPAC Extension Expenses”) (collectively, the “SPAC Specified Expenses”); TABLE OF CONTENTS (b) if this Agreement is terminated (i) by the Parties pursuant to Section 9.1(a), (ii) by the SPAC or the Company pursuant to Section 9.1(b)(ii), Section 9.1(b)(iii) or Section 9.1(b)(iv), or (iii) by the Company pursuant to Section 9.1(c)(i), all Expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such Expenses, and no Party shall have any liability to any other Party for any other expenses or fees; (c) if this Agreement is terminated (i) by the Company or the SPAC pursuant to Section 9.1(b)(i) or the Company pursuant to Section 9.1(c)(ii) or (ii) by the SPAC pursuant to Section 9.1(d), the Company shall pay to the SPAC, by wire transfer of immediately available funds within thirty (30) Business Days after such termination, all Expenses incurred by the SPAC in connection with this Agreement and the transactions contemplated hereby up to the date of such termination (including (i) SPAC Specified Expenses incurred in connection with the transactions, including SPAC Extension Expenses and (ii) any Excise Tax Liability provided that, solely with respect to Excise Tax Liability, notice of such termination pursuant to this paragraph (c) is provided after December 1, 2023); and (d) if the transactions contemplated by this Agreement are consummated, New PubCo shall bear all of the Expenses of the Parties (including the SPAC Specified Expenses and any Excise Tax Liability); provided, however, that this Section 9.3(d) shall not be construed to alter the application of the Trust Account proceeds as set forth in Section 6.18. As used in this Agreement, “Expenses” shall include only those out-of-pocket expenses of the type and with parties set forth on Schedule 9.3(d) or as mutually agreed upon by the Company and the SPAC (such agreement not to be unreasonably withheld, conditioned, or delayed by either the Company or the SPAC). All deferred expenses (including fees or commissions payable to the IPO Underwriters and any legal fees) of the IPO due upon consummation of a Business Combination shall constitute Expenses of New PubCo, which Expenses will be payable by New PubCo in accordance with Section 9.3(d) above. The Company acknowledges and agrees that the provisions of Section 9.3 are an integral part of the transactions contemplated by this Agreement, and that, without such provisions, the SPAC would not have entered into this Agreement. If the Company fails to pay in a timely manner the amounts due pursuant to Section 9.3 and, in order to obtain such payment, the SPAC makes a claim against the Company that results in a judgment, the Company party shall pay to the SPAC its reasonable costs and expenses, including reasonable attorneys’ fees and expenses, incurred or accrued in connection with such claim.
WAIVERS AND RELEASES 10.1 Waiver of Claims Against Trust. Reference is made to the IPO Prospectus. The Company hereby represents and warrants that it has read the IPO Prospectus other than SEC Reports, the SPAC’s Organizational Documents, and the Trust Agreement and understands that the SPAC has established the Trust Account containing the proceeds of the IPO and from certain private placements occurring simultaneously with the IPO (including interest accrued from time to time thereon) for the benefit of the SPAC’s public shareholders (the “SPAC Public Shareholders”) and that the SPAC may disburse monies from the Trust Account only as set forth in the Trust Agreement. For and in consideration of the SPAC entering into this Agreement and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company hereby agrees on behalf of itself and its Affiliates that, notwithstanding anything to the contrary in this Agreement, none of the Company nor any of its respective Affiliates do now or shall at any time hereafter have any right, title, interest or claim of any kind in or to any monies in the Trust Account or distributions therefrom, or make any claim against the Trust Account (including any distributions therefrom), regardless of whether such claim arises as a result of, in connection with or relating in any way to, this Agreement or any proposed or actual business relationship between the SPAC or any of its Representatives, on the one hand, and the Company or any of its respective Representatives, on the other hand, or any other matter, and regardless of whether such claim arises based on contract, tort, equity or any other theory of legal liability (collectively, the “Released Claims”). The Company on behalf of itself and its Affiliates hereby irrevocably waives any Released Claims that any such Party or any of its Affiliates may have against the Trust Account (including any distributions therefrom) now or in the future as a result of, or arising out of, any negotiations, Contracts or agreements with the SPAC or its Representatives and will not seek recourse against the Trust Account (including any distributions therefrom) for any reason whatsoever (including for an alleged breach of this Agreement or any other agreement with the SPAC or its Affiliates); provided, however, that the foregoing waiver will not limit or prohibitTABLE OF CONTENTS the Company or its Affiliates from pursuing a claim against the SPAC, Amalco Sub or any other Person for legal relief against monies or other assets of the SPAC or Amalco Sub held outside of the Trust Account of for specific performance or other equitable relief in connection with the transactions contemplated by this Agreement. The Company agrees and acknowledges that such irrevocable waiver is material to this Agreement and specifically relied upon by the SPAC and its Affiliates to induce the SPAC to enter in this Agreement, and the Company further intends and understands such waiver to be valid, binding and enforceable against such Party and each of its Affiliates under applicable Law. To the extent that the Company or any of its respective Affiliates commences any Action based upon, in connection with, relating to or arising out of any matter relating to the SPAC or its Representatives, which Proceeding seeks, in whole or in part, monetary relief against the SPAC or its Representatives, the Company hereby acknowledges and agrees that it and its Affiliates’ sole remedy shall be against funds held outside of the Trust Account and that such claim shall not permit such Party or any of its Affiliates (or any Person claiming on any of their behalf or in lieu of them) to have any claim against the Trust Account (including any distributions therefrom) or any amounts contained therein.
MISCELLANEOUS 11.1 Notices. All notices, consents, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered (a) in person, (b) by electronic means (including e-mail), with affirmative confirmation of receipt, (c) one (1) Business Day after being sent, if sent by reputable, nationally recognized overnight courier service or (d) three (3) Business Days after being mailed, if sent by registered or certified mail, pre-paid and return receipt requested, in each case to the applicable Party at the following addresses (or at such other address for a Party as shall be specified by like notice):If to the SPAC or Amalco Sub at or
prior to the Closing, or to the
Sponsor, to:
Focus Impact Acquisition Corp.
1345 Avenue of the Americas
New York, NY 10105
Attn: Carl Stanton
E-mail: cstanton@focus-impact.com | | | with a copy (which will not constitute notice) to:
Kirkland & Ellis LLP
601 Lexington Avenue
New York, NY 02210022
Attn: Lauren M. Colasacco, P.C.,
Peter Seligson, P.C.
Email: lauren.colasacco@kirkland.com;
peter.seligson@kirkland.com | | | | | If to the Company, to:
DevvStream Holdings Inc.
2133-1177 West Hastings Street
Vancouver, BC V6E 2K3
Attention: Sunny Trinh
Email: sunny@devvstream.com | | | with a copy (which will not constitute notice) to:
Morrison & Foerster LLP
12531 High Bluff Drive
San Diego, CA 92130
Attention: Shai Kalansky; Omar Pringle;
Justin Salon
Email: skalansky@mofo.com; opringle@mofo.com;
justinsalon@mofo.com | | | | | If to Amalco and, following the
Closing, the SPAC:
c/o DevvStream Holdings Inc.
2133-1177 West Hastings Street
Vancouver, BC V6E 2K3
Attention: Carl Stanton, Sunny Trinh
Email: cstanton@focus-impact.com,
sunny@devvstream.com | | | with a copy (which will not constitute notice) to:
Morrison & Foerster LLP
12531 High Bluff Drive
San Diego, CA 92130
Attention: Shai Kalansky; Omar Pringle;
Justin Salon
Email: skalansky@mofo.com;
opringle@mofo.com; justinsalon@mofo.com
and
|
TABLE OF CONTENTS | | | Kirkland & Ellis LLP
601 Lexington Avenue
New York, NY 10022
Attn: Lauren M. Colasacco, P.C.;
Peter Seligson, P.C.
Email: lauren.colasacco@kirkland.com;
peter.seligson@kirkland.com |
11.2 Binding Effect; Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. This Agreement shall not be assigned by operation of Law or otherwise without the prior written consent of the SPAC and the Company, and any assignment without such consent shall be null and void; provided, that the no such assignment shall relieve the assigning Party of its obligations hereunder.11.3 Third Parties. Except for the rights of (a) the D&O Indemnified Persons set forth in Section 6.17, which the Parties acknowledge and agree are express third party beneficiaries of this Agreement, nothing contained in this Agreement or in any instrument or document executed by any party in connection with the transactions contemplated hereby shall create any rights in, or be deemed to have been executed for the benefit of, any Person that is not a Party or thereto or a successor or permitted assign of such a Party. Notwithstanding anything to the contrary herein, the Sponsor shall be an express third-party beneficiary of Section 6.13, this Section 11.3, and Section 11.8.11.4 Governing Law; Jurisdiction. The Law of the State of Delaware shall govern (a) all claims or matters related to or arising from this Agreement (including any tort or non-contractual claims) and (b) any questions, disputes or other matters in connection with the construction, interpretation, validity and enforceability hereof, and the performance of the obligations imposed by this Agreement, in each case without giving effect to any choice-of-law or conflict-of-law rules or provisions (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. Each of the Parties submits to the exclusive jurisdiction of first, the Chancery Court of the State of Delaware or if such court declines jurisdiction, then to the Federal District Court for the District of Delaware, in any Proceeding arising out of or relating to this Agreement, agrees that all claims in respect of the Proceeding shall be heard and determined in any such court and agrees not to bring any Proceeding arising out of or relating to this Agreement in any other courts.11.5 Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ALL RIGHTS TO TRIAL BY JURY IN ANY PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE BETWEEN OR AMONG ANY OF THE PARTIES (WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY AND/OR THE RELATIONSHIPS ESTABLISHED AMONG THE PARTIES UNDER THIS AGREEMENT. THE PARTIES HERETO FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.11.6 Remedies; Specific Performance. Except as otherwise expressly provided herein, any and all remedies provided herein will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by Law or equity upon such Party, and the exercise by a Party of any one remedy will not preclude the exercise of any other remedy. The failure on the part of any Party to exercise, and no delay in exercising, any right, power, or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power, or remedy by such Party preclude any other or further exercise thereof or the exercise of any other right, power, or remedy. Each Party acknowledges that the rights of each Party to consummate the transactions contemplated hereby are unique, recognizes and affirms that in the event of a breach of this Agreement by any Party, money damages would be inadequate and the non-breaching Parties would not have adequate remedy at law, and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed by an applicable Party in accordance with their specific terms or were otherwise breached. Accordingly, each Party shall be entitled to an injunction or restraining order to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, without the requirement to post any bond or other security or to prove that money damages would be inadequate, this being in addition to any other right or remedy to which such Party may be entitled under thisTABLE OF CONTENTS Agreement, at law or in equity. Each of the Parties agrees that it will not oppose the granting of an injunction, specific performance and other equitable relief when expressly available pursuant to the terms of this Agreement on the basis that the other Parties have an adequate remedy at Law or an award of specific performance is not an appropriate remedy for any reason at Law or equity. 11.7 Severability. Whenever possible, each provision hereof shall be interpreted in such manner as to be effective and valid under applicable Law. In case any provision in this Agreement shall be held invalid, illegal or unenforceable by a court of competent jurisdiction, such provision shall be modified or deleted, as to the jurisdiction involved, only to the extent necessary to render the same valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby nor shall the validity, legality or enforceability of such provision be affected thereby in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties will substitute for any invalid, illegal or unenforceable provision a suitable and equitable provision that carries out, so far as may be valid, legal and enforceable, the intent and purpose of such invalid, illegal or unenforceable provision.11.8 Amendment and Waiver. No amendment of any provision hereof shall be valid unless the same shall be in writing and signed by (a) the SPAC and the Company prior to the Closing and (b) New PubCo and the Sponsor after the Closing. No waiver of any provision or condition hereof shall be valid unless the same shall be in writing and signed by the Party against which such waiver is to be enforced. No waiver by any Party of any default, breach of representation or warranty or breach of covenant hereunder, whether intentional or not, shall be deemed to extend to any other, prior or subsequent default or breach or affect in any way any rights arising by virtue of any other, prior or subsequent such occurrence.11.9 No Recourse. Notwithstanding anything that may be expressed or implied herein (except in the case of the immediately succeeding sentence) or any document, agreement, or instrument delivered contemporaneously herewith, and notwithstanding the fact that any Party may be a partnership or limited liability company, each Party hereto, by its acceptance of the benefits of this Agreement, covenants, agrees and acknowledges that no Persons other than the Parties shall have any obligation hereunder and that it has no rights of recovery hereunder against, and no recourse hereunder or under any documents, agreements, or instruments delivered contemporaneously herewith or in respect of any oral representations made or alleged to be made in connection herewith or therewith shall be had against, any former, current or future director, officer, agent, Affiliate, manager, assignee, incorporator, controlling Person, fiduciary, representative or employee of any Party (or any of their successors or permitted assignees), against any former, current, or future general or limited partner, manager, stockholder or member of any Party (or any of their successors or permitted assignees) or any Affiliate thereof or against any former, current or future director, officer, agent, employee, Affiliate, manager, assignee, incorporator, controlling Person, fiduciary, representative, general or limited partner, stockholder, manager or member of any of the foregoing, but in each case not including the Parties (each, but excluding for the avoidance of doubt, the Parties, a “Non-Party Affiliate”), whether by or through attempted piercing of the corporate veil, by or through a claim (whether in tort, Contract or otherwise) by or on behalf of such Party against the Non-Party Affiliates, by the enforcement of any assessment or by any Proceeding, or by virtue of any statute, regulation or other applicable Law, or otherwise; it being agreed and acknowledged that no personal Liability whatsoever shall attach to, be imposed on, or otherwise be incurred by any Non-Party Affiliate, as such, for any obligations of the applicable Party under this Agreement or the transactions contemplated hereby, under any documents or instruments delivered contemporaneously herewith, in respect of any oral representations made or alleged to be made in connection herewith or therewith, or for any claim (whether in tort, Contract or otherwise) based on, in respect of, or by reason of, such obligations or their creation. Notwithstanding the forgoing, a Non-Party Affiliate may have obligations under any documents, agreements, or instruments delivered contemporaneously herewith or otherwise contemplated hereby if such Non-Party Affiliate is party to such document, agreement or instrument. Except to the extent otherwise set forth in, and subject in all cases to the terms and conditions of and limitations herein, this Agreement may only be enforced against, and any claim or cause of action of any kind based upon, arising out of, or related to this Agreement, or the negotiation, execution or performance hereof, may only be brought against the entities that are named as Parties hereto and then only with respect to the specific obligations set forth herein with respect to such Party. Each Non-Party Affiliate is intended as a third-party beneficiary of this Section 11.9.11.10 Entire Agreement. This Agreement and the documents or instruments referred to herein, including any exhibits and schedules attached hereto, which exhibits and schedules are incorporated herein by reference, together with the Ancillary Documents, contain the entire agreement and understanding among the Parties with respect to the subject matter hereof and thereof and supersede all prior and contemporaneous agreements, understandings and discussions, whether written or oral, relating to such subject matter in any way. The Parties have voluntarily agreedTABLE OF CONTENTS to define their rights and Liabilities with respect to the transactions contemplated hereby exclusively pursuant to the express terms and provisions hereof, and the Parties disclaim that they are owed any duties or are entitled to any remedies not set forth herein. Furthermore, this Agreement embodies the justifiable expectations of sophisticated parties derived from arm’s-length negotiations and no Person has any special relationship with another Person that would justify any expectation beyond that of an ordinary buyer and an ordinary seller in an arm’s-length transaction. 11.11 Interpretation. The table of contents and the Article and Section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the Parties and shall not in any way affect the meaning or interpretation of this Agreement. Any capitalized terms used in any Schedule or Exhibit attached hereto and not otherwise defined therein shall have the meanings set forth herein. In this Agreement, unless the context otherwise requires: (a) any pronoun used shall include the corresponding masculine, feminine or neuter forms, and words in the singular, including any defined terms, include the plural and vice versa; (b) reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity; (c) any accounting term used and not otherwise defined in this Agreement or any Ancillary Document has the meaning assigned to such term in accordance with GAAP or IFRS; (d) “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding or succeeding such term and shall be deemed in each case to be followed by the words “without limitation”; (e) the words “herein,” “hereto,” and “hereby” and other words of similar import shall be deemed in each case to refer to this Agreement as a whole and not to any particular Section or other subdivision of this Agreement; (f) the word “extent” in the phrase “to the extent” (or similar phrases) shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”; (g) the word “if” and other words of similar import when used herein shall be deemed in each case to be followed by the phrase “and only if”; (h) the term “or” means “and/or”; (i) any reference to the term “ordinary course” or “ordinary course of business” shall be deemed in each case to be followed by the words “consistent with past practice”; (j) any agreement, instrument, insurance policy, Law or Order defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument, insurance policy, Law or Order as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes, regulations, rules or Orders) by succession of comparable successor statutes, regulations, rules or Orders and references to all attachments thereto and instruments incorporated therein; (k) except as otherwise indicated, all references in this Agreement to the words “Section,” “Article,” “Schedule” and “Exhibit” are intended to refer to Sections, Articles, Schedules and Exhibits to this Agreement; and (l) the term “Dollars” or “$” means United States dollars. Any reference in this Agreement to any Contract (including this Agreement) mean such Contract as amended, restated, supplemented or modified from time to time in accordance with the terms thereof; provided, that with respect to any Contract listed (or required to be listed) on the disclosure schedules, all material amendments thereto (for the avoidance, excluding in either case any purchase orders, work orders or statements of work) must also be listed on the appropriate section of the applicable schedule and disclosed. Any reference in this Agreement to a Person’s directors shall include any member of such Person’s governing body and any reference in this Agreement to a Person’s officers shall include any Person filling a substantially similar position for such Person. Any reference in this Agreement or any Ancillary Document to a Person’s shareholders or shareholders shall include any applicable owners of the equity interests of such Person, in whatever form. The Parties and their respective counsel have reviewed and negotiated this Agreement as the joint agreement and understanding of the Parties, and the language used herein shall be deemed to be the language chosen by the Parties to express their mutual intent, and no rule of strict construction shall be applied against any Person. Any information or materials shall be deemed provided, made available or delivered to the SPAC if such information or materials have been uploaded to the electronic data room maintained by the Company and its financial advisor on the “DevvStream Confidential Data Room” online data site hosted by Microsoft at https://www.microsoft.com/en-us/microsoft-365/sharepoint/collaboration? ms.officeurl=sharepoint&rtc=1 for purposes of the transactions contemplated hereby (the “Data Room”) or otherwise provided to the SPAC and its representatives (including counsel) via e-mail, in each case with respect to the representations and warranties contained in Article IV and Article V, at least one (1) Business Day prior to the Effective Date.11.12 Counterparts. This Agreement and each Ancillary Document may be executed and delivered (including by facsimile or other electronic transmission) in one or more counterparts, and by the different Parties in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.TABLE OF CONTENTS 11.13 Conflicts and Privilege.(a) The SPAC and the Company, on behalf of their respective successors and assigns (including, after the Closing, Amalco), hereby agree that, in the event a dispute with respect to this Agreement, any Ancillary Documents or the transactions contemplated hereby or thereby arises after the Closing between or among (x) the Sponsor, Amalco, shareholders or holders of other equity interests of the SPAC or the Sponsor, and/or any of their respective directors, members, partners, officers, employees or Affiliates (other than Amalco) (collectively, the “SPAC Group”), on the one hand, and (y) the Company and/or any member of the New Company Group (as defined below), on the other hand, any legal counsel, including K&E, that represented the SPAC and/or the Sponsor prior to the Closing may represent the Sponsor and/or any other member of SPAC Group, in such dispute even though the interests of such Persons may be directly adverse to Amalco, and even though such counsel may have represented the SPAC in a matter substantially related to such dispute, or may be handling ongoing matters for Amalco and/or the Sponsor. The SPAC and the Company, on behalf of their respective successors and assigns, further agree that, as to all legally privileged communications prior to the Closing (made in connection with the negotiation, preparation, execution, delivery and performance under, or any dispute or Action arising out of or relating to, this Agreement, any Ancillary Documents or the transactions contemplated hereby or thereby) between or among the SPAC, the Sponsor and/or any other member of SPAC Group, on the one hand, and K&E, on the other hand, the attorney/client privilege and the expectation of client confidence shall survive the Amalgamation and belong to Sponsor after the Closing, and shall not pass to or be claimed or controlled by Amalco. Notwithstanding the foregoing, any privileged communications or information shared by the Company prior to the Closing with the SPAC or the Sponsor under a confidentiality agreement shall remain the privileged communications or information of the Company and shall not be used by the SPAC Group against the New Company Group, as subsequently defined, in connection with any dispute among the parties. (b) The SPAC and the Company, on behalf of their respective successors and assigns (including, after the Closing, Amalco), hereby agree that, in the event a dispute with respect to this Agreement, any Ancillary Documents or the transactions contemplated hereby or thereby arises after the Closing between or among (x) the shareholders or holders of other equity interests of the Company, Amalco and/or any of their respective directors, members, partners, officers, employees or Affiliates (collectively, the “New Company Group”), on the one hand, and (y) any member of SPAC Group, on the other hand, any legal counsel, including MoFo that represented the Company prior to the Closing may represent any member of the New Company Group in such dispute even though the interests of such Persons may be directly adverse to SPAC Group, and even though such counsel may have represented the SPAC and/or the Company in a matter substantially related to such dispute, or may be handling ongoing matters for Amalco, and further agree that, as to all legally privileged communications prior to the Closing (made in connection with the negotiation, preparation, execution, delivery and performance under, or any dispute or Action arising out of or relating to, this Agreement, any Ancillary Documents or the transactions contemplated hereby or thereby) between or among the Company and/or any member of the New Company Group, on the one hand, and MoFo, on the other hand, the attorney/client privilege and the expectation of client confidence shall survive the Amalgamation and belong to the New Company Group after the Closing, and shall not pass to or be claimed or controlled by Amalco. Notwithstanding the foregoing, any privileged communications or information shared by the SPAC prior to the Closing with the Company under a confidentiality agreement shall remain the privileged communications or information of the SPAC, and controlled by Sponsor, and shall not be used by the New Company Group against the SPAC Group in connection with any dispute among the parties.
DEFINITIONS 12.1 Certain Definitions.For purpose of this Agreement, the following capitalized terms have the following meanings: “ABCA” has the meaning specified in the Recitals. “Acquisition Proposal” has the meaning specified in Section 6.6. “Affiliate” means, with respect to any Person, any other Person directly or indirectly Controlling, Controlled by, or under common Control with such Person. TABLE OF CONTENTS “Aggregate Exercise Price” means the aggregate exercise price of all In-the-Money Options valued in U.S. Dollars calculated using the exchange rate published in the Wall Street Journal, United States Eastern Edition, under the heading “Currency Trading” on the date two (2) Business Days prior to the Effective Time, whether vested or unvested, and all Company Warrants, in each case, outstanding immediately prior to the Effective Time or exercised in cash (and included in such calculation solely to the extent the amount of such exercise price was actually received in cash by the Company) after the date hereof and prior to the Effective Time. “Agreement” has the meaning specified in the Preamble hereto. “Alternative Transaction” has the meaning specified in Section 6.6. “Amalco” has the meaning specified in the Recitals hereto. “Amalco Sub” has the meaning specified in the Preamble hereto. “AmalcoSub Material Adverse Effect” has the meaning specified in Section 4.3. “Amalgamation” has the meaning specified in the Recitals hereto. “Amalgamation Consideration Value” means the Equity Value plus the Aggregate Exercise Price. “Ancillary Documents” means each agreement, instrument or document attached hereto as an Exhibit, and the other agreements, certificates, and instruments to be executed or delivered by any of the Parties in connection with or pursuant to this Agreement. “Anti-Corruption Laws” means all U.S. and non-U.S. Laws relating to the prevention of corruption, money laundering, and bribery, including the U.S. Foreign Corrupt Practices Act of 1977, as amended, and the UK Bribery Act of 2010. “Arrangement” has the meaning specified in the Recitals hereto. “Arrangement Resolution” means the special resolution approving the Plan of Arrangement to be considered at the Company Meeting by Company Shareholders, substantially in the form set forth in Exhibit F. “Assets” has the meaning specified in Section 5.18. “BCBCA” has the meaning specified in the Recitals hereto. “Benefit Plan” means each “employee benefit plan” (as such term is defined in ERISA § 3(3), whether or not subject to ERISA), each deferred compensation, compensation, incentive, equity purchase or other equity or equity-based compensation, phantom equity, severance, termination pay, salary continuation, retention, stay, post-termination, holiday, vacation, bonus, commission, hospitalization or other medical, life or other insurance, supplemental unemployment benefits, profit sharing, pension, savings, fringe benefit, retirement or other similar plan, program, agreement, Contract, commitment, policy or arrangement, and each other compensation or benefit plan, program, agreement, whether formal or informal, whether written or unwritten and whether legally binding or not. “Board” means the board of directors of an entity as constituted from time to time. “Book-Entry Shares” has the meaning specified in Section 2.14(b). “Business Combination” has the meaning specified in the Recitals hereto. “Business Day” means any day other than a Saturday, Sunday or a legal holiday on which commercial banking institutions in Delaware are authorized to close for business, excluding as a result of “stay at home,” “shelter-in-place,” “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any Governmental Authority so long as the electronic funds transfer systems, including for wire transfers, of commercially banking institutions in Delaware are generally open for use by customers on such day. “Canadian Certifications” has the meaning specified in Section 5.31. “Canadian Securities Laws” has the meaning specified in Section 5.31. “Carbon Credit” means an instrument, benefit, offset, allowance or other unit that represents a verified reduction or removal of one metric tonne of CO2 equivalent. TABLE OF CONTENTS “Carbon Standard” means, with respect to a Carbon Credit, the program or standard administered by a mandatory or voluntary domestic or international greenhouse gas program, certification, scheme or protocol, that certifies such Carbon Credit as a verified reduction or removal of one metric tonne of CO2 equivalent, including its methodologies and published guidance. “Cboe Canada” means the Neo Exchange Inc., operating as Cboe Canada. “CDS” has the meaning specified in Section 2.14(b). “Certificate of Incorporation” means the certificate of incorporation or articles of incorporation, as applicable, of a corporation. “Certificates” has the meaning specified in Section 2.14(b). “Change in Recommendation” has the meaning specified in Section 9.1(d)(ii). “Closing” has the meaning specified in Section 1.1 “Closing Date” has the meaning specified in Section 1.1. “Closing Filing” has the meaning specified in Section 6.13(b). “Closing Press Release” has the meaning specified in Section 6.13(b). “Code” means the U.S. Internal Revenue Code of 1986, as amended, including any valid treasury regulation promulgated thereunder. “Common Amalgamation Consideration” means, with respect to the Company Securities, a number of New PubCo Common Shares equal to the Amalgamation Consideration Value divided by $10.20. “Common Conversion Ratio” means, in respect of a Company Share, the number equal to (a) the Common Amalgamation Consideration divided by (b) the Fully Diluted Common Shares Outstanding. “Company” has the meaning specified in the Preamble hereto. “Company Benefit Plan” has the meaning specified in Section 5.20(a). “Company Board Recommendation” has the meaning specified in Section 2.4(b). “Company Certificate” has the meaning specified in Section 2.14(d). “Company Circular” means the notice of the Company Meeting and accompanying management information circular, including all schedules, appendices and exhibits to, and information incorporated by reference in, such management information circular, to be sent to Company Shareholders in connection with the Company Meeting and the Arrangement, as amended, supplemented or otherwise modified from time to time in accordance with the terms of this Agreement. “Company Convertible Notes” means those certain Company Convertible Notes to be issued by the Company during the Interim Period in accordance with Section 6.2 pursuant to the Company Convertible Notes Subscription Agreements. “Company Convertible Notes Subscription Agreements” means those certain Convertible Note Subscription Agreements to be entered into by the Company during the Interim Period in accordance with Section 6.2 with respect to the Company Convertible Notes. “Company Convertible Securities” means, collectively, any securities convertible into or exchangeable for, any shares, capital stock or other equity of or other voting interests in the Company, including the Company Option and Company Warrants. “Company Disclosure Schedules” has the meaning specified in Article V. “Company Equity Awards” means, collectively, each Company Option and each Company RSU. “Company Equity Incentive Plan” means the 2022 Equity Incentive Plan of DevvStream Holdings Inc., as amended and restated from time to time, and the 2022 Non-Qualified Stock Option Plan of DevvStream Inc., as amended and restated from time to time. TABLE OF CONTENTS “Company Fairness Opinion” has the meaning specified in Section 5.32. “Company Financial Statements” has the meaning specified in Section 5.7(a). “Company IP Agreements” means including (a) Contracts under which the Company has granted or agreed to grant to any other Person any license, covenant, release, immunity or other right that applies to or any Owned IP and (b) all Company IP Licenses. “Company IP Licenses” has the meaning specified in Section 5.14(b). “Company Material Adverse Effect” has the meaning specified in Section 5.3. “Company Material Contract” has the meaning specified in Section 5.13(a). “Company Meeting” means the special meeting of Company Shareholders, including any adjournment or postponement thereof in accordance with the terms of this Agreement, to be called and held in accordance with the Interim Order to consider the Arrangement Resolution and for any other purpose as may be set forth in the Company Circular and agreed to in writing by the SPAC, acting reasonably. “Company Option ITM Amount” has the meaning specified in Section 2.12(c)(i). “Company Options” means each option (whether vested or unvested) to purchase Company Shares granted under a Company Equity Incentive Plan. “Company Permits” has the meaning specified in Section 5.10. “Company Personal Property Leases” has the meaning specified in Section 5.17. “Company Products” means each of the products, services, and Software (including mobile phone and table applications) that have been or are currently being developed, marketed, distributed, licensed, sold, offered, or provided by or on behalf of any of the Company, including any products or services (a) made available through or as part of the Company website or (b) derived from or incorporating any Company data. “Company Registered IP” has the meaning specified in Section 5.14(a). “Company RSUs” means each restricted stock unit representing the right to receive payment in Company Shares, granted under a restricted stock unit award agreement. “Company Securities” means, collectively, the Company Shares, the Company Options, and the Company Warrants. “Company Securityholders” means, collectively, the holders of Company Securities prior to the Effective Time. “Company Shareholder Approval Matters” means approval of the Arrangement Resolution. “Company Shareholders” means, collectively, the holders of Company Shares prior to the Effective Time. “Company Shares” means the Multiple Voting Company Shares and the Subordinated Voting Company Shares. “Company Specified Representations” has the meaning specified in Section 8.3(a)(i). “Company Support & Lock-Up Agreements” has the meaning specified in the Recitals hereto. “Company Systems” means all computer firmware, hardware, software, and computer or information technology systems or infrastructure, networks, and data or information contained therein or transmitted thereby, and other similar items of automated, computerized, or software systems owned, licensed, used or relied upon by the Company or any of its Subsidiaries in the conduct of its business, including the Company Products. “Company Warrants” means the 9,787,343 outstanding common share purchase warrants of the Company, which are exercisable for up to 9,787,343 Company Shares. “Confidentiality Agreement” means that certain Confidentiality Agreement, dated as of February 21, 2023, by and between the Company and SPAC. “Consent” means any consent, approval, waiver, authorization or Permit of, or notice to or declaration or filing with any Governmental Authority or any other Person. TABLE OF CONTENTS “Contracts” means all contracts, agreements, binding arrangements, bonds, notes, indentures, mortgages, debt instruments, purchase order, licenses (and all other contracts, agreements or binding arrangements concerning Intellectual Property), franchises, leases and other instruments or obligations of any kind, written or oral (including any amendments and other modifications thereto). “Control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, its capacity as a sole or managing member or otherwise. “Converted Option” has the meaning specified in Section 2.12(c)(i). “Converted RSU” has the meaning specified in Section 2.12(c)(ii). “Converted Warrant” has the meaning specified in Section 2.12(d). “Convertible Note Shares” has the meaning specified in Section 2.12(f). “Copyleft License” means any license that requires, as a condition of use, modification or distribution of Software subject to such license, that such Software, or other Software or other Intellectual Property incorporated into, derived from, used or distributed with such Software (a) in the case of Software, be made available or distributed in a form other than binary (e.g., in source code form), (b) be licensed for the purpose of preparing derivative works, (c) be licensed under terms that allow Company Products or portions thereof or interfaces therefor to be reverse engineered, reverse assembled or disassembled (other than by operation of legal requirement) or (d) be redistributable at no license fee. “Copyrights” means any works of authorship, mask works and all copyrights therein, including all renewals and extensions, copyright registrations and applications for registration and renewal, and non-registered copyrights. “Core Company Securityholder” has the meaning specified in the Recitals hereto. “Court” means the Supreme Court of British Columbia, or other court as applicable. “D&O Indemnified Persons” has the meaning specified in Section 6.17(a). “Data Room” has the meaning specified in Section 11.11. “DGCL” has the meaning specified in the Recitals hereto. “Dissent Rights” means the rights of dissent in respect of the Arrangement Resolution described in the Plan of Arrangement and the BCBCA. “DTC” has the meaning specified in Section 2.14(b). “Effective Date” has the meaning ascribed thereto in the Plan of Arrangement, which shall be the Closing Date. “Effective Time” has the meaning ascribed thereto in the Plan of Arrangement, which shall occur on the Closing Date. “Effective Time Outstanding Company Shares” has the meaning specified in Section 2.12(a). “Enforceability Exceptions” has the meaning specified in Section 3.2. “Environmental Law” means any Law in any way relating to (a) public or worker health or safety, (b) pollution or the protection, preservation or restoration of the environment and natural resources (including air, water vapor, surface water, groundwater, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), or (c) the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, Release or disposal of Hazardous Materials. “Environmental Liabilities” means, in respect of any Person, all material Liabilities under Environmental Law, including as a result of any claim or demand by any other Person or in response to any violation of Environmental Law. “Equity Value” means One Hundred Forty-Five Million Dollars ($145,000,000). “ERISA” means the Employee Retirement Income Security Act of 1974, as amended. “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended. “Exchange Agent” has the meaning specified in Section 2.14(a). TABLE OF CONTENTS “Excise Tax” means the 1% excise tax imposed on certain repurchases of stock of publicly traded U.S. and certain non-U.S. corporations made after December 31, 2022, as enacted under the Inflation Reduction Act of 2022 under Section 4501 of the Code. “Excise Tax Liability” means any cost, expense, liability or payment obligation of the SPAC in respect of any Excise Tax, but excluding any Taxes imposed as a result of the Company reimbursing the SPAC for any such Excise Tax. “Ex-Im Laws” means all U.S. and non-U.S. Laws relating to export, reexport, transfer, and import controls, including the Export Administration Regulations, the customs and import Laws administered by U.S. Customs and Border Protection, and the EU Dual Use Regulation. “Expenses” has the meaning specified in Section 9.3. “Extension” has the meaning specified in Section 6.3. “Federal Securities Laws” has the meaning specified in Section 6.7(a). “Final Order” means the final order of the Court, in a form acceptable to the Parties, each acting reasonably, approving the Arrangement, as such order may be amended by the Court (with the consent of each of the Parties, acting reasonably) at any time prior to the Effective Date or as such order may be affirmed or amended on appeal (provided, that any such amendment is satisfactory to each of the Parties, acting reasonably). “Financing” has the meaning specified in Section 6.19(a). “Financing Agreements” has the meaning specified in Section 6.19(a). “Financing Incentive Shares” has the meaning specified in Section 6.19(a). “Financing Incentive Warrants” has the meaning specified in Section 6.19(a). “Financing Investors” has the meaning specified in Section 6.19(a). “Fraud” means actual and intentional common law fraud committed by a Party with respect to the making of such Party’s representations and warranties expressly set forth in this Agreement or any Ancillary Document with the intent that any other Party rely thereon. Under no circumstances shall “fraud” include any equitable fraud, constructive fraud, negligent misrepresentation, unfair dealings, or any other fraud or torts based on recklessness or negligence. “Fraud Claim” means any claim based on Fraud. “Fully Diluted Common Shares Outstanding” means, without duplication, at any measurement time (a)(i) ten (10), multiplied by (ii) the aggregate number of Multiple Voting Company Shares that are issued and outstanding, plus (b) the aggregate number of Subordinated Voting Company Shares that are issued and outstanding, plus (c) the aggregate number of Subordinated Voting Company Shares to be issued pursuant to the exercise and conversion of the Company Options in accordance therewith, plus (d) the aggregate number of Subordinated Voting Company Shares to be issued pursuant to the exercise and conversion of the Company Warrants in accordance therewith, plus (e) the aggregate number of Subordinated Voting Company Shares to be issued pursuant to the vesting of the Company RSUs in accordance therewith. “GAAP” means generally accepted accounting principles as in effect in the United States of America. “Governmental Authority” means any federal, state, provincial, local, foreign or other governmental, quasi-governmental or administrative body, instrumentality, department or agency, including any stock exchange, securities commission, or any court, tribunal, administrative hearing body, arbitration panel or body (public or private), commission, or other similar dispute-resolving panel or body. “Hazardous Material” means any substance, material or waste that is regulated, or that could result in the imposition of Liability or standards of conduct, under any Environmental Law, including petroleum and its by-products, asbestos, polychlorinated biphenyls, per- and polyfluoroalkyl substances, radon, mold, noise, odor and urea formaldehyde insulation. “HSR Act” mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and any rules or regulations promulgated thereunder. TABLE OF CONTENTS “IFRS” means International Financial Reporting Standards. “Indebtedness” of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money (including the outstanding principal and accrued but unpaid interest), (b) all obligations for the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of business), (c) any (i) accrued or outstanding severance, retention or termination payments, (ii) accrued paid time off (including vacation, personal and sick days) or (iii) accrued bonuses, commissions or other incentive compensation, in each case, in respect of any current or former employee, officer, director or other individual service provider of the Company and together with the employer’s portion of all FICA state, local, or foreign withholding, payroll, employment, unemployment, social security or similar Taxes in connection with such amounts, calculated as if all such amounts were paid on the Closing Date, (d) any obligations under any unfunded or underfunded pension or retirement, post-retirement medical, post-employment benefit or nonqualified deferred compensation plans, programs, agreements or arrangements, together with the employer’s portion of all payroll, employment, unemployment, social security or similar Taxes in connection with such amounts, (e) any other indebtedness of such Person that is evidenced by a note, bond, debenture, credit agreement or similar instrument, (f) all obligations of such Person under leases that should be classified as capital leases in accordance with GAAP or IFRS, (g) all obligations of such Person for the reimbursement of any obligor on any line or letter of credit, banker’s acceptance, guarantee or similar credit transaction, in each case, that has been drawn or claimed against, (h) all obligations of such Person in respect of acceptances issued or created, (i) all interest rate and currency swaps, caps, collars and similar agreements or hedging devices under which payments are obligated to be made by such Person, whether periodically or upon the happening of a contingency, (j) all obligations secured by a Lien on any property of such Person, (k) any premiums, prepayment fees or other penalties, fees, costs or expenses associated with payment of any Indebtedness of such Person, (l) any and all accounts payable of such Person, (m) any and all accrued expenses of such Person, and (n) all obligation described in clauses (a) through (m) above of any other Person which is directly or indirectly guaranteed by such Person or which such Person has agreed (contingently or otherwise) to purchase or otherwise acquire or in respect of which it has otherwise assured a creditor against loss, but in all cases excluding transaction Expenses associated with the transactions contemplated by this Agreement. “Intellectual Property” means any and all of the following in any jurisdiction throughout the world: (a) Trademarks; (b) Copyrights; (c) Trade Secrets; (d) Patents; (e) Internet Assets; and (f) Software, data, and databases, and (g) all other intellectual property and related proprietary and moral rights together with all goodwill related to the foregoing. “Intended Company Tax Treatment” has the meaning specified in the Recitals hereto. “Intended SPAC Tax Treatment” has the meaning specified in the Recitals hereto. “Intended Tax Treatment” has the meaning specified in the Recitals hereto. “Interim Order” means the interim order of the Court contemplated by Section 2.2 and made pursuant to Section 291 of the BCBCA in a form acceptable to the Company and the SPAC, each acting reasonably, providing for, among other things, the calling and holding of the Company Meeting, as the same may be amended by the Court or with the consent of the SPAC and the Company, such consent not to be unreasonably withheld, conditioned or delayed. “Interim Period” has the meaning specified in Section 6.1. “Internal Controls” has the meaning specified in Section 5.7(d). “Internet Assets” means all domain name registrations, social media accounts, handles, and identifiers, web sites and web addresses and related rights, items and documentation related thereto, and applications for registration therefor. “In-the-Money Option” means each Company Option for which the exercise price per share subject to such Company Option is less than the Common Conversion Ratio multiplied by $10.20. “Inversion” has the meaning specified in the Recitals hereto. “Investment Canada Act” means the Investment Canada Act, R.S.C., 1985, c. 28 (1st Supp.), as amended, and any rules or regulations promulgated thereunder. “Investment Company Act” has the meaning specified in Section 3.17. TABLE OF CONTENTS “IPO” means the initial public offering of the SPAC Units pursuant to the IPO Prospectus. “IPO Prospectus” has the meaning specified in the Recitals hereto. “IPO Underwriters” means the several underwriters, as represented by Citigroup Global Markets Inc. and Goldman Sachs & Co. LLC in the IPO. “IRS” means the United States Internal Revenue Service. “ITA” means the Income Tax Act (Canada). “JOBS Act” has the meaning specified in Section 3.16. “K&E” has the meaning specified in Section 6.10(e). “Key Employee” means Sunny Trinh, Chris Merkel, Bryan Went and David Oliver. “Key Employment Agreements” has the meaning set forth in Section 6.15(e). “Knowledge” means, (a) with respect to the SPAC, the actual knowledge of the individuals set forth on Section 12.1(a) of the SPAC Disclosure Schedules after reasonable due inquiry, (b) with respect to Amalco Sub, the actual knowledge of the individuals set forth on Section 12.1(b) of the SPAC Disclosure Schedules after reasonable due inquiry, and (c) with respect to the Company, the actual knowledge of the individuals set forth on Section 12.1(c) of the Company Disclosure Schedules after reasonable due inquiry. “Labor Agreement” means any collective bargaining agreement or other labor-related Contract with any labor union, labor organization, or works council. “Latest Balance Sheet Date” means (a) with respect to the Company and its Subsidiaries, April 30, 2023 and (b) with respect to the SPAC, June 30, 2023. “Law” means any federal, state, county, local, provincial, municipal, foreign, international, supranational or other law, act, statute, legislation, principle of common law, ordinance, code, edict, decree, proclamation, treaty, convention, rule, regulation, directive, resolution, requirement, writ, injunction, settlement, Order or Consent that is or has been issued, enacted, adopted, passed, approved, promulgated, made, implemented or otherwise put into effect by or under the authority of any Governmental Authority. “Leases” has the meaning specified in Section 5.16(a). “Letter of Transmittal” has the meaning specified in Section 2.14(b). “Liabilities” means any and all liabilities, Indebtedness, Actions or obligations of any nature (whether absolute, accrued, contingent or otherwise, whether known or unknown, whether direct or indirect, whether matured or unmatured, whether due or to become due and whether or not required to be recorded or reflected on a balance sheet under GAAP, IFRS or other applicable accounting standards), including Tax liabilities due or to become due. “Licensed IP” means all Intellectual Property in which the Company has or purports to have a license or non-ownership right to use or exploit such Intellectual Property, including Intellectual Property subject to a covenant not to sue in favor of the Company. “Lien” means any mortgage, pledge, security interest, attachment, right of first refusal, option, proxy, voting trust, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof), restriction (whether on voting, sale, transfer, disposition or otherwise), any subordination arrangement in favor of another Person, license, or any filing or agreement to file a financing statement as debtor under the Uniform Commercial Code or any similar Law. “Lost Certificate Affidavit” has the meaning specified in Section 2.14(f). “Matching Period” has the meaning specified in Section 6.6(d)(v). “Material Adverse Effect” means, with respect to any specified Person, any fact, event, occurrence, change or effect that has had, or would reasonably be expected to have, individually or in the aggregate, a material adverse effect upon (a) the business, assets, Liabilities, results of operations or condition (financial or otherwise) of such Person, taken as a whole, or (b) the ability of such Person on a timely basis to consummate the transactions contemplated by this Agreement or the Ancillary Documents to which it is a party or bound or to perform its TABLE OF CONTENTS obligations hereunder or thereunder; provided, however, that for purposes of clause (a) above, any changes or effects directly or indirectly attributable to, resulting from, relating to or arising out of the following (by themselves or when aggregated with any other, changes or effects) shall not be deemed to be, constitute, or be taken into account when determining whether there has or may, would or could have occurred a Material Adverse Effect: (i) general changes in the financial or securities markets or general economic or political conditions in the country or region in which such Person does business; (ii) changes, conditions or effects that generally affect the industries in which such Person principally operates; (iii) changes in GAAP or other applicable accounting principles or mandatory changes in the regulatory accounting requirements applicable to any industry in which such Person principally operates; (iv) conditions caused by acts of God, terrorism, war (whether or not declared), natural disaster or weather conditions, epidemics, pandemics, or disease outbreaks (including SARS-CoV-2 or COVID-19, and any evolutions or variants thereof or related or associated epidemics, pandemics or disease outbreaks) or public health emergencies (as declared by the World Health Organization or the Health and Human Services Secretary of the United States); and (v) any failure in and of itself by such Person to meet any internal or published budgets, projections, forecasts or predictions of financial performance for any period (provided, that the underlying cause of any such failure may be considered in determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur to the extent not excluded by another exception herein); providedfurther, however, that any event, occurrence, fact, condition, or change referred to in clauses (i)—(iv) immediately above shall be taken into account in determining whether a Material Adverse Effect has occurred or could reasonably be expected to occur to the extent that such event, occurrence, fact, condition, or change has a disproportionate effect on such Person compared to other participants in the industries in which such Person primarily conducts its businesses. “Misconduct” has the meaning specified in Section 5.19(c). “MoFo” has the meaning specified in Section 6.10(e). “Multiple Voting Company Shares” means the common shares of the Company, without par value, with multiple voting rights. “Nasdaq” means the Nasdaq Global Market. “New Company Group” has the meaning specified in Section 11.13(b). “New PubCo” has the meaning specified in the Recitals hereto. “New PubCo Common Shares” means, following the SPAC Continuance, the common shares of New PubCo. “New PubCo Organizational Documents” has the meaning specified in Section 2.7(a). “New PubCo Securities” means, following the SPAC Continuance, New PubCo Common Shares, and New PubCo Warrants, collectively. “New PubCo Warrants” means warrants to purchase shares in New PubCo with equivalent terms to the SPAC Private Warrants and SPAC Public Warrants. “Non-Party Affiliate” has the meaning specified in Section 11.9. “Non-Redemption Agreement” has the meaning specified in Section 6.19(a). “OFAC” has the meaning specified in Section 12.1 “Off-the-Shelf Software” has the meaning specified in Section 5.14(b). “Order” means any order, directive, decree, ruling, judgment, injunction, writ, determination, binding decision, verdict, award or other action that is or has been made, entered, rendered, or otherwise put into effect by or under the authority of any Governmental Authority. “Organizational Documents” means, with respect to any Person that is an entity, its Certificate of Incorporation, certificate of formation, bylaws, operating agreement, memorandum of association, notice of articles, articles or similar organizational documents, in each case, as amended. “Outside Date” has the meaning specified in Section 9.1(b)(iv). “Owned IP” means all Intellectual Property in which the Company has or purports to have an ownership interest in any nature (whether solely or jointly with another Person). TABLE OF CONTENTS “Party” has the meaning specified in the Preamble hereto. “Patents” means any patents, patent applications and the inventions, designs and improvements described and claimed therein, patentable inventions, and other patent rights (including any divisional, provisional, continuations, continuations-in-part, substitutions, or reissues thereof, whether or not patents are issued on any such applications and whether or not any such applications are amended, modified, withdrawn, or refiled). “PCAOB” means the U.S. Public Company Accounting Oversight Board (or any successor thereto). “PCAOB Financial Statements” has the meaning specified in Section 6.4(a). “Per Common Share Amalgamation Consideration” means, (i) with respect to each Multiple Voting Company Share, an amount of New PubCo Common Shares equal to (A) ten (10), multiplied by (B) the Common Conversion Ratio, and (ii) with respect to each Subordinated Voting Company Share, an amount of New PubCo Common Shares equal the Common Conversion Ratio. “Permits” means all federal, state, provincial, local or foreign or other third-party permits, grants, easements, consents, approvals, authorizations, exemptions, licenses, franchises, concessions, ratifications, permissions, clearances, confirmations, endorsements, waivers, certifications, designations, ratings, registrations, qualifications or Orders of any Governmental Authority or any other Person. “Permitted Liens” means (a) Liens for Taxes or assessments and similar governmental charges or levies, which either are (i) not delinquent or (ii) being contested in good faith and by appropriate Proceedings, and adequate reserves have been established with respect thereto, (b) other Liens imposed by operation of Law arising in the ordinary course of business for amounts which are not due and payable and as would not in the aggregate materially adversely affect the value of, or materially adversely interfere with the use of, the property subject thereto, (c) Liens incurred or deposits made in the ordinary course of business in connection with social security, (d) Liens on goods in transit incurred pursuant to documentary letters of credit, in each case arising in the ordinary course of business, or (e) Liens arising under this Agreement or any Ancillary Document. “Person” means an individual, corporation, partnership (including a general partnership, limited partnership, or limited liability partnership), limited liability company, association, trust or other entity or organization, including a government, domestic or foreign, or political subdivision thereof, or an agency or instrumentality thereof. “Personal Data” means, with respect to any natural Person, any information that allows the identification of such Person or enables access to such Person’s financial information or that is otherwise subject to or defined as “personal data,” “personally identifiable information,” “personal information,” “protected health information” or similar term under any applicable Privacy Laws. “Personal Property” means any machinery, equipment, tools, vehicles, furniture, leasehold improvements, office equipment, plant, parts and other tangible personal property. “Plan of Arrangement” has the meaning specified in the Recitals hereto. “Post-Closing New PubCo Board” has the meaning specified in Section 6.15(a). “Premium Cap” has the meaning specified in Section 6.17(b). “Privacy Laws” means all applicable Laws relating to privacy and protection of Personal Data and any and all similar Laws relating to privacy, security, data protection, data availability and destruction and data breach, including security incident notification. “Proceeding” or “Action” means any notice of noncompliance or violation, or any claim, demand, action, suit, proceeding, complaint (including a qui tam complaint), charge, hearing, litigation, audit, settlement, labor dispute, inquiry, civil investigative demand, subpoena, stipulation, assessment, arbitration, demand for recoupment or revocation, or any request (including any request for information) or investigation before or by a Governmental Authority or an arbitrator. “Proxy Statement” has the meaning specified in Section 6.12(a). “Public Certifications” means collectively, all certifications and statements required by (a) Rules 13a-14 or 15d-14 under the Exchange Act, and (b) 18 U.S.C. § 1350 (Section 906 of SOX). “Redemption” has the meaning specified in Section 6.12(a). TABLE OF CONTENTS “Redemption Rights” has the meaning specified in Section 6.12(a). “Registration Rights Agreement” has the meaning specified in Section 6.20 hereto. “Registration Statement” has the meaning specified in Section 6.12(a). “Registry” means any Carbon Credit registry established or operated for the verification, holding, transfer, retirement, and cancellation of a Carbon Credit, including but not limited to, the registry maintained by each of Verra, Gold Standard, Climate Action Reserve or the American Carbon Registry. “Registry Account” means an account established by or on behalf of the Company with a Registry including for the holding, transfer, retirement and cancellation of a Carbon Credit. “Related Party Transactions” has the meaning specified in Section 5.22. “Related Person” has the meaning specified in Section 5.22. “Release” means any release, spill, emission, leaking, pumping, pouring, emptying, escaping, injection, deposit, disposal, discharge, dispersal, or leaching into the indoor or outdoor environment, or into or out of any property. “Released Claims” has the meaning specified in Section 10.1. “Representatives” means, as to any Person, such Person’s Affiliates and the respective managers, directors, officers, employees, independent contractors, consultants, advisors (including financial advisors, counsel and accountants), agents and other legal representatives of such Person or its Affiliates. “Required Company Shareholder Approval” has the meaning specified in Section 8.1(b). “Required Financial Statements” has the meaning specified in Section 6.4(a). “Required SPAC Shareholder Approval” has the meaning specified in Section 8.1(a). “Rules” has the meaning specified in Section 5.33. “Sanctioned Country” means any country or region or government thereof that is, or has been in the last five years, the subject or target of a comprehensive embargo under Trade Controls (including Cuba, Iran, North Korea, Syria, Venezuela, the Crimea region of Ukraine, the so-called “Donetsk People’s Republic,” and the so-called “Luhansk People’s Republic”). “Sanctioned Person” means any Person that is the subject or target of sanctions or restrictions under Trade Controls including: (i) any Person listed on any U.S. or non-U.S. sanctions- or export-related restricted party list, including the U.S. Department of the Treasury Office of Foreign Assets Control’s (“OFAC”) List of Specially Designated Nationals and Blocked Persons, or any other OFAC, U.S. Department of Commerce Bureau of Industry and Security, or U.S. Department of State sanctions- or export-related restricted party list; (ii) any Person located, organized, or resident in a Sanctioned Country; (iii) any Person that is, in the aggregate, 50 percent or greater owned, directly or indirectly, or otherwise controlled by a Person or Persons described in clauses (i)-(ii); or (iv) any national of a Sanctioned Country with whom U.S. persons are prohibited from dealing. “Sanctions” means all U.S. and non-U.S. Laws relating to economic or trade sanctions, including the Laws administered or enforced by the United States (including by OFAC or the U.S. Department of State) and the United Nations Security Council. “SEC” means the U.S. Securities and Exchange Commission (or any successor Governmental Authority). “SEC Reports” has the meaning specified in Section 3.7. “Securities Act” means the Securities Act of 1933, as amended. “SEDAR+ Reports” has the meaning specified in Section 5.31. “Signing Filing” has the meaning specified in Section 6.13(b). “Signing Press Release” has the meaning specified in Section 6.13(b). “Software” means any computer software programs, including all source code, object code, data and databases, and documentation related thereto and all software modules, tools and databases. TABLE OF CONTENTS “Source Code” means the source code and interpreted code for all Software, including all comments and procedural code, in a form intelligible to trained programmers and capable of being translated into object code through assembly, compiling or otherwise, or capable of being interpreted (e.g., by an interpreter), in each case for operation on a host system, further including all related documentation, including flow charts, schematics, statements of principles of operations, and architecture standards, describing the data flows, data structures, and control logic of the Software in sufficient detail to enable a trained programmer through study of such documentation to maintain or modify the Software without undue experimentation. “SOX” means the U.S. Sarbanes-Oxley Act of 2002, as amended. “SPAC” has the meaning specified in the Preamble hereto. “SPAC Board” means prior to the SPAC Continuance, the members of the board of directors of the SPAC. “SPAC Class A Shares” means prior to the SPAC Continuance, the shares of Class A common stock, par value $0.0001 per share, of the SPAC. “SPAC Class B Shares” means prior to the SPAC Continuance, the shares of Class B common stock, par value $0.0001 per share, of the SPAC. “SPAC Continuance” has the meaning specified in the Recitals hereto. “SPAC Disclosure Schedules” has the meaning specified in Article III. “SPAC Extension Expenses” has the meaning specified in Section 9.3(a). “SPAC Financials” has the meaning specified in Section 3.7(d). “SPAC Group” has the meaning specified in Section 11.13(a). “SPAC Material Adverse Effect” has the meaning specified in Section 3.1. “SPAC Material Contract” has the meaning specified in Section 3.14(a). “SPAC Preferred Shares” means the shares of preferred stock, par value $0.0001 per share, of the SPAC. “SPAC Private Warrants” means non-redeemable whole warrants, issued in a private placement to the Sponsor at the time of the consummation of the IPO, entitling the holders thereof to purchase one (1) SPAC Class A Share at a purchase price of $11.50 per share. “SPAC Public Shareholders” has the meaning specified in Section 10.1. “SPAC Public Warrants” means redeemable whole warrants, one-half (1/2) of each such warrant which was included as part of each SPAC Unit issued in the IPO, entitling the holders thereof to purchase one (1) SPAC Class A Share at a purchase price of $11.50 per share. “SPAC Securities” means prior to the SPAC Continuance, the SPAC Units, SPAC Shares, SPAC Preferred Shares and SPAC Warrants, collectively. “SPAC Shareholder Approval Matters” has the meaning specified in Section 6.12(a). “SPAC Shareholders” means, collectively, the holders of SPAC Shares prior to the Effective Time. “SPAC Shares” means the SPAC Class A Shares and the SPAC Class B Shares, collectively. “SPAC Special Meeting” has the meaning specified in Section 6.12(a). “SPAC Specified Expenses” has the meaning set forth in Section 9.3(a). “SPAC Specified Representations” has the meaning set forth in Section 8.2(a)(i). “SPAC Units” means the units of the SPAC issued in the IPO (including overallotment units acquired by the IPO Underwriter), consisting of (a) one (1) SPAC Class A Share and (b) one-half (1/2) of one SPAC Public Warrant. “SPAC Warrants” means the SPAC Private Warrants and the SPAC Public Warrants, collectively. “Sponsor” has the meaning specified in the Recitals hereto. “Sponsor Side Letter” has the meaning specified in the Recitals hereto. TABLE OF CONTENTS “Subordinated Voting Company Shares” means the common shares of the Company, without par value, with subordinated voting rights. “Subsidiary” means, with respect to any Person, any corporation, partnership, association or other business entity of which (a) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other subsidiaries of that Person or a combination thereof, or (b) if a partnership, association or other business entity, a majority of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons will be deemed to have a majority ownership interest in a partnership, association or other business entity if such Person or Persons will be allocated a majority of partnership, association or other business entity gains or losses or will be or control the managing director, managing member, general partner or other managing Person of such partnership, association or other business entity. A Subsidiary of a Person will also include any variable interest entity which is consolidated with such Person under applicable accounting rules. “Superior Proposal” means any bona fide written Acquisition Proposal to acquire, directly or indirectly, not less than all of the outstanding Company Shares or all or substantially all of the assets of the Company on a consolidated basis that did not result from a breach of Section 6.6 and: (a) that is reasonably capable of being completed, without undue delay, taking into account all financial, legal, regulatory and other aspects of such Acquisition Proposal, (b) that is not subject to a financing condition and in respect of which it has been demonstrated to the satisfaction of the Company Board after receipt of advice from its financial advisors and legal counsel, that adequate arrangements have been made in respect of any financing required to complete such Acquisition Proposal; (c) that is not subject to a due diligence condition; and (d) in respect of which the Company Board determines, in its good faith judgment, after receiving the advice of its legal counsel and its financial advisors, that it would, if consummated in accordance with its terms (but without assuming away the risk of non-completion), result in a transaction which is more favorable, from a financial point of view, to Company Shareholders than the Arrangement (including any amendments to the terms and conditions of the Arrangement proposed by the SPAC pursuant to Section 6.6(d)). “Superior Proposal Notice” has the meaning specified in Section 6.6(d)(iii). “Tail Policy” has the meaning specified in Section 6.17(b). “Tax” or “Taxes” means (a) all direct or indirect federal, state, provincial, local, foreign and other net income, gross income, gross receipts, sales, use, value-added, ad valorem, transfer, franchise, profits, license, lease, service, service use, withholding, payroll, employment, social security and related contributions due in relation to the payment of compensation to employees, excise, severance, stamp, occupation, premium, property, windfall profits, alternative minimum, estimated, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts with respect thereto, (b) any Liability for payment of amounts described in clause (a) whether as a result of being a member of an affiliated, consolidated, combined or unitary group for any period or otherwise through operation of law and (c) any Liability for the payment of amounts described in clauses (a) or (b) as a result of any tax sharing, tax group, tax indemnity or tax allocation agreement (excluding commercial agreements entered into in the ordinary course of business the primary purpose of which is not the sharing of Taxes) with, or any other express or implied agreement to indemnify, any other Person. “Tax Return” means any return, report, statement, refund, claim, declaration, information return, statement, estimate or other document filed or required to be filed with a Governmental Authority in respect of Taxes, including any Schedule or attachment thereto and including any amendments thereof. “Trade Controls” has the meaning specified in Section 5.25(a). “Trade Secrets” means any trade secrets, confidential business information, concepts, ideas, designs, research or development information, processes, procedures, techniques, technical information, specifications, operating and maintenance manuals, engineering drawings, methods, know-how, data, mask works, discoveries, inventions, modifications, extensions, improvements, customer and pricing lists, and other proprietary rights (whether or not patentable or subject to copyright, trademark, or trade secret protection). “Trademarks” means any trademarks, service marks, trade dress, trade names, brand names, internet domain names, designs, logos, or corporate names (including, in each case, the goodwill associated therewith), whether registered or unregistered, and all registrations and applications for registration and renewal thereof. TABLE OF CONTENTS “Trading Day” means any day on which the New PubCo Common Shares are actually traded on the principal securities exchange or securities market on which the New PubCo Common Shares are then traded. “Trading Market” means the stock exchange or such other nationally recognized stock market on which the New PubCo Common Shares are trading at the time of determination. “Transfer Taxes” has the meaning specified in Section 6.10(b). “Transmittal Documents” has the meaning specified in Section 2.14(d). “Trust Account” means the trust account established by the SPAC with the proceeds from the IPO pursuant to the Trust Agreement in accordance with the IPO Prospectus. “Trust Agreement” means that certain Investment Management Trust Agreement, dated as of November 1, 2021, as it may be amended, by and between the SPAC and the Trustee. “Trustee” means Continental Stock Transfer & Trust Company, in its capacity as trustee under the Trust Agreement. “Unaudited Balance Sheet” has the meaning specified in Section 5.7(a)(ii). “Unaudited Financial Statements” has the meaning specified in Section 5.7(a)(ii). “VWAP” means, with respect to any security, for each Trading Day, the daily volume weighted average price (based on such Trading Day) of such security on the Trading Market as reported by Bloomberg Financial L.P. using the AQR function. (REMAINDER OF PAGE INTENTIONALLY LEFT BLANK) TABLE OF CONTENTS IN WITNESS WHEREOF, each Party has caused this Agreement to be signed and delivered as of the date first written above. | | | FOCUS IMPACT ACQUISITION CORP. | | | | | | | | | | | | | | By: | | | /s/ Carl Stanton | | | | | | | Name: | | | Carl Stanton | | | | | | | Title: | | | Chief Executive Officer | | | | | | | | | | | | | | FOCUS IMPACT AMALCO SUB LTD. | | | | | | | | | | | | | | By: | | | /s/ Carl Stanton | | | | | | | Name: | | | Carl Stanton | | | | | | | Title: | | | Chief Executive Officer | | | | | | | | | | | | | | DEVVSTREAM HOLDINGS INC. | | | | | | | | | | | | | | By: | | | /s/ Sunny Trinh | | | | | | | Name | | | Sunny Trinh | | | | | | | Title: | | | Chief Executive Officer |
[Signature Page to the Business Combination Agreement] TABLE OF CONTENTS
Plan of Arrangement
(Attached.) TABLE OF CONTENTS
New PubCo Organizational Documents
(Attached.) TABLE OF CONTENTS
Sponsor Side Letter
(Attached.) TABLE OF CONTENTS
Company Support & Lock-Up Agreement
(Attached.) TABLE OF CONTENTS
Registration Rights Agreement
(Attached.) TABLE OF CONTENTS
Arrangement Resolution
(Attached.) TABLE OF CONTENTS
Core Company Securityholders 1. | | | Devvio, Inc. | | | | | 2. | | | Thomas Anderson | | | | | 3. | | | Ray Quintana | | | | | 4. | | | Jamila Aziza Piracci | | | | | 5. | | | Stephen Kukucha | | | | | 6. | | | Michael BuehlerMax Bühler | | | | | 7. | | | David Goertz | | | | | 8. | | | Christopher Merkel | | | | | 9. | | | Sunny Trinh | | | | | 10. | | | Bryan Went |
TABLE OF CONTENTS
Company Securityholders Party to the Registration Rights Agreement 1. | | | Devvio, Inc. | | | | | 2. | | | Thomas Anderson | | | | | 3. | | | Ray Quintana | | | | | 4. | | | Jamila Aziza Piracci | | | | | 5. | | | Stephen Kukucha | | | | | 6. | | | Michael BuehlerMax Bühler | | | | | 7. | | | David Goertz | | | | | 8. | | | Christopher Merkel | | | | | 9. | | | Sunny Trinh | | | | | 10. | | | Bryan Went |
TABLE OF CONTENTS
Company Capital Expenditures Budget
DevvStream CapEx Budget - 2nd Half CY 2023 BCRB Offtake Agreement | | | $140,000 | | | Q4 2023 | eWater Offtake Agreement | | | $500,000 | | | Q4 2023 | | | | $640,000 | | | |
TABLE OF CONTENTS
Articles of Continuance
Business Corporations Act
Section 188 2.
| The classes of shares, and any maximum number of shares that the corporation is authorized to issue: |
| Refer to “Share Structure” attachment. | |
3.
| Restrictions on share transfers (if any): |
| There are no “Restrictions on Share Transfers”. | |
4.
| Number, or minimum and maximum number, of directors that the corporation may have: |
| The Corporation shall have a minimum of 3 and a maximum of 15 directors. | |
5.
| If the corporation is restricted FROM carrying on a certain business, or restricted TO carrying on a certain business, specify the restriction(s): |
| There shall be no restrictions on the business that the Corporation may carry on. | |
6.
| Other rules or provisions (if any): |
| Refer to “Other Rules or Provisions” attachment. | |
7.
| If a change of name is effected, indicate previous name: |
| Focus Impact Acquisition Corp. | |
8.
| Current Extra-Provincial Registration(if applicable):Alberta Corporate Access Number |
9.
| Current Jurisdiction Information |
| Name of Corporation: Focus Impact Acquisition Corp.
Registration Number in Current Jurisdiction: 5219712
Jurisdiction: Delaware
Date of Formation in Current Jurisdiction: February 23, 2021 | |
10.
| Business Number (If a business number is not provided, CRA will assign as new business number) |
11. | | | Date Authorized: | | | , 2023 | | | | | | | | | | Month / Day / Year | | | |
TABLE OF CONTENTS 12.
| Authorized Representative/Authorized Signing Authority for the Corporation |
| Name & Title of Person Authorizing (please print) | | | Address: (including postal code) | | | | | | Authorized Signature | | | | | | | | | | | | | | | | | | • | | | • | | | | | | | | | | | | | | | • | | | | | | | | | | | | | | | | | | | | | | | | | |
This information is being collected for the purposes of corporate registry records in accordance with the Business Corporations Act. Questions about the collection of this information can be directed to the Freedom of Information and Protection of Privacy Coordinator for Alberta Registries, Research and Program Support, Box 314 , Edmonton, Alberta T5J 4L4, (780) 427-7013. TABLE OF CONTENTS SHARE STRUCTURE
Attached to and Forming Part of
the Articles of DevvStream Corp. The Corporation is authorized to issue an unlimited number of Common Shares and an unlimited number of Preferred Shares, issuable in series. Subject to the rights, privileges, restrictions and conditions which attach to any other class of shares of the Corporation, the Common Shares, as a class, shall have attached thereto the following rights, privileges, restrictions and conditions: Each holder of Common Shares shall be entitled to notice of and to attend (including, if applicable, virtually) any meeting of the shareholders of the Corporation. Holders of Common Shares shall be entitled to vote at any meeting of the shareholders of the Corporation, and at each such meeting, shall be entitled to one vote in respect of each Common Share held, except for a meeting of which only holders of another particular class or series of shares of the Corporation shall have the right to vote. 1.2
| Dividends and Distributions |
Holders of Common Shares shall be entitled to receive, as and when declared by the Board, dividends or other distributions in cash or otherwise, subject to the rights, privileges, restrictions, and conditions attached to the Preferred Shares of any series or any other class or series of stock having a preference over the Common Shares with respect to the payment of dividends. 1.3
| Liquidation, Dissolution or Winding-Up |
In the event of the liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or in the event of any other distribution of assets of the Corporation among its shareholders for the purpose of winding up its affairs, the holders of Common Shares shall, subject to the prior rights of the holders of any shares of the Corporation ranking in priority to the Common Shares, be entitled to participate ratably in the remaining property of the Corporation (on a per share basis). The rights, privileges, restrictions and conditions attaching to the Preferred Shares, as a class, shall be as follows: 1.1.
| Subject to the filing of Articles of Amendment in accordance with the Business Corporations Act (Alberta) (the “Act”), the Board of Directors may at any time and from time to time issue the Preferred Shares in one or more series, each series to consist of such number of shares as may, before the issuance thereof, be determined by the Board of Directors. |
1.2.
| Subject to the filing of Articles of Amendment in accordance with the Act, the Board of Directors may from time to time fix, before issuance, the designation, rights, privileges, restrictions and conditions attaching to each series of Preferred Shares including, without limiting the generality of the foregoing, the amount, if any, specified as being payable preferentially to such series on a Distribution; the extent, if any, of further participation on a Distribution; voting rights, if any; and dividend rights (including whether such dividends be preferential, or cumulative or non-cumulative), if any. |
TABLE OF CONTENTS OTHER RULES OR PROVISIONS
Attached to and Forming Part of
the Articles of DevvStream Corp. 1.
| The directors of the Corporation may appoint one or more directors of the Corporation but the total number of directors so appointed may not exceed one third of the number of directors elected at the previous annual meeting of shareholders of the Corporation. Any directors of the Corporation appointed pursuant to the previous sentence shall hold office for a term expiring not later than the close of the next annual meeting of shareholders |
2.
| Shareholders meetings may be held anywhere inside or outside of Alberta, (i) entirely in person; or (ii) entirely by electronic means; or (iii) both in person and by electronic means, in all cases as the directors determine by resolution from time to time. |
3.
| Except as otherwise provided in these Articles or except as provided in the Business Corporations Act (Alberta) or other applicable law, any shares entitled to vote on any matter shall vote together as if they were shares of a single class. |
4.
| To the extent required by applicable laws, the Corporation and/or its transfer agent may deduct and withhold any tax. To the extent any amounts are so withheld and are timely remitted to the applicable governmental authority, such amounts shall be treated for all purposes herein as having been paid to the person otherwise entitled thereto. |
TABLE OF CONTENTS Notice of Address and
Notice of Agent for Service
Business Corporations Act
Sections 20 and 20.1 2.
| Address of Registered Office (Street address, including postal code, or legal land description) |
| #1700, 421 – 7th Avenue S.W.
Calgary, AB T2P 4K9 | |
3.
| Records Office (Street address, including postal code, or legal land description) |
| #1700, 421 – 7th Avenue S.W.
888 - 3rd Street S.W.
Calgary, AB T2P 4K9 | |
4.
| Agent for Service (Full name and street address, including postal code and email address) |
| Paul Barbeau
McMillan LLP
#1700, 421 – 7th Avenue S.W.
Calgary, AB T2P 4K9
Email: annual.returns@McMillan.ca | |
5.
| Email Address for Annual Return Reminders |
| annual.returns@Mcmillan.ca | |
6. | | | Date Authorized: | | | , 2023 | | | | | | | | | | Month / Day / Year | | | |
| | | | (Authorized Signatory) | | | (Print Name & Title of Authorized Person) |
This information is being collected for the purposes of corporate registry records in accordance with the Business Corporations Act Questions about the collection of this information can be directed to the Freedom of Information and Protection of Privacy Coordinator for Alberta Registries, Research and Program Support, Box 3140, Edmonton, Alberta T5J 2G7, (780) 427- 7013. REG 3016 (2001/09) TABLE OF CONTENTS Notice of Directors
Business Corporations Act
Section 106 2.
| On the date of Continuance the following persons were appointed Director(s): |
| Name of Director
(Last, First, Second) | | | Mailing Address (including postal code) | | | • | | | • | | | • | | | • | |
3. | | | The following persons ceased to hold office as Director(s) on | | | N/A | | | : | | | | | | | year / month / day | | | |
| Name of Director
(Last, First, Second) | | | Mailing Address (including postal code) | | | | | | | | | | | | | |
4.
| As of this date, the Director(s) of the corporation are: |
| Name of Director
(Last, First, Second) | | | Mailing Address (including postal code) | | | • | | | • | | | • | | | • | |
5. | | | Date Authorized: | | | , 2023 | | | | | | | | | | Month / Day / Year | | | |
| | | • | (Authorized Signatory) | | | (Print Name & Title of Authorized Person) |
This information is being collected for the purposes of corporate registry records in accordance with the Business Corporations Act Questions about the collection of this information can be directed to the Freedom of Information and Protection of Privacy Coordinator for Alberta Registries, Research and Program Support, Box 3140, Edmonton, Alberta T5J 2G7, (780) 427- 7013. REG 3016 (2001/09) TABLE OF CONTENTS DEVVSTREAM CORP.
BY-LAW NO. 1 ARTICLE 1
INTERPRETATION Section 1.1 Definitions. As used in this by-law, the following terms have the following meanings: “Act” means the Business Corporations Act (Alberta) and the regulations under the Act, all as amended, re-enacted or replaced from time to time. “Authorized Signatory” has the meaning specified in Section 2.2. “Corporation” means DevvStream Corp. “person” means a natural person, partnership, limited partnership, limited liability partnership, corporation, limited liability company, unlimited liability company, joint stock company, trust, unincorporated association, joint venture or other entity or governmental or regulatory entity, and pronouns have a similarly extended meaning. “recorded address” means (i) in the case of a shareholder or other securityholder, the shareholder’s or securityholder’s latest address as shown in the records of the Corporation, (ii) in the case of joint shareholders or other joint securityholders, the address appearing in the records of the Corporation in respect of the joint holding or, if there is more than one address in respect of the joint holding, the first address that appears, and (iii) in the case of a director, officer or auditor, the person’s latest address as shown in the records of the Corporation or, if applicable, the last notice filed with the Director under the Act, whichever is the most recent. “show of hands” means, in connection with a meeting, a show of hands by persons present at the meeting, the functional equivalent of a show of hands by telephonic or electronic means and any combination of such methods. Terms used in this by-law that are defined in the Act have the meanings given to such terms in the Act. Section 1.2 Interpretation. The division of this by-law into Articles, Sections and other subdivisions and the insertion of headings are for convenient reference only and do not affect its interpretation. Words importing the singular number include the plural and vice versa. Any reference in this by-law to gender includes all genders. In this by-law the words “including”, “includes” and “include” means “including (or includes or include) without limitation”. Section 1.3 Subject to Act and Articles. This by-law is subject to, and should be read in conjunction with, the Act and the articles. If there is any conflict or inconsistency between any provision of the Act or the articles and any provision of this by-law, the provision of the Act or the articles will govern. ARTICLE 2
BUSINESS OF THE CORPORATION Section 2.1 Financial Year. The financial year of the Corporation ends on such date of each year as the directors determine from time to time. Section 2.2 Execution of Instruments and Voting Rights. Contracts, documents and instruments may be signed on behalf of the Corporation, either manually or by facsimile or by electronic means, (i) by any one director or officer or (ii) by any other person authorized by the directors from time to time (each person referred to in (i) and (ii) is an “Authorized Signatory”). Voting rights for securities held TABLE OF CONTENTS by the Corporation may be exercised on behalf of the Corporation by any one Authorized Signatory. In addition, the directors may, from time to time, authorize any person or persons (i) to sign contracts, documents and instruments generally on behalf of the Corporation or to sign specific contracts, documents or instruments on behalf of the Corporation and (ii) to exercise voting rights for securities held by the Corporation generally or to exercise voting rights for specific securities held by the Corporation. Any Authorized Signatory, or other person authorized to sign any contract, document or instrument on behalf of the Corporation, may affix the corporate seal, if any, to any contract, document or instrument when required. As used in this Section, the phrase “contracts, documents and instruments” means any and all kinds of contracts, documents and instruments in written or electronic form, including cheques, drafts, orders, guarantees, notes, acceptances and bills of exchange, deeds, mortgages, hypothecs, charges, conveyances, transfers, assignments, powers of attorney, agreements, proxies, releases, receipts, discharges and certificates and all other paper writings or electronic writings. Section 2.3 Banking Arrangements. The banking and borrowing business of the Corporation or any part of it may be transacted with such banks, trust companies or other firms or corporations as the directors determine from time to time. All such banking and borrowing business or any part of it may be transacted on the Corporation’s behalf under the agreements, instructions and delegations, and by the one or more officers and other persons, that the directors authorize from time to time. This paragraph does not limit in any way the authority granted under Section 2.2. ARTICLE 3
DIRECTORS Section 3.1 Place of Meetings. Any or all meetings of directors may be held at any place in or outside Canada. Section 3.2 Calling of Meetings. A chair of the board, the chief executive officer, the president or any one or more directors may call a meeting of the directors at any time. Meetings of directors will be held at the time and place as the person(s) calling the meeting determine. Section 3.3 Regular Meetings. The directors may establish regular meetings of directors. Any resolution establishing such meetings will specify the dates, times and places of the regular meetings and will be sent to each director. Section 3.4 Notice of Meeting. Subject to this section, notice of the time and place of each meeting of directors will be given to each director not less than 24 hours before the time of the meeting. No notice of meeting is required for any regularly scheduled meeting except where the Act requires the notice to specify the purpose of, or the business to be transacted at, the meeting. Provided a quorum of directors is present, a meeting of directors may be held, without notice, immediately following the annual meeting of shareholders. The accidental omission to give notice of any meeting of directors to, or the non-receipt of any notice by, any person, or any error in any notice not affecting the substance of the notice, does not invalidate any resolution passed or any action taken at the meeting. Section 3.5 Waiver of Notice. A director may waive notice of a meeting of directors, any irregularity in a notice of meeting of directors or any irregularity in a meeting of directors. Such waiver may be given in any manner and may be given at any time either before or after the meeting to which the waiver relates. Waiver of any notice of a meeting of directors cures any irregularity in the notice, any default in the giving of the notice and any default in the timeliness of the notice. TABLE OF CONTENTS Section 3.6 Quorum. A majority of the number of directors in office or such greater or lesser number as the directors may determine from time to time, constitutes a quorum at any meeting of the directors. Where the Corporation has fewer than three directors, all directors must be present at any meeting of directors to constitute a quorum. Notwithstanding any vacancy among the directors, a quorum of directors may exercise all the powers of the directors. Section 3.7 Meeting by Telephonic, Electronic or Other Communication Facility. If all the directors of the Corporation present at or participating in a meeting of directors consent, a director may participate in such meeting by means of a telephonic, electronic or other communication facility. A director participating in a meeting by such means is deemed to be present at the meeting. Any consent is effective whether given before or after the meeting to which it relates and may be given with respect to all meetings of the directors. Section 3.8 Chair. The chair of any meeting of directors is the first mentioned of the following officers that is a director and is present at the meeting: (a)
| the co-chairs of the board or any one of them; |
(b)
| the lead director, if any; or |
(c)
| the chief executive officer. |
If no such person is present at the meeting, the directors present shall choose one of their number to chair the meeting. Section 3.9 Secretary. The corporate secretary, if any, will act as secretary at meetings of directors. If a corporate secretary has not been appointed or the corporate secretary is absent, the chair of the meeting will appoint a person, who need not be a director, to act as secretary of the meeting. Section 3.10 Votes to Govern. At all meetings of directors, every question shall be decided by a majority of the votes cast. In case of an equality of votes, the chair of the meeting is not entitled to a second or casting vote. Section 3.11 Remuneration and Expenses. The directors may determine from time to time the remuneration, if any, to be paid to a director for his or her services as a director. The directors are also entitled to be reimbursed for travelling and other out-of-pocket expenses properly incurred by them in attending directors meetings, committee meetings and shareholders meetings and in the performance of other duties of directors of the Corporation. The directors may also award additional remuneration to any director undertaking special services on the Corporation’s behalf beyond the services ordinarily required of a director by the Corporation. A director may be employed by or provide services to the Corporation otherwise than as a director. Such a director may receive remuneration for such employment or services in addition to any remuneration paid to the director for his or her services as a director. ARTICLE 4
COMMITTEES Section 4.1 Committees of Directors. The directors may appoint from their number one or more committees and delegate to such committees any of the powers of the directors except those powers that, under the Act, a committee of directors has no authority to exercise. Section 4.2 Proceedings. Meetings of committees of directors may be held at any place in or outside Canada. At all meetings of committees, every question shall be decided by a majority of the votes cast on the question. Unless otherwise determined by the directors, each committee of directors may make, amend or repeal rules and procedures to regulate its meetings TABLE OF CONTENTS including: (i) fixing its quorum, provided that quorum may not be less than a majority of its members; (ii) procedures for calling meetings; (iii) requirements for providing notice of meetings; (iv) selecting a chair for a meeting; and (v) determining whether the chair will have a deciding vote in the event there is an equality of votes cast on a question. Subject to a committee of directors establishing rules and procedures to regulate its meetings, Section 3.1 to Section 3.11 inclusive apply to committees of directors, with such changes as are necessary. ARTICLE 5
OFFICERS Section 5.1 Appointment of Officers. The directors may appoint such officers of the Corporation as they deem appropriate from time to time. The officers may include any of a chair or co-chairs of the board, a chief executive officer, a president, one or more vice-presidents, a chief financial officer, a chief investment officer, a chief corporate officer, a general counsel, a corporate secretary and a treasurer and one or more assistants to any of the appointed officers. No person may be the chair or co-chair of the board unless that person is a director. Section 5.2 Powers and Duties. Unless the directors determine otherwise, an officer has all powers and authority that are incident to his or her office. An officer will have such other powers, authority, functions and duties that are prescribed or delegated, from time to time, by the directors, or by other officers if authorized to do so by the directors. The directors or authorized officers may, from time to time, vary, add to or limit the powers and duties of any officer. Section 5.3 Chair(s) of the Board. If appointed, the chair or co-chairs of the board will preside at directors meetings and shareholders meetings in accordance with Section 3.8 and Section 7.9, respectively. The chair or co-chairs of the board will have such other powers and duties as the directors determine. Section 5.4 Chief Executive Officer. If appointed, the chief executive officer of the Corporation will have general powers and duties of supervision of the business and affairs of the Corporation. The chief executive officer will have such other powers and duties as the directors determine. Subject to Section 3.9 and Section 7.9, during the absence or disability of the corporate secretary or the treasurer, or if no corporate secretary or treasurer has been appointed, the chief executive officer will also have the powers and duties of the office of corporate secretary and treasurer, as the case may be. Section 5.5 President. If appointed, the president of the Corporation will have general powers and duties of supervision of the business and affairs of the Corporation. The president will have such other powers and duties as the directors determine. Section 5.6 Corporate Secretary. If appointed, the corporate secretary will have the following powers and duties: (i) the corporate secretary will give or cause to be given, as and when instructed, notices required to be given to shareholders, directors, officers, auditors and members of committees of directors; (ii) the corporate secretary may attend at and be the secretary of meetings of directors, shareholders, and committees of directors and will have the minutes of all proceedings at such meetings entered in the books and records kept for that purpose; and (iii) the corporate secretary will be the custodian of any corporate seal of the Corporation and the books, papers, records, documents, and instruments belonging to the Corporation, except when another officer or agent has been appointed for that purpose. The corporate secretary will have such other powers and duties as the directors or the chief executive officer of the Corporation determine. Section 5.7 Treasurer. If appointed, the treasurer of the Corporation will have the following powers and duties: (i) the treasurer will ensure that the Corporation prepares and maintains adequate accounting records in compliance with the Act; (ii) the treasurer will also be responsible for the deposit of money, the safekeeping of securities and the disbursement of the funds of TABLE OF CONTENTS the Corporation; and (iii) at the request of the directors, the treasurer will render an account of the Corporation’s financial transactions and of the financial position of the Corporation. The treasurer will have such other powers and duties as the directors or the chief executive officer of the Corporation determine. Section 5.8 Removal of Officers. The directors may remove an officer from office at any time, with or without cause. Such removal is without prejudice to the officer’s rights under any employment contract with the Corporation. ARTICLE 6
PROTECTION OF DIRECTORS, OFFICERS AND OTHERS Section 6.1 Limitation of Liability. Subject to the Act and other applicable law, no director or officer is liable for: (i) the acts, omissions, receipts, failures, neglects or defaults of any other director, officer or employee; (ii) joining in any receipt or other act for conformity; (iii) any loss, damage or expense happening to the Corporation through the insufficiency or deficiency of title to any property acquired for or on behalf of the Corporation; (iv) the insufficiency or deficiency of any security in or upon which any of the monies of the Corporation shall be invested; (v) any loss or damage arising from the bankruptcy, insolvency or tortious acts of any person with whom any of the monies, securities or effects of the Corporation shall be deposited; or (vi) any loss occasioned by any error of judgment or oversight on his part, or for any other loss, damage or misfortune whatever which shall happen in the execution of the duties of his office or in relation to his office. Section 6.2 Indemnity. The Corporation will indemnify to the fullest extent permitted by the Act (i) any director or officer of the Corporation, (ii) any former director or officer of the Corporation, (iii) any individual who acts or acted at the Corporation’s request as a director or officer, or in a similar capacity, of another entity, and (iv) their respective heirs and legal representatives. The Corporation is authorized to execute agreements in favour of any of the foregoing persons evidencing the terms of the indemnity. Nothing in this by-law limits the right of any person entitled to indemnity to claim indemnity apart from the provisions of this by-law. Section 6.3 Insurance. The Corporation may purchase and maintain insurance for the benefit of any person referred to in Section 6.2 against such liabilities and in such amounts as the directors may determine and as are permitted by the Act. ARTICLE 7
SHAREHOLDERS Section 7.1 Calling Annual and Special Meetings. The board of directors (by way of a resolution passed at a meeting where there is a quorum of directors or by way of written resolution signed by all directors) have the power to call annual meetings of shareholders and special meetings of shareholders. A chair of the board or the chief executive officer may also call meetings of shareholders provided that the business to be transacted at such meeting has been approved by the board. Annual meetings of shareholders and special meetings of shareholders will be held on the date and at the time and place in or outside Alberta as the person(s) calling the meeting determine. Section 7.2 Electronic Meetings. Meetings of shareholders may be held by telephonic or electronic means. A shareholder who, through those means, votes at the meeting or establishes a communications link to the meeting is deemed for the purposes of the Act to be present at the meeting. The directors may establish procedures regarding the holding of meetings of shareholders by such means. TABLE OF CONTENTS Section 7.3 Notice of Meetings. The time period to provide notice of the time and place of a meeting of shareholders is not less than twenty-one (21) days and not more than fifty (50) days before the meeting. The accidental omission to give notice of any meeting of shareholders to, or the non-receipt of any notice by, any person, or any error in any notice not affecting the substance of the notice, does not invalidate any resolution passed or any action taken at the meeting. Section 7.4 Waiver of Notice. A shareholder, a proxyholder, a director or the auditor and any other person entitled to attend a meeting of shareholders may waive notice of a meeting of shareholders, any irregularity in a notice of meeting of shareholders or any irregularity in a meeting of shareholders. Such waiver may be waived in any manner and may be given at any time either before or after the meeting to which the waiver relates. Waiver of any notice of a meeting of shareholders cures any irregularity in the notice, any default in the giving of the notice and any default in the timeliness of the notice. Section 7.5 Representatives. A representative of a shareholder that is a body corporate or an association will be recognized if (i) a certified copy of the resolution of the directors or governing body of the body corporate or association, or a certified copy of an extract from the by-laws of the body corporate or association, authorizing the representative to represent the body corporate or association is deposited with the Corporation, or (ii) the authorization of the representative is established in another manner that is satisfactory to the corporate secretary or the chair of the meeting. Section 7.6 Persons Entitled to be Present. The only persons entitled to be present at a meeting of shareholders are those persons entitled to vote at the meeting, the directors, the officers, the auditor of the Corporation and others who, although not entitled to vote, are entitled or required under any provision of the Act or the articles or by-laws to be present at the meeting. Any other person may be admitted with the consent of the chair of the meeting or the persons present who are entitled to vote at the meeting. Section 7.7 Quorum. A quorum of shareholders is present at a meeting of shareholders if the holders of not less than 331∕3% of the votes entitled to be cast at the meeting are present in person or represented by proxy, irrespective of the number of persons actually present at the meeting. Section 7.8 Proxies. A proxy shall comply with the applicable requirements of the Act and other applicable law and will be in such form as the directors may approve from time to time or such other form as may be acceptable to the chair of the meeting at which the instrument of proxy is to be used. A proxy will be acted on only if it is deposited with the Corporation or its agent prior to the time specified in the notice calling the meeting at which the proxy is to be used or it is deposited with the corporate secretary, a scrutineer or the chair of the meeting or any adjournment of the meeting prior to the time of voting. Section 7.9 Chair, Secretary and Scrutineers. The chair of any meeting of shareholders is the first mentioned of the following officers that is present at the meeting: (a)
| the co-chairs of the board or any one of them; |
(b)
| the chief executive officer; or |
(c)
| the lead director, if any. |
If no such person is present at the meeting, the persons present who are entitled to vote shall choose a director who is present, or a shareholder who is present, to chair the meeting. TABLE OF CONTENTS The corporate secretary, if any, will act as secretary at meetings of shareholders. If a corporate secretary has not been appointed or the corporate secretary is absent, the chair of the meeting will appoint a person, who need not be a shareholder, to act as secretary of the meeting. If desired, the chair of the meeting may appoint one or more persons, who need not be shareholders, to act as scrutineers at any meeting of shareholders. The scrutineers will assist in determining the number of shares held by persons entitled to vote who are present at the meeting and the existence of a quorum. The scrutineers will also receive, count and tabulate ballots and assist in determining the result of a vote by ballot, and do such acts as are necessary to conduct the vote in an equitable manner. The decision of a majority of the scrutineers shall be conclusive and binding upon the meeting and a declaration or certificate of the scrutineers shall be conclusive evidence of the facts declared or stated in it. Section 7.10 Procedure. The chair of a meeting of shareholders will conduct the meeting and determine the procedure to be followed at the meeting. The chair’s decision on all matters or things, including any questions regarding the validity or invalidity of a form of proxy or other instrument appointing a proxy, is conclusive and binding upon the meeting of shareholders. Section 7.11 Manner of Voting. Subject to the Act and other applicable law, any question at a meeting of shareholders shall be decided by a show of hands, unless a ballot on the question is required or demanded. Subject to the Act and other applicable law, the chair of the meeting may require a ballot or any person who is present and entitled to vote may demand a ballot on any question at a meeting of shareholders. The requirement or demand for a ballot may be made either before or after any vote on the question by a show of hands. A ballot will be taken in the manner the chair of the meeting directs. A requirement or demand for a ballot may be withdrawn at any time prior to the taking of the ballot. The result of such ballot shall be the decision of the shareholders upon the question. In the case of a vote by a show of hands, each person present who is entitled to vote has one vote. If a ballot is taken, each person present who is entitled to vote is entitled to the number of votes that are attached to the shares which such person is entitled to vote at the meeting. Section 7.12 Votes to Govern. Any question at a meeting of shareholders shall be decided by a majority of the votes cast on the question unless the articles, the by-laws, the Act or other applicable law requires otherwise. In case of an equality of votes either when the vote is by a show of hands or when the vote is by a ballot, the chair of the meeting is not entitled to a second or casting vote. Section 7.13 Adjournment. The chair of any meeting of shareholders may, with the consent of the persons present who are entitled to vote at the meeting, adjourn the meeting from time to time and place to place, subject to such conditions as such persons may decide. Any adjourned meeting is duly constituted if held in accordance with the terms of the adjournment and a quorum is present at the adjourned meeting. Any business may be considered and transacted at any adjourned meeting which might have been considered and transacted at the original meeting of shareholders. ARTICLE 8
ADVANCE NOTICE Section 8.1 Nomination of Directors. Subject only to the Act, for so long as the Corporation is a distributing corporation, only persons who are nominated in accordance with the procedures set out in this Section 8.1 shall be eligible for election as directors to the board of the Corporation. Nominations of persons for election to the board may be made for any annual meeting of shareholders, or for any special meeting of shareholders if one of the purposes for which the special meeting was called was the election of directors: (a)
| by or at the direction of the board, including pursuant to a notice of meeting; |
TABLE OF CONTENTS (b)
| by or at the direction or request of one or more shareholders pursuant to a requisition of shareholders made in accordance with the provisions of the Act; or |
(c)
| by any person (a “Nominating Shareholder”): |
(i)
| who, at the close of business on the date of the giving of the notice provided for in Section 8.3 below and on the record date for notice of such meeting, is entered in the Corporation’s securities register as a holder of one or more shares carrying the right to vote at such meeting or who beneficially owns shares that are entitled to be voted at such meeting; and |
(ii)
| who complies with the notice procedures set forth in this Article 8. |
Section 8.2 Timely Notice. In addition to any other applicable requirements, for a nomination to be made by a Nominating Shareholder, such person must have given timely notice thereof (in accordance with Section 8.3 below) in proper written form to the board (in accordance with Section 8.4 below). Section 8.3 Manner of Timely Notice. To be timely, a Nominating Shareholder’s notice to the board must be made: (a)
| in the case of an annual meeting of shareholders, not less than 30 days prior to the date of the annual meeting of shareholders; provided, however, that in the event that the annual meeting of shareholders is to be held on a date that is less than 50 days after the date (the “Notice Date”) that is the earlier of the date that a notice of meeting is filed for such meeting and the date on which the first public announcement of the date of the annual meeting was made, notice by the Nominating Shareholder may be made not later than the close of business on the 10th day following the Notice Date; and |
(b)
| in the case of a special meeting (which is not also an annual meeting) of shareholders called for the purpose of electing directors of the Corporation (whether or not called for such purposes), not later than the close of business on the 15th day following the day that is the earlier of the date that a notice of meeting is filed for such meeting and the date on which the first public announcement of the date of the special meeting of shareholders was made. |
Section 8.4 Proper Form of Notice. To be in proper written form, a Nominating Shareholder’s notice to the board must set forth: (a)
| as to each person whom the Nominating Shareholder proposes to nominate for election as a director (a “Proposed Nominee”): |
(i)
| the name, age, business address and residential address of the person; |
(ii)
| the principal occupation or employment of the person for the past five years; |
(iii)
| the status of the person as a “resident Canadian” (as such term is defined in the Act); |
(iv)
| the class or series and number of shares which are controlled or which are owned beneficially or of record by the person as of the record date for the meeting of shareholders (if such date shall then have been made publicly available and shall have occurred) and as of the date of such notice; |
(v)
| full particulars regarding any contract, agreement, arrangement, understanding or relationship (collectively, “Arrangements”), including, without limitation, financial, compensation and indemnity related Arrangements, between the Proposed Nominee or any associate or affiliate of the Proposed Nominee and any Nominating Shareholder or any of its Representatives; and |
(vi)
| any other information relating to the person that would be required to be disclosed in a dissident’s proxy circular in connection with solicitations of proxies for election of directors pursuant to the Act and Applicable Securities Laws; and |
(b)
| as to the Nominating Shareholder giving the notice: |
(i)
| the name, age, business address and, if applicable, residential address of such Nominating Shareholder; |
TABLE OF CONTENTS (ii)
| full particulars of any proxy, contract, relationship, arrangement, agreement or understanding pursuant to which such Nominating Shareholder has a right to vote any shares; and |
(iii)
| any other information relating to such Nominating Shareholder that would be required to be made in a dissident’s proxy circular in connection with solicitations of proxies for election of directors pursuant to Applicable Securities Laws. |
The Corporation may require any Proposed Nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such Proposed Nominee to serve as an independent director or that could be material to a reasonable shareholder’s understanding of the independence, or lack thereof, of such Proposed Nominee. All information to be provided in a timely notice pursuant to Section 8.3 above shall be provided as of the record date for determining shareholders entitled to vote at the meeting (if such date shall then have been publicly announced) and as of the date of such notice. The Nominating Shareholder shall update such information forthwith if there are any material changes in the information previously disclosed. Section 8.5 Determination of Eligibility. Subject to Section 8.6, no person shall be eligible for election as a director of the Corporation unless such person has been nominated in accordance with the provisions of this Article 8; provided, however, that nothing in this Article 8 shall be deemed to preclude discussion by a shareholder (as distinct from the nomination of directors) at a meeting of shareholders of any matter in respect of which such shareholder would have been entitled to submit a proposal pursuant to the Act. The chairperson of the meeting shall have the power and duty to determine whether a nomination was made in accordance with the procedures set forth in the foregoing provisions and, if any proposed nomination is not in compliance with such foregoing provisions, to declare that such defective nomination shall be disregarded. Section 8.6 Waiver. Notwithstanding the foregoing, the board may, in its sole discretion, waive any requirement in this Article 8. Section 8.7 Terms. For the purposes of this Section: “Applicable Securities Laws” means the applicable securities legislation of each relevant province and territory of Canada, as amended from time to time, the rules, regulations and forms made or promulgated under any such statute and the published national instruments, multilateral instruments, policies, bulletins and notices of the securities commission and similar regulatory authority of each province and territory of Canada; “public announcement” means disclosure in a press release reported by a national news service in Canada, or in a document publicly filed by the Corporation under its profile on the System of Electronic Document Analysis and Retrieval at www.sedar.com; and “Representatives” of a person means the affiliates and associates of such person, all persons acting jointly or in concert with any of the foregoing, and the affiliates and associates of any of such persons acting jointly or in concert, and “Representative” means anyone of them. ARTICLE 9
SECURITIES Section 9.1 Form of Security Certificates. Subject to the Act, security certificates, if required, will be in the form that the directors approve from time to time or that the Corporation adopts. Section 9.2 Transfer of Shares. No transfer of a security issued by the Corporation will be registered except upon (i) presentation of the security certificate representing the security with an endorsement which complies with the Act, together with such reasonable assurance that the endorsement is genuine and effective as the directors may require, (ii) payment of all applicable TABLE OF CONTENTS taxes and fees and (iii) compliance with the articles of the Corporation. If no security certificate has been issued by the Corporation in respect of a security issued by the Corporation, clause (i) above may be satisfied by presentation of a duly executed security transfer power, together with such reasonable assurance that the security transfer power is genuine and effective as the directors may require. Section 9.3 Transfer Agents and Registrars. The Corporation may from time to time appoint one or more agents to maintain, for each class or series of securities issued by it in registered or other form, a central securities register and one or more branch securities registers. Such an agent may be designated as transfer agent or registrar according to their functions and one person may be designated both registrar and transfer agent. The Corporation may at any time terminate such appointment. ARTICLE 10
PAYMENTS Section 10.1 Payments of Dividends and Other Distributions. Any dividend or other distribution payable in cash to shareholders will be paid by cheque or by electronic means or by such other method as the directors may determine. The payment will be made to or to the order of each registered holder of shares in respect of which the payment is to be made. Cheques will be sent to the registered holder’s recorded address, unless the holder otherwise directs. In the case of joint holders, the payment will be made to the order of all such joint holders and, if applicable, sent to them at their recorded address, unless such joint holders otherwise direct. The sending of the cheque or the sending of the payment by electronic means or the sending of the payment by a method determined by the directors in an amount equal to the dividend or other distribution to be paid less any tax that the Corporation is required to withhold will satisfy and discharge the liability for the payment, unless payment is not made upon presentation, if applicable. Section 10.2 Non-Receipt of Payment. In the event of non-receipt of any payment made as contemplated by Section 10.1 by the person to whom it is sent, the Corporation may issue re-payment to such person for a like amount. The directors may determine, whether generally or in any particular case, the terms on which any re-payment may be made, including terms as to indemnity, reimbursement of expenses, and evidence of non-receipt and of title. Section 10.3 Unclaimed Dividends. To the extent permitted by law, any dividend or other distribution that remains unclaimed after a period of two years from the date on which the dividend has been declared to be payable is forfeited and will revert to the Corporation. ARTICLE 11
FORUM SELECTION AND CORPORATE OPPORTUNITIES Section 11.1 Forum of Adjudication of Certain Disputes. Unless the Corporation consents in writing to the selection of an alternative forum, the Courts of the Province of Alberta, Canada and the appellate Courts therefrom, shall, to the fullest extent permitted by law, be the sole and exclusive forum for: (i) any derivative action or proceeding brought on behalf of the Corporation; (ii) any action or proceeding asserting breach of fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation; (iii) any action or proceeding asserting a claim arising pursuant to any provision of the Act, or the Corporation’s articles or by-laws (as the same may be amended from time to time); or (iv) any action or proceeding asserting a claim otherwise related to the Corporation’s “affairs” (as such term is defined in the Act). If any action or proceeding the subject matter of which is within the scope of the preceding sentence is filed in a Court other than a Court located within the Province of Alberta (a “Foreign Action”) in the name of any securityholder, such securityholder shall be deemed to have consented to: (i) the personal jurisdiction of the provincial and federal Courts located within the Province of Alberta in connection with any action or proceeding brought in any such Court to enforce the preceding sentence; and (ii) having service of process made upon such securityholder in any such action or proceeding by service upon such securityholder’s counsel in the Foreign Action as agent for such securityholder. TABLE OF CONTENTS Section 11.2 Corporate Opportunities. (1)
| The Corporation renounces, to the maximum extent permitted by law, any interest or expectancy of the Corporation in, or in being offered an opportunity to participate in, any Excluded Opportunity. An “Excluded Opportunity” is any matter, transaction or interest that is presented to, or acquired, created or developed by, or which otherwise comes into the possession of, any director or officer of the Corporation (or any of its subsidiaries) who is also a director or officer of another company or corporation (or of any subsidiaries thereof) (collectively, “Covered Persons”), unless such matter, transaction or interest is presented to, or acquired, created or developed by, or otherwise comes into the possession of, a Covered Person expressly and solely in such Covered Person’s capacity as a director or officer of the Corporation or a subsidiary thereof. |
(2)
| The Corporation may enter into agreements with other parties regarding the allocation of corporate opportunities. To the maximum extent permissible under applicable law, no director or officer shall have any liability for complying or attempting to comply in good faith with the provisions thereof (which may involve, among other things, not bringing potential transactions to the attention of the Corporation). |
ARTICLE 12
MISCELLANEOUS Section 12.1 Notices. Any notice, communication or document required to be given, delivered or sent by the Corporation to any director, officer, shareholder or auditor is sufficiently given, delivered or sent if delivered personally, or if delivered to the person’s recorded address, or if mailed to the person at the person’s recorded address by prepaid mail, or if otherwise communicated by electronic means permitted by the Act. The directors may establish procedures to give, deliver or send a notice, communication or document to any director, officer, shareholder or auditor by any means of communication permitted by the Act or other applicable law. In addition, any notice, communication or document may be delivered by the Corporation in the form of an electronic document. Section 12.2 Notice to Joint Holders. If two or more persons are registered as joint holders of any security, any notice may be addressed to all such joint holders but notice addressed to one of them constitutes sufficient notice to all of them. Section 12.3 Computation of Time. In computing the date when notice must be given when a specified number of days’ notice of any meeting or other event is required, the date of giving the notice is excluded and the date of the meeting or other event is included. Section 12.4 Persons Entitled by Death or Operation of Law. Every person who, by operation of law, transfer, death of a securityholder or any other means whatsoever, becomes entitled to any security, is bound by every notice in respect of such security which has been given to the securityholder from whom the person derives title to such security. Such notices may have been given before or after the happening of the event upon which they became entitled to the security. ARTICLE 13
EFFECTIVE DATE Section 13.1 Effective Date. This by-law comes into force when made by the directors in accordance with the Act. Section 13.2 Repeal. All previous by-laws of the Corporation are repealed as of the coming into force of this by-law. Such repeal shall not affect the previous operation of any by-law so repealed or affect the validity of any act done or right, privilege, obligation or liability acquired or incurred under any such by-law prior to its repeal. TABLE OF CONTENTS This by-law was made by resolution of the directors in connection with the continuance of the Corporation into Alberta on , 202. | | | | | | | Authorized Signatory |
This by-law was confirmed by ordinary resolution of the shareholders in connection with the continuance of the Corporation into Alberta on , 202. | | | | | | | Authorized Signatory |
TABLE OF CONTENTS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT This AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT, dated as of [•] (this “AgreementAgreement”), is made and entered into by and among DevvStream Corp. (formerly known as Focus Impact Acquisition Corp.), a company existing under the laws of the Province of Alberta (the “Company”), Focus Impact Sponsor, LLC, a Delaware limited liability company (the “Sponsor”), and the undersigned parties listed under Legacy Devvstream Holders on the signature page hereto (each a “Legacy Devvstream Holder” and, collectively, the “Legacy Devvstream Holders” and, together with Sponsor and any person or entity who hereafter becomes a party to this Agreement pursuant to Section 6(e) of this Agreement, each a “Holder” and collectively the “Holders”). RECITALS WHEREAS, the Company, Focus Impact Amalco Sub Inc., a company existing under the Laws of the Province of British Columbia and a wholly-owned subsidiary of the Company (“Amalco Sub”), and DevvStream Holdings Inc., a company existing under the laws of the Province of British Columbia (“Legacy Devvstream”), are party to that certain Business Combination Agreement, dated as of September 12, 2023 (the “Business Combination Agreement”), pursuant to which, on the date hereof, Legacy Devvstream and the Company combined (as further described in the Business Combination Agreement, the “Business Combination”) by way of an arrangement on the terms and subject to the conditions set forth in a plan of arrangement under Section 288 of the Business Corporations Act (British Columbia), pursuant to which, among other things, Amalco Sub and Legacy Devvstream amalgamated to form one corporate entity; WHEREAS, pursuant to the Business Combination Agreement and in connection with the consummation of the Business Combination, the Legacy Devvstream Holders received shares of Common Stock (as defined herein) (the “Business Combination Shares”); WHEREAS, immediately following the consummation of the Business Combination, the Sponsor held an aggregate of [•] shares of Common Stock (as defined herein) (the “Sponsor Shares”) and [•] private placement warrants to purchase shares of Common Stock at an exercise price of $11.50 per share (the “Sponsor Warrants”); WHEREAS, the Company and the Sponsor are parties to that certain Registration and Stockholder Rights Agreement, dated as of November 1, 2021 (the “Prior Agreement”); WHEREAS, pursuant to Section 6.8 of the Prior Agreement, the provisions, covenants and conditions set forth in the Prior Agreement may be amended or modified upon the written consent of the Company and the holders of at least a majority in interest of the registrable securities under the Prior Agreement at the time in question and the Sponsor is the holder of at least a majority in interest of such registrable securities as of the date hereof; and WHEREAS, in connection with the consummation of the Business Combination, the parties to the Prior Agreement desire to amend and restate the Prior Agreement in its entirety as set forth herein, and the parties hereto desire to enter into this Agreement pursuant to which the Company shall grant the Holders certain registration rights with respect to the Registrable Securities (as defined below) on the terms and conditions set forth in this Agreement. NOW, THEREFORE, in consideration of the premises and the mutual premises and covenants contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, IT IS AGREED as follows: 1. DEFINITIONS As used in this Agreement, the following terms shall have the following meanings: “Affiliate” of any specified Person shall mean any other Person directly or indirectly controlling or controlled by, or under common control with, such specified Person. The term “control” (including the terms “controlling,” “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. “Agreement” shall have the meaning set forth in the Preamble hereof. TABLE OF CONTENTS “Amalco Sub” shall have the meaning set forth in the Preamble hereof. “Blackout Period” shall have the meaning set forth in Section 2(e)(ii). “Block Trade” shall mean an offering and/or sale of Registrable Securities by any Holder on a block trade or underwritten basis (whether firm commitment or otherwise) without substantial marketing efforts prior to pricing, including, without limitation, a same day trade, overnight trade or similar transaction and without a lock-up agreement of more than forty-five (45) days to which the Company is a party (including, for the avoidance of doubt, any lock-up or clear market covenant contained in the underwriting agreement for such transaction). “Board” shall mean the Board of Directors of the Company. “Business Combination” shall have the meaning set forth in the Recitals hereof. “Business Combination Agreement” shall have the meaning set forth in the Recitals hereof. “Business Combination Shares” shall have the meaning set forth in the Recitals hereof. “Business Day” shall mean any day except Saturday, Sunday or any days on which banks are generally not open for business in New York, New York and the Provinces of Ontario and Alberta, Canada. “Commission” shall mean the Securities and Exchange Commission. “Common Stock” shall mean the Company’s common shares, par value $0.0001 per share. “Company” shall have the meaning set forth in the Preamble hereof. “Demanding Holder” shall have the meaning set forth in Section 2(a)(iv). “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended (or any corresponding provision of succeeding law) and the rules and regulations thereunder. “FINRA” shall mean the Financial Industry Regulatory Authority. “Holder” shall have the meaning set forth in the Preamble hereof. “In-Kind Distribution” shall have the meaning set forth in Section 6(e). “Legacy Devvstream” shall have the meaning set forth in the Recitals hereof. “Legacy Devvstream Holders” shall have the meaning set forth in the Preamble hereof. “Legal Dispute” shall have the meaning set forth in Section 6(j). “Liabilities” shall have the meaning set forth in Section 4(a)(i). “Maximum Threshold” shall have the meaning set forth in Section 2(a)(v). “Minimum Takedown Threshold” shall have the meaning set forth in Section 2(a)(iv). “Misstatement” means an untrue statement of a material fact or an omission to state a material fact required to be stated in a Registration Statement or Prospectus or necessary to make the statements in a Registration Statement or Prospectus (in the case of a Prospectus, in the light of the circumstances under which they were made) not misleading. “New Registration Statement” shall have the meaning set forth in Section 2(a)(i). “Non-Holder Securities” shall have the meaning set forth in Section 2(a)(v). “Other Coordinated Offering” shall have the meaning set forth in Section 2(c)(i). “Person” shall mean any individual, partnership, joint venture, corporation, trust, limited liability company, unincorporated organization or other entity or any governmental entity. “Piggyback Registration” shall have the meaning set forth in Section 2(b)(i). “Prior Agreement” shall have the meaning set forth in the Recitals hereof. TABLE OF CONTENTS “Prospectus” means the prospectus or prospectuses included in any Registration Statement (including without limitation, any prospectus subject to completion and a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act and any term sheet filed pursuant to Rule 434 under the Securities Act), as amended or supplemented by any prospectus supplement with respect to the terms of the offering of any portion of Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference or deemed to be incorporated by reference in such prospectus or prospectuses. “Registrable Securities” shall mean (a) the Sponsor Shares, (b) the Sponsor Warrants (including any shares of Common Stock issued or issuable upon the exercise of the Sponsor Warrants), (c) any outstanding shares of Common Stock or Warrants held by a Holder immediately following the consummation of the Business Combination (including the Common Stock constituting a portion of the Business Combination Shares), (d) any shares of Common Stock that may be acquired by Holders upon the exercise of a Warrant or other right to acquire Common Stock held by a Holder as of the date of this Agreement, (e) any shares of Common Stock or Warrants otherwise acquired or owned by a Holder following the date hereof to the extent that such securities are “restricted securities” (as defined in Rule 144) or are otherwise held by an “affiliate” (as defined in Rule 144) of the Company, and (f) any other equity security of the Company or any of its subsidiaries issued or issuable with respect to any securities referenced in clauses (a) through (e) above by way of a stock dividend or stock split or in connection with a recapitalization, merger, consolidation, spin-off, reorganization or similar transaction; provided, however, that such Registrable Securities shall cease to be Registrable Securities with respect to any Holder upon the earliest to occur of (x) when such Registrable Securities shall have been sold, transferred, disposed of or exchanged by such Holder in a transaction effected in accordance with, or exempt from, the registration requirements of the Securities Act, and (y) the date on which such securities shall have ceased to be outstanding. “Registration” shall mean a registration, including any related Underwritten Shelf Takedown, effected by preparing and filing a Registration Statement, Prospectus or similar document in compliance with the requirements of the Securities Act, and the applicable rules and regulations promulgated thereunder, and such registration statement becoming effective. “Registration Statement” means any registration statement of the Company filed with the Commission under the Securities Act which covers any Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all materials incorporated by reference or deemed to be incorporated by reference in such Registration Statement. “Sale Expenses” shall mean (a) the fees and disbursements of counsel and independent public accountants for the Company incurred in connection with the Company’s performance of or compliance with this Agreement, including the expenses of any special audits or “comfort” letters required by or incident to such performance and compliance, and any premiums and other costs of policies of insurance obtained by the Company against Liabilities arising out of the sale of any securities, (b) all registration, filing and stock exchange fees, all fees and expenses of complying with securities or “blue sky” laws (including any legal investment memoranda related thereto), all fees and expenses of custodians, transfer agents and registrars, all printing and producing expenses, messenger and delivery expenses, (c) expenses relating to any analyst or Holder presentations or any “road shows” undertaken in connection with the marketing or selling of Registrable Securities, (d) fees and expenses in connection with any review by FINRA of the underwriting arrangements or other terms of the offering, and all fees and expenses of any “qualified independent underwriter,” (e) costs of any selling agreements and other documents in connection with the offering, sale or delivery of Registrable Securities, (f) the reasonable fees and disbursements of one legal counsel for all Holders participating in any Underwritten Offering, (g) any reasonable fees and disbursements of underwriters customarily paid by issuers or sellers of securities and (h) all of the Company’s internal expenses (including all salaries and expenses of its officers and employees performing legal or accounting duties); provided, however, that “Sale Expenses” shall not include any out-of-pocket expenses of any Holder (other than as set forth in clauses (b) and (f) above), transfer taxes, underwriting or brokerage commissions or discounts associated with effecting any sales of Registrable Securities that may be offered, which expenses shall be borne by such Holder. “SEC Guidance” shall have the meaning set forth in Section 2(a)(i). TABLE OF CONTENTS “Securities Act” Securities Act of 1933, as amended. “Shelf Registration Statement” shall have the meaning set forth in Section 2(a)(i). “Shelf Takedown Limit” shall have the meaning set forth in Section 2(a)(iv). “Sponsor” shall have the meaning set forth in the Preamble hereof. “Sponsor Shares” shall have the meaning set forth in the Recitals hereof. “Sponsor Warrants” shall have the meaning set forth in the Recitals hereof. “Subsequent Shelf Registration” shall have the meaning set forth in Section 2(a)(ii). “Suspension Period” shall have the meaning set forth in Section 2(e)(i). “Underwritten Offering” shall mean a sale of securities of the Company to an underwriter or underwriters for reoffering to the public. “Underwritten Shelf Takedown” shall have the meaning set forth in Section 2(a)(iv). “Warrants” shall mean warrants of the Company that entitle the holder to Common Stock (including, for the avoidance of doubt, the Sponsor Warrants). “Withdrawal Notice” shall have the meaning set forth in Section 2(a)(vi). 2. REGISTERED OFFERINGS (a) Registration Rights. (i) Shelf Registration. Subject to Section 3(c), the Company agrees to file within sixty (60) days after the date of this Agreement, a shelf Registration Statement on Form S-1, or such other form under the Securities Act then available to the Company, providing for the resale of all Registrable Securities (determined as of two (2) business days prior to such filing) pursuant to Rule 415, from time to time (a “Shelf Registration Statement”). The Company shall use commercially reasonable efforts to cause such Shelf Registration Statement to be declared effective by the Commission as soon as practicable after the filing thereof. The Shelf Registration Statement shall provide for the resale from time to time, and pursuant to any method or combination of methods legally available (including, without limitation, an Underwritten Offering, a direct sale to purchasers or a sale through brokers or agents) to the Holders of any and all Registrable Securities. Following the filing of the Shelf Registration Statement, the Company shall use its commercially reasonable efforts to convert the Shelf Registration Statement on Form S-1 (and any Subsequent Shelf Registration) to a Registration Statement on Form S-3 as soon as practicable after the Company is eligible to use Form S-3. Notwithstanding the registration obligations set forth in this Section 2(a)(i), in the event the Commission informs the Company that all of the Registrable Securities cannot, as a result of the application of Rule 415, be registered for resale as a secondary offering on a single registration statement, the Company agrees to promptly (A) inform each of the Holders and use its commercially reasonable efforts to file amendments to the Shelf Registration Statement as required by the Commission and/or (B) withdraw the Shelf Registration Statement and file a new registration statement (a “New Registration Statement”), in either case covering the maximum number of Registrable Securities permitted to be registered by the Commission, on Form S-1 or Form S-3 or such other form available to register for resale the Registrable Securities as a secondary offering; provided, however, that prior to filing such amendment or New Registration Statement, the Company shall be obligated to use its commercially reasonable efforts to advocate with the Commission for the registration of all of the Registrable Securities in accordance with any publicly-available written or oral guidance, comments, requirements or requests of the Commission staff (the “SEC Guidance”), including, without limitation, relevant Compliance and Disclosure Interpretations. Notwithstanding any other provision of this Agreement, if any SEC Guidance sets forth a limitation of the number of Registrable Securities permitted to be registered on a particular Registration Statement as a secondary offering (and notwithstanding that the Company used diligent efforts to advocate with the Commission for the registration of all or a greater number of Registrable Securities), unless otherwise directed in writing by a Holder as to its Registrable Securities, the number of Registrable Securities to be registered on such Registration Statement will be reduced pro rata, based on the number of Registrable Securities held by each Holder, subject to a determination by the Commission that certain Holders must be reduced first based on the number of Registrable Securities held by such Holders. In the event the Company amends the Shelf Registration Statement TABLE OF CONTENTS or files a New Registration Statement, as the case may be, under clauses (A) or (B) above, the Company will use its commercially reasonable efforts to file with the Commission, as promptly as allowed by Commission or SEC Guidance provided to the Company or to registrants of securities in general, one or more registration statements on Form S-1 or Form S-3 or such other form available to register for resale those Registrable Securities that were not registered for resale on the Shelf Registration Statement, as amended, or the New Registration Statement. (ii) Subsequent Shelf Registration. If any Shelf Registration Statement ceases to be effective under the Securities Act for any reason at any time while Registrable Securities are still outstanding, the Company shall, subject to Section 2(e), use its commercially reasonable efforts to as promptly as is reasonably practicable cause such Shelf Registration Statement to again become effective under the Securities Act (including obtaining the prompt withdrawal of any order suspending the effectiveness of such Shelf Registration Statement), and shall use its commercially reasonable efforts to as promptly as is reasonably practicable amend such Shelf Registration Statement in a manner reasonably expected to result in the withdrawal of any order suspending the effectiveness of such Shelf Registration Statement or file an additional registration statement as a Shelf Registration Statement (a “Subsequent Shelf Registration”) registering the resale of all Registrable Securities (determined as of two business days prior to such filing), and pursuant to any method or combination of methods legally available to, and requested by, any Holder named therein. If a Subsequent Shelf Registration is filed, the Company shall use its commercially reasonable efforts to (i) cause such Subsequent Shelf Registration to become effective under the Securities Act as promptly as is reasonably practicable after the filing thereof (it being agreed that the Subsequent Shelf Registration shall be an automatic shelf registration statement (as defined in Rule 405 promulgated under the Securities Act) if the Company is a well-known seasoned issuer (as defined in Rule 405 promulgated under the Securities Act) at the most recent applicable eligibility determination date) and (ii) keep such Subsequent Shelf Registration continuously effective, available for use and in compliance with the provisions of the Securities Act until such time as there are no longer any Registrable Securities. Any such Subsequent Shelf Registration shall be on Form S-3 to the extent that the Company is eligible to use such form. Otherwise, such Subsequent Shelf Registration shall be on another appropriate form. (iii) Additional Registrable Securities. In the event that any Holder holds Registrable Securities that are not registered for resale on a delayed or continuous basis, the Company, upon request of a Holder that holds at least five percent (5.0%) of the Registrable Securities, shall promptly use its commercially reasonable efforts to cause the resale of such Registrable Securities to be covered by either, at the Company’s option, the Shelf Registration Statement (including by means of a post-effective amendment) or a Subsequent Shelf Registration and cause the same to become effective as soon as practicable after such filing and such Shelf Registration Statement or Subsequent Shelf Registration shall be subject to the terms hereof; provided, however, that the Company shall only be required to cause such Registrable Securities to be so covered twice per calendar year. (iv) Requests for Underwritten Shelf Takedowns. At any time and from time to time when an effective Shelf Registration Statement is on file with the Commission, any one or more Holders (any of the Holders being, in such case, a “Demanding Holder”) may request to sell all or any portion of its Registrable Securities in an Underwritten Offering that is registered pursuant to the Shelf Registration Statement (each, an “Underwritten Shelf Takedown”); provided in each case that the Company shall only be obligated to effect an Underwritten Offering if such offering shall include Registrable Securities proposed to be sold by the Demanding Holder(s) with a total offering price reasonably expected to exceed, in the aggregate, $10.0 million (the “Minimum Takedown Threshold”). All requests for Underwritten Shelf Takedowns shall be made by giving written notice to the Company, which shall specify the approximate number of Registrable Securities proposed to be sold in the Underwritten Shelf Takedown. Promptly (but in any event within five (5) days) after receipt of a request for Underwritten Shelf Takedown, the Company shall give written notice of the Underwritten Shelf Takedown to all other Holders. The Company shall have the right to select the underwriters for such offering (which shall consist of one or more reputable nationally recognized investment banks), subject to the initial Demanding Holder’s prior approval (which shall not be unreasonably withheld, conditioned or delayed). The Holders may collectively demand no more than two (2) Underwritten Shelf Takedowns pursuant to this Section 2(a)(iv) in any 12-month period (the “Shelf Takedown Limit”). Notwithstanding anything to the contrary in this Agreement, the Company may effect any Underwritten Shelf Takedown pursuant to any then effective Registration Statement, including a Form S-3, that is then available for such offering. TABLE OF CONTENTS (v) Reduction of Underwritten Shelf Takedown. If, in connection with an Underwritten Offering that is effectuated for the account of stockholders of the Company, including pursuant to Section 2(a)(iv), in which Registrable Securities are included, the managing underwriters of such Underwritten Offering advise the Company in writing that, in their opinion and in consultation with the Company, the number of Registrable Securities requested to be included in such Underwritten Offering exceeds the number that can be sold in such Underwritten Offering and/or that the number of Registrable Securities proposed to be included in any such Underwritten Offering would adversely affect the price per share of the Company’s equity securities to be sold in such Underwritten Offering (such maximum number of securities or Registrable Securities, as applicable, the “Maximum Threshold”), then the number of Registrable Securities to be included in such Underwritten Offering shall be allocated among the Holders and holders of Non-Holder Securities as follows: (A) first, the securities comprised of Registrable Securities, pro rata, based on the amount of such Registrable Securities initially requested to be included by the Holders (pursuant to either Section 2(a)(iv) or 2(b)(i)) or as such Holders may otherwise agree, that can be sold without exceeding the Maximum Threshold; (B) second, to the extent that the Maximum Threshold has not been reached under the foregoing clause (A), the equity securities of a holder of the Company’s securities other than Registrable Securities (“Non-Holder Securities”) that either (1) the Company is obligated to include pursuant to written contractual rights entered into prior to or on the date hereof or (2) such other contractual rights governing the applicable Non-Holder Securities, pro rata, based on the amount of such equity securities initially requested to be included by the holders of Non-Holder Securities or as such holders of Non-Holder Securities may otherwise agree, that can be sold without exceeding the Maximum Threshold; (C) third, to the extent that the Maximum Threshold has not been reached under the foregoing clauses (A) and (B), Non-Holder Securities that the Company is obligated to include pursuant to written contractual rights entered into after the date hereof that do not comply with clause (B)(2) above, that can be sold without exceeding the Maximum Threshold; and (D) fourth, to the extent that the Maximum Threshold has not been reached under the foregoing clauses (A), (B) and (C), the shares of Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Threshold. Notwithstanding this Section 2(a)(v), the Sponsor shall be entitled to initiate one Underwritten Shelf Takedown pursuant to which it shall be entitled to sell all Registrable Securities it requests to be included in such offering, prior to the application of the reduction principles set forth in clauses (A) through (D) above; provided, however, that the number of Registrable Securities so requested by the Sponsor shall not exceed the Maximum Threshold. (vi) Withdrawal. Prior to the filing of the applicable “red herring” prospectus or prospectus supplement used for marketing such Underwritten Shelf Takedown, a majority-in-interest of the Demanding Holders initiating an Underwritten Shelf Takedown shall have the right to withdraw from such Underwritten Shelf Takedown for any or no reason whatsoever upon written notification (a “Withdrawal Notice”) to the Company and the underwriter or underwriters (if any) of their intention to withdraw from such Underwritten Shelf Takedown; provided that any Holder may elect to have the Company continue an Underwritten Shelf Takedown if the Minimum Takedown Threshold would still be satisfied by the Registrable Securities proposed to be sold in the Underwritten Shelf Takedown by the Holders. If withdrawn, a demand for an Underwritten Shelf Takedown shall constitute a demand for an Underwritten Shelf Takedown for purposes of Section 2(a)(iv), unless the Holder reimburses the Company for all Sale Expenses with respect to such Underwritten Shelf Takedown; provided that, if a Holder elects to continue an Underwritten Shelf Takedown pursuant to the proviso in the immediately preceding sentence, such Underwritten Shelf Takedown shall instead count as an Underwritten Shelf Takedown demanded by the Holders for purposes of Section 2(a)(iv). Following the receipt of any Withdrawal Notice, the Company shall promptly forward such Withdrawal Notice to any other Holders that had elected to participate in such Underwritten Shelf Takedown. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Sale Expenses incurred in connection with a Underwritten Shelf Takedown prior to its withdrawal under this Section 2(a)(vi), other than if a Demanding Holder elects to pay such Sale Expenses pursuant to the second sentence of this Section 2(a)(vi). (b) Piggyback Rights. (i) Right to Piggyback. If the Company or any Holder proposes to conduct a registered offering of, or if the Company proposes to file a Registration Statement under the Securities Act with respect to the Registration of, equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into equity securities, for its own account or for the account of stockholders of the Company (or by the Company and by the stockholders of the Company including, without limitation, an Underwritten Shelf Takedown pursuant to Section 2(a)(iv)), other than a Registration Statement (or any registered offering with respect thereto) (i) filed TABLE OF CONTENTS in connection with any employee stock option or other benefit plan, (ii) pursuant to a Registration Statement on Form S-4 (or similar form that relates to a transaction subject to Rule 145 under the Securities Act or any successor rule thereto), (iii) for an offering of debt that is convertible into equity securities of the Company, (iv) for a dividend reinvestment plan or (v) for a rights offering, then the Company shall give written notice of such proposed offering to all of the Holders of Registrable Securities as soon as practicable but not less than ten (10) days before the anticipated filing date of such Registration Statement or, in the case of an Underwritten Offering pursuant to a Shelf Registration Statement, the applicable “red herring” prospectus or prospectus supplement used for marketing such offering, which notice shall (A) describe the amount and type of securities to be included in such offering, the intended method(s) of distribution, and the name of the proposed managing underwriter or underwriters, if any, in such offering, and (B) offer to all of the Holders of Registrable Securities the opportunity to include in such registered offering such number of Registrable Securities as such Holders may request in writing within five (5) days after receipt of such written notice (such Registration, a “PiggybackRegistration”). Subject to Section 2(b)(ii), the Company shall cause all such Registrable Securities to be included in such Piggyback Registration and, if applicable, shall use its commercially reasonable efforts to cause the managing underwriter or underwriters of such Piggyback Registration to permit the Registrable Securities requested by the Holders pursuant to this Section2(b)(i) to be included therein on the same terms and conditions as any similar securities of the Company included in such Registration and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. The inclusion of any Holder’s Registrable Securities in a Piggyback Registration shall be subject to such Holder’s agreement to enter into an underwriting agreement in customary form with the underwriter(s) selected for such Underwritten Offering by the Company. (ii) Reduction of Offering. If the managing underwriter or underwriters in an Underwritten Offering that is to be a Piggyback Registration advises the Company and the Holders of Registrable Securities participating in the Piggyback Registration in writing that the dollar amount or number of shares of Common Stock or other equity securities that the Company desires to sell, taken together with (i) the Non-Holder Securities as to which Registration or a registered offering has been demanded pursuant to separate written contractual arrangements (including any other applicable contractual piggy-back registration rights) and (ii) the Registrable Securities as to which registration has been requested pursuant to Section 2(b) exceeds the Maximum Threshold, then: (A) If the Registration or registered offering is initiated by the Company primarily for its own account, the number of shares of Common Stock to be included in such Underwritten Offering shall be allocated as follows: (A) first, the shares of Common Stock or other securities to be sold by the Company; (B) second, to the extent that the Maximum Threshold has not been reached under the foregoing clause (A), the Registrable Securities of Holders exercising their rights to register their Registrable Securities hereunder pro rata, based on the number of shares of such Common Stock initially requested to be included by the Holders that can be sold without exceeding the Maximum Threshold; and (C) third, to the extent that the Maximum Threshold has not been reached under the foregoing clauses (A) and (B), Non-Holder Securities that the Company is obligated to include pursuant to separate written contractual rights that can be sold without exceeding the Maximum Threshold; (B) If the Registration or registered offering is initiated for the account of stockholders of the Company other than the Holders of Registrable Securities, the number of shares of Common Stock to be included in such Underwritten Offering shall be allocated as follows: (A) first, the Non-Holder Securities that the Company is obligated to include pursuant to written contractual rights that provide that such securities must be included on a pari passu basis to the Registrable Securities, and any Registrable Securities requested to be included, pro rata, based on the amount of such securities initially requested to be included or as such holders of Non-Holder Securities and Registrable Securities may otherwise agree, that can be sold without exceeding the Maximum Threshold; (B) second, to the extent that the Maximum Threshold has not been reached under the foregoing clause (A), Non-Holder Securities that the Company is obligated to include pursuant to written contractual rights entered into after the date hereof that do not comply with clause (A) above, that can be sold without exceeding the Maximum Threshold; and (C) third, to the extent that the Maximum Threshold has not been reached under the foregoing clauses (A) and (B), the shares of Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Threshold; and TABLE OF CONTENTS (C) If the Registration or registered offering is pursuant to a request by Holder(s) of Registrable Securities pursuant to Section 2(a)(iv), then the Company shall include in any such Registration or registered offering securities pursuant to Section 2(a)(v). (iii) Withdrawal. Any Holder of Registrable Securities (other than a Demanding Holder, whose right to withdrawal from an Underwritten Shelf Takedown, and related obligations, shall be governed by SectionSection 2(a)(vi)) shall have the right to withdraw from a Piggyback Registration for any or no reason whatsoever upon written notification to the Company and the underwriter or underwriters (if any) of his, her or its intention to withdraw from such Piggyback Registration prior to the effectiveness of the Registration Statement filed with the Commission with respect to such Piggyback Registration or, in the case of a Piggyback Registration pursuant to a Shelf Registration Statement, the filing of the applicable “red herring” prospectus or prospectus supplement with respect to such Piggyback Registration used for marketing such transaction. The Company (whether on its own determination or as the result of a request for withdrawal by persons pursuant to separate written contractual obligations) may withdraw a Registration Statement filed with the Commission in connection with a Piggyback Registration (which, in no circumstance, shall include the Shelf Registration Statement) at any time prior to the effectiveness of such Registration Statement. Notwithstanding anything to the contrary in this Agreement (other than Section 2(a)(vi)), the Company shall be responsible for the Sale Expenses incurred in connection with the Piggyback Registration prior to its withdrawal under this Section2(b)(iii). (iv) Unlimited Piggyback Registration Rights. For purposes of clarity, subject to Section 2(a)(vi), any Piggyback Registration effected pursuant to Section 2(b) shall not be counted as a demand for an Underwritten Shelf Takedown under Section 2(a)(iv). (c) Block Trades; Other Coordinated Offerings. (i) Block Trades. Notwithstanding the foregoing, at any time and from time to time when an effective Shelf Registration Statement is on file with the Commission, if a Demanding Holder wishes to engage in (A) a Block Trade or (B) an “at the market” or similar registered offering through a broker, sales agent or distribution agent, whether as agent or principal (an “Other Coordinated Offering”), in each case with a total offering price reasonably expected to exceed, in the aggregate, either (x) $10.0 million or (y) all remaining Registrable Securities held by the Demanding Holder, then notwithstanding the time periods provided for in Section 2(a)(iv), such Demanding Holder shall notify the Company of the Block Trade or Other Coordinated Offering at least five (5) business days prior to the day such offering is to commence and the Company shall as expeditiously as possible use its commercially reasonable efforts to facilitate such Block Trade or Other Coordinated Offering; provided that the Demanding Holders representing a majority of the Registrable Securities wishing to engage in the Block Trade or Other Coordinated Offering shall use commercially reasonable efforts to work with the Company and any underwriters or placement agents or sales agents prior to making such request in order to facilitate preparation of the registration statement, prospectus and other offering documentation related to the Block Trade or Other Coordinated Offering; provided further that in the case of such underwritten Block Trade or Other Coordinated Offering, only such Holder shall have a right to notice of and to participate in such offering. (ii) Withdrawal. Prior to the filing of the applicable “red herring” prospectus or prospectus supplement used in connection with a Block Trade or Other Coordinated Offering, a majority-in-interest of the Demanding Holders initiating such Block Trade or Other Coordinated Offering shall have the right to submit a Withdrawal Notice to the Company and the underwriter or underwriters or placement agents or sales agents (if any) of their intention to withdraw from such Block Trade or Other Coordinated Offering. If withdrawn, a demand for a Block Trade or Other Coordinated Offering shall constitute a demand for an Underwritten Shelf Takedown, unless the Holder reimburses the Company for all Sale Expenses with respect to such Block Trade or Other Coordinated Offering. (iii) Cap on Block Trades and Other Coordinated Offerings. Any Registration effected pursuant to this Section 2(c) shall be deemed an Underwritten Shelf Takedown and counted towards the Shelf Takedown Limit. Notwithstanding anything to the contrary in this Agreement, Section 2(b) shall not apply to a Block Trade or Other Coordinated Offering initiated by a Demanding Holder pursuant to this Agreement. Provided, however, a Block Trade or Other Coordinated Offering shall not be deemed an Underwritten Shelf Takedown and shall not count towards the Shelf Takedown Limit if the Company is not required to take any of the actions described in subsections (v), (vi) and (xi) of Section 3(a) in connection with such Block Trade or Other Coordinated Offering. TABLE OF CONTENTS (d) Continued Effectiveness. The Company shall use commercially reasonable efforts to keep any Registration Statement continuously effective for the period beginning on the date on which such Registration Statement is declared effective and ending on the date that all of Registrable Securities registered under the Registration Statement cease to be Registrable Securities. During the period that such Registration Statement is effective, the Company shall use commercially reasonable efforts to supplement or make amendments to the Registration Statement, if required by the Securities Act or if reasonably requested by Holder (whether or not required by the form on which the securities are being registered), including to reflect any specific plan of distribution or method of sale, and shall use its commercially reasonable efforts to have such supplements and amendments declared effective, if required, as soon as practicable after filing. (e) Suspension Period; Blackout Period. (i) Misstatement. Upon receipt of written notice from the Company that a Registration Statement or Prospectus contains a Misstatement, each of the Holders shall forthwith discontinue disposition of Registrable Securities until it has received copies of a supplemented or amended Prospectus correcting the Misstatement (it being understood that the Company hereby covenants to prepare and file such supplement or amendment as soon as practicable after the time of such notice), or until it is advised in writing by the Company that the use of the Prospectus may be resumed (any such period, a “Suspension Period”). (ii) Other Suspension. Notwithstanding any provision of this Agreement to the contrary, if the Board determines in good faith that any use of a Registration Statement or Prospectus hereunder involving Registrable Securities would (i) reasonably be expected to, in the good faith judgment of the majority of the Board, after consultation with counsel to the Company, materially impede, delay or interfere with, or require premature disclosure of, any material financing, offering, acquisition, disposition, merger, corporate reorganization, segment reclassification or discontinuance of operations that is required to be reflected in pro forma or restated financial statements that amends historical financial statements of the Company, or other significant transaction or any negotiations, discussions or pending proposals with respect thereto, involving the Company or any of its subsidiaries; (ii) require the inclusion in such Registration Statement of financial statements that are unavailable to the Company for reasons beyond the Company’s control; or (iii) require, after consultation with counsel to the Company, the disclosure of material non-public information, the disclosure of which would (x) not be required to be made if a Registration Statement were not being used and (y) reasonably be expected to materially and adversely affect the Company, then the Company shall be entitled to suspend, for not more than sixty (60) consecutive days (any such period, a “Blackout Period”), but in no event more than two (2) times in any consecutive twelve (12) month period (which periods may be successive), commencing on the date of this Agreement, the use of any Registration Statement or Prospectus and shall not be required to amend or supplement the Registration Statement, any related Prospectus or any document incorporated therein by reference. The Company promptly will give written notice of any such Blackout Period to the Holders. (f) Sale Expenses. All Sale Expenses of any Holder incurred in connection with Section 2 and Section 3 shall be borne by the Company. It is acknowledged by the Holders that the Holders shall bear all incremental selling expenses relating to the sale of Registrable Securities, such as underwriters’ or agents’ commissions and discounts, brokerage fees, underwriter marketing costs and, other than as set forth in the definition of “Sale Expenses,” all reasonable fees and expenses of any legal counsel representing the Holders. (g) Market Stand-Off. In connection with any Underwritten Offering of equity securities of the Company (other than a Block Trade or Other Coordinated Offering), each Holder that holds greater than five percent (5%) of the outstanding Common Stock that is given an opportunity to participate in the Underwritten Offering pursuant to the terms of this Agreement and participates in such Underwritten Offering and each Holder that is an executive officer or director of the Company agrees that it shall not transfer any shares of Common Stock or other equity securities of the Company (other than those included in such offering pursuant to this Agreement), without the prior written consent of the Company, during the 90-day period beginning on the date of pricing of such offering or such shorter period during which the Company agrees not to conduct an underwritten primary offering of Common Stock, except in the event the underwriters managing the offering otherwise agree by written consent. Each Holder that holds greater than five percent (5%) of the outstanding Common Stock and participates in such Underwritten Offering or is an executive officer or director of the Company agrees to execute a customary lock-up agreement in favor of the underwriters to such effect (in each case on substantially the same terms and conditions as all such Holders). TABLE OF CONTENTS 3. PROCEDURES (a) In connection with the filing of any Registration Statement or sale of Registrable Securities as provided in this Agreement, the Company shall use commercially reasonable efforts to, as expeditiously as reasonably practicable: (i) notify promptly the Holders and, if requested by a Holder, confirm such advice in writing promptly at the address determined in accordance with Section 6(d), (A) of the issuance by the Commission or any state securities authority of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, (B) if, between the effective date of a Registration Statement and the closing of any sale of Registrable Securities covered thereby, the representations and warranties of the Company contained in any underwriting agreement, securities sales agreement or other similar agreement, if any, relating to the offering cease to be true and correct in all material respects, (C) of the happening of any event or the discovery of any facts during the period a Registration Statement is effective as a result of which such Registration Statement or any document incorporated by reference therein contains any Misstatement or alleged Misstatement (which information shall be accompanied by an instruction to suspend the use of the Registration Statement and the prospectus until the requisite changes have been made), (D) of the receipt by the Company of any notification with respect to the suspension of the qualification of Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose and (E) of the filing of a post-effective amendment to such Registration Statement; (ii) furnish each Holder’s legal counsel, if any, copies of any comment letters relating to such Holder received from the Commission or any other request by the Commission or any state securities authority for amendments or supplements to a Registration Statement and prospectus or for additional information relating to such Holder; (iii) use commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement as promptly as practicable; (iv) upon the occurrence of any event or the discovery of any facts, as contemplated by Section 3(a)(i)(C), as promptly as practicable after the occurrence of such an event, use its commercially reasonable efforts to prepare a supplement or post-effective amendment to the Registration Statement or the related prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Registrable Securities, such prospectus will not contain at the time of such delivery any Misstatement or alleged Misstatement. At such time as such public disclosure is otherwise made or the Company determines that such disclosure is not necessary, in each case to correct any Misstatement, the Company agrees promptly to notify the Holders of such determination and to furnish any Holder such number of copies of the prospectus as amended or supplemented, as such Holder may reasonably request; (v) enter into agreements in customary form (including underwriting agreements) and take all other reasonable and customary appropriate actions in order to expedite or facilitate the disposition of such Registrable Securities regardless of whether an underwriting agreement is entered into and regardless of whether the registration is an underwritten registration, including: (A) for an Underwritten Offering, making such representations and warranties to the underwriters, if any, in form, substance and scope as are customarily made by issuers to underwriters in similar Underwritten Offerings as may be reasonably requested by them; (B) for an Underwritten Offering, obtaining opinions of counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to any managing underwriter(s) and their counsel) addressed to the underwriters, if any, covering the matters customarily covered in opinions requested in Underwritten Offerings and such other matters as may be reasonably requested by the underwriter(s); (C) for an Underwritten Offering, obtaining “comfort” letters and updates thereof from the Company’s independent registered public accounting firm (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements are, or are required to be, included in the Registration Statement) addressed to the underwriter(s), such letters to be in customary form and covering matters of the type customarily covered in “comfort” letters to underwriters in connection with similar Underwritten Offerings; TABLE OF CONTENTS (D) entering into a securities sales agreement with the Holder(s) and an agent of Holder(s) providing for, among other things, the appointment of such agent for the Holder(s) for the purpose of soliciting purchases of Registrable Securities, which agreement shall be in form, substance and scope customary for similar offerings; (E) if an underwriting agreement is entered into, using commercially reasonable efforts to cause the same to set forth indemnification provisions and procedures substantially similar to the indemnification provisions and procedures set forth in Section 4 with respect to the underwriters or, at the request of any underwriters, in the form customarily provided to underwriters in similar types of transactions; and (F) delivering such documents and certificates as may be reasonably requested and as are customarily delivered in similar offerings to the managing underwriters, if any; (vi) make available for inspection by any underwriter participating in any disposition pursuant to a Registration Statement, the Holders’ legal counsel and any accountant retained by a Holder, all financial and other records, pertinent corporate documents and properties or assets of the Company reasonably requested by any such Persons (excluding all trade secrets and other proprietary or privileged information) to the extent required for the offering, and cause the respective officers, directors, employees, and any other agents of the Company to supply all information reasonably requested by any such representative, underwriter, counsel or accountant in connection with a Registration Statement, and make such representatives of the Company available for discussion of such documents as shall be reasonably requested by the Company; provided, however, that the Holders’ legal counsel, if any, and the representatives of any underwriters will use commercially reasonable efforts, to the extent reasonably practicable, to coordinate the foregoing inspection and information gathering and to not unreasonably disrupt the Company’s business operations; (vii) a reasonable time prior to filing any Registration Statement, any prospectus forming a part thereof, any amendment to such Registration Statement, or amendment or supplement to such prospectus, provide copies of such document to the underwriter(s) of an Underwritten Offering of Registrable Securities; within five (5) Business Days after the filing of any Registration Statement, provide copies of such Registration Statement to any Holder’s legal counsel upon request; consider in good faith making any changes requested and make such changes in any of the foregoing documents as are legally required prior to the filing thereof, or in the case of changes received from any Holder’s legal counsel by filing an amendment or supplement thereto, as the underwriter or underwriters, or in the case of changes received from a Holder’s legal counsel relating to such Holder or the plan of distribution of Registrable Securities, as such Holder’s legal counsel reasonably requests prior to the effectiveness of the applicable Registration Statement; not file any such document in a form to which any underwriter shall not have previously been advised and furnished a copy of; not include in any amendment or supplement to such documents any information about any Holders or any change to the plan of distribution of Registrable Securities that would limit the method of distribution of Registrable Securities unless such Holder’s legal counsel has been advised in advance and has approved such information or change (it being understood that any Holder that determines not to approve the inclusion of such change or information that has been specifically requested by the Commission will not have its Registrable Securities included in such Registration Statement and the Company shall not be in breach of this Agreement as a result of such exclusion); and reasonably during normal business hours make the representatives of the Company available for discussion of such document as shall be reasonably requested by the Holders’ legal counsel, if any, on behalf of a Holder, Holder’s legal counsel or any underwriter; (viii) otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the Commission and make available to its securityholders, as soon as reasonably practicable, an earnings statement covering at least twelve (12) months beginning with the first day of the Company’s first full calendar quarter after the effective date of the Registration Statement, which shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder; (ix) cooperate and assist in any filings required to be made with FINRA and in the performance of any due diligence investigation by any underwriter and its counsel (including any “qualified independent underwriter” that is required to be retained in accordance with the rules and regulations of FINRA); (x) if Registrable Securities are to be sold in an Underwritten Offering, include in the registration statement to be used all such information as may be reasonably requested by the underwriters for the marketing and sale of such Registrable Securities; and TABLE OF CONTENTS (xi) in connection with an Underwritten Offering, use its reasonable efforts to cause the appropriate officers of the Company to (A) prepare and make presentations at any “road shows” and before analysts and (B) cooperate as reasonably requested by the underwriters in the offering, marketing or selling of Registrable Securities. (b) Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event or the discovery of any facts of the type described in Section 3(a)(i), each Holder will forthwith discontinue disposition of Registrable Securities pursuant to a Registration Statement relating to such Registrable Securities until such Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 3(a)(i), and, if so directed by the Company, each Holder will deliver to the Company (at the Company’s expense) all copies in such Holder’s possession, other than permanent file copies then in such Holder’s possession, of the prospectus covering such Registrable Securities at the time of receipt of such notice. (c) The Company may (as a condition to any Holder’s participation in an Underwritten Offering or Holder’s inclusion in a Registration Statement) require each Holder to furnish to the Company such information regarding the Holder and the proposed distribution by the Holder as the Company may from time to time reasonably request in writing. 4. INDEMNIFICATION (a) Indemnification by The Company. The Company agrees to indemnify and hold harmless each Holder, and the respective officers, directors, partners, employees, representatives and agents of each Holder, and each Person, if any, who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) a Holder, as follows: (i) against any and all loss, liability, claim, damage, judgment, actions, other liabilities and expenses whatsoever (the “Liabilities”), as incurred, arising out of any Misstatement contained in any Registration Statement (or any amendment or supplement thereto) pursuant to which Registrable Securities were registered under the Securities Act at the time such Registration Statement became effective, including all documents incorporated therein by reference; (ii) against any and all Liabilities, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission; provided that any such settlement is effected with the written consent of the Company; and (iii) against any and all expense whatsoever, as incurred (including the fees and disbursements of counsel chosen by any indemnified party), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under Section 4(a)(i) or Section 4(a)(ii); provided, however, that the indemnity obligations in this Section 4(a) shall not apply to any Liabilities (A) to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by any Holder with the understanding that such information will be used in a Registration Statement (or any amendment thereto) or any prospectus (or any amendment or supplement thereto) or (B) to the extent they arise from the use of any Registration Statement during any Suspension Period or Blackout Period. (b) Indemnification by the Holders. The Holders agree, severally and not jointly, to indemnify and hold harmless the Company, and each of its respective officers, directors, partners, employees, representatives and agents and any person controlling the Company, against any and all Liabilities described in the indemnity contained in Section 4(a), as incurred, but only with respect to Misstatements or alleged Misstatements made in the Registration Statement (or any amendment thereto) or any prospectus included therein (or any amendment or supplement thereto) in reliance upon and in conformity with written information with respect to such Holder furnished to the Company by such Holder with the understanding that such information will be used in the Registration Statement (or any amendment thereto) or such prospectus (or any amendment or supplement thereto); provided, however, that Holder shall not be liable for any claims hereunder in excess of the amount of net proceeds received by such Holder from the sale of Registrable Securities pursuant to such Registration Statement. TABLE OF CONTENTS (c) Notices of Claims, etc. Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action or proceeding commenced against it in respect of which indemnity may be sought hereunder, but failure so to notify an indemnifying party shall not relieve such indemnifying party from any Liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any Liability which it may have otherwise than on account of this indemnity agreement. An indemnifying party may participate at its own expense in the defense of such action; provided, however, that counsel to the indemnifying party shall not (except with the consent of the indemnified party) also be counsel to the indemnified party. In no event shall the indemnifying party or parties be liable for the fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 4 (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all Liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. (d) Contribution. If the indemnification provided for in this Section 4 is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any Liabilities referred to therein, then each indemnifying party shall contribute to the aggregate amount of such Liabilities incurred by such indemnified party, as incurred, in such proportion as is appropriate to reflect the relative fault of the Company, on the one hand, and the Holders, on the other hand, in connection with the statements or omissions which resulted in such Liabilities, as well as any other relevant equitable considerations. The relative fault of the Company, on the one hand, and the Holders, on the other hand, shall be determined by reference to, among other things, whether any Misstatement or alleged Misstatements relates to information supplied by the Company or a Holder and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and each Holder agree that it would not be just and equitable if contribution pursuant to this Section 4 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 4. The aggregate amount of Liabilities incurred by an indemnified party and referred to above in this Section 4 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 4, each Person, if any, who controls a Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, shall have the same rights to contribution as the Holder, and each director of the Company, and each Person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as the Company. 5. TERMINATION. The rights of the Holders under this Agreement shall terminate in accordance with the terms of this Agreement and in any event, with respect to each Holder, the date on which such Holder or any of its permitted assignees no longer hold any Registrable Securities. Notwithstanding the foregoing, the obligations of the parties under Section 4 of this Agreement shall remain in full force and effect following such time. 6. MISCELLANEOUS (a) Covenants Relating To Rule 144. With a view to making available to the Holders the benefits of Rule 144 and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration statement, if the Shares of the Company are registered under the Exchange Act, the Company agrees to: (A) file with the SEC all reports and other documents required of the Company under Section 13(a) or 15(d) of the Exchange Act (at any time after it has become subject to such reporting requirements); and (B) furnish to any Holder, so long as the Holder owns any Registrable Securities, upon request, (i) a written statement by the Company that it has complied with the reporting requirements of the Exchange Act (at any time after it has become subject to such reporting requirements), or that it qualifies as a TABLE OF CONTENTS registrant whose securities may be resold pursuant to a registration statement (at any time after it so qualifies) and (ii) such other information as may be reasonably requested by any Holder in order to avail itself of any rule or regulation of the SEC which permits the selling of any such securities without registration or pursuant to such form. (b) No Inconsistent Agreements. The Company has not entered into, and the Company will not after the date of this Agreement enter into, any agreement which is inconsistent with the rights granted to the Holders pursuant to this Agreement or otherwise conflicts with the provisions of this Agreement, and the Company hereby represents and warrants that, as of the date hereof, no registration or similar rights have been granted to any other person other than pursuant to this Agreement. (c) Amendment; Modification; Waiver. This Agreement may be amended, modified or supplemented at any time only by written agreement of the Company and the Holders owning a majority in voting power of the then-outstanding Registrable Securities; provided, however, that notwithstanding the foregoing, any amendment hereto or waiver hereof that adversely affects one Holder, solely in its capacity as a holder of the shares of the Company, in a manner that is materially different from the other Holders (in such capacity) shall require the consent of the Holder so affected. The conditions to the respective obligations of each of the parties to this Agreement to consummate the transactions contemplated hereby are for the sole benefit of such party and may be waived by such party in whole or in part to the extent permitted by applicable law; provided, however, that any such waiver shall only be effective if made in writing and executed by the party against whom the waiver is to be effective. No failure or delay by any party to this Agreement in exercising any right, power or privilege hereunder or under applicable law shall operate as a waiver of such rights and, except as otherwise expressly provided herein, no single or partial exercise thereof shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. (d) Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given (a) when delivered in person or, by e-mail (return receipt requested), (b) on the next Business Day when sent by overnight courier or (c) on the second succeeding Business Day when sent by registered or certified mail (postage prepaid, return receipt requested) to the respective parties to this Agreement at the following addresses (or at such other address for a party to this Agreement as shall be specified by like notice): If to a Holder, to the most current address given by such Holder to the Company by means of a notice given in accordance with the provisions of this Section 6(d). | | | If to the Company to: | | | | | | | | | | | | | | | DevvStream Corp. | | | | | | | | c/o DevvStream Holdings Inc. | | | | | | | | 2133-1177 West Hastings Street | | | | | | | | Vancouver, BC V6E 2K3 | | | | | | | | Attention: [•] | | | | | | | | E-mail: [•] | | | | | | | | | | | | | with a copy (which shall not constitute notice) to: | | | | | | | | | | | | | | | Morrison & Foerster LLP | | | | | | | | 12531 High Bluff Drive | | | | | | | | San Diego, CA 92130 | | | | | | | | Attention: Shai Kalansky; Omar Pringle; Justin Salon | | | | | | | | Email: skalansky@mofo.com; opringle@mofo.com; justinsalon@mofo.com | | | | | | | | | | | | | | | | and | | | | | | | | | | | | | | | | Kirkland & Ellis LLP | | | | | | | | 601 Lexington Avenue | | | | | | | | New York, NY 10022 | | | | | | | | Attn: Lauren M. Colasacco, P.C.; Peter Seligson, P.C. | | | | | | | | Email: lauren.colasacco@kirkland.com; peter.seligson@kirkland.com | |
TABLE OF CONTENTS All such notices, requests, demands, waivers and communications shall be deemed received upon (i) actual receipt thereof by the addressee, or (ii) actual delivery thereof to the appropriate address. (e) Binding Agreement; Assignment. This Agreement and all of the provisions hereof shall be binding upon and shall inure to the benefit of the parties to this Agreement and their respective successors and permitted assigns. Other than with respect to registration rights provided hereunder which may be assigned by a Holder to its Affiliates, no party to this Agreement may assign its rights under this Agreement without the prior written consent of the other parties, and any attempted or purported assignment or delegation in violation of this Section 6(e) shall be null and void. Provided, however, that if Sponsor seeks to effectuate an in-kind distribution of all or part of its Registrable Securities to its direct or indirect equityholders (an “In-Kind Distribution”), the Company will use reasonable best efforts to work with Sponsor to facilitate such In-Kind Distribution in the manner reasonably requested. Prior to any In-Kind Distribution, each distributee shall deliver to the Company a written acknowledgment and agreement in form and substance reasonably satisfactory to the Company that the distributee will be bound by, and will be a party to, this Agreement; provided, however, that a failure by a distributee to deliver such acknowledgment and agreement shall not render such distribution to such distributee void, but such distributee shall not be entitled to the benefits of this Agreement until such time as such acknowledgment and agreement is delivered. Upon any In-Kind Distribution, (i) in the event of a distribution of all of Sponsor’s Registrable Securities, the distributees holding Registrable Securities equal to a majority-in-interest of the Registrable Securities then held by Sponsor at the time of such distribution shall thereafter be entitled to exercise and enforce the rights specifically granted to Sponsor hereunder and (ii) each distributee shall be considered a “Holder” hereunder. (f) Specific Performance. The parties to this Agreement acknowledge that the rights of each party hereto to consummate the transactions contemplated hereby are unique and recognize and affirm that in the event of a breach of this Agreement by any party hereto, money damages may be inadequate and the non-breaching party may have no adequate remedy at law. Accordingly, the parties to this Agreement agree that such non-breaching party shall have the right, in addition to any other rights and remedies existing in their favor at law or in equity, to enforce its rights and the other parties’ obligations hereunder not only by an action or actions for damages but also by an action or actions for specific performance, injunctive and/or other equitable relief (without posting of bond or other security), including any order, injunction or decree sought by such non-breaching party to cause the other parties hereto to perform their respective agreements and covenants contained in this Agreement. Each party to this Agreement further agrees that the only permitted objection that it may raise in response to any action for equitable relief is that it contests the existence of a breach or threatened breach of this Agreement, and that no party to this Agreement shall allege, and each party to this Agreement hereby waives the defense, that there is an adequate remedy at law. (g) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by e-mail shall be as effective as delivery of a manually executed counterpart of the Agreement. (h) Headings. The article and section headings contained in this Agreement are exclusively for the purpose of reference, are not part of the agreement of the parties to this Agreement and shall not in any way affect the meaning or interpretation of this Agreement. (i) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware (regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof) as to all matters, including matters of validity, construction, effect, performance and remedies. (j) Consent to Jurisdiction, etc.; WAIVER OF JURY TRIAL. Each party to this Agreement irrevocably agrees that any action, suit or proceeding between or among the parties to this Agreement arising in connection with any disagreement, dispute, controversy or claim arising out of or relating to this Agreement or any related document (each, a “Legal Dispute”) shall be brought exclusively in the courts of the State of Delaware; provided that if subject matter jurisdiction over the Legal Dispute is vested exclusively in the United States federal courts, such Legal Dispute shall be heard in the United States District Court for the District of Delaware. Each party to this Agreement hereby irrevocably and unconditionally submits to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding that is brought in any such court has been brought in an inconvenient forum. During the period a Legal Dispute that is filed in accordance with this Section 6(j) is pending TABLE OF CONTENTS before a court, all actions, suits or proceedings with respect to such Legal Dispute or any other Legal Dispute, including any counterclaim, cross-claim or interpleader, shall be subject to the exclusive jurisdiction of such court. Each party to this Agreement may bring such Legal Dispute only if he, she or it hereby waives, and shall not assert as a defense in any Legal Dispute, that (a) such party is not personally subject to the jurisdiction of the above-named courts for any reason, (b) such action, suit or proceeding may not be brought or is not maintainable in such court, (c) such party’s property is exempt or immune from execution, (d) such action, suit or proceeding is brought in an inconvenient forum, or (e) the venue of such action, suit or proceeding is improper. A final judgment in any action, suit or proceeding described in this Section 6(j) following the expiration of any period permitted for appeal and subject to any stay during appeal shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable laws. EACH OF THE PARTIES TO THIS AGREEMENT MAY BRING A LEGAL DISPUTE ONLY IF HE, SHE OR IT IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT TO TRIAL BY JURY ON ANY CLAIMS OR COUNTERCLAIMS ASSERTED IN ANY LEGAL DISPUTE RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND FOR ANY COUNTERCLAIM RELATING THERETO. IF THE SUBJECT MATTER OF ANY SUCH LEGAL DISPUTE IS ONE IN WHICH THE WAIVER OF JURY TRIAL IS PROHIBITED, NO PARTY NOR ANY PERSON ASSERTING RIGHTS AS A THIRD-PARTY BENEFICIARY SHALL ASSERT IN SUCH LEGAL DISPUTE A NONCOMPULSORY COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. FURTHERMORE, NO PARTY TO THIS AGREEMENT SHALL SEEK TO CONSOLIDATE ANY SUCH LEGAL DISPUTE WITH A SEPARATE ACTION OR OTHER LEGAL PROCEEDING IN WHICH A JURY TRIAL CANNOT BE WAIVED. (k) Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other terms, conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby are not affected in any manner materially adverse to any party to this Agreement. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties to this Agreement 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 a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible. (l) Brokered Sales. At any time and from time to time in connection with a sale or transfer of Registrable Securities exempt from registration under the Securities Act or through any broker-dealer transactions described in the plan of distribution set forth within any prospectus and pursuant to the Registration Statement of which such prospectus forms a part, the Company shall, subject to the receipt of customary documentation required from the applicable Holders in connection therewith and compliance with applicable laws, (i) promptly instruct its transfer agent to remove any restrictive legends applicable to the Registrable Securities being sold or transferred and (ii) cause its legal counsel to deliver the necessary legal opinions, if any, to the transfer agent in connection with the instruction under subclause clause (i). In addition, the Company shall cooperate reasonably with, and take such customary actions as may reasonably be requested by such Holders in connection with the aforementioned sales or transfers. [SIGNATURE PAGE FOLLOWS] TABLE OF CONTENTS IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first above written. | | | DEVVSTREAM CORP. | | | | | | | | | | | By: | | | | | | | Name: | | | | | | | Title: | | | |
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[Signature Page to Amended and Restated Registration Rights Agreement] TABLE OF CONTENTS COMPANY SUPPORT & LOCK-UP AGREEMENT THIS COMPANY SUPPORT & LOCK-UP AGREEMENT (this “Agreement”), dated as of September 12, 2023, is made by and among DevvStream Holdings Inc., a company existing under the Laws of the Province of British Columbia (the “Company”), Focus Impact Acquisition Corp., a Delaware corporation (the “SPAC”), and the individual or entity whose name appears in the signature block to this Agreement. W I T N E S S E T H: WHEREAS, concurrently with the execution of this Agreement, the Company, the SPAC and one or more acquisition entities are entering into a Business Combination Agreement (the “BCA”) providing for, among other things, the combination of the Company and the SPAC (as further described in the BCA, the “Business Combination”) by way of an arrangement on the terms and subject to the conditions set forth in a plan of arrangement under Section 288 of the Business Corporations Act (British Columbia) (the “Arrangement”), pursuant to which, among other things, the SPAC will continue from the State of Delaware under the Delaware General Corporation Law to the Province of Alberta under the Business Corporations Act (Alberta) (the “New PubCo,” and references herein to the SPAC from and after such continuance shall be deemed to refer to New PubCo) and a wholly-owned subsidiary of New PubCo will amalgamate with the Company to form one corporate entity under Section 288 of the Business Corporations Act (British Columbia) (the “Amalgamation”); WHEREAS, as a condition and inducement to the SPAC entering into the BCA, the SPAC has required that the Core Company Securityholders (as defined in the BCA) agree, and each Core Company Securityholder has agreed, to enter into an agreement in the form of this Agreement (each such agreement, a “Support & Lock-Up Agreement”) and abide by the covenants and obligations with respect to the Core Company Securityholder’s Covered Shares; and WHEREAS, the Board of Directors of the Company and the SPAC have authorized the entering into of the BCA and approved the execution and delivery of this Agreement and each other Support & Lock-Up Agreement in connection therewith, understanding that the execution and delivery of this Agreement and each other Support & Lock-Up Agreement by the Core Company Securityholders is a material inducement and condition to the Company’s and the SPAC’s willingness to enter into the BCA. NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements herein contained, and intending to be legally bound hereby, the parties hereto agree as follows: ARTICLE 1
GENERAL Section 1.01. Defined Terms. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto in the BCA. The following capitalized terms, as used in this Agreement, shall have the following meanings: “Beneficial Ownership” has the meaning ascribed to such term in Rule 13d-3 under the Exchange Act. The terms “Beneficially Own,” “Beneficially Owned” and “Beneficial Owner” shall each have a correlative meaning. “Core Company Securityholder Related Parties” means, with respect to the Core Company Securityholder, the Core Company Securityholder’s Affiliates. “Covered Shares” means, with respect to a Core Company Securityholder, the specified Core Company Securityholder’s Existing Shares, together with any shares of the Company or securities convertible into or exercisable or exchangeable for shares of the Company (including, for the avoidance of doubts, any options, restricted stock units and warrants of the Company), in each case, that such specified Core Company Securityholder has or acquires Beneficial Ownership of on or after the date hereof and over which the Core Company Securityholder has voting power. In addition, from and after the Effective Time until the Expiration Time, the “Covered Shares” shall be deemed to also include the New PubCo Common Shares received by the Core Company Securityholder in the Business Combination or upon the exercise of any Covered Shares following the Effective Time (until the Expiration Time). TABLE OF CONTENTS “Encumbrance” means any security interest, pledge, mortgage, lien (statutory or other), charge, option to purchase, lease or other right to acquire any interest or any claim, restriction, covenant, title defect, hypothecation, assignment, deposit arrangement or other encumbrance of any kind or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement). The term “Encumber” shall have a correlative meaning. “Existing Shares” means, with respect to the Core Company Securityholder, (1) the subordinate voting shares and (2) the multiple voting shares of the Company currently owned by the Core Company Securityholder as well as any options, restricted stock units or warrants or other securities exchangeable into shares of the Company. The Core Company Securityholder’s Existing Shares are set forth on Schedule 1 of this Agreement. “Expiration Time” means the earliest to occur of (a) the first date on which the Lock-up Period has expired, (b) the first date on which the Sponsor Lock-up Period has expired and (c) such date and time as the BCA shall be terminated in accordance with Section 9.1 thereof. “Permitted Transfer” means a Transfer of Covered Shares (a) in the case of an entity, to such entity’s officers or directors or controlling shareholders or to any affiliate or family member of such entity or its officers or directors or controlling shareholders; (b) in the case of an individual, by gift to a member of such individual’s immediate family or to a trust, the beneficiary of which is a member of such individual’s immediate family, an affiliate of such individual or to a charitable organization; (c) in the case of an individual, by virtue of laws of descent and distribution upon death of such individual; (d) in the case of an individual, pursuant to a qualified domestic relations order; or (e) in the case of the Core Company Securityholder, with the prior written consent of the SPAC, such consent not to be unreasonably withheld; provided, however, that all such permitted transferees must enter into a written agreement with the parties hereto agreeing to be bound by the terms of this Agreement as if a party hereto and if such written agreement is not executed and delivered to the Company and the SPAC, such Transfer shall not be a Permitted Transfer hereunder. “Sponsor Lock-up Period” means the period of time during which the Sponsor shall not transfer New PubcoPubCo Common Shares pursuant to the Sponsor Side Letter. Any reduction in the Sponsor Lock-Up Period shall be simultaneously and automatically applied to the Lock-up Period in this Agreement. “Transfer” means, directly or indirectly, to sell, transfer, gift, assign, pledge, Encumber, hypothecate, hedge or similarly dispose of (including by merger (including by conversion into securities or other consideration), by tendering into any tender or exchange offer, by testamentary disposition, by operation of law or otherwise), either voluntarily or involuntarily, or to enter into any contract, option or other arrangement or understanding with respect to the voting of or sale, transfer, gift, assignment, pledge, Encumbrance, hypothecation, hedge or similar disposition of (including by merger, by tendering into any tender or exchange offer, by testamentary disposition, by operation of law or otherwise). ARTICLE 2
VOTING Section 2.01. Agreement to Vote. (a) The Core Company Securityholder hereby irrevocably and unconditionally agrees that during the period between the execution of this Agreement and the earlier of (i) the termination of the BCA in accordance with its terms and (ii) the Closing, at a meeting of the Company’s shareholders (the “Special Meeting”), and at any other meeting of the shareholders of the Company, however called, including any adjournment or postponement thereof, and in connection with any written consent of shareholders of the Company, the Core Company Securityholder shall, in each case to the fullest extent that the Covered Shares of the Core Company Securityholder are entitled to vote thereon or consent thereto: (i) appear at each such meeting or otherwise cause such Covered Shares to be counted as present thereat for purposes of calculating a quorum, or respond to the request by the Company for written consent, as applicable; and (ii) vote (or cause to be voted), in person or by proxy, or by written consent, as applicable, all of such Covered Shares (A) in favor of (1) the adoption and approval of the BCA and the related plan of arrangement and approval of any other matters necessary or reasonably requested by the Company and the SPAC in connection therewith, and (2) any proposal to adjourn or postpone any meeting of the shareholders of the Company at which any of the foregoing matters are submitted for consideration and vote of the TABLE OF CONTENTS shareholders of the Company to a later date if there are not a quorum or sufficient votes for approval of such matters on the date on which the meeting is held to vote upon any of the foregoing matters; (B) if a shareholder vote is required with respect thereto, against any action or agreement that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company contained in the BCA, or of the Core Company Securityholder contained in this Agreement; and (C) if a shareholder vote is required with respect thereto, against (1) any proposals that compete with the Business Combination or involve any other transaction, business combination and/or plan of arrangement with a Person other than the SPAC or its Affiliates that is required or permitted to be submitted to a vote of the shareholders of the Company, (2)any other action, agreement or transaction involving the Company or any of its Affiliates that is intended, or would reasonably be expected to, impede, interfere with, delay, postpone, adversely affect or prevent the consummation of the Business Combination and/or the related plan of arrangement or this Agreement or the performance by the Company of its obligations under the BCA or by the Core Company Securityholder of its obligations under this Agreement and (3) any proposal, action or agreement that would change in any manner the dividend policy or capitalization of, including the voting rights of, any class of capital stock or other securities of the Company (other than, in the case of this clause (3), pursuant to the BCA or the Ancillary Documents and the transactions contemplated thereby). (b) The Core Company Securityholder hereby (i) waives, and agrees not to exercise or assert, any dissent, appraisal or similar rights in connection with the Arrangement and (ii) agrees (A) not to commence or participate in, and (B) to take all actions necessary to opt out of, any class action with respect to, any claim, derivative or otherwise, against the Company or any of its Affiliates relating to the negotiation, execution or delivery of this Agreement, the BCA or the consummation of the Business Combination and/or the related plan of arrangement, including any claim (1) challenging the validity of, or seeking to enjoin the operation of, any provision of this Agreement or (2) alleging a breach of any fiduciary duty of the Board of Directors of the Company in connection with this Agreement, the BCA or the Business Combination and/or the related plan of arrangement. (c) The obligations of the Core Company Securityholder specified in this Section 2.01 shall apply whether or not (i) the Business Combination, the BCA, the related plan of arrangement or any action described above is recommended by the Board of Directors of the Company (or any committee thereof) or (ii) the Board of Directors of the Company has previously recommended the Business Combination, the BCA, the related plan of arrangement or any action described above and subsequently withdrawn or otherwise changed such recommendation. Section 2.02. No Inconsistent Agreements. The Core Company Securityholder hereby covenants and agrees that, except for this Agreement, the Core Company Securityholder (a) has not entered into, and shall not enter into at any time prior to the Effective Time, any voting agreement or voting trust with respect to the Covered Shares of the Core Company Securityholder, (b) has not granted, and shall not grant at any time prior to the Effective Time, a proxy (except pursuant to Section 2.03 or pursuant to any proxy in form and substance reasonably satisfactory to SPAC and Company delivered to the Company, directing that the Covered Shares of the Core Company Securityholder be voted in accordance with Section 2.01), consent or power of attorney (other than in the letter of transmittal being used in the Business Combination) with respect to the Covered Shares of the Core Company Securityholder and (c) has not taken and shall not knowingly take any action that would make any representation or warranty of the Core Company Securityholder contained herein untrue or incorrect or have the effect of preventing or disabling the Core Company Securityholder from performing any of its covenants or obligations under this Agreement; provided, however, that this Section 2.02 shall not preclude the Core Company Securityholder from Transferring Covered Shares pursuant to a Permitted Transfer or taking any action permitted under the last sentence of Section 4.01(a) (subject in each case to the express terms of this Agreement). The Core Company Securityholder hereby represents that all proxies, powers of attorney, instructions or other requests given by the Core Company Securityholder prior to the execution of this Agreement in respect of the voting of the Covered Shares of the Core Company Securityholder, if any, are not irrevocable and the Core Company Securityholder hereby revokes (and shall cause to be revoked) any and all previous proxies, powers of attorney, instructions or other requests with respect to the Core Company Securityholder’s Covered Shares. Section 2.03. Proxy. The Core Company Securityholder hereby irrevocably appoints as its proxy and attorney-in-fact, the Company and any Person designated in writing by the Company, each of them individually, with full power of substitution and resubstitution, until the termination of this Agreement, to vote the Covered Shares Beneficially Owned by the Core Company Securityholder in accordance with Section 2.01 in connection with any TABLE OF CONTENTS vote of shareholders of the Company in respect of any of the matters described in Section 2.01; provided, however, that the Core Company Securityholder’s grant of the proxy contemplated by this Section 2.03 shall be effective if, and only if, the Core Company Securityholder fails to vote such Covered Shares (or grant a consent or approval, as applicable) in accordance with Section 2.01. This proxy, if it becomes effective, is coupled with an interest, is given as an additional inducement of the Company and the SPAC to enter into the BCA and shall be irrevocable prior to the Effective Time, at which time any such proxy shall terminate and be released. Neither the Company, the SPAC nor any Person may exercise this proxy on any matter, or in circumstance, except as provided above. ARTICLE 3
REPRESENTATIONS AND WARRANTIES The Core Company Securityholder hereby represents and warrants to the SPAC and the Company as to, and only as to, the Core Company Securityholder as follows: Section 3.01. Authorization; Validity of Agreement. If the Core Company Securityholder is not an individual, the Core Company Securityholder is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. The Core Company Securityholder has the requisite capacity and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. This Agreement has been duly authorized (to the extent authorization is required), executed and delivered by the Core Company Securityholder and, assuming this Agreement constitutes a valid and binding obligation of the SPAC and the Company, constitutes a legal, valid and binding obligation of the Core Company Securityholder, enforceable against the Core Company Securityholder in accordance with its terms (subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws affecting creditors’ rights generally and general principles of equity). [If the Core Company Securityholder is married and the Core Company Securityholder’s Covered Shares constitute community property under applicable Law, a spousal consent in substantially the form attached hereto as Exhibit A has been duly executed and delivered by, and constitutes the valid and binding agreement of, the Core Company Securityholder’s spouse (subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws affecting creditors’ rights generally and general principles of equity).]1 Section 3.02. Ownership. Except as otherwise set forth on Schedule 1, unless Transferred pursuant to a Permitted Transfer, (a) the Core Company Securityholder’s Existing Shares, if any, are, and all of the Covered Shares Beneficially Owned by the Core Company Securityholder from the date hereof through and at the Effective Time will be, Beneficially Owned by the Core Company Securityholder, and (b) the Core Company Securityholder has good and valid title to the Core Company Securityholder’s Existing Shares, if any, free and clear of any Encumbrances other than pursuant to this Agreement, or under applicable federal, provincial or state securities laws. The Core Company Securityholder has and will have at all times through the Effective Time sole voting power (including the right to control such vote as contemplated herein), sole power of disposition, sole power to issue instructions with respect to the matters set forth in Article 2, and sole power to agree to all of the matters set forth in this Agreement, in each case with respect to all of the Core Company Securityholder’s Existing Shares, except with respect to any Existing Shares that are Transferred pursuant to a Permitted Transfer. Section 3.03. No Violation. The execution and delivery of this Agreement by the Core Company Securityholder does not, and the performance by the Core Company Securityholder of its obligations under this Agreement will not, (a) conflict with or violate any applicable Law or, if applicable, any certificate, notice of articles or articles of incorporation, as applicable, or bylaws or other equivalent organizational documents of the Core Company Securityholder, or (b) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or result in the creation of any Encumbrance upon any of the properties or assets of the Core Company Securityholder under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which the Core Company Securityholder is a party or by which the Core Company Securityholder or any of its, his or her properties or assets may be bound, except in each case as would not prevent or delay consummation of the Business Combination and the other transactions contemplated by the BCA or impair the ability of the Core Company Securityholder to perform its, his or her obligations hereunder or to consummate the transactions contemplated hereby on a timely basis. TABLE OF CONTENTS Section 3.04. Consents and Approvals. The execution and delivery of this Agreement by the Core Company Securityholder does not, and the performance by the Core Company Securityholder of its, his or her obligations under this Agreement and the consummation by the Core Company Securityholder of the transactions contemplated hereby will not, require the Core Company Securityholder to obtain any consent, approval, authorization or permit of, or to make any filing with or notification to, any Governmental Authority. Section 3.05. Absence of Litigation. As of the date hereof, there is no litigation, action, suit or proceeding pending or, to the knowledge of the Core Company Securityholder, threatened against or affecting the Core Company Securityholder and/or any of its Affiliates before or by any Governmental Authority that would reasonably be expected to impair the ability of the Core Company Securityholder to perform its, his or her obligations hereunder or to consummate the transactions contemplated hereby on a timely basis. Section 3.06. Reliance by Company and SPAC. The Core Company Securityholder understands and acknowledges that the Company and the SPAC are entering into the BCA in reliance upon the execution and delivery of this Agreement by the Core Company Securityholder and the representations and warranties of the Core Company Securityholder contained herein. The Core Company Securityholder understands and acknowledges that the BCA governs the terms of the Business Combination and the other transactions contemplated thereby. Section 3.07. Adequate Information. The Core Company Securityholder is a sophisticated holder with respect to the Covered Shares and has adequate information concerning the transactions contemplated by the BCA and concerning the business and financial condition of the SPAC and the Company to make an informed decision regarding the matters referred to herein and has independently, based on such information as the Core Company Securityholder has deemed appropriate, made the Core Company Securityholder’s own analysis and decision to enter into this Agreement. ARTICLE 4
OTHER COVENANTS Section 4.01. Prohibition on Transfers; Other Actions. (a) The Core Company Securityholder agrees that, from the date hereof until the Effective Time (and without limitation of the provisions set forth in Section 4.01(b)), the Core Company Securityholder shall not (i) Transfer or permit the Transfer of the Core Company Securityholder’s Covered Shares, Beneficial Ownership thereof or any other interest therein unless such Transfer is a Permitted Transfer effected in accordance with the terms of this Agreement; (ii) enter into any agreement, arrangement or understanding with any Person, or take any other action, that violates or would reasonably be expected to violate or conflict, or result in or give rise to a violation of, the Core Company Securityholder’s representations, warranties, covenants and obligations under this Agreement; or (iii) take any action that would restrict or otherwise adversely affect the Core Company Securityholder’s legal power, authority and right to comply with and perform its covenants and obligations under this Agreement. Any Transfer in violation of this provision shall be void ab initio. Until the earlier of the termination of the BCA in accordance with its terms and the Effective Time (and without limitation of the provisions set forth in Section 4.01(b)), the Core Company Securityholder (A) shall not request that the Company register the transfer (book-entry or otherwise) of any of the Core Company Securityholder’s Covered Shares or any certificate in respect thereof and (B) hereby consents to the entry of stop transfer instructions by the Company with respect to any transfer of the Core Company Securityholder’s Covered Shares, unless, in each case, such transfer is a Permitted Transfer effected in accordance with the terms of this Agreement. Notwithstanding anything in this Agreement to the contrary, nothing in this Agreement shall require any action, or restrict the Core Company Securityholder, with respect to any Covered Shares subject to any pledge or security interest in effect as of the date hereof as set forth on Schedule 1 to the extent such action or restriction is inconsistent with the terms of such pledge or security interest; provided that, unless and until there is a bona fide foreclosure with respect to such pledge or security interest, the Core Company Securityholder agrees that there are no terms of any such pledge or security interest that will prevent or impair the Core Company Securityholder from complying with any obligation, agreement or covenant set forth herein. (b) The Core Company Securityholder shall not Transfer, or permit any Transfer, of the Core Company Securityholder’s Covered Shares (unless such Transfer is a Permitted Transfer effected in accordance with the terms of this Agreement) until the earlier of (i) three hundred and sixty (360) days after the completion of the Business Combination and (ii) the date on which New PubCo (or its successor) completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of New PubCo’s (or such TABLE OF CONTENTS successor’s) shareholders having the right to exchange their securities for cash, securities or other property (the “Lock-up Period”). Notwithstanding the foregoing, if, subsequent to the Business Combination, the closing price of the New PubcoPubCo Common Shares equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period commencing at least 150 days after the Business Combination, the Core Company Securityholder’s Covered Shares shall be released from the Core Company Securityholder’s Covered Shares Lock-up. Section 4.02. Dividends, Distributions, Etc. In the event of any change in the shares of the Company or the SPAC, as the case may be, by reason of any reclassification, recapitalization, reorganization, share split (including a reverse share split) or subdivision or combination, exchange or readjustment of shares, or any dividend or distribution, merger or other similar change in capitalization, the terms “Existing Shares” and “Covered Shares” shall be deemed to refer to and include such shares as well as all such dividends and distributions and any securities into which or for which any or all of such shares may be changed or exchanged or which are received in such transaction. Section 4.03. Notice of Acquisitions. The Core Company Securityholder agrees to notify the SPAC and the Company as promptly as reasonably practicable of the number of any additional shares of the Company or other securities convertible into or exercisable or exchangeable for shares of the Company of which the Core Company Securityholder acquires Beneficial Ownership on or after the date hereof and prior to the Effective Time. ARTICLE 5
MISCELLANEOUS Section 5.01. Termination. This Agreement shall remain in effect until the Expiration Time, at which time this Agreement shall terminate in its entirety and be of no further force or effect; provided, however, that any proxy granted hereunder shall be automatically and immediately terminated and released at the Effective Time. Neither the provisions of this Section 5.01 nor the termination of this Agreement shall (a) relieve any party hereto from any liability of such party to any other party incurred prior to such termination or expiration, (b) relieve any party hereto from any liability to any other party arising out of or in connection with any breach of this Agreement prior to such termination or expiration or fraud (c) terminate the obligations under Section 2.01(b). Section 5.02. No Agreement as Director or Officer. Notwithstanding any provision in this Agreement to the contrary, nothing in this Agreement shall (a) limit, restrict or otherwise affect the Core Company Securityholder or any Affiliate or Representative of the Core Company Securityholder in his or her capacity as a director or officer of the Company from acting (or not acting) in such capacity or voting in the capacity as a director in such person’s sole discretion on any matter, including in respect of the BCA, and no such actions or votes shall be deemed a breach of this Agreement, or (b) be construed to prohibit, limit or restrict the Core Company Securityholder or any Affiliates or Representatives of the Core Company Securityholder from exercising fiduciary duties as a director or officer of the Company solely in their capacity as such, and not acting in their capacity as a securityholder. Without limiting the foregoing, it is the intention of the parties that this Agreement shall apply to the Core Company Securityholder solely in the Core Company Securityholder’s capacity as a shareholder of the Company. Section 5.03. No Ownership Interest. The Core Company Securityholder has agreed to enter into this Agreement and act in the manner specified in this Agreement for consideration. Except as expressly set forth in this Agreement, all rights and all ownership and economic benefits of and relating to the Core Company Securityholder’s Covered Shares shall remain vested in and belong to the Core Company Securityholder, and except as expressly set forth in this Agreement, nothing herein shall, or shall be construed to, grant the Company or the SPAC any power, sole or shared, to direct or control the voting or disposition of any of such Covered Shares. TABLE OF CONTENTS Section 5.04. Notices. All notices, requests, claims, demands and other communications hereunder shall be given (and shall be deemed to have been duly received if given) by hand delivery in writing, by facsimile transmission with confirmation of receipt, by email transmission with confirmation of receipt or by recognized overnight or international courier service, as follows: | | | if to Company: | | | | | | | | DevvStream Holdings Inc. | | | | 2133-1177 West Hastings Street | | | | Vancouver, BC V6E 2K3 | | | | Attention: Sunny Trinh | | | | Email: sunny@devvstream.com | | | | | | | | with a copy to (which shall not constitute notice): | | | | | | | | Morrison & Foerster LLP | | | | 12531 High Bluff Drive, Suite 100 | | | | San Diego, CA 92130 | | | | Attention: Shai Kalansky; Omar Pringle; Justin Salon | | | | Email: skalansky@mofo.com; opringle@mofo.com; justinsalon@mofo.com | | | | | | | | if to the SPAC: | | | | | | | | Focus Impact Acquisition Corp. | | | | 1345 Avenue of the Americas | | | | New York, NY 10105 | | | | Attn: Carl Stanton | | | | E-mail: cstanton@focus-impact.com | | | | | | | | with a copy to (which shall not constitute notice): | | | | | | | | Kirkland & Ellis LLP | | | | 601 Lexington Avenue | | | | New York, NY 02210022 | | | | Attn: Lauren M. Colasacco, P.C., Peter Seligson, P.C. | | | | Email: lauren.colasacco@kirkland.com; peter.seligson@kirkland.com |
and if to the Core Company Securityholder, to the address set forth on Schedule 1, or to such other address as the Person to whom notice is given may have previously furnished to the others in writing in the manner set forth above. Section 5.05. Interpretation. When reference is made in this Agreement to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The words “hereof,” “herein,” “hereby” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The word “or” shall not be exclusive. Whenever used in this Agreement, any noun or pronoun shall be deemed to include the plural as well as the singular and to cover all genders. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted. Section 5.06. Counterparts. This Agreement may be executed in counterparts (which may be delivered by facsimile or other electronic transmission), each of which shall be deemed to be an original, but all of which, taken together, shall constitute one and the same agreement. TABLE OF CONTENTS Section 5.07. Entire Agreement. This Agreement and, to the extent referenced herein, the BCA, together with the several agreements and other documents and instruments referred to herein or therein or attached hereto or thereto, constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, both oral and written, among the parties with respect to the subject matter hereof and thereof. Except for the representations and warranties expressly contained in Article 3, the Core Company Securityholder makes no express or implied representation or warranty with respect to the Core Company Securityholder or the Covered Shares, or otherwise. Section 5.08. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. (a) This Agreement shall be governed by, construed and enforced in accordance with the Laws of the Province of British Columbia and the federal Laws applicable therein, without regard to any choice of law or conflict of laws principles thereof that would cause the application of the Law of any jurisdiction other than the Province of British Columbia. Each Party irrevocably attorns and submits to the non-exclusive jurisdiction of the British Columbia courts situated in the City of Vancouver and waives objection to the venue of any proceeding in such court or that such court provides an inconvenient forum. (b) EACH PARTY 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 ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO (I) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, SEEK TO ENFORCE THAT FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. Section 5.09. Amendment; Waiver. Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Agreement or, in the case of a waiver, by each party against whom the waiver is to be effective, but such waiver shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Section 5.10. Remedies. The parties hereto agree that irreparable damage would occur and that the parties would not have any adequate remedy at law in the event that any provision of this Agreement were not performed in accordance with their specific terms hereof or were otherwise breached and that it is accordingly agreed that, prior to termination of this Agreement, the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to specific performance of the terms hereof, in addition to any other remedy at law or equity. Section 5.11. Severability. If any term or other provision of this Agreement is held to be invalid, illegal or incapable of being enforced by any rule of law or public policy in any jurisdiction, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect and shall not be affected thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced in any jurisdiction, this Agreement will be reformed, construed and enforced in such jurisdiction so as to effect the original intent of the parties as closely as possible to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible. Section 5.12. Successors and Assigns; Third Party Beneficiaries. Other than by the Core Company Securityholder to a transferee pursuant to a Permitted Transfer or any assignment, delegation or other transfer effected by the Amalgamation or the SPAC Continuance, no party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of each other party hereto. No provision of this Agreement is intended to confer any rights, benefits, remedies, obligations or liabilities hereunder upon any Person other than the parties hereto and their respective heirs, executors, personal legal representatives, successors and permitted assigns. For the avoidance of doubt and without limiting the SPAC’s rights hereunder, the SPAC shall be a beneficiary of, and entitled to enforce, the rights of the Company under Section 2.03 (Proxy) to the extent not being enforced by the Company. Section 5.13. Expenses. All costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense. TABLE OF CONTENTS Section 5.14. Non-Recourse. Notwithstanding anything to the contrary herein or in any other documents delivered pursuant hereto, (a) this Agreement may be enforced only against, and any claim based upon, arising out of or related to a breach of this Agreement by the Core Company Securityholder may be made only against, the Core Company Securityholder (or in each case its Permitted Transferees), and (b) none of the Core Company Securityholder Related Parties shall have any liability for any liabilities of the parties hereto for any such claims (whether in tort, contract or otherwise) for breach of this Agreement or in respect of any oral representations made or alleged to be made in connection herewith (other than any such Permitted Transferee). Section 5.15. Acknowledgment of Counsel. Each party to this Agreement other than the Company hereby (a) acknowledges that (i) Morrison & Foerster LLP and McMillan LLP represent and serve as counsel for only the Company (and no other party to this Agreement) with respect to this Agreement, the BCA and the transactions contemplated hereby or thereby and (ii) such party has either sought the advice of their own counsel or has had the opportunity to seek their own counsel and has chosen not to do so, and (b) gives their informed consent to Morrison & Foerster LLP’s and McMillan LLP'sLLP’s representation of the Company in connection with this Agreement, the BCA and the transactions contemplated hereby or thereby. Section 5.16. Trust Account Waiver. Section 10.1 of the BCA is incorporated herein by reference mutatis mutandis. [Remainder of this page intentionally left blank] TABLE OF CONTENTS IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed (where applicable, by their respective officers or other authorized Person thereunto duly authorized) as of the date first written above. | | | DEVVSTREAM HOLDINGS INC. | | | | | | | | | | | | | | By: | | | | | | | | | | Name: | | | Sunny Trinh | | | | | | | Title: | | | Chief Executive Officer | | | | | | | | | | | | | | FOCUS IMPACT ACQUISITION CORP. | | | | | | | | | | | | | | By: | | | | | | | | | | Name: | | | Carl Stanton | | | | | | | Title: | | | Chief Executive Officer |
[Signature Page to Support & Lock-up Agreement]
TABLE OF CONTENTS IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed (where applicable, by their respective officers or other authorized Person thereunto duly authorized) as of the date first written above. | | | CORE COMPANY SECURITYHOLDER: | | | | | [] | | | | | | | | | | | | | | | | By: | | | | | | | | | | Name: | | | | | | | | | | | Title: | | | | |
[Signature Page to Support & Lock-up Agreement]
TABLE OF CONTENTS Schedule 1 | [ ] | | | (i) [ ] multiple voting shares of the Company,
(ii) [ ] subordinate voting shares of the Company. | | | [ ] | |
TABLE OF CONTENTS Exhibit A
Consent of Spouse I, , spouse of [Name of Core Company Securityholder], have read and approved that certain Support and Lock-up Agreement (the “Agreement”), dated as of [ ], 2023, by and among DevvStream Holdings Inc., Focus Impact Acquisition Corp. and the Core Company Securityholder. In consideration of the right of my spouse to participate in the transactions described in the Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to the exercise of any rights under the Agreement insofar as I may have any rights under the community property laws of the [jurisdiction] or similar laws relating to marital property in effect in the [state / country] of our residence as of the date of the signing of the foregoing Agreement. Dated: , 2023 | | | By: | | | | | | | Name: | | | |
TABLE OF CONTENTS Arrangement Resolution DevvStream Corp. 2023
2024 Equity Incentive Plan
[To Be Filed
Adopted by Amendment.the Board of Directors: [ ], 2024
Approved by the Stockholders: [ ], 2024 (a) Plan Purpose. The purpose of the Plan is to further align the interests of eligible participants with those of the Company’s stockholders by providing incentive compensation opportunities tied to the performance of the Company and its Common Stock. The Plan is intended to advance the interests of the Company and increase stockholder value by attracting, retaining and motivating key personnel upon whose judgment, initiative and effort the successful conduct of the Company’s business is largely dependent. (b) Available Awards. The Plan provides for the grant of the following Awards: (i) Incentive Stock Options; (ii) Nonstatutory Stock Options; (iii) SARs; (iv) Restricted Stock Awards; (v) RSU Awards; (vi) Performance Awards; and (vii) Other Awards. (c) Adoption Date; Effective Date. The Plan will come into existence on the Adoption Date, but no Award may be granted prior to the Effective Date. 2.
| Shares Subject to the Plan. |
(a) Share Reserve. Subject to adjustment in accordance with Section 2(c) and any adjustments as necessary to implement any Capitalization Adjustments, the aggregate number of shares of Common Stock that may be issued pursuant to Awards will be [•] shares; provided, that, commencing the first business day of each fiscal year of the Company, beginning with the Company’s fiscal year following the fiscal year of the Effective Date, the number of Shares available for issuance under the Plan shall be increased by a number equal to the lesser of (i) 5% of the number of Shares outstanding on the last day of the immediately preceding fiscal year of the Company, calculated on a fully diluted basis, or (ii) such lesser number of Shares as determined by the Board. (b) Aggregate Incentive Stock Option Limit. Notwithstanding anything to the contrary in Section 2(a) and subject to any adjustments as necessary to implement any Capitalization Adjustments, the aggregate maximum number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options is [•] shares. (c) Share Reserve Operation. (i) Limit Applies to Common Stock Issued Pursuant to Awards. For clarity, the Share Reserve is a limit on the number of shares of Common Stock that may be issued pursuant to Awards and does not limit the granting of Awards, except that the Company will keep available at all times the number of shares of Common Stock reasonably required to satisfy its obligations to issue shares pursuant to such Awards. Shares may be issued in connection with a merger or acquisition as permitted by, as applicable, Nasdaq Listing Rule 5635(c), NYSE Listed Company Manual Section 303A.08, NYSE American Company Guide Section 711 or other applicable rule, and such issuance will not reduce the number of shares available for issuance under the Plan. (ii) Actions that Do Not Constitute Issuance of Common Stock and Do Not Reduce Share Reserve. The following actions do not result in an issuance of shares under the Plan and accordingly do not reduce the number of shares subject to the Share Reserve and available for issuance under the Plan: (1) the expiration or termination of any portion of an Award without the shares covered by such portion of the Award having been issued; (2) the settlement of any portion of an Award in cash (i.e., the Participant receives cash rather than Common Stock); (3) the withholding of shares that would otherwise be issued by the Company to satisfy the exercise, strike or purchase price of an Award; or (4) the withholding of shares that would otherwise be issued by the Company to satisfy a tax withholding obligation in connection with an Award. TABLE OF CONTENTS (iii) Reversion of Previously Issued Shares of Common Stock to Share Reserve. The following shares of Common Stock previously issued pursuant to an Award and accordingly initially deducted from the Share Reserve will be added back to the Share Reserve and again become available for issuance under the Plan: (1) any shares that are forfeited back to or repurchased by the Company because of a failure to meet a contingency or condition required for the vesting of such shares; (2) any shares that are reacquired by the Company to satisfy the exercise, strike or purchase price of an Award; and (3) any shares that are reacquired by the Company to satisfy a tax withholding obligation in connection with an Award. 3.
| Eligibility and Limitations. |
(a) Eligible Award Recipients. Subject to the terms of the Plan, Employees, Directors and Consultants are eligible to receive Awards. (b) Specific Award Limitations. (i) Limitations on Incentive Stock Option Recipients. Incentive Stock Options may be granted only to Employees of the Company or a “parent corporation” or “subsidiary corporation” thereof (as such terms are defined in Sections 424(e) and (f) of the Code). (ii) Incentive Stock Option $100,000 Limitation. To the extent that the aggregate Fair Market Value (determined at the time of grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of the Company and any Affiliates) exceeds $100,000 (or such other limit established in the Code) or otherwise does not comply with the rules governing Incentive Stock Options, the Options or portions thereof that exceed such limit (according to the order in which they were granted) or otherwise do not comply with such rules will be treated as Nonstatutory Stock Options, notwithstanding any contrary provision of the applicable Option Agreement(s). (iii) Limitations on Incentive Stock Options Granted to Ten Percent Stockholders. A Ten Percent Stockholder may not be granted an Incentive Stock Option unless (1) the exercise price of such Option is at least 110% of the Fair Market Value on the date of grant of such Option and (2) the Option is not exercisable after the expiration of five years from the date of grant of such Option. (iv) Limitations on Nonstatutory Stock Options and SARs. Nonstatutory Stock Options and SARs may not be granted to Employees, Directors and Consultants unless the stock underlying such Awards is treated as “service recipient stock” under Section 409A or unless such Awards otherwise comply with the requirements of Section 409A. (c) Aggregate Incentive Stock Option Limit. The aggregate maximum number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options is the number of shares specified in Section 2(b). 4.
| Options and Stock Appreciation Rights. |
Each Option and SAR will have such terms and conditions as determined by the Board. Each Option will be designated in writing as an Incentive Stock Option or Nonstatutory Stock Option at the time of grant; provided, however, that if an Option is not so designated or if an Option designated as an Incentive Stock Option fails to qualify as an Incentive Stock Option, then such Option will be a Nonstatutory Stock Option, and the shares purchased upon exercise of each type of Option will be separately accounted for. Each SAR will be denominated in shares of Common Stock equivalents. The terms and conditions of separate Options and SARs need not be identical; provided, however, that each Option Agreement and SAR Agreement will conform (through incorporation of provisions hereof by reference in the Award Agreement or otherwise) to the substance of each of the following provisions: (a) Term. Subject to Section 3(b) regarding Ten Percent Stockholders, no Option or SAR will be exercisable after the expiration of ten years from the date of grant of such Award or such shorter period specified in the Award Agreement. (b) Exercise or Strike Price. Subject to Section 3(b) regarding Ten Percent Stockholders, the exercise or strike price of each Option or SAR will not be less than 100% of the Fair Market Value on the TABLE OF CONTENTS date of grant of such Award. Notwithstanding the foregoing, an Option or SAR may be granted with an exercise or strike price lower than 100% of the Fair Market Value on the date of grant of such Award if such Award is granted pursuant to an assumption of or substitution for another option or stock appreciation right pursuant to a Corporate Transaction and in a manner consistent with the provisions of Sections 409A and, if applicable, 424(a) of the Code. (c) Exercise Procedure and Payment of Exercise Price for Options. In order to exercise an Option, the Participant must provide notice of exercise to the Plan Administrator in accordance with the procedures specified in the Option Agreement or otherwise provided by the Company. The Board has the authority to grant Options that do not permit all of the following methods of payment (or otherwise restrict the ability to use certain methods) and to grant Options that require the consent of the Company to utilize a particular method of payment. The exercise price of an Option may be paid, to the extent permitted by Applicable Law and as determined by the Board, by one or more of the following methods of payment to the extent set forth in the Option Agreement: (i) by cash or check, bank draft or money order payable to the Company; (ii) pursuant to a “cashless exercise” program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of the Common Stock subject to the Option, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the exercise price to the Company from the sales proceeds; (iii) by delivery to the Company (either by actual delivery or attestation) of shares of Common Stock that are already owned by the Participant free and clear of any liens, claims, encumbrances or security interests, with a Fair Market Value on the date of exercise that does not exceed the exercise price, provided that (1) at the time of exercise the Common Stock is publicly traded, (2) any remaining balance of the exercise price not satisfied by such delivery is paid by the Participant in cash or other permitted form of payment, (3) such delivery would not violate any Applicable Law or agreement restricting the redemption of the Common Stock, (4) any certificated shares are endorsed or accompanied by an executed assignment separate from certificate, and (5) such shares have been held by the Participant for any minimum period necessary to avoid adverse accounting treatment as a result of such delivery; (iv) if the Option is a Nonstatutory Stock Option, by a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Common Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value on the date of exercise that does not exceed the exercise price, provided that (1) such shares used to pay the exercise price will not be exercisable thereafter and (2) any remaining balance of the exercise price not satisfied by such net exercise is paid by the Participant in cash or other permitted form of payment; or (v) in any other form of consideration that may be acceptable to the Board and permissible under Applicable Law. (d) Exercise Procedure and Payment of Appreciation Distribution for SARs. In order to exercise any SAR, the Participant must provide notice of exercise to the Plan Administrator in accordance with the SAR Agreement. The appreciation distribution payable to a Participant upon the exercise of a SAR will not be greater than an amount equal to the excess of (i) the aggregate Fair Market Value on the date of exercise of a number of shares of Common Stock equal to the number of Common Stock equivalents that are vested and being exercised under such SAR, over (ii) the strike price of such SAR. Such appreciation distribution may be paid to the Participant in the form of Common Stock or cash (or any combination of Common Stock and cash) or in any other form of payment, as determined by the Board and specified in the SAR Agreement. (e) Transferability. Options and SARs may not be transferred to third party financial institutions for value. The Board may impose such additional limitations on the transferability of an Option or SAR as it determines. In the absence of any such determination by the Board, the following restrictions on the TABLE OF CONTENTS transferability of Options and SARs will apply, provided that except as explicitly provided herein, neither an Option nor a SAR may be transferred for consideration and provided, further, that if an Option is an Incentive Stock Option, such Option may be deemed to be a Nonstatutory Stock Option as a result of such transfer: (i) Restrictions on Transfer. An Option or SAR will not be transferable, except by will or by the laws of descent and distribution, and will be exercisable during the lifetime of the Participant only by the Participant; provided, however, that the Board may permit transfer of an Option or SAR in a manner that is not prohibited by applicable tax and securities laws upon the Participant’s request, including to a trust if the Participant is considered to be the sole beneficial owner of such trust (as determined under Section 671 of the Code and applicable state law) while such Option or SAR is held in such trust, provided that the Participant and the trustee enter into a transfer and other agreements required by the Company. (ii) Domestic Relations Orders. Notwithstanding the foregoing, subject to the execution of transfer documentation in a format acceptable to the Company and subject to the approval of the Board or a duly authorized Officer, an Option or SAR may be transferred pursuant to a domestic relations order. (f) Vesting. The Board may impose such restrictions on or conditions to the vesting and/or exercisability of an Option or SAR as determined by the Board. Except as otherwise provided in the Award Agreement or other written agreement between a Participant and the Company or an Affiliate, vesting of Options and SARs will cease upon termination of the Participant’s Continuous Service. (g) Termination of Continuous Service for Cause. Except as explicitly otherwise provided in the Award Agreement or other written agreement between a Participant and the Company or an Affiliate, if a Participant’s Continuous Service is terminated for Cause, the Participant’s Options and SARs will terminate and be forfeited immediately upon such termination of Continuous Service, and the Participant will be prohibited from exercising any portion (including any vested portion) of such Awards on and after the date of such termination of Continuous Service and the Participant will have no further right, title or interest in such forfeited Award, the shares of Common Stock subject to the forfeited Award, or any consideration in respect of the forfeited Award. (h) Post-Termination Exercise Period Following Termination of Continuous Service for Reasons Other than Cause. Subject to Section 4(i), if a Participant’s Continuous Service terminates for any reason other than for Cause, the Participant may exercise his or her Option or SAR to the extent vested, but only within the following period of time or, if applicable, such other period of time provided in the Award Agreement or other written agreement between a Participant and the Company or an Affiliate; provided, however, that in no event may such Award be exercised after the expiration of its maximum term (as set forth in Section 4(a)): (i) three months following the date of such termination if such termination is a termination without Cause (other than any termination due to the Participant’s Disability or death); (ii) 12 months following the date of such termination if such termination is due to the Participant’s Disability; (iii) 12 months following the date of such termination if such termination is due to the Participant’s death; or (iv) 12 months following the date of the Participant’s death if such death occurs following the date of such termination but during the period such Award is otherwise exercisable (as provided in (i) or (ii) above). TABLE OF CONTENTS Following the date of such termination, to the extent the Participant does not exercise such Award within the applicable Post-Termination Exercise Period (or, if earlier, prior to the expiration of the maximum term of such Award), such unexercised portion of the Award will terminate, and the Participant will have no further right, title or interest in the terminated Award, the shares of Common Stock subject to the terminated Award, or any consideration in respect of the terminated Award. (i) Restrictions on Exercise; Extension of Exercisability. A Participant may not exercise an Option or SAR at any time that the issuance of shares of Common Stock upon such exercise would violate Applicable Law. Except as otherwise provided in the Award Agreement or other written agreement between a Participant and the Company or an Affiliate, if a Participant’s Continuous Service terminates for any reason other than for Cause and, at any time during the last thirty days of the applicable Post-Termination Exercise Period: (i) the exercise of the Participant’s Option or SAR would be prohibited solely because the issuance of shares of Common Stock upon such exercise would violate Applicable Law, or (ii) the immediate sale of any shares of Common Stock issued upon such exercise would violate the Company’s Trading Policy, then the applicable Post-Termination Exercise Period will be extended to the last day of the calendar month that commences following the date the Award would otherwise expire, with an additional extension of the exercise period to the last day of the next calendar month to apply if any of the foregoing restrictions apply at any time during such extended exercise period, generally without limitation as to the maximum permitted number of extensions); provided, however, that in no event may such Award be exercised after the expiration of its maximum term (as set forth in Section 4(a)). (j) Non-Exempt Employees. No Option or SAR, whether or not vested, granted to an Employee who is a non-exempt employee for purposes of the Fair Labor Standards Act of 1938, as amended, will be first exercisable for any shares of Common Stock until at least six months following the date of grant of such Award. Notwithstanding the foregoing, in accordance with the provisions of the Worker Economic Opportunity Act, any vested portion of such Award may be exercised earlier than six months following the date of grant of such Award in the event of (i) such Participant’s death or Disability, (ii) a Corporate Transaction in which such Award is not assumed, continued or substituted, or (iii) such Participant’s retirement (as such term may be defined in the Award Agreement or another applicable agreement or, in the absence of any such definition, in accordance with the Company’s then current employment policies and guidelines). This Section 4(j) is intended to operate so that any income derived by a non-exempt employee in connection with the exercise or vesting of an Option or SAR will be exempt from his or her regular rate of pay. (k) Whole Shares. Options and SARs may be exercised only with respect to whole shares of Common Stock or their equivalents. 5.
| Awards Other Than Options and Stock Appreciation Rights. |
(a) Restricted Stock Awards and RSU Awards. Each Restricted Stock Award and RSU Award will have such terms and conditions as determined by the Board; provided, however, that each Restricted Stock Award Agreement and RSU Award Agreement will conform (through incorporation of the provisions hereof by reference in the Award Agreement or otherwise) to the substance of each of the following provisions: (i) Form of Award. (1) Restricted Stock Awards. To the extent consistent with the Company’s Bylaws, at the Board’s election, shares of Common Stock subject to a Restricted Stock Award may be (A) held in book entry form subject to the Company’s instructions until such shares become vested or any other restrictions lapse, or (B) evidenced by a certificate, which certificate will be held in such form and manner as determined by the Board. Unless otherwise determined by the Board, a Participant will have voting and other rights as a stockholder of the Company with respect to any shares subject to a Restricted Stock Award. (2) RSU Awards. An RSU Award represents a Participant’s right to be issued on a future date the number of shares of Common Stock that is equal to the number of restricted stock units subject to the RSU Award. As a holder of an RSU Award, a Participant is an unsecured creditor of the Company with respect to the Company's unfunded obligation, if any, to issue shares of Common Stock in settlement of such Award and nothing contained in the Plan or any RSU TABLE OF CONTENTS Agreement, and no action taken pursuant to its provisions, will create or be construed to create a trust of any kind or a fiduciary relationship between a Participant and the Company or an Affiliate or any other person. A Participant will not have voting or any other rights as a stockholder of the Company with respect to any RSU Award (unless and until shares are actually issued in settlement of a vested RSU Award). (ii) Consideration. (1) Restricted Stock Awards. A Restricted Stock Award may be granted in consideration for (A) cash or check, bank draft or money order payable to the Company, (B) services to the Company or an Affiliate, or (C) any other form of consideration as the Board may determine and permissible under Applicable Law. (2) RSU Awards. Unless otherwise determined by the Board at the time of grant, an RSU Award will be granted in consideration for the Participant’s services to the Company or an Affiliate, such that the Participant will not be required to make any payment to the Company (other than such services) with respect to the grant or vesting of the RSU Award, or the issuance of any shares of Common Stock pursuant to the RSU Award. If, at the time of grant, the Board determines that any consideration must be paid by the Participant (in a form other than the Participant’s services to the Company or an Affiliate) upon the issuance of any shares of Common Stock in settlement of the RSU Award, such consideration may be paid in any form of consideration as the Board may determine and permissible under Applicable Law. (iii) Vesting. The Board may impose such restrictions on or conditions to the vesting of a Restricted Stock Award or RSU Award as determined by the Board. Except as otherwise provided in the Award Agreement or other written agreement between a Participant and the Company or an Affiliate, vesting of Restricted Stock Awards and RSU Awards will cease upon termination of the Participant’s Continuous Service. (iv) Termination of Continuous Service. Except as otherwise provided in the Award Agreement or other written agreement between a Participant and the Company or an Affiliate, if a Participant’s Continuous Service terminates for any reason, (1) the Company may receive through a forfeiture condition or a repurchase right any or all of the shares of Common Stock held by the Participant under his or her Restricted Stock Award that have not vested as of the date of such termination as set forth in the Restricted Stock Award Agreement and the Participant will have no further right, title or interest in the Restricted Stock Award, the shares of Common Stock subject to the Restricted Stock Award, or any consideration in respect of the Restricted Stock Award and (2) any portion of his or her RSU Award that has not vested will be forfeited upon such termination and the Participant will have no further right, title or interest in the RSU Award, the shares of Common Stock issuable pursuant to the RSU Award, or any consideration in respect of the RSU Award. (v) Dividends and Dividend Equivalents. Dividends or dividend equivalents may be paid or credited, as applicable, with respect to any shares of Common Stock subject to a Restricted Stock Award or RSU Award, as determined by the Board and specified in the Award Agreement. (vi) Settlement of RSU Awards. An RSU Award may be settled by the issuance of shares of Common Stock or cash (or any combination thereof) or in any other form of payment, as determined by the Board and specified in the RSU Award Agreement. At the time of grant, the Board may determine to impose such restrictions or conditions that delay such delivery to a date following the vesting of the RSU Award. (b) Performance Awards. With respect to any Performance Award, the length of any Performance Period, the Performance Goals to be achieved during the Performance Period, the other terms and conditions of such Award, and the measure of whether and to what degree such Performance Goals have been attained will be determined by the Board. (c) Other Awards. Other forms of Awards valued in whole or in part by reference to, or otherwise based on, Common Stock, including the appreciation in value thereof, may be granted either alone or in addition to Awards provided for under Section 4 and the preceding provisions of this Section 5. Subject to TABLE OF CONTENTS the provisions of the Plan, the Board will have sole and complete discretion to determine the persons to whom and the time or times at which such Other Awards will be granted, the number of shares of Common Stock (or the cash equivalent thereof) to be granted pursuant to such Other Awards and all other terms and conditions of such Other Awards. 6.
| Adjustments upon Changes in Common Stock; Other Corporate Events. |
(a) Capitalization Adjustments. In the event of a Capitalization Adjustment, the Board shall appropriately and proportionately adjust: (i) the class(es) and maximum number of shares of Common Stock subject to the Plan and the maximum number of shares by which the Share Reserve may annually increase pursuant to Section 2(a); (ii) the class(es) and maximum number of shares that may be issued pursuant to the exercise of Incentive Stock Options pursuant to Section 2(b); and (iii) the class(es) and number of securities and exercise price, strike price or purchase price of Common Stock subject to outstanding Awards. The Board shall make such adjustments, and its determination shall be final, binding and conclusive. Notwithstanding the foregoing, no fractional shares or rights for fractional shares of Common Stock shall be created in order to implement any Capitalization Adjustment. The Board shall determine an appropriate equivalent benefit, if any, for any fractional shares or rights to fractional shares that might be created by the adjustments referred to in the preceding provisions of this Section. (b) Dissolution or Liquidation. Except as otherwise provided in the Award Agreement, in the event of a dissolution or liquidation of the Company, all outstanding Awards (other than Awards consisting of vested and outstanding shares of Common Stock not subject to a forfeiture condition or the Company’s right of repurchase) will terminate immediately prior to the completion of such dissolution or liquidation, and the shares of Common Stock subject to the Company’s repurchase rights or subject to a forfeiture condition may be repurchased or reacquired by the Company notwithstanding the fact that the holder of such Award is providing Continuous Service, provided, however, that the Board may determine to cause some or all Awards to become fully vested, exercisable and/or no longer subject to repurchase or forfeiture (to the extent such Awards have not previously expired or terminated) before the dissolution or liquidation is completed but contingent on its completion. (c) Corporate Transaction. Except as set forth in Section 11, in the event of a Corporate Transaction, a Participant’s Award will be treated, to the extent determined by the Board to be permitted under Section 409A, in accordance with one or more of the following methods as determined by the Board in its sole discretion: (i) settle such Awards for an amount (as determined in the sole discretion of the Board) of cash or securities, where in the case of stock options and stock appreciation rights, the value of such amount, if any, will be equal to the in-the-money spread value (if any) of such Awards; (ii) provide for the assumption of or the issuance of substitute awards that will substantially preserve the otherwise applicable terms of any affected Awards previously granted under the Plan, as determined by the Board in its sole discretion; (iii) modify the terms of such awards to add events, conditions or circumstances (including termination of employment or service within a specified period after a Corporate Transaction) upon which the vesting of such Awards or lapse of restrictions thereon will accelerate; (iv) deem any performance conditions satisfied at target, maximum or actual performance through closing or provide for the performance conditions to continue (as is or as adjusted by the Board) after closing or (v) provide that for a period of at least 20 days prior to the Corporate Transaction, any stock options or stock appreciation rights that would not otherwise become exercisable prior to the Corporate Transaction will be exercisable as to all shares subject thereto (but any such exercise will be contingent upon and subject to the occurrence of the Corporate Transaction and if the Corporate Transaction does not take place within a specified period after giving such notice for any reason whatsoever, the exercise will be null and void) and that any stock options or stock appreciation rights not exercised prior to the consummation of the Corporate Transaction will terminate and be of no further force and effect as of the consummation of the Corporate Transaction. For the avoidance of doubt, in the event of a Corporate Transaction where all Options and SARs are settled for an amount (as determined in the sole discretion of the Corporate Transaction) of cash or securities, the Board may, in its sole discretion, terminate any Option or SAR for which the exercise price is equal to or exceeds the per share value of the consideration to be paid in the Corporate Transaction without payment of consideration therefor. (d) Appointment of Stockholder Representative. As a condition to the receipt of an Award under this Plan, a Participant will be deemed to have agreed that the Award will be subject to the terms of any TABLE OF CONTENTS agreement governing a Corporate Transaction involving the Company, including, without limitation, a provision for the appointment of a stockholder representative that is authorized to act on the Participant’s behalf with respect to any escrow, indemnities and any contingent consideration. (e) No Restriction on Right to Undertake Transactions. The grant of any Award under the Plan and the issuance of shares pursuant to any Award does not affect or restrict in any way the right or power of the Company or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of stock or of options, rights or options to purchase stock or of bonds, debentures, preferred or prior preference stocks whose rights are superior to or affect the Common Stock or the rights thereof or which are convertible into or exchangeable for Common Stock, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise. (a) Administration by Board. The Board will administer the Plan unless and until the Board delegates administration of the Plan to a Committee or Committees, as provided in subsection (c) below. (b) Powers of Board. The Board will have the power, subject to, and within the limitations of, the express provisions of the Plan: (i) To determine from time to time (1) which of the persons eligible under the Plan will be granted Awards; (2) when and how each Award will be granted; (3) what type or combination of types of Award will be granted; (4) the provisions of each Award granted (which need not be identical), including the time or times when a person will be permitted to receive an issuance of Common Stock or other payment pursuant to an Award; (5) the number of shares of Common Stock or cash equivalent with respect to which an Award will be granted to each such person; (6) the Fair Market Value applicable to an Award; and (7) the terms of any Performance Award that is not valued in whole or in part by reference to, or otherwise based on, the Common Stock, including the amount of cash payment or other property that may be earned and the timing of payment. (ii) To construe and interpret the Plan and Awards granted under it, and to establish, amend and revoke rules and regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Award Agreement, in a manner and to the extent it deems necessary or expedient to make the Plan or Award fully effective. (iii) To settle all controversies regarding the Plan and Awards granted under it. (iv) To accelerate the time at which an Award may first be exercised or the time during which an Award or any part thereof will vest, notwithstanding the provisions in the Award Agreement stating the time at which it may first be exercised or the time during which it will vest. (v) To prohibit the exercise of any Option, SAR or other exercisable Award during a period of up to 30 days prior to the consummation of any pending stock dividend, stock split, combination or exchange of shares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets to stockholders, or any other change affecting the shares of Common Stock or the share price of the Common Stock including any Corporate Transaction, for reasons of administrative convenience. (vi) To suspend or terminate the Plan at any time. Suspension or termination of the Plan will not Materially Impair rights and obligations under any Award granted while the Plan is in effect except with the written consent of the affected Participant. (vii) To amend the Plan in any respect the Board deems necessary or advisable; provided, however, that stockholder approval will be required for any amendment to the extent required by Applicable Law. Except as provided above, rights under any Award granted before amendment of the Plan will not be Materially Impaired by any amendment of the Plan unless (1) the Company requests the consent of the affected Participant, and (2) such Participant consents in writing. (viii) To submit any amendment to the Plan for stockholder approval. TABLE OF CONTENTS (ix) To approve forms of Award Agreements for use under the Plan and to amend the terms of any one or more Awards, including, but not limited to, amendments to provide terms more favorable to the Participant than previously provided in the Award Agreement, subject to any specified limits in the Plan that are not subject to Board discretion; provided however, that, a Participant’s rights under any Award will not be Materially Impaired by any such amendment unless (1) the Company requests the consent of the affected Participant, and (2) such Participant consents in writing. (x) Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company and that are not in conflict with the provisions of the Plan or Awards. (xi) To adopt such procedures and sub-plans as are necessary or appropriate to permit and facilitate participation in the Plan by, or take advantage of specific tax treatment for Awards granted to, Employees, Directors or Consultants who are foreign nationals or employed outside the United States (provided that Board approval will not be necessary for immaterial modifications to the Plan or any Award Agreement to ensure or facilitate compliance with the laws of the relevant foreign jurisdiction). (xii) To effect, at any time and from time to time, subject to the consent of any Participant whose Award is Materially Impaired by such action, (1) the reduction of the exercise price (or strike price) of any outstanding Option or SAR; (2) the cancellation of any outstanding Option or SAR and the grant in substitution therefor of (A) a new Option, SAR, Restricted Stock Award, RSU Award or Other Award, under the Plan or another equity plan of the Company, covering the same or a different number of shares of Common Stock, (B) cash and/or (C) other valuable consideration (as determined by the Board); or (3) any other action that is treated as a repricing under generally accepted accounting principles. (c) Delegation to Committee. (i) General. The Board may delegate some or all of the administration of the Plan to a Committee or Committees. If administration of the Plan is delegated to a Committee, the Committee will have, in connection with the administration of the Plan, the powers theretofore possessed by the Board that have been delegated to the Committee, including the power to delegate to another Committee or a subcommittee of the Committee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board will thereafter be to the Committee or subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. Each Committee may retain the authority to concurrently administer the Plan with Committee or subcommittee to which it has delegated its authority hereunder and may, at any time, revest in such Committee some or all of the powers previously delegated. The Board may retain the authority to concurrently administer the Plan with any Committee and may, at any time, revest in the Board some or all of the powers previously delegated. (ii) Rule 16b-3 Compliance. To the extent an Award is intended to qualify for the exemption from Section 16(b) of the Exchange Act that is available under Rule 16b-3 of the Exchange Act, the Award will be granted by the Board or a Committee that consists solely of two or more Non-Employee Directors, as determined under Rule 16b-3(b)(3) of the Exchange Act and thereafter any action establishing or modifying the terms of the Award will be approved by the Board or a Committee meeting such requirements to the extent necessary for such exemption to remain available. (d) Effect of Board’s Decision. All determinations, interpretations and constructions made by the Board or any Committee in good faith will not be subject to review by any person and will be final, binding and conclusive on all persons. (e) Delegation to an Officer. The Board or any Committee may delegate to one or more Officers the authority to do one or both of the following (i) designate Employees who are not Officers to be recipients of Options and SARs (and, to the extent permitted by Applicable Law, other types of Awards) and, to the extent permitted by Applicable Law, the terms thereof, and (ii) determine the number of shares of Common Stock to be subject to such Awards granted to such Employees; provided, however, that the resolutions or charter adopted by the Board or any Committee evidencing such delegation will specify the total number of shares of Common Stock that may be subject to the Awards granted by such Officer and that such Officer TABLE OF CONTENTS may not grant an Award to himself or herself. Any such Awards will be granted on the applicable form of Award Agreement most recently approved for use by the Board or the Committee, unless otherwise provided in the resolutions approving the delegation authority. Notwithstanding anything to the contrary herein, neither the Board nor any Committee may delegate to an Officer who is acting solely in the capacity of an Officer (and not also as a Director) the authority to determine the Fair Market Value. (a) Withholding Authorization. As a condition to acceptance of any Award under the Plan, a Participant authorizes withholding from payroll and any other amounts payable to such Participant, and otherwise agrees to make adequate provision for (including), any sums required to satisfy any U.S. federal, state, local and/or foreign tax or social insurance contribution withholding obligations of the Company or an Affiliate, if any, which arise in connection with the exercise, vesting or settlement of such Award, as applicable. Accordingly, a Participant may not be able to exercise an Award even though the Award is vested, and the Company shall have no obligation to issue shares of Common Stock subject to an Award, unless and until such obligations are satisfied. (b) Satisfaction of Withholding Obligation. To the extent permitted by the terms of an Award Agreement, the Company may, in its sole discretion, satisfy any U.S. federal, state, local and/or foreign tax or social insurance withholding obligation relating to an Award by any of the following means or by a combination of such means: (i) causing the Participant to tender a cash payment; (ii) withholding shares of Common Stock from the shares of Common Stock issued or otherwise issuable to the Participant in connection with the Award; (iii) withholding cash from an Award settled in cash; (iv) withholding payment from any amounts otherwise payable to the Participant; (v) by allowing a Participant to effectuate a “cashless exercise” pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board; or (vi) by such other method as may be set forth in the Award Agreement. (c) No Obligation to Notify or Minimize Taxes; No Liability to Claims. Except as required by Applicable Law the Company has no duty or obligation to any Participant to advise such holder as to the time or manner of exercising such Award. Furthermore, the Company has no duty or obligation to warn or otherwise advise such holder of a pending termination or expiration of an Award or a possible period in which the Award may not be exercised. The Company has no duty or obligation to minimize the tax consequences of an Award to the holder of such Award and will not be liable to any holder of an Award for any adverse tax consequences to such holder in connection with an Award. As a condition to accepting an Award under the Plan, each Participant (i) agrees to not make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates related to tax liabilities arising from such Award or other Company compensation and (ii) acknowledges that such Participant was advised to consult with his or her own personal tax, financial and other legal advisors regarding the tax consequences of the Award and has either done so or knowingly and voluntarily declined to do so. Additionally, each Participant acknowledges any Option or SAR granted under the Plan is exempt from Section 409A only if the exercise or strike price is at least equal to the “fair market value” of the Common Stock on the date of grant as determined by the Internal Revenue Service and there is no other impermissible deferral of compensation associated with the Award. Additionally, as a condition to accepting an Option or SAR granted under the Plan, each Participant agrees not make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates in the event that the Internal Revenue Service asserts that such exercise price or strike price is less than the “fair market value” of the Common Stock on the date of grant as subsequently determined by the Internal Revenue Service. (d) Withholding Indemnification. As a condition to accepting an Award under the Plan, in the event that the amount of the Company’s and/or its Affiliate’s withholding obligation in connection with such Award was greater than the amount actually withheld by the Company and/or its Affiliates, each Participant agrees to indemnify and hold the Company and/or its Affiliates harmless from any failure by the Company and/or its Affiliates to withhold the proper amount. (a) Source of Shares. The stock issuable under the Plan will be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the Company on the open market or otherwise. TABLE OF CONTENTS (b) Use of Proceeds from Sales of Common Stock. Proceeds from the sale of shares of Common Stock pursuant to Awards will constitute general funds of the Company. (c) Corporate Action Constituting Grant of Awards. Corporate action constituting a grant by the Company of an Award to any Participant will be deemed completed as of the date of such corporate action, unless otherwise determined by the Board, regardless of when the instrument, certificate, or letter evidencing the Award is communicated to, or actually received or accepted by, the Participant. In the event that the corporate records (e.g., Board consents, resolutions or minutes) documenting the corporate action approving the grant contain terms (e.g., exercise price, vesting schedule or number of shares) that are inconsistent with those in the Award Agreement or related grant documents as a result of a clerical error in the Award Agreement or related grant documents, the corporate records will control and the Participant will have no legally binding right to the incorrect term in the Award Agreement or related grant documents. (d) Stockholder Rights. No Participant will be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Common Stock subject to such Award unless and until (i) such Participant has satisfied all requirements for exercise of the Award pursuant to its terms, if applicable, and (ii) the issuance of the Common Stock subject to such Award is reflected in the records of the Company. (e) No Employment or Other Service Rights. Nothing in the Plan, any Award Agreement or any other instrument executed thereunder or in connection with any Award granted pursuant thereto will confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Award was granted or affect the right of the Company or an Affiliate to terminate at will and without regard to any future vesting opportunity that a Participant may have with respect to any Award (i) the employment of an Employee with or without notice and with or without cause, (ii) the service of a Consultant pursuant to the terms of such Consultant’s agreement with the Company or an Affiliate, or (iii) the service of a Director pursuant to the Bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state or foreign jurisdiction in which the Company or the Affiliate is incorporated, as the case may be. Further, nothing in the Plan, any Award Agreement or any other instrument executed thereunder or in connection with any Award will constitute any promise or commitment by the Company or an Affiliate regarding the fact or nature of future positions, future work assignments, future compensation or any other term or condition of employment or service or confer any right or benefit under the Award or the Plan unless such right or benefit has specifically accrued under the terms of the Award Agreement and/or Plan. (f) Change in Time Commitment. In the event a Participant’s regular level of time commitment in the performance of his or her services for the Company and any Affiliates is reduced (for example, and without limitation, if the Participant is an Employee of the Company and the Employee has a change in status from a full-time Employee to a part-time Employee or takes an extended leave of absence) after the date of grant of any Award to the Participant, the Board may determine, to the extent permitted by Applicable Law, to (i) make a corresponding reduction in the number of shares or cash amount subject to any portion of such Award that is scheduled to vest or become payable after the date of such change in time commitment, and (ii) in lieu of or in combination with such a reduction, extend the vesting or payment schedule applicable to such Award. In the event of any such reduction, the Participant will have no right with respect to any portion of the Award that is so reduced or extended. (g) Execution of Additional Documents. As a condition to accepting an Award under the Plan, the Participant agrees to execute any additional documents or instruments necessary or desirable, as determined in the Plan Administrator’s sole discretion, to carry out the purposes or intent of the Award, or facilitate compliance with securities and/or other regulatory requirements, in each case at the Plan Administrator’s request. (h) Electronic Delivery and Participation. Any reference herein or in an Award Agreement to a “written” agreement or document will include any agreement or document delivered electronically, filed publicly at www.sec.gov (or any successor website thereto) or posted on the Company’s intranet (or other shared electronic medium controlled by the Company to which the Participant has access). By accepting any Award the Participant consents to receive documents by electronic delivery and to participate in the Plan TABLE OF CONTENTS through any on-line electronic system established and maintained by the Plan Administrator or another third party selected by the Plan Administrator. The form of delivery of any Common Stock (e.g., a stock certificate or electronic entry evidencing such shares) shall be determined by the Company. (i) Clawback/Recovery. All Awards granted under the Plan will be subject to recoupment in accordance with any clawback policy that the Company is required to adopt pursuant to the listing standards of any foreign or national securities exchange or association on which the Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other Applicable Law and any clawback policy that the Company otherwise adopts, to the extent applicable and permissible under Applicable Law. In addition, the Board may impose such other clawback, recovery or recoupment provisions in an Award Agreement as the Board determines necessary or appropriate, including but not limited to a reacquisition right in respect of previously acquired shares of Common Stock or other cash or property upon the occurrence of Cause. No recovery of compensation under such a clawback policy will be an event giving rise to a Participant’s right to voluntarily terminate employment upon a “resignation for good reason,” or for a “constructive termination” or any similar term under any plan of or agreement with the Company. (j) Securities Law Compliance. A Participant will not be issued any shares in respect of an Award unless either (i) the shares are registered under the Securities Act; or (ii) the Company has determined that such issuance would be exempt from the registration requirements of the Securities Act. A Participant will not be issued an Award or any shares in respect of an Award unless either (i) the distribution is qualified by a prospectus in any Province where required under Canadian securities laws, or (ii) the distribution of the shares is exempt from the prospectus requirements of Canadian securities laws. Each Award also must comply with other Applicable Law governing the Award, and a Participant will not receive such shares if the Company determines that such receipt would not be in material compliance with Applicable Law. (k) Transfer or Assignment of Awards; Issued Shares. Except as expressly provided in the Plan or the form of Award Agreement, Awards granted under the Plan may not be transferred or assigned by the Participant. After the vested shares subject to an Award have been issued, or in the case of Restricted Stock and similar awards, after the issued shares have vested, the holder of such shares is free to assign, hypothecate, donate, encumber or otherwise dispose of any interest in such shares provided that any such actions are in compliance with the provisions herein, the terms of the Trading Policy and Applicable Law. (l) Effect on Other Employee Benefit Plans. The value of any Award granted under the Plan, as determined upon grant, vesting or settlement, shall not be included as compensation, earnings, salaries, or other similar terms used when calculating any Participant’s benefits under any employee benefit plan sponsored by the Company or any Affiliate, except as such plan otherwise expressly provides. The Company expressly reserves its rights to amend, modify, or terminate any of the Company's or any Affiliate's employee benefit plans. (m) Deferrals. To the extent permitted by Applicable Law, the Board, in its sole discretion, may determine that the delivery of Common Stock or the payment of cash, upon the exercise, vesting or settlement of all or a portion of any Award may be deferred and may also establish programs and procedures for deferral elections to be made by Participants. Deferrals will be made in accordance with the requirements of Section 409A. (n) Section 409A. Unless otherwise expressly provided for in an Award Agreement, the Plan and Award Agreements will be interpreted to the greatest extent possible in a manner that makes the Plan and the Awards granted hereunder exempt from Section 409A, and, to the extent not so exempt, in compliance with the requirements of Section 409A. If the Board determines that any Award granted hereunder is not exempt from and is therefore subject to Section 409A, the Award Agreement evidencing such Award will incorporate the terms and conditions necessary to avoid the consequences specified in Section 409A(a)(1) of the Code, and to the extent an Award Agreement is silent on terms necessary for compliance, such terms are hereby incorporated by reference into the Award Agreement. Notwithstanding anything to the contrary in this Plan (and unless the Award Agreement specifically provides otherwise), if the shares of Common Stock are publicly traded, and if a Participant holding an Award that constitutes “deferred compensation” under Section 409A is a “specified employee” for purposes of Section 409A, no distribution or payment of any amount that is due because of a “separation from service” (as defined in Section 409A without regard to TABLE OF CONTENTS alternative definitions thereunder) will be issued or paid before the date that is six months and one day following the date of such Participant’s “separation from service” or, if earlier, the date of the Participant’s death, unless such distribution or payment can be made in a manner that complies with Section 409A, and any amounts so deferred will be paid in a lump sum on the day after such six month period elapses, with the balance paid thereafter on the original schedule. (o) Choice of Law. This Plan and any controversy arising out of or relating to this Plan shall be governed by, and construed in accordance with, the internal laws of the State of Delaware, without regard to conflict of law principles that would result in any application of any law other than the law of the State of Delaware. 10.
| Covenants of the Company. |
The Company will seek to obtain from each regulatory commission or agency, as may be deemed to be necessary, having jurisdiction over the Plan such authority as may be required to grant Awards and to issue and sell shares of Common Stock upon exercise or vesting of the Awards; provided, however, that this undertaking will not require the Company to register under the Securities Act the Plan, any Award or any Common Stock issued or issuable pursuant to any such Award. If, after reasonable efforts and at a reasonable cost, the Company is unable to obtain from any such regulatory commission or agency the authority that counsel for the Company deems necessary or advisable for the lawful issuance and sale of Common Stock under the Plan, the Company will be relieved from any liability for failure to issue and sell Common Stock upon exercise or vesting of such Awards unless and until such authority is obtained. A Participant is not eligible for the grant of an Award or the subsequent issuance of Common Stock pursuant to the Award if such grant or issuance would be in violation of any Applicable Law. 11.
| Additional Rules for Awards Subject to Section 409A. |
(a) Application. Unless the provisions of this Section of the Plan are expressly superseded by the provisions in the form of Award Agreement, the provisions of this Section shall apply and shall supersede anything to the contrary set forth in the Award Agreement for a Non-Exempt Award. (b) Non-Exempt Awards Subject to Non-Exempt Severance Arrangements. To the extent a Non-Exempt Award is subject to Section 409A due to application of a Non-Exempt Severance Arrangement, the following provisions of this subsection (b) apply. (i) If the Non-Exempt Award vests in the ordinary course during the Participant’s Continuous Service in accordance with the vesting schedule set forth in the Award Agreement, and does not accelerate vesting under the terms of a Non-Exempt Severance Arrangement, in no event will the shares be issued in respect of such Non-Exempt Award any later than the later of: (i) December 31st of the calendar year that includes the applicable vesting date, or (ii) the 60th day that follows the applicable vesting date. (ii) If vesting of the Non-Exempt Award accelerates under the terms of a Non-Exempt Severance Arrangement in connection with the Participant’s Separation from Service, and such vesting acceleration provisions were in effect as of the date of grant of the Non-Exempt Award and, therefore, are part of the terms of such Non-Exempt Award as of the date of grant, then the shares will be earlier issued in settlement of such Non-Exempt Award upon the Participant’s Separation from Service in accordance with the terms of the Non-Exempt Severance Arrangement, but in no event later than the 60th day that follows the date of the Participant’s Separation from Service. However, if at the time the shares would otherwise be issued the Participant is subject to the distribution limitations contained in Section 409A applicable to “specified employees,” as defined in Section 409A(a)(2)(B)(i) of the Code, such shares shall not be issued before the date that is six months following the date of such Participant’s Separation from Service, or, if earlier, the date of the Participant’s death that occurs within such six month period. (iii) If vesting of a Non-Exempt Award accelerates under the terms of a Non-Exempt Severance Arrangement in connection with a Participant’s Separation from Service, and such vesting acceleration provisions were not in effect as of the date of grant of the Non-Exempt Award and, therefore, are not a part of the terms of such Non-Exempt Award on the date of grant, then such acceleration of vesting of TABLE OF CONTENTS the Non-Exempt Award shall not accelerate the issuance date of the shares, but the shares shall instead be issued on the same schedule as set forth in the Grant Notice as if they had vested in the ordinary course during the Participant’s Continuous Service, notwithstanding the vesting acceleration of the Non-Exempt Award. Such issuance schedule is intended to satisfy the requirements of payment on a specified date or pursuant to a fixed schedule, as provided under Treasury Regulations Section 1.409A-3(a)(4). (c) Treatment of Non-Exempt Awards Upon a Corporate Transaction for Employees and Consultants. The provisions of this subsection (c) shall apply and shall supersede anything to the contrary set forth in the Plan with respect to the permitted treatment of any Non-Exempt Award in connection with a Corporate Transaction if the Participant was either an Employee or Consultant upon the applicable date of grant of the Non-Exempt Award. (i) Vested Non-Exempt Awards. The following provisions shall apply to any Vested Non-Exempt Award in connection with a Corporate Transaction: (1) If the Corporate Transaction is also a Section 409A Change in Control then the Acquiring Entity may not assume, continue or substitute the Vested Non-Exempt Award. Upon the Section 409A Change in Control the settlement of the Vested Non-Exempt Award will automatically be accelerated and the shares will be immediately issued in respect of the Vested Non-Exempt Award. Alternatively, the Company may instead provide that the Participant will receive a cash settlement equal to the Fair Market Value of the shares that would otherwise be issued to the Participant upon the Section 409A Change in Control. (2) If the Corporate Transaction is not also a Section 409A Change in Control, then the Acquiring Entity must either assume, continue or substitute each Vested Non-Exempt Award. The shares to be issued in respect of the Vested Non-Exempt Award shall be issued to the Participant by the Acquiring Entity on the same schedule that the shares would have been issued to the Participant if the Corporate Transaction had not occurred. In the Acquiring Entity’s discretion, in lieu of an issuance of shares, the Acquiring Entity may instead substitute a cash payment on each applicable issuance date, equal to the Fair Market Value of the shares that would otherwise be issued to the Participant on such issuance dates, with the determination of the Fair Market Value of the shares made on the date of the Corporate Transaction. (ii) Unvested Non-Exempt Awards. The following provisions shall apply to any Unvested Non-Exempt Award unless otherwise determined by the Board pursuant to subsection (e) of this Section. (1) In the event of a Corporate Transaction, the Acquiring Entity shall assume, continue or substitute any Unvested Non-Exempt Award. Unless otherwise determined by the Board, any Unvested Non-Exempt Award will remain subject to the same vesting and forfeiture restrictions that were applicable to the Award prior to the Corporate Transaction. The shares to be issued in respect of any Unvested Non-Exempt Award shall be issued to the Participant by the Acquiring Entity on the same schedule that the shares would have been issued to the Participant if the Corporate Transaction had not occurred. In the Acquiring Entity’s discretion, in lieu of an issuance of shares, the Acquiring Entity may instead substitute a cash payment on each applicable issuance date, equal to the Fair Market Value of the shares that would otherwise be issued to the Participant on such issuance dates, with the determination of Fair Market Value of the shares made on the date of the Corporate Transaction. (2) If the Acquiring Entity will not assume, substitute or continue any Unvested Non-Exempt Award in connection with a Corporate Transaction, then such Award shall automatically terminate and be forfeited upon the Corporate Transaction with no consideration payable to any Participant in respect of such forfeited Unvested Non-Exempt Award. Notwithstanding the foregoing, to the extent permitted and in compliance with the requirements of Section 409A, the Board may in its discretion determine to elect to accelerate the vesting and settlement of the Unvested Non-Exempt Award upon the Corporate Transaction, or instead substitute a cash payment equal to the Fair Market Value of such shares that would otherwise be issued to the Participant, as further provided in subsection (e)(ii) below. In the absence of such TABLE OF CONTENTS discretionary election by the Board, any Unvested Non-Exempt Award shall be forfeited without payment of any consideration to the affected Participants if the Acquiring Entity will not assume, substitute or continue the Unvested Non-Exempt Awards in connection with the Corporate Transaction. (3) The foregoing treatment shall apply with respect to all Unvested Non-Exempt Awards upon any Corporate Transaction, and regardless of whether or not such Corporate Transaction is also a Section 409A Change in Control. (d) Treatment of Non-Exempt Awards Upon a Corporate Transaction for Non-Employee Directors. The following provisions of this subsection (d) shall apply and shall supersede anything to the contrary that may be set forth in the Plan with respect to the permitted treatment of a Non-Exempt Director Award in connection with a Corporate Transaction. (i) If the Corporate Transaction is also a Section 409A Change in Control then the Acquiring Entity may not assume, continue or substitute the Non-Exempt Director Award. Upon the Section 409A Change in Control the vesting and settlement of any Non-Exempt Director Award will automatically be accelerated and the shares will be immediately issued to the Participant in respect of the Non-Exempt Director Award. Alternatively, the Company may provide that the Participant will instead receive a cash settlement equal to the Fair Market Value of the shares that would otherwise be issued to the Participant upon the Section 409A Change in Control pursuant to the preceding provision. (ii) If the Corporate Transaction is not also a Section 409A Change in Control, then the Acquiring Entity must either assume, continue or substitute the Non-Exempt Director Award. Unless otherwise determined by the Board, the Non-Exempt Director Award will remain subject to the same vesting and forfeiture restrictions that were applicable to the Award prior to the Corporate Transaction. The shares to be issued in respect of the Non-Exempt Director Award shall be issued to the Participant by the Acquiring Entity on the same schedule that the shares would have been issued to the Participant if the Corporate Transaction had not occurred. In the Acquiring Entity’s discretion, in lieu of an issuance of shares, the Acquiring Entity may instead substitute a cash payment on each applicable issuance date, equal to the Fair Market Value of the shares that would otherwise be issued to the Participant on such issuance dates, with the determination of Fair Market Value made on the date of the Corporate Transaction. (e) If the RSU Award is a Non-Exempt Award, then the provisions in this Section 11(e) shall apply and supersede anything to the contrary that may be set forth in the Plan or the Award Agreement with respect to the permitted treatment of such Non-Exempt Award: (i) Any exercise by the Board of discretion to accelerate the vesting of a Non-Exempt Award shall not result in any acceleration of the scheduled issuance dates for the shares in respect of the Non-Exempt Award unless earlier issuance of the shares upon the applicable vesting dates would be in compliance with the requirements of Section 409A. (ii) The Company explicitly reserves the right to earlier settle any Non-Exempt Award to the extent permitted and in compliance with the requirements of Section 409A, including pursuant to any of the exemptions available in Treasury Regulations Section 1.409A-3(j)(4)(ix). (iii) To the extent the terms of any Non-Exempt Award provide that it will be settled upon a Corporate Transaction, to the extent it is required for compliance with the requirements of Section 409A, the Corporate Transaction event triggering settlement must also constitute a Section 409A Change in Control. To the extent the terms of a Non-Exempt Award provides that it will be settled upon a termination of employment or termination of Continuous Service, to the extent it is required for compliance with the requirements of Section 409A, the termination event triggering settlement must also constitute a Separation From Service. However, if at the time the shares would otherwise be issued to a Participant in connection with a “separation from service” such Participant is subject to the distribution limitations contained in Section 409A applicable to “specified employees,” as defined in Section 409A(a)(2)(B)(i) of the Code, such shares shall not be issued before the date that is six months following the date of the Participant’s Separation From Service, or, if earlier, the date of the Participant’s death that occurs within such six month period. TABLE OF CONTENTS (iv) The provisions in this subsection (e) for delivery of the shares in respect of the settlement of an RSU Award that is a Non-Exempt Award are intended to comply with the requirements of Section 409A so that the delivery of the shares to the Participant in respect of such Non-Exempt Award will not trigger the additional tax imposed under Section 409A, and any ambiguities herein will be so interpreted. If all or any part of the Plan or any Award Agreement is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any portion of the Plan or such Award Agreement not declared to be unlawful or invalid. Any Section of the Plan or any Award Agreement (or part of such a Section) so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid. 13.
| Termination of the Plan. |
The Board may suspend or terminate the Plan at any time. No Incentive Stock Options may be granted after the tenth anniversary of the earlier of: (i) the Adoption Date, or (ii) the date the Plan is approved by the Company’s stockholders. No Awards may be granted under the Plan while the Plan is suspended or after it is terminated. As used in the Plan, the following definitions apply to the capitalized terms indicated below: (a) “Acquiring Entity” means the surviving or acquiring corporation (or its parent company) in connection with a Corporate Transaction. (b) “Adoption Date” means the date the Plan is first approved by the Board or Compensation Committee. (c) “Affiliate” means, at the time of determination, any “parent” or “subsidiary” of the Company as such terms are defined in Rule 405 promulgated under the Securities Act. The Board may determine the time or times at which “parent” or “subsidiary” status is determined within the foregoing definition. (d) “Applicable Law” means any applicable securities, federal, state, foreign, material local or municipal or other law, statute, constitution, principle of common law, resolution, ordinance, code, edict, decree, rule, listing rule, regulation, judicial decision, ruling or requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Body (including under the authority of any applicable self-regulating organization such as the Nasdaq Stock Market, New York Stock Exchange, or the Financial Industry Regulatory Authority). (e) “Award” means any right to receive Common Stock, cash or other property granted under the Plan (including an Incentive Stock Option, a Nonstatutory Stock Option, a Restricted Stock Award, an RSU Award, a SAR, a Performance Award or any Other Award). (f) “Award Agreement” means a written or electronic agreement between the Company and a Participant evidencing the terms and conditions of an Award. The Award Agreement generally consists of the Grant Notice and the agreement containing the written summary of the general terms and conditions applicable to the Award and which is provided, including through electronic means, to a Participant along with the Grant Notice. (g) “Board” means the Board of Directors of the Company (or its designee). Any decision or determination made by the Board shall be a decision or determination that is made in the sole discretion of the Board (or its designee), and such decision or determination shall be final and binding on all Participants. (h) “Capitalization Adjustment” means any change that is made in, or other events that occur with respect to, the Common Stock subject to the Plan or subject to any Award after the date the Plan is adopted by the Board without the receipt of consideration by the Company through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, large TABLE OF CONTENTS nonrecurring cash dividend, stock split, reverse stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or any similar equity restructuring transaction, as that term is used in Statement of Financial Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor thereto). Notwithstanding the foregoing, the conversion of any convertible securities of the Company will not be treated as a Capitalization Adjustment. (i) “Cause” has the meaning ascribed to such term in any written agreement between a Participant and the Company defining such term and, in the absence of such agreement, such term means, with respect to a Participant, the occurrence of any of the following events: (i) the Participant’s dishonest statements or acts with respect to the Company or any Affiliate of the Company, or any current or prospective customers, suppliers, vendors or other third parties with which such entity does business that adversely affects the Company or its Affiliates; (ii) the Participant’s commission of (A) a felony or (B) any misdemeanor involving moral turpitude, deceit, dishonesty or fraud; (iii) the Participant’s failure to perform the Participant’s assigned duties and responsibilities to the reasonable satisfaction of the Company which failure continues, in the reasonable judgment of the Company, after written notice given to the Participant by the Company; (iv) the Participant’s gross negligence, willful misconduct or insubordination with respect to the Company or any Affiliate of the Company; or (v) the Participant’s material violation of any provision of any agreement(s) between the Participant and the Company or any Affiliate of the Company relating to noncompetition, nonsolicitation, nondisclosure and/or assignment of inventions. The determination that a termination of the Participant’s Continuous Service is either for Cause or without Cause will be made by the Board with respect to Participants who are executive officers of the Company and by the Company’s Chief Executive Officer with respect to Participants who are not executive officers of the Company. Any determination by the Company that the Continuous Service of a Participant was terminated with or without Cause for the purposes of outstanding Awards held by such Participant will have no effect upon any determination of the rights or obligations of the Company or such Participant for any other purpose. (j) “Code” means the Internal Revenue Code of 1986, as amended, including any applicable regulations and guidance thereunder. (k) “Committee” means the Compensation Committee and any other committee of one or more Directors to whom authority has been delegated by the Board or Compensation Committee in accordance with the Plan. (l) “Common Stock” means the common shares of the Company. (m) “Company” means DevvStream Corp., a company existing under the Laws of the Province of Alberta, Canada, and any successor entity thereto. (n) “Compensation Committee” means the Compensation Committee of the Board. (o) “Consultant” means any person, including an advisor, who is (i) engaged by the Company or an Affiliate to render consulting or advisory services and is compensated for such services, or (ii) serving as a member of the board of directors of an Affiliate and is compensated for such services. However, service solely as a Director, or payment of a fee for such service, will not cause a Director to be considered a “Consultant” for purposes of the Plan. Notwithstanding the foregoing, a person is treated as a Consultant under this Plan only if a Form S-8 Registration Statement under the Securities Act is available to register either the offer or the sale of the Company’s securities to such person. (p) “Continuous Service” means that the Participant’s service with the Company or an Affiliate, whether as an Employee, Director or Consultant, is not interrupted or terminated. A change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee, Director or Consultant or a change in the Entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s service with the Company or an Affiliate, will not terminate a Participant’s Continuous Service; provided, however, that if the Entity for which a Participant is rendering services ceases to qualify as an Affiliate, as determined by the Board, such Participant’s Continuous Service will be considered to have terminated on the date such Entity ceases to qualify as an Affiliate. For example, a change in status from an Employee of the Company to a Consultant of an Affiliate or to a Director will not constitute an interruption of Continuous Service. To the extent permitted by law, the Board or the chief executive officer of the Company, in that party’s sole discretion, may determine whether Continuous Service TABLE OF CONTENTS will be considered interrupted in the case of (i) any leave of absence approved by the Board or chief executive officer, including sick leave, military leave or any other personal leave, or (ii) transfers between the Company, an Affiliate, or their successors. Notwithstanding the foregoing, a leave of absence will be treated as Continuous Service for purposes of vesting in an Award only to such extent as may be provided in the Company’s leave of absence policy, in the written terms of any leave of absence agreement or policy applicable to the Participant, or as otherwise required by law. In addition, to the extent required for exemption from or compliance with Section 409A, the determination of whether there has been a termination of Continuous Service will be made, and such term will be construed, in a manner that is consistent with the definition of “separation from service” as defined under Treasury Regulation Section 1.409A-1(h) (without regard to any alternative definition thereunder). (q) “Corporate Transaction” means any of the following transactions, provided, however, that the Board shall determine under parts (iv) and (v) whether multiple transactions are related, and its determination shall be final, binding and conclusive: (i) a merger, amalgamation or consolidation in which the Company is not the surviving entity; (ii) the sale, transfer or other disposition of all or substantially all of the assets of the Company; (iii) the complete liquidation or dissolution of the Company; (iv) any reverse merger or series of related transactions culminating in a reverse merger (including, but not limited to, a tender offer followed by a reverse merger) in which the Company is the surviving entity but (A) the shares of Common Stock outstanding immediately prior to such merger are converted or exchanged by virtue of the merger into other property, whether in the form of securities, cash or otherwise, or (B) in which securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such merger or the initial transaction culminating in such merger, but excluding any such transaction or series of related transactions that the Board determines shall not be a Corporate Transaction; or (v) acquisition in a single or series of related transactions by any person or related group of persons (other than the Company or by a Company-sponsored employee benefit plan) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities but excluding any such transaction or series of related transactions that the Board determines shall not be a Corporate Transaction. Notwithstanding the foregoing or any other provision of this Plan, (A) the term Corporate Transaction shall not include a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company, (B) the definition of Corporate Transaction (or any analogous term) in an individual written agreement between the Company or any Affiliate and the Participant shall supersede the foregoing definition with respect to Awards subject to such agreement; provided, however, that if no definition of Corporate Transaction or any analogous term is set forth in such an individual written agreement, the foregoing definition shall apply, and (C) with respect to any nonqualified deferred compensation that becomes payable on account of the Corporate Transaction, the transaction or event described in clause (i), (ii), (iii), or (iv) also constitutes a Section 409A Change in Control if required in order for the payment not to violate Section 409A of the Code. (r) “Director” means a member of the Board. (s) “determine” or “determined” means as determined by the Board or the Committee (or its designee) in its sole discretion. (t) “Disability” means, with respect to a Participant, such Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months, as provided in Section 22(e)(3) of the Code, and will be determined by the Board on the basis of such medical evidence as the Board deems warranted under the circumstances. TABLE OF CONTENTS (u) “Effective Date” means the Closing Date as defined in the Business Combination Agreement by and among Focus Impact Acquisition Corp., Focus Impact Amalco Sub Ltd. and the Company, dated September 12, 2023. (v) “Employee” means any person employed by the Company or an Affiliate. However, service solely as a Director, or payment of a fee for such services, will not cause a Director to be considered an “Employee” for purposes of the Plan. (w) “Employer” means the Company or the Affiliate of the Company that employs the Participant. (x) “Entity” means a corporation, partnership, limited liability company or other entity. (y) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. (z) “Exchange Act Person” means any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” will not include (i) the Company or any Subsidiary of the Company, (ii) any employee benefit plan of the Company or any Subsidiary of the Company or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company, (iii) an underwriter temporarily holding securities pursuant to a registered public offering of such securities, (iv) an Entity Owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their Ownership of stock of the Company; or (v) any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of the Effective Date, is the Owner, directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities. (aa) “Fair Market Value” means, as of any date, unless otherwise determined by the Board, the value of the Common Stock (as determined on a per share or aggregate basis, as applicable) determined as follows: (i) If the Common Stock is listed on any established stock exchange or traded on any established market, the Fair Market Value will be the closing sales price for such stock as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the date of determination, as reported in a source the Board deems reliable. (ii) If there is no closing sales price for the Common Stock on the date of determination, then the Fair Market Value will be the closing selling price on the last preceding date for which such quotation exists. (iii) In the absence of such markets for the Common Stock, or if otherwise determined by the Board, the Fair Market Value will be determined by the Board in good faith and in a manner that complies with Sections 409A and 422 of the Code. (bb) “Governmental Body” means any: (i) nation, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature; (ii) federal, state, local, municipal, foreign or other government; (iii) governmental or regulatory body, or quasi-governmental body of any nature (including any governmental division, department, administrative agency or bureau, commission, authority, instrumentality, official, ministry, fund, foundation, center, organization, unit, body or Entity and any court or other tribunal, and for the avoidance of doubt, any Tax authority) or other body exercising similar powers or authority; or (iv) self-regulatory organization (including the Nasdaq Stock Market, New York Stock Exchange, and the Financial Industry Regulatory Authority). (cc) “Grant Notice” means the notice provided to a Participant that he or she has been granted an Award under the Plan and which includes the name of the Participant, the type of Award, the date of grant of the Award, number of shares of Common Stock subject to the Award or potential cash payment right, (if any), the vesting schedule for the Award (if any) and other key terms applicable to the Award. (dd) “Incentive Stock Option” means an option granted pursuant to Section 4 of the Plan that is intended to be, and qualifies as, an “incentive stock option” within the meaning of Section 422 of the Code. TABLE OF CONTENTS (ee) “Materially Impair” means any amendment to the terms of the Award that materially adversely affects the Participant’s rights under the Award. A Participant's rights under an Award will not be deemed to have been Materially Impaired by any such amendment if the Board, in its sole discretion, determines that the amendment, taken as a whole, does not materially impair the Participant's rights. For example, the following types of amendments to the terms of an Award do not Materially Impair the Participant’s rights under the Award: (i) imposition of reasonable restrictions on the minimum number of shares subject to an Option or SAR that may be exercised; (ii) to maintain the qualified status of the Award as an Incentive Stock Option under Section 422 of the Code; (iii) to change the terms of an Incentive Stock Option in a manner that disqualifies, impairs or otherwise affects the qualified status of the Award as an Incentive Stock Option under Section 422 of the Code; (iv) to clarify the manner of exemption from, or to bring the Award into compliance with or qualify it for an exemption from, Section 409A; or (v) to comply with other Applicable Laws. (ff) “Non-Employee Director” means a Director who either (i) is not a current employee or officer of the Company or an Affiliate, does not receive compensation, either directly or indirectly, from the Company or an Affiliate for services rendered as a consultant or in any capacity other than as a Director (except for an amount as to which disclosure would not be required under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act (“Regulation S-K”)), does not possess an interest in any other transaction for which disclosure would be required under Item 404(a) of Regulation S-K, and is not engaged in a business relationship for which disclosure would be required pursuant to Item 404(b) of Regulation S-K; or (ii) is otherwise considered a “non-employee director” for purposes of Rule 16b-3. (gg) “Non-Exempt Award” means any Award that is subject to, and not exempt from, Section 409A, including as the result of (i) a deferral of the issuance of the shares subject to the Award which is elected by the Participant or imposed by the Company, or (ii) the terms of any Non-Exempt Severance Agreement. (hh) “Non-Exempt Director Award” means a Non-Exempt Award granted to a Participant who was a Director but not an Employee on the applicable grant date. (ii) “Non-Exempt Severance Arrangement” means a severance arrangement or other agreement between the Participant and the Company that provides for acceleration of vesting of an Award and issuance of the shares in respect of such Award upon the Participant’s termination of employment or separation from service (as such term is defined in Section 409A(a)(2)(A)(i) of the Code (and without regard to any alternative definition thereunder) (“Separation from Service”) and such severance benefit does not satisfy the requirements for an exemption from application of Section 409A provided under Treasury Regulations Section 1.409A-1(b)(4), 1.409A-1(b)(9) or otherwise. (jj) “Nonstatutory Stock Option” means any option granted pursuant to Section 4 of the Plan that does not qualify as an Incentive Stock Option. (kk) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act. (ll) “Option” means an Incentive Stock Option or a Nonstatutory Stock Option to purchase shares of Common Stock granted pursuant to the Plan. (mm) “Option Agreement” means a written or electronic agreement between the Company and the Optionholder evidencing the terms and conditions of the Option grant. The Option Agreement includes the Grant Notice for the Option and the agreement containing the written summary of the general terms and conditions applicable to the Option and which is provided, including through electronic means, to a Participant along with the Grant Notice. Each Option Agreement will be subject to the terms and conditions of the Plan. (nn) “Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Option. (oo) “Other Award” means an award valued in whole or in part by reference to, or otherwise based on, Common Stock, including the appreciation in value thereof (e.g., options or stock rights with an exercise price or strike price less than 100% of the Fair Market Value at the time of grant) that is not an Incentive Stock Option, Nonstatutory Stock Option, SAR, Restricted Stock Award, RSU Award or Performance Award. TABLE OF CONTENTS (pp) “Other Award Agreement” means a written or electronic agreement between the Company and a holder of an Other Award evidencing the terms and conditions of an Other Award grant. Each Other Award Agreement will be subject to the terms and conditions of the Plan. (qq) “Own,” “Owned,” “Owner,” “Ownership” means that a person or Entity will be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership” of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power, which includes the power to vote or to direct the voting, with respect to such securities. (rr) “Participant” means an Employee, Director or Consultant to whom an Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Award. (ss) “Performance Award” means an Award that may vest or may be exercised or a cash award that may vest or become earned and paid contingent upon the attainment during a Performance Period of certain Performance Goals and which is granted under the terms and conditions of Section 5(b) pursuant to such terms as are approved by the Board. In addition, to the extent permitted by Applicable Law and set forth in the applicable Award Agreement, the Board may determine that cash or other property may be used in payment of Performance Awards. Performance Awards that are settled in cash or other property are not required to be valued in whole or in part by reference to, or otherwise based on, the Common Stock. (tt) “Performance Criteria” means one or more criteria that the Board will select for purposes of establishing the Performance Goals for a Performance Period. The Performance Criteria that will be used to establish such Performance Goals may be based on any one of, or combination of, the following as determined by the Board: earnings (including earnings per share and net earnings); earnings before interest, taxes and depreciation; earnings before interest, taxes, depreciation and amortization; total stockholder return; return on equity or average stockholder’s equity; return on assets, investment, or capital employed; stock price; margin (including gross margin); income (before or after taxes); operating income; operating income after taxes; pre-tax profit; operating cash flow; sales or revenue targets; increases in revenue or product revenue; expenses and cost reduction goals; improvement in or attainment of working capital levels; economic value added (or an equivalent metric); market share; cash flow; cash flow per share; share price performance; debt reduction; customer satisfaction; stockholders’ equity; capital expenditures; debt levels; operating profit or net operating profit; workforce diversity; growth of net income or operating income; billings; financing; regulatory milestones; stockholder liquidity; corporate governance and compliance; intellectual property; personnel matters; progress of internal research; progress of partnered programs; partner satisfaction; budget management; partner or collaborator achievements; internal controls, including those related to the Sarbanes-Oxley Act of 2002; investor relations, analysts and communication; implementation or completion of projects or processes; employee retention; number of users, including unique users; strategic partnerships or transactions (including in-licensing and out-licensing of intellectual property); establishing relationships with respect to the marketing, distribution and sale of the Company’s products; supply chain achievements; co-development, co-marketing, profit sharing, joint venture or other similar arrangements; individual performance goals; corporate development and planning goals; and other measures of performance selected by the Board or Committee whether or not listed herein. (uu) “Performance Goals” means, for a Performance Period, one or more goals established by the Board for the Performance Period based upon the Performance Criteria. Performance Goals may be based on a Company-wide basis, with respect to one or more business units, divisions, Affiliates, or business segments, and in either absolute terms or relative to the performance of one or more comparable companies or the performance of one or more relevant indices. Unless specified otherwise by the Board (i) in the Award Agreement at the time the Award is granted or (ii) in such other document setting forth the Performance Goals at the time the Performance Goals are established, the Board will appropriately make adjustments in the method of calculating the attainment of Performance Goals for a Performance Period as follows: (1) to exclude restructuring and/or other nonrecurring charges; (2) to exclude exchange rate effects; (3) to exclude the effects of changes to generally accepted accounting principles; (4) to exclude the effects of any statutory adjustments to corporate tax rates; (5) to exclude the effects of items that are “unusual” in nature or occur “infrequently” as determined under generally accepted accounting principles; (6) to exclude the dilutive effects of acquisitions or joint ventures; (7) to assume that any business divested by the Company achieved performance objectives at targeted levels during the balance of a Performance Period TABLE OF CONTENTS following such divestiture; (8) to exclude the effect of any change in the outstanding shares of common stock of the Company by reason of any stock dividend or split, stock repurchase, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to common stockholders other than regular cash dividends; (9) to exclude the effects of stock based compensation and the award of bonuses under the Company’s bonus plans; (10) to exclude costs incurred in connection with potential acquisitions or divestitures that are required to be expensed under generally accepted accounting principles; and (11) to exclude the goodwill and intangible asset impairment charges that are required to be recorded under generally accepted accounting principles. In addition, the Board may establish or provide for other adjustment items in the Award Agreement at the time the Award is granted or in such other document setting forth the Performance Goals at the time the Performance Goals are established. In addition, the Board retains the discretion to reduce or eliminate the compensation or economic benefit due upon attainment of Performance Goals and to define the manner of calculating the Performance Criteria it selects to use for such Performance Period. Partial achievement of the specified criteria may result in the payment or vesting corresponding to the degree of achievement as specified in the Award Agreement or the written terms of a Performance Cash Award. (vv) “Performance Period” means the period of time selected by the Board over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to vesting or exercise of an Award. Performance Periods may be of varying and overlapping duration, at the sole discretion of the Board. (ww) “Plan” means this DevvStream Corp. 2024 Equity Incentive Plan, as amended from time to time. (xx) “Plan Administrator” means the person, persons, and/or third-party administrator designated by the Company to administer the day to day operations of the Plan and the Company’s other equity incentive programs. (yy) “Post-Termination Exercise Period” means the period following termination of a Participant’s Continuous Service within which an Option or SAR is exercisable, as specified in Section 4(h). (zz) “Restricted Stock Award” or “RSA” means an Award of shares of Common Stock which is granted pursuant to the terms and conditions of Section 5(a). (aaa) “Restricted Stock Award Agreement” means a written or electronic agreement between the Company and a holder of a Restricted Stock Award evidencing the terms and conditions of a Restricted Stock Award grant. The Restricted Stock Award Agreement includes the Grant Notice for the Restricted Stock Award and the agreement containing the written summary of the general terms and conditions applicable to the Restricted Stock Award and which is provided, including by electronic means, to a Participant along with the Grant Notice. Each Restricted Stock Award Agreement will be subject to the terms and conditions of the Plan. (bbb) “RSU Award” or “RSU” means an Award of restricted stock units representing the right to receive an issuance of shares of Common Stock which is granted pursuant to the terms and conditions of Section 5(a). (ccc) “RSU Award Agreement” means a written or electronic agreement between the Company and a holder of an RSU Award evidencing the terms and conditions of an RSU Award grant. The RSU Award Agreement includes the Grant Notice for the RSU Award and the agreement containing the written summary of the general terms and conditions applicable to the RSU Award and which is provided, including by electronic means, to a Participant along with the Grant Notice. Each RSU Award Agreement will be subject to the terms and conditions of the Plan. (ddd) “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to time. (eee) “Rule 405” means Rule 405 promulgated under the Securities Act. (fff) “Section 409A” means Section 409A of the Code and the regulations and other guidance thereunder. TABLE OF CONTENTS (ggg) “Section 409A Change in Control” means a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the Company’s assets, as provided in Section 409A(a)(2)(A)(v) of the Code and Treasury Regulations Section 1.409A-3(i)(5) (without regard to any alternative definition thereunder). (hhh) “Securities Act” means the Securities Act of 1933, as amended. (iii) “Share Reserve” means the number of shares available for issuance under the Plan as set forth in Section 2(a). (jjj) “Stock Appreciation Right” or “SAR” means a right to receive the appreciation on Common Stock that is granted pursuant to the terms and conditions of Section 4. (kkk) “SAR Agreement” means a written or electronic agreement between the Company and a holder of a SAR evidencing the terms and conditions of a SAR grant. The SAR Agreement includes the Grant Notice for the SAR and the agreement containing the written summary of the general terms and conditions applicable to the SAR and which is provided, including by electronic means, to a Participant along with the Grant Notice. Each SAR Agreement will be subject to the terms and conditions of the Plan. (lll) “Subsidiary” means, with respect to the Company, (i) any corporation of which more than 50% of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, stock of any other class or classes of such corporation will have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any partnership, limited liability company or other entity in which the Company has a direct or indirect interest (whether in the form of voting or participation in profits or capital contribution) of more than 50%. (mmm) “Ten Percent Stockholder” means a person who Owns (or is deemed to Own pursuant to Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any Affiliate. (nnn) “Trading Policy” means the Company’s policy permitting certain individuals to sell Company shares only during certain “window” periods and/or otherwise restricts the ability of certain individuals to transfer or encumber Company shares, as in effect from time to time. (ooo) “Unvested Non-Exempt Award” means the portion of any Non-Exempt Award that had not vested in accordance with its terms upon or prior to the date of any Corporate Transaction. (ppp) “Vested Non-Exempt Award” means the portion of any Non-Exempt Award that had vested in accordance with its terms upon or prior to the date of a Corporate Transaction. TABLE OF CONTENTS PLAN OF ARRANGEMENT UNDER SECTION 288
OF THE BUSINESS CORPORATIONS ACT (BRITISH COLUMBIA) ARTICLE 1
DEFINITIONS AND INTERPRETATION 1.1 Definitions. Unless indicated otherwise, where used in this Plan of Arrangement, capitalized terms used but not defined shall have the meanings specified in the Business Combination Agreement and the following terms shall have the following meanings (and grammatical variations of such terms shall have corresponding meanings): (a)
| “Amalco” has the meaning specified in Section 2.3(d); |
(b)
| “Amalco Sub” means Focus Impact Amalco Sub Ltd., a company existing under the Laws of the Province of British Columbia, and a wholly-owned subsidiary of the SPAC; |
(c)
| “Amalco Sub Shares” means the common shares in the capital of Amalco Sub; |
(d)
| “Amalgamation” means the amalgamation of Amalco Sub and the Company in accordance with the terms of Section 269 of the BCBCA to form Amalco; |
(e)
| “Amalgamation Consideration Value” means the Equity Value plus the Aggregate Exercise Price; |
(f)
| “Arrangement” means an arrangement under Section 288 of the BCBCA, on the terms set forth in this Plan of Arrangement, subject to any amendment or variations hereto made in accordance with the Business Combination Agreement and this Plan of Arrangement or made at the direction of the Court in the Final Order with the prior written consent of the Company and the SPAC, each acting reasonably; |
(g)
| “Arrangement Resolution” means the special resolution approving the Plan of Arrangement to be considered at the Company Meeting by Company Shareholders, substantially in the form set forth in Exhibit F to the Business Combination Agreement; |
(a)
| “Book-Entry Shares” has the meaning specified in Section 4.1(a); |
(b)
| “Business Combination Agreement” means the Business Combination Agreement dated as of September 12, 2023, among the SPAC, the Company, and Amalco Sub, as the same may be amended, amended and restated or supplemented from time to time; |
(c)
| “Business Day” means any day other than a Saturday, Sunday or a legal holiday on which commercial banking institutions in Delaware or British Columbia are authorized to close for business, excluding as a result of “stay at home,” “shelter- in-place,” “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any Governmental Authority so long as the electronic funds transfer systems, including for wire transfers, of commercially banking institutions in Delaware and British Columbia are generally open for use by customers on such day; |
(d)
| “BCBCA” means the Business Corporations Act (British Columbia), and the regulations made thereunder, as now in effect and as such act and regulations may be promulgated or amended from time to time; |
(e)
| “CDS” means the Canadian Depository for Securities; |
(f)
| “Certificates” has the meaning specified in Section 4.1(a); |
(g)
| “Code” means the U.S. Internal Revenue Code of 1986; |
(h)
| “Common Amalgamation Consideration” means, with respect to the Company Securities, a number of New PubCo Common Shares equal to the Amalgamation Consideration Value divided by $10.20; |
(i)
| “Common Conversion Ratio” means, in respect of a Company Share, the number equal to (i) the Common Amalgamation Consideration divided by (ii) the Fully Diluted Common Shares Outstanding; |
(j)
| “Company” means DevvStream Holdings Inc., a company existing under the laws of the Province of British Columbia; |
TABLE OF CONTENTS (k)
| “Company Convertible Notes” means those certain Company Convertible Notes to be issued by the Company during the Interim Period in accordance with Section 6.2 of the Business Combination Agreement pursuant to the Company Convertible Notes Subscription Agreements; |
(l)
| “Company Convertible Notes Subscription Agreements” means those certain Convertible Note Subscription Agreements to be entered into by the Company during the Interim Period in accordance with Section 6.2 of the Business Combination Agreement with respect to the Company Convertible Notes; |
(m)
| “Company Equity Incentive Plan” means the 2022 Equity Incentive Plan of DevvStream Holdings Inc., as amended and restated from time to time, and the 2022 Non-Qualified Stock Option Plan of DevvStream Inc., as amended and restated from time to time; |
(n)
| “Company Meeting” means the special meeting of Company Shareholders, including any adjournment or postponement thereof in accordance with the terms of the Business Combination Agreement, to be called and held in accordance with the Interim Order to consider the Arrangement Resolution and for any other purpose as may be set forth in the Company Circular and agreed to in writing by the SPAC, acting reasonably; |
(o)
| “Company Option ITM Amount” has the meaning set out in Section 2.3(d)(ii)(A); |
(p)
| “Company Options” means each option (whether vested or unvested) to purchase Company Shares granted under the Company Equity Incentive Plan; |
(q)
| “Company RSUs” means each restricted stock unit representing the right to receive payment in Company Shares or an amount in cash equal to the fair market value of such Company Shares, granted under the Company Equity Incentive Plan or award agreements; |
(r)
| “Company Securities” means, collectively, the Company Shares, the Company Options, and the Company Warrants; |
(s)
| “Company Securityholders” means, collectively, the holders of Company Securities at the Effective Time; |
(t)
| “Company Shareholders” means, collectively, the holders of Company Shares at the Effective Time; |
(u)
| “Company Shares” means the Multiple Voting Company Shares and the Subordinate Voting Company Shares; |
(v)
| “Company Warrants” means the 9,787,343 outstanding common share purchase warrants of the Company, which are exercisable for up to 9,787,343 Subordinate Voting Company Shares; |
(w)
| “Converted Option” has the meaning set out in Section 2.3(d)(ii)(A); |
(x)
| “Converted Option ITM Amount” has the meaning set out in Section 2.3(d)(ii)(A); |
(y)
| “Converted RSU” has the meaning set out in Section 2.3(d)(ii)(B); |
(z)
| “Converted Warrant” has the meaning set out in Section 2.3(d)(iii); |
(aa)
| “Court” means the Supreme Court of British Columbia, or other court as applicable; |
(bb)
| “Dissent Procedures” has the meaning set out in Section 3.1; |
(cc)
| “Dissent Rights” has the meaning set out in Section 3.1; |
(dd)
| “Dissenting Shareholder” means a registered Company Shareholder who dissents in respect of the Arrangement in strict compliance with the Dissent Procedures; |
(ee)
| “DTC” means the Depository Trust Company; |
(ff)
| “Effective Date” means the date on which the Arrangement becomes effective; |
(gg)
| “Effective Time” means 8:01 a.m. (Vancouver time) on the Effective Date or such other time as the Company and the SPAC agree in writing before the Effective Date; |
TABLE OF CONTENTS (hh)
| “Final Order” means the final order of the Court, in a form acceptable to the Parties, each acting reasonably, approving the Arrangement, as such order may be amended by the Court (with the consent of each of the Parties, acting reasonably) at any time prior to the Effective Date or as such order may be affirmed or amended on appeal (provided, that any such amendment is satisfactory to each of the Parties, acting reasonably); |
(ii)
| “Fully Diluted Common Shares Outstanding” means, without duplication, at any measurement time (a)(i) ten (10), multiplied by (ii) the aggregate number of Multiple Voting Company Shares that are then issued and outstanding, plus (b) the aggregate number of Subordinate Voting Company Shares that are then issued and outstanding, plus (c) the aggregate number of Subordinate Voting Company Shares to be issued pursuant to the exercise and conversion of the Company Options in accordance therewith, plus (d) the aggregate number of Subordinate Voting Company Shares to be issued pursuant to the exercise and conversion of the Company Warrants in accordance therewith, plus (e) the aggregate number of Subordinate Voting Company Shares to be issued pursuant to the vesting of the Company RSUs in accordance therewith; |
(jj)
| “holder” means, when used with reference to any Company Shareholder, the holder of such Company Shares as shown from time to time on the register of shareholders maintained by or on behalf of the Company in respect of the Company Shares; |
(kk)
| “Interim Order” means the interim order of the Court contemplated by Section 2.2 of the Business Combination Agreement and made pursuant to Section 291 of the BCBCA in a form acceptable to the Company and the SPAC, each acting reasonably, providing for, among other things, the calling and holding of the Company Meeting, as the same may be amended by the Court or with the consent of the SPAC and the Company, such consent not to be unreasonably withheld, conditioned or delayed; |
(ll)
| “ITA” means the Income Tax Act (Canada); |
(mm)
| “Letter of Transmittal” has the meaning specified in Section 4.1(a); |
(nn)
| “Lien” means any mortgage, pledge, security interest, attachment, right of first refusal, option, proxy, voting trust, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof), restriction (whether on voting, sale, transfer, disposition or otherwise), any subordination arrangement in favor of another Person, license, or any filing or agreement to file a financing statement as debtor under the Uniform Commercial Code or any similar Law (but excluding the conversion restrictions on the Multiple Voting Company Shares); |
(oo)
| “Multiple Voting Company Shares” means the multiple voting shares of the Company, without par value; |
(pp)
| “New PubCo” means the SPAC after the SPAC Continuance; |
(qq)
| “New PubcoPubCo Board” means the board of directors of New Pubco;PubCo; |
(rr)
| “New PubCo Common Shares” means, following the SPAC Continuance, the common shares of New PubCo; |
(ss)
| “New PubCo Organizational Documents” means the amended and restated New PubCo Organizational Documents in substantially the form attached as Exhibit B to the Business Combination Agreement; |
(tt)
| “Party” and “Parties” means, as applicable, the SPAC, Amalco Sub and the Company; |
(uu)
| “Per Common Share Amalgamation Consideration” means, (i) with respect to each Multiple Voting Company Share, an amount of New PubCo Common Shares equal to (A) ten (10), multiplied by (B) the Common Conversion Ratio, and (ii) with respect to each Subordinate Voting Company Share, an amount of New PubCo Common Shares equal to the Common Conversion Ratio; |
(vv)
| “Person” means an individual, corporation, partnership (including a general partnership, limited partnership, or limited liability partnership), limited or unlimited liability company, association, trust or other entity or organization, including a government, domestic or foreign, or political subdivision thereof, or an agency or instrumentality thereof; |
TABLE OF CONTENTS (ww)
| “Plan of Arrangement” means this plan of arrangement and any amendment or variation hereto made in accordance with Article 5 hereto or the Business Combination Agreement or upon the direction of the Court in the Final Order with the prior written consent of the Company and the SPAC, each acting reasonably; |
(xx)
| “Registrar” means the Registrar of Companies appointed pursuant to Section 400 of the BCBCA; |
(yy)
| “SPAC” means Focus Impact Acquisition Corp., a Delaware corporation; |
(zz)
| “SPAC Continuance” means the redomicile or continuance of the SPAC from the State of Delaware under the Delaware General Corporation Law to the Province of Alberta under the Business Corporations Act (Alberta); |
(aaa)
| “Subordinate Voting Company Shares” means the subordinate voting shares of the Company, without par value; and |
(bbb)
| “Transmittal Documents” has the meaning set out in Section 4.1(c). |
1.2 Interpretation Not Affected by Headings, etc. The division of this Plan of Arrangement into sections and other portions and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation hereof. Unless otherwise indicated, all references in this Plan of Arrangement to a “Section” followed by a number and/or a letter refer to the specified section of this Plan of Arrangement. Unless otherwise indicated, the terms “this Plan of Arrangement”, “hereof”, “herein”, “hereunder” and “hereby” and similar expressions refer to this Plan of Arrangement as amended or supplemented from time to time pursuant to the applicable provisions hereof, and not to any particular section or other portion hereof. 1.3 Currency. Unless otherwise stated, all sums of money referred to in this Plan of Arrangement are expressed in lawful money of the United States. 1.4 Number, etc. Unless the context otherwise requires, words importing the singular shall include the plural and vice versa and words importing any gender shall include all genders. 1.5 Construction. In this Plan of Arrangement unless otherwise indicated: (a)
| the words “include”, “including” or “in particular”, when following any general term or statement, shall not be construed as limiting the general term or statement to the specific items or matters set forth or to similar items or matters, but rather as permitting the general term or statement to refer to all other items or matters that could reasonably fall within the broadest possible scope of the general term or statement; |
(b)
| a reference to a statute means that statute, as amended and in effect as of the date of this Plan of Arrangement, and includes each and every regulation and rule made thereunder and in effect as of the date hereof; and |
(c)
| where a word, term or phrase is defined, its derivatives or other grammatical forms have a corresponding meaning. |
1.6 Time. Time shall be of the essence in every matter or action contemplated hereunder. All times expressed herein or in any Letter of Transmittal contemplated herein are local time Vancouver, British Columbia unless otherwise stipulated herein or therein. ARTICLE 2
ARRANGEMENT 2.1 Business Combination Agreement. This Plan of Arrangement is made pursuant to, is subject to the provisions of, and forms a part of, the Business Combination Agreement, except in respect of the sequence of the steps comprising the Arrangement, which shall occur in the order set forth herein. 2.2 Binding Effect. This Plan of Arrangement shall become effective at, and be binding at and immediately after, the Effective Time on: (a) the Company; (b) the Company Securityholders (including Dissenting Shareholders); (c) the SPAC; and (d) Amalco Sub. 2.3 Arrangement. Commencing at the Effective Time, the following shall occur and shall be deemed to occur sequentially, in two-minute intervals, in the following order and without any further authorization, act or formality unless stated otherwise: TABLE OF CONTENTS (a)
| the New PubCo shall adopt the New PubCo Organizational Documents, which shall take effect immediately on the date and time that the New PubCo Organizational Documents are filed in accordance with the ABCA; |
(b)
| each Company Share held by a Dissenting Shareholder in respect of which the Company Shareholder has validly exercised his, her or its Dissent Rights shall be transferred and assigned by such Dissenting Shareholder, without any further act or formality on his, her or its party, to the Company (free and clear of any Liens) in accordance with, and for the consideration set forth in, Section 3.1; |
(c)
| with respect to each Company Share transferred and assigned in accordance with Section 2.3(b): |
(i)
| the registered holder thereof shall cease to be the registered holder of such Company Share and the name of such registered holder shall be removed from the register of Company Shareholders as of the Effective Time; |
(ii)
| the registered holder thereof shall be deemed to have executed and delivered all consents, releases, assignments and waivers, statutory or otherwise, required to transfer and assign such Company Share; and |
(iii)
| such Company Shares shall be cancelled by the Company for no consideration, other than as set forth in Section 3.1(a); |
(d)
| the Company and Amalco Sub shall merge to form one corporate entity (“Amalco”) with the same effect as if they had amalgamated under Section 269 of the BCBCA (except that the Company will be considered the surviving corporation in the Amalgamation) and, for the avoidance of doubt, the Amalgamation is intended to constitute a single integrated transaction, qualifying as a “reorganization” within the meaning of Section 368(a) of the Code and the U.S. Treasury Regulations promulgated thereunder for U.S. federal income tax purposes, and the Amalgamation is intended to qualify as an amalgamation as defined in subsection 87(1) of the ITA, and without limiting the generality of the foregoing, upon and as a consequence of the Amalgamation: |
(i)
| each Company Share shall automatically, without any action on the part of the Parties or the holder thereof, but subject to the requirements of the Letter of Transmittal, be exchanged for that certain number of New PubCo Common Shares equal to the applicable Per Common Share Amalgamation Consideration in respect of each Company Share; |
(ii)
| each outstanding Company Equity Award issued and outstanding immediately prior to the Effective Time shall automatically, without any action on the part of the Parties or the holder thereof, be cancelled and converted as follows: |
(A)
| each outstanding Company Option, whether vested or unvested, shall automatically, without any action on the part of the Parties or the holder thereof, be cancelled and converted into an option to purchase (x) a number of New PubCo Common Shares (rounded down to the nearest whole share) equal to the product of (I) the number of Subordinate Voting Company Shares underlying such Company Option, multiplied by (II) the Common Conversion Ratio, (y) at an exercise price per share (rounded up to the nearest whole cent) equal to the (I) exercise price per share of such Company Option immediately prior to the Effective Time divided by (II) the Common Conversion Ratio (each, a “Converted Option”); provided, however, that such conversion shall occur in a manner intended to comply with the requirements of Section 409A of the Code, and subsection 7(1.4) of the ITA, and therefore, notwithstanding the foregoing, in the event that: (1) the excess of the aggregate fair market value of the New PubcoPubCo Common Shares subject to a Converted Option, determined immediately after the Effective Time, over the aggregate option exercise price for such New PubcoPubCo Common Shares pursuant to such Converted Option (such excess referred to as the “Converted Option ITM Amount”) would otherwise exceed (2) the excess of the aggregate fair market value of the Subordinate Voting Company Shares subject to the Company Option in exchange for which the Converted Option was granted, determined immediately prior to the Effective Time, over the aggregate option exercise price for the Subordinate Voting Company Shares pursuant to such Company Option (such excess referred to as the “Company Option ITM Amount”), the previous provisions shall be adjusted with effect at and from the Effective Time so that the Converted Option ITM Amount of the |
TABLE OF CONTENTS Converted Option does not exceed the Company Option ITM Amount of the Company Option in accordance with subsection 7(1.4) of the ITA and, to the extent applicable, Section 409A of the Code, but only to the extent necessary and in a manner that does not otherwise (except to the extent necessary to comply with subsection 7(1.4) of the ITA and Section 409A of the Code) adversely affect the holder of the Converted Option. Each Converted Option shall be subject to substantially the same terms and conditions as were applicable under such Company Option and the Company Equity Incentive Plan immediately prior to the Effective Time (including with respect to vesting and restrictions on transfer), except for (1) terms rendered inoperative by reason of the transactions contemplated by the Business Combination Agreement (including the replacement of the counterparty from Company to New PubCo) or (2) such other immaterial administrative or ministerial changes as the New PubCo Board (or the compensation committee of the New PubCo Board) may determine in good faith are appropriate to effectuate the administration of the Converted Options; (B)
| each outstanding Company RSU shall automatically, without any action on the part of the Parties or the holder thereof, be cancelled and converted into an New PubCo restricted stock unit (a “Converted RSU”) representing the right to receive a number of New PubCo Common Shares (rounded to the nearest whole share), or equal to the product of (I) the number of Subordinate Voting Company Shares underlying such Company RSU, multiplied by (II) the Common Conversion Ratio. Each Converted RSU shall be subject to substantially the same terms and conditions as were applicable under such Company RSU and the Company Equity Incentive Plan immediately prior to the Effective Time (including with respect to vesting and restrictions on transfer), except for (1) terms rendered inoperative by reason of the transactions contemplated by the Business Combination Agreement (including the replacement of the counterparty from Company to New PubCo) or (2) such other immaterial administrative or ministerial changes as the New PubCo Board (or the compensation committee of the New PubCo Board) may determine in good faith are appropriate to effectuate the administration of the Converted RSUs; |
(iii)
| each Company Warrant issued and outstanding shall, in accordance with its terms, become exercisable for New PubCo Common Shares (a “Converted Warrant”) and shall provide the holder the right to acquire, subject to substantially the same terms and conditions as were applicable under such Company Warrant, (A) a number of New PubCo Common Shares (rounded down to the nearest whole share) equal to the product of (I) the number of Subordinate Voting Company Shares underlying such Company Warrant, multiplied by (II) the Common Conversion Ratio, (B) at an exercise price per share (rounded up to the nearest whole cent) equal to (I) the exercise price per share of such Company Warrant immediately prior to the Effective Time divided by (II) the Common Conversion Ratio; |
(iv)
| each Company Convertible Note outstanding at the Effective Time shall be fully and finally settled in accordance with its terms and converted first into that number of Company Shares (for the avoidance of doubt, which shall not be included in the Fully Diluted Common Shares Outstanding) and then into that number of New PubCo Common Shares as set forth in the Company Convertible Note Subscription Agreements with respect thereto, which Convertible Note Shares shall be held in accordance with the terms of such Company Convertible Note Subscription Agreements; and |
(v)
| each outstanding share of Amalco Sub shall automatically, without any action on the part of the Parties or the holder thereof, be exchanged for one newly issued, fully paid and non-assessable common share of Amalco; |
(e)
| without limiting the generality of Section 2.3(d), the Company and Amalco Sub shall continue as Amalco and, from and after the Effective Date: |
(i)
| Amalco shall own and hold the property of the Company and Amalco Sub and, without limiting the provisions hereof, all rights of creditors or others shall be unimpaired by such amalgamation; |
(ii)
| all liabilities and obligations of the Company and Amalco Sub, whether arising by contract or otherwise, may be enforced against Amalco to the same extent as if such obligations had been incurred or contracted by it; |
TABLE OF CONTENTS (iii)
| other than the Company Options and the Company RSUs exchanged under Section 2.3(d), all rights, contracts, permits and interests of the Company and Amalco Sub shall continue as rights, contracts, permits and interests of Amalco as if the Company and Amalco Sub continued and, for greater certainty, the amalgamation shall not constitute a transfer or assignment of the rights or obligations of either of the Company or Amalco Sub under any such rights, contracts, permits and interests; |
(iv)
| any existing cause of action, claim or liability to prosecution shall be unaffected; |
(v)
| the Company will be considered the surviving corporation in the Amalgamation; |
(vi)
| a civil, criminal or administrative action or proceeding pending by or against either the Company or Amalco Sub may be continued by or against Amalco; |
(vii)
| a conviction against, or ruling, order or judgment in favour of or against either the Company or Amalco Sub may be enforced by or against Amalco; |
(viii) the name of Amalco shall be “DevvStream Holdings Inc.”; (ix)
| Amalco shall be authorised to issue an unlimited number of common shares; |
(x)
| (A) the chief executive officer and chief financial officer of the Company immediately prior to the Effective Time shall be the directors of Amalco, with each such director to hold office in accordance with the Organizational Documents of Amalco and (B) the officers of the Company immediately prior to the Effective Time shall be the officers of Amalco, with each such officer to hold office in accordance with the Organizational Documents of Amalco; |
(xi)
| the articles and notice of articles of Amalco shall otherwise be substantially in the form of the articles and notice of articles of the Company; |
(xii)
| the capital of the common shares of Amalco shall be an amount equal to the total of: (A) the aggregate paid-up capital (as such term is defined in the ITA) of the Company Shares (which in each case, for greater certainty, does not include any paid-up capital attributable to the Company Shares described in Section 2.3(b)), and (B) the aggregate paid-up capital (as such term is defined in the ITA) of the Amalco Sub Shares described in Section 2.3(d)(iii), in each case as measured at the time immediately prior to the Effective Time; and |
(xiii)
| there shall be added to the stated capital of New PubCo Common Shares an amount equal to the paid-up capital (as such term is defined in the ITA) of the Company Shares (which, for greater certainty, does not include any paid-up capital attributable to the Company Shares described in Section 2.3(b)) as measured at the time immediately prior to the Effective Time. |
(f)
| the exchanges and cancellations provided for in Sections 2.3(b) through 2.3(e) hereof shall be deemed to occur simultaneously at the time on the Effective Date on which such exchanges and cancellations first begin as contemplated therein, notwithstanding certain procedures related thereto that may not be completed until after such Business Day. |
2.4 No Fractional Shares. In no event shall any holder of Company Securities be entitled to a fractional New PubCo Common Share. Where the aggregate number of New PubCo Common Shares to be issued to a former Company Securityholder as consideration under this Arrangement and pursuant to the Business Combination Agreement would result in a fraction of a New PubCo Common Share being issuable, the number of New PubCo Common Shares to be received by such Company Securityholder (after aggregating all fractional New PubCo Common Shares that otherwise would be received by such holder) shall be rounded down to the nearest whole New PubCo Common Share. ARTICLE 3
RIGHTS OF DISSENT 3.1 Rights of Dissent (a)
| Registered holders of Company Shares may exercise dissent rights with respect to any Company Shares held by such holder (“Dissent Rights”) in connection with the Arrangement pursuant to and in the manner set forth in Division 2 of Part 8 of the BCBCA, as modified by the Interim Order, the Final Order and this Section 3.1 (the “Dissent Procedures”); provided that, notwithstanding Section 242 of the BCBCA, the |
TABLE OF CONTENTS written objection to the Arrangement Resolution contemplated by Section 242 of the BCBCA must be received by the Company not later than 5:00 p.m. (Vancouver time) on the Business Day that is two (2) Business Days immediately preceding the date of the Company Meeting (as it may be adjourned or postponed from time to time). Each Dissenting Shareholder who duly exercises such holder’s Dissent Rights shall, notwithstanding anything to the contrary in Section 245 of the BCBCA, be deemed to have transferred for cancellation the Company Shares held by such holder and in respect of which Dissent Rights have been validly exercised to the Company free and clear of all Liens (other than the right to be paid fair value for such Company Shares as set out in this Section 3.1), as provided in Section 2.3(b) and if they: (i)
| ultimately are determined to be entitled to be paid fair value for such Company Shares: (A) shall be deemed not to have participated in the transactions in Article 2 (other than Section 2.3(b) and 2.3(c)); (B) will be entitled to be paid by the Company the fair value of such Company Shares, which fair value shall be determined in accordance with the procedures applicable to the payout value set out in Sections 244 and 245 of the BCBCA and determined as of the close of business on the Business Day before the Arrangement Resolution was adopted; and (C) shall not be entitled to any other payment or consideration, including any payment or consideration that would be payable or issuable under the Arrangement had such holders not exercised their Dissent Rights in respect of such Company Shares; or |
(ii)
| ultimately are not entitled, for any reason, to be paid fair value for their Company Shares, shall be deemed to have participated in the Arrangement on the same basis as a non-dissenting holder of Company Shares and shall be entitled to receive only the New PubCo Common Shares on the basis determined in accordance with Section 2.3(d)(i) that such holder would have received pursuant to the Arrangement if such registered holder had not exercised Dissent Rights; |
but in no case shall the New PubCo, Amalco Sub, the Company, Amalco or any other Person be required to recognize such Persons as holders of Company Shares after the Effective Time, and the names of such Persons shall be deleted from the registers of holders of Company Shares at the Effective Time. (b)
| In addition to any other restrictions set forth in the BCBCA and the Interim Order, Company Shareholders who vote, or who have instructed a proxyholder to vote, in favour of the Arrangement Resolution shall not be entitled to exercise Dissent Rights. |
ARTICLE 4
DELIVERY OF NEW PUBCO COMMON SHARES 4.1 Delivery of New PubCo Common Shares (a)
| At or prior to the Effective Time, New PubCo shall send, or shall cause the Exchange Agent to send, to each Company Shareholder holding Company Securities evidenced by certificates (the “Certificates”) or represented by book- entry (the “Book-Entry Shares”) and not held by DTC or CDS, a letter of transmittal for use in such exchange, in a form to be mutually agreed upon by the Parties (the “Letter of Transmittal”) (which shall specify that the delivery of the exchanged New PubCo Common Shares shall be effected, and risk of loss and title shall pass, only upon proper delivery of a properly completed and duly executed Letter of Transmittal) and, if applicable, the appropriate Certificates, if any (or a Lost Certificate Affidavit), to the Exchange Agent for use in such exchange. |
(b)
| With respect to Book-Entry Shares, including the New PubCo Common Shares, held through the DTC or CDS, the SPAC and the Company shall cooperate to establish procedures with the Exchange Agent, DTC or CDS to ensure that the Exchange Agent will transmit to DTC or CDS, as the case may be (or their respective nominees) as soon as reasonably practicable on or after the Closing Date, upon surrender of Book-Entry Shares held of record by DTC or CDS (or their respective nominees) in accordance with customary surrender procedures, the applicable New PubCo Common Shares to be exchanged for such Book-Entry Shares held through the DTC or CDS, as applicable. |
(c)
| Each Company Shareholder shall be entitled to receive the applicable Common Amalgamation Consideration in respect of the Company Shares tendered for exchange within thirty (30) days after the Effective Time, subject to either, with respect to Book-Entry Shares, the procedures established in accordance with Section 4.1(b) or, with respect to Company Securities evidenced by Certificates, the |
TABLE OF CONTENTS delivery to the Exchange Agent of the following items prior thereto (collectively, the “Transmittal Documents”): (i) the Certificates (or a Lost Certificate Affidavit), (ii) a properly completed and duly executed Letter of Transmittal, and (iii) such other documents as may be reasonably requested by the Exchange Agent or New PubCo. Until so surrendered, each Certificate shall represent after the Effective Time for all purposes only the right to receive the Common Amalgamation Consideration attributable to such Company Shareholder. 4.2 Distributions with Respect to Unsurrendered Certificates. No dividends or other distributions declared or made after the Effective Time with respect to New PubCo Common Shares with a record date after the Effective Time shall be paid to the holder of any unsurrendered Certificate which immediately prior to the Effective Time represented outstanding Company Shares that were exchanged pursuant to Section 2.3 unless and until the holder of record of such Certificate shall surrender such Certificate in accordance with Section 4.1. Subject to applicable law, at the time of such surrender of any such Certificate (or in the case of clause (b) below, at the appropriate payment date), there shall be paid to the holder of record of the Certificates formerly representing whole Company Shares, without interest, (a) the amount of dividends or other distributions with a record date after the Effective Time but prior to surrender and a payment date prior to surrender paid with respect to such whole New PubCo Common Share and (b) on the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time but prior to surrender and a payment date subsequent to surrender payable with respect to such whole New PubCo Common Share. 4.3 Lost Certificates. In the event any Certificate which immediately prior to the Effective Time represented one or more outstanding Company Shares that were exchanged pursuant to Section 2.3(d)(i) shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed, the Exchange Agent will issue in exchange for such lost, stolen or destroyed certificate, one or more certificates or book-entry advice statements representing one or more New PubCo Common Shares (and any dividends or distributions with respect thereto) deliverable in accordance with such holder’s Letter of Transmittal. When authorizing such payment in exchange for any lost, stolen or destroyed certificate, the Person to whom Certificates or book-entry advice statements representing New PubCo Common Shares are to be issued shall, as a condition precedent to the issuance thereof, give a bond satisfactory to New PubCo and its transfer agent and the Exchange Agent in such sum as New PubCo may direct or otherwise indemnify New PubCo, its transfer agent and the Exchange Agent in a manner satisfactory to New PubCo, its transfer agent and the Exchange Agent against any claim that may be made against New PubCo, its transfer agent and/or the Exchange Agent with respect to the certificate alleged to have been lost, stolen or destroyed. 4.4 Extinction of Rights. Any Certificate or book-entry advice statements which immediately prior to the Effective Time represented outstanding Company Shares that were exchanged pursuant to Section 2.3(d)(i) and not deposited, with all other instruments required by Section 4.1 on or prior to the second anniversary of the Effective Date shall cease to represent a claim or interest of any kind or nature as a shareholder of New PubCo or as a former shareholder of the Company. On such date, New PubCo Common Shares to which the former registered holder of the Certificate referred to in the preceding sentence was ultimately entitled shall be deemed to have been surrendered to New PubCo together with all entitlements to dividends, distributions and interest thereon held for such former registered holder. None of New PubCo, Amalco Sub, the Company or the Exchange Agent shall be liable to any person in respect of any New PubCo Common Shares (or dividends, distributions and interest in respect thereof) delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. 4.5 Withholding Rights. The SPAC, New PubCo and the Exchange Agent shall be entitled to deduct and withhold from the Common Amalgamation Consideration and any other amounts otherwise issuable or payable pursuant hereunder (whether in cash or kind) such amounts as the applicable party may be required to deduct and withhold therefrom under any applicable Law in respect of Taxes; provided, however, that before making any deduction or withholding pursuant to this Section 4.5 (other than with respect to compensatory payments or as a result of the Company failing to deliver the certification required by Section 8.3(d)(vi) of the Business Combination Agreement), SPAC and New PubCo shall use commercially reasonable efforts to give the Company at least five (5) Business Days prior written notice of any anticipated deduction or withholding (together with any legal basis thereof) to provide the Company with sufficient opportunity to provide any forms or other documentation from the applicable equity holders or take such other steps in order to avoid such deduction or withholding. SPAC and New PubCo shall reasonably consult and cooperate with the Company or the applicable Company Shareholder in good faith to minimize or eliminate, to the extent permissible under applicable Law, the amount of any such deduction or withholding, TABLE OF CONTENTS including by cooperating with the submission of any certificates or forms to establish an exemption from, reduction in, or refund of any such deduction or withholding. To the extent that any amounts are so deducted, withheld and remitted to the appropriate Governmental Authority, such amounts shall be treated for all purposes hereof as having been paid to the Person to whom such amounts would otherwise have been paid. SPAC, New PubCo and the Exchange Agent, as applicable, may sell or otherwise dispose of such portion of the Common Amalgamation Consideration or other consideration otherwise payable to such holder or former holder in the form of New PubCo Common Shares as is necessary to provide sufficient funds to enable the withholding party to comply with such deduction or withholding requirements, and none of SPAC, New PubCo or the Exchange Agent, as applicable, shall be liable to any Person for any deficiency in respect of any proceeds received (whether in cash or in kind), and New PubCo or the Exchange Agent, as applicable, shall notify the holder thereof and remit to the holder thereof any unapplied balance of the net proceeds of such sale. 4.6 Deemed Fully Paid and Non-Assessable Shares. All Company Shares and New PubcoPubCo Shares issued pursuant hereto shall be deemed to be validly issued and outstanding as fully paid and non-assessable shares for all purposes of the BCBCA. ARTICLE 5
AMENDMENTS 5.1 SPAC and the Company reserve the right to amend, modify and/or supplement this Plan of Arrangement at any time and from time to time prior to the Effective Date, provided that each such amendment, modification and/or supplement must be: (a) set out in writing, (b) agreed to in writing by SPAC and the Company, (c) filed with the Court and, if made following the Company Meeting, approved by the Court (to the extent required by the Court), and (d) communicated to holders of Company Shares, if and as required by the Court. 5.2 Any amendment, modification or supplement to this Plan of Arrangement may be proposed by the Company at any time prior to the Company Meeting (provided that SPAC shall have previously consented in writing thereto) with or without any other prior notice or communication, and if so proposed and accepted by the Persons voting at the Company Meeting (other than as may be required under the Interim Order), shall become part of this Plan of Arrangement for all purposes. 5.3 Any amendment, modification or supplement to this Plan of Arrangement that is approved by the Court following the Company Meeting shall be effective only if (a) it is consented to in writing by each of the Company and SPAC, and (b) if required by the Court, it is consented to by holders of the Company Shares voting in the manner directed by the Court. 5.4 Any amendment, modification or supplement to this Plan of Arrangement may be made following the Effective Date by New PubCo and Amalco, provided that it concerns a matter which, in the reasonable opinions of New PubCo and Amalco, each acting reasonably, is of an administrative nature required to better give effect to the implementation of this Plan of Arrangement and is not adverse to the financial or economic interests of any holder of Company Shares. 5.5 The Parties, acting reasonably, agree to make all necessary consequential amendments to the Plan of Arrangement that are reasonably necessary to give effect to the foregoing. ARTICLE 6
FURTHER ASSURANCES 6.1 Notwithstanding that the transactions and events set out herein shall occur and be deemed to occur in the order set out in this Plan of Arrangement without any further act or formality, each of the parties to the Business Combination Agreement shall make, do and execute, or cause to be made, done or executed, all such further acts, deeds, agreements, transfers, assurances, instruments or documents as may reasonably be required by any of them in order further to document or evidence any of the transactions or events set out herein. TABLE OF CONTENTS RESOLUTIONS OF THE SOLE SHAREHOLDER
OF
FOCUS IMPACT AMALCO SUB LTD.
(the “Company”) The following resolutions are consented to in writing by the sole shareholder of the Company pursuant to the Business Corporations Act (British Columbia) (the “Act”) as of September 12, 2023. RECITALS: A.
| The Company wishes to enter into a business combination agreement dated as of September 12, 2023 by and among DevvStream Holdings Inc., Focus Impact Acquisition Corp. (the “SPAC”) and the Company, in substantially the form attached hereto as Exhibit “A” (the “Business Combination Agreement”), pursuant to which the parties intends to carry out an initial business combination (as such term is used in the final prospectus of the SPAC dated as of October 27, 2021), which shall include an amalgamation between the Company and DevvStream Holdings Inc., as part of an arrangement (the “Arrangement”) on the terms and subject to the conditions set forth in a plan of arrangement under Section 288 of the Act. |
NOW THEREFORE BE IT RESOLVED THAT: The Business Combination Agreement 1.
| Entry into the Business Combination Agreement by the Company, substantially in the form presented to the sole shareholder, is hereby authorized and approved. |
2.
| The Company is authorized to carry out the transactions contemplated by the Business Combination Agreement, including those set forth in the Plan of Arrangement. |
Ancillary Documents 3.
| Entry into any ancillary agreements, deeds, other instruments and other documents relating to the Arrangement and the transactions contemplated by the Business Combination Agreement (collectively, the “Ancillary Documents”) by the Company is hereby authorized and approved. |
General 4.
| All prior acts and deeds of any of the officers or directors of the Company taken to carry out the intent and accomplish the purposes of the foregoing resolutions are hereby approved, adopted, ratified and confirmed in all respects as the respective acts and deeds of the Company. |
[Signature page follows] TABLE OF CONTENTS These resolutions may be executed by inserting, attaching, or otherwise associating such person’s electronic signature in, to or with such resolution (including causing any of the foregoing to occur), and the insertion, attachment or other association of such person’s electronic signature will be conclusive evidence of such person’s authorization of the foregoing. | | | | | | FOCUS IMPACT ACQUISITION CORP. | | | | | | | | | | | | | | By: | | | /s/ Carl Stanton | | | | | | | Name: | | | Carl Stanton | | | | | | | Title: | | | Chief Executive Officer |
[Signature Page to the Amalco Sub Shareholder Resolutions Authorizing Arrangement]
TABLE OF CONTENTS Exhibit “A”
Business Combination Agreement See attached. TABLE OF CONTENTS SPONSOR SIDE LETTERREPRESENTATIONS AND WARRANTIES
This letter agreement (this “Side Letter”) is dated as of September 12, 2023, byThe Core Company Securityholder hereby represents and among Focus Impact Sponsor, LLC, a Delaware limited liability company (the “Sponsor”) and Focus Impact Acquisition Corp., a Delaware corporation (“SPAC”). Capitalized terms used but not defined in this Side Letter shall have the respective meanings ascribed to such terms in the Business Combination Agreement (as defined below), except as otherwise provided in this Side Letter.
RECITALS
WHEREAS, as of the date hereof, the Sponsor is the holder of record of 5,750,000 SPAC Class B Shares (the “Sponsor Shares”) and 11,200,000 Private Placement Warrants (the “Sponsor Warrants” and, together with the Sponsor Shares, the “Sponsor Equity”);
WHEREAS, contemporaneously with the execution and delivery of this Side Letter, SPAC has entered into a Business Combination Agreement with DevvStream Holdings Inc., a company existing under the Laws of the Province of British Columbia (the “Company”), Focus Impact Amalco Sub Ltd., a company existing under the Laws of the Province of British Columbia (“Amalco Sub”), dated as of the date hereof (as amended or modified from time to time in accordance with the terms of such agreement, the “Business Combination Agreement”), pursuant to which, among other things, (i) immediately priorwarrants to the Closing, SPAC shall continue as an Alberta corporation (the “SPAC Continuance”, and following such SPAC Continuance the SPAC is referred to herein for the periods following the effectiveness of the SPAC Continuance as the “New PubCo”) and, at the Closing in accordance with the Plan of Arrangement, Amalco Sub and the Company will amalgamate (the “Amalgamation”)as to, form one corporate entity whichand only as to, the Core Company Securityholder as follows:
Section 3.01. Authorization; Validity of Agreement. If the Core Company Securityholder is a wholly owned subsidiarynot an individual, the Core Company Securityholder is duly organized, validly existing and in good standing under the laws of the New PubCo (“Amalco”); WHEREAS, in connection withjurisdiction of its organization. The Core Company Securityholder has the SPAC Continuancerequisite capacity and the occurrence of the Closing, each Sponsor Share will automatically be converted into one share of common stock of New PubCo (“New Pubco Common Shares”) pursuantauthority to the Governing Documents of SPACexecute and each Sponsor Warrant will be assumed by New PubCo and be converted into the rightdeliver this Agreement, to exercise such warrants for New PubCo Common Shares (collectively, the “Automatic Conversion”);
WHEREAS, in accordance with the terms of this Side Letter, in lieu of the Automatic Conversion: (i) 575,000 Sponsor Shares (the “Automatic Forfeiture Sponsor Shares”) which shares will automatically be canceled upon the occurrence of the Closing for no consideration therefor and (ii) to the extent agreed by the Sponsor in accordance with Section 1.2 of this Side Letter (a) up to 1,725,000 Sponsor Shares (the “Financing Sponsor Share Cap”) and (b) up to 3,360,000 Sponsor Warrants (the “Financing Sponsor Warrant Cap”) will automatically be canceled upon the occurrence of the Closing for no consideration therefor;
WHEREAS, the Sponsor Shares and Sponsor Warrants not forfeitedperform its obligations hereunder shall continue to be subject to the Automatic Conversion; and
WHEREAS, as an inducement to the Company to enter into the Business Combination Agreement and to consummate the transactions contemplated therein,hereby. This Agreement has been duly authorized (to the partiesextent authorization is required), executed and delivered by the Core Company Securityholder and, assuming this Agreement constitutes a valid and binding obligation of the SPAC and the Company, constitutes a legal, valid and binding obligation of the Core Company Securityholder, enforceable against the Core Company Securityholder in accordance with its terms (subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws affecting creditors’ rights generally and general principles of equity). [If the Core Company Securityholder is married and the Core Company Securityholder’s Covered Shares constitute community property under applicable Law, a spousal consent in substantially the form attached hereto desireas Exhibit A has been duly executed and delivered by, and constitutes the valid and binding agreement of, the Core Company Securityholder’s spouse (subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws affecting creditors’ rights generally and general principles of equity).]1
Section 3.02. Ownership. Except as otherwise set forth on Schedule 1, unless Transferred pursuant to a Permitted Transfer, (a) the Core Company Securityholder’s Existing Shares, if any, are, and all of the Covered Shares Beneficially Owned by the Core Company Securityholder from the date hereof through and at the Effective Time will be, Beneficially Owned by the Core Company Securityholder, and (b) the Core Company Securityholder has good and valid title to the Core Company Securityholder’s Existing Shares, if any, free and clear of any Encumbrances other than pursuant to this Agreement, or under applicable federal, provincial or state securities laws. The Core Company Securityholder has and will have at all times through the Effective Time sole voting power (including the right to control such vote as contemplated herein), sole power of disposition, sole power to issue instructions with respect to the matters set forth in Article 2, and sole power to agree to certainall of the matters as set forth herein, including makingin this Agreement, in each case with respect to all of the Core Company an express third party beneficiarySecurityholder’s Existing Shares, except with respect to any Existing Shares that are Transferred pursuant to a Permitted Transfer. Section 3.03. No Violation. The execution and delivery of this Side Letter toAgreement by the extent set forth herein. AGREEMENT
NOW, THEREFORE, in considerationCore Company Securityholder does not, and the performance by the Core Company Securityholder of its obligations under this Agreement will not, (a) conflict with or violate any applicable Law or, if applicable, any certificate, notice of articles or articles of incorporation, as applicable, or bylaws or other equivalent organizational documents of the foregoing andCore Company Securityholder, or (b) violate, conflict with, result in a breach of any provision of or the mutual agreements contained herein, and intendingloss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or result in the creation of any Encumbrance upon any of the properties or assets of the Core Company Securityholder under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which the Core Company Securityholder is a party or by which the Core Company Securityholder or any of its, his or her properties or assets may be legally bound, hereby, the parties hereto hereby agreeexcept in each case as follows:
ARTICLE I
COVENANTS
Section 1.1 Automatic Forfeiture of Certain Sponsor Shares. Effective as of thewould not prevent or delay consummation of the SPAC Continuance at the Closing, in accordance with the Business Combination Agreement,and the Sponsor hereby consents toother transactions contemplated by the automatic forfeitureBCA or impair the ability of the Automatic Forfeiture Sponsor Shares in lieu ofCore Company Securityholder to perform its, his or her obligations hereunder or to consummate the Automatic Conversion, in accordance with the terms and conditions of this Side Letter (such automatic forfeiture, the “Automatic Sponsor Share Forfeiture”). The Sponsor shall receive no consideration in respect of the Automatic Forfeiture Sponsor Shares.transactions contemplated hereby on a timely basis.
TABLE OF CONTENTS Section 1.2 Financing Forfeiture3.04. Consents and Approvals. InThe execution and delivery of this Agreement by the eventCore Company Securityholder does not, and the performance by the Core Company Securityholder of its, his or her obligations under this Agreement and the consummation by the Core Company Securityholder of the transactions contemplated hereby will not, require the Core Company Securityholder to obtain any consent, approval, authorization or permit of, or to make any filing with or notification to, any Governmental Authority. Section 3.05. Absence of Litigation. As of the date hereof, there is no litigation, action, suit or proceeding pending or, to the knowledge of the Core Company Securityholder, threatened against or affecting the Core Company Securityholder and/or any of its Affiliates before or by any Governmental Authority that would reasonably be expected to impair the ability of the Core Company Securityholder to perform its, his or her obligations hereunder or to consummate the transactions contemplated hereby on a timely basis. Section 3.06. Reliance by Company and SPAC. The Core Company Securityholder understands and acknowledges that the Company and the SPAC agree to issue Financing Incentive Shares pursuant toare entering into the BCA in reliance upon the execution and delivery of this Agreement by the Core Company Securityholder and the representations and warranties of the Core Company Securityholder contained herein. The Core Company Securityholder understands and acknowledges that the BCA governs the terms of the Business Combination Agreement, and the Sponsor has provided its written consent thereto, effective as of the consummation of the SPAC Continuance at the Closing, in accordanceother transactions contemplated thereby. Section 3.07. Adequate Information. The Core Company Securityholder is a sophisticated holder with the Business Combination Agreement, the Sponsor hereby consentsrespect to the automatic forfeiture of a number of SponsorCovered Shares equal toand has adequate information concerning the number of Financing Incentive Shares, in no event to exceed a number equal to the Financing Sponsor Share Cap (the “Financing Forfeiture Sponsor Shares”) in lieu of the Automatic Conversion, in accordance with the terms and conditions of this Side Letter (such automatic forfeiture, the “Financing Sponsor Share Forfeiture”). The Sponsor shall receive no consideration in respect of the Financing Forfeiture Sponsor Shares. In the event the Company and the SPAC agree to issue Financing Incentive Warrants pursuant to the Business Combination Agreement, and the Sponsor has provided its written consent thereto, effective as of the consummation of the SPAC Continuance at the Closing, in accordance with the Business Combination Agreement, the Sponsor hereby consents to the automatic forfeiture of a number of Sponsor Warrants equal to the number of Financing Incentive Warrants, in no event to exceed a number equal to the Financing Sponsor Warrant Cap (the “Financing Forfeiture Sponsor Warrants”) in lieu of the Automatic Conversion, in accordance with the terms and conditions of this Side Letter (such automatic forfeiture, the “Financing Sponsor Warrant Forfeiture”). The Sponsor shall receive no consideration in respect of the Financing Forfeiture Sponsor Warrants. Alternatively (and for the avoidance of doubt, without limiting the Automatic Sponsor Share Forfeituretransactions contemplated by Section 1.1), the Sponsor may agree to transfer (in lieu of forfeiting) all of its right, titleBCA and interest in, toconcerning the business and under certain Sponsor Shares and/or Sponsor Warrants to Financing Investors in and as a part of the Financing, in which case (i) such transferred Sponsor Shares and/or transferred Sponsor Warrants shall not be forfeited, (ii) upon such transfer, such Sponsor Shares and Sponsor Warrants shall be deemed to have been elected to be converted in Class A Shares per SPAC’s certificate of incorporation and cease to be considered Sponsor Shares and Sponsor Warrants, and shall instead be treated for all purposes as Class A Shares and Public Warrantsfinancial condition of the SPAC and (iii) any shares or warrants so transferred shall reduce, on a share for share or warrant for warrant basis, the Financing Sponsor Share Cap or the Financing Sponsor Warrant Cap, respectively, as appropriate. The Sponsor shall receive no consideration in respect of such transferred Sponsor Shares or Sponsor Warrants. At the Closing in connection with the SPAC Continuance, (i) all of the Sponsor Shares, other than the Automatic Forfeiture Sponsor Shares and the Financing Forfeiture Sponsor Shares, shall be converted into New PubCo Common Shares and (ii) all of the Sponsor Warrants, other than the Financing Forfeiture Sponsor Warrants, shall continue to be obligations of New PubCo and exercisable for New PubCo Common Shares. Notwithstanding anything to the contrary in that certain Warrant Agreement, dated as of November 1, 2021, by and between the SPAC and Continental Stock Transfer & Trust Company, the Sponsor agrees that it will not elect its right to exercise the Private Placement Warrants on a “cashless basis” pursuant to Section 3.1 or Section 3.3.1(c) thereof. Notwithstanding anything to the contrary herein, this sentence and the immediately preceding sentence shall survive any termination of the Sponsor Lock-Up Period and the termination of this Agreement pursuant to Section 3.1(i) or 3.1(ii) (and the Company shall haveto make an informed decision regarding the rightmatters referred to enforceherein and has independently, based on such information as the immediately preceding sentence notwithstanding termination ofCore Company Securityholder has deemed appropriate, made the Core Company Securityholder’s own analysis and decision to enter into this Agreement pursuant to Section 3.1(i) or 3.1(ii)).Agreement. ARTICLE 4
OTHER COVENANTS Section 1.3 Adjustments4.01. Prohibition on Transfers; Other Actions. In the event that any stock dividend, stock split, reverse stock split, recapitalization, reclassification, combination or exchange of shares of the SPAC occurs with respect to any Sponsor Shares or Sponsor Warrants before the Closing, but excluding for the avoidance of doubt the Automatic Conversion and the Automatic Sponsor Share Forfeiture, the Financing Sponsor Share Forfeiture and Financing Sponsor Warrant Forfeiture, (each, a “Pre-Closing Split”), then the number of Sponsor Shares and Sponsor Warrants that are subject to forfeiture hereunder shall be adjusted as a result of such Pre-Closing Split to provide the same economic effect as contemplated by this Side Letter prior to such Pre-Closing Split. Section 1.4 Transfer Restrictions.
(a) The Sponsor hereby acknowledges andCore Company Securityholder agrees that, duringfrom the period betweendate hereof until the execution of this Side Letter and the ClosingEffective Time (and without limitation of the provisions set forth in Section 1.4(b)4.01(b)), the SponsorCore Company Securityholder shall not (i) Transfer or permit the Transfer of the Core Company Securityholder’s Covered Shares, and Sponsor Warrants shall remain subject to and bound by the provisions of, and may only be Transferred (as defined in the Lock-Up Agreement)Beneficial Ownership thereof or any other interest therein unless such Transfer is a Permitted Transfer effected in accordance with Section 5the terms of that certain letter agreement (the “Lock-Up Agreement”), dated as of November 1, 2021, by and among SPAC, the Sponsor and certain members of SPAC’s board of directors and/or management signatory thereto, a copy of which is attached hereto as Exhibit A. Sponsor also agrees not to (i)this Agreement; (ii) enter into any agreement, arrangement or understanding with any Person, or take any other action, that violates or would reasonably be expected to violate or conflict, or result in or give rise to a violation of, the Sponsor’sCore Company Securityholder’s representations, warranties, covenants and obligations under this Side Letter;Agreement; or (ii)(iii) take any action that would restrict or otherwise adversely affect the Sponsor’sCore Company Securityholder’s legal power, authority and TABLE OF CONTENTS
right to comply with and perform its covenants and obligations under this Side Letter.Agreement. Any Transfer in violation of this provision shall be void ab initio. Any transfereeUntil the earlier of Sponsorthe termination of the BCA in accordance with its terms and the Effective Time (and without limitation of the provisions set forth in Section 4.01(b)), the Core Company Securityholder (A) shall not request that the Company register the transfer (book-entry or otherwise) of any of the Core Company Securityholder’s Covered Shares or Sponsor Warrants (a “Sponsor Party”) must enter into a written agreement reasonably acceptableany certificate in respect thereof and (B) hereby consents to the entry of stop transfer instructions by the Company with respect to any transfer of the parties hereto agreeing to be bound byCore Company Securityholder’s Covered Shares, unless, in each case, such transfer is a Permitted Transfer effected in accordance with the terms of this Side Letter as if a party hereto and if such written agreement is not executed and deliveredAgreement. Notwithstanding anything in this Agreement to the contrary, nothing in this Agreement shall require any action, or restrict the Core Company Securityholder, with respect to any Covered Shares subject to any pledge or security interest in effect as of the date hereof as set forth on Schedule 1 to the extent such action or restriction is inconsistent with the terms of such pledge or security interest; provided that, unless and until there is a bona fide foreclosure with respect to such pledge or security interest, the SPAC,Core Company Securityholder agrees that there are no terms of any such pledge or security interest that will prevent or impair the Core Company Securityholder from complying with any obligation, agreement or covenant set forth herein. (b) The Core Company Securityholder shall not Transfer, or permit any Transfer, of the Core Company Securityholder’s Covered Shares (unless such Transfer shall not be permitted hereunder or underis a Permitted Transfer effected in accordance with the Lock-Up Agreement. (b) Untilterms of this Agreement) until the earlier of (i) 360three hundred and sixty (360) days after the Closingcompletion of the Business Combination and (ii) the date following the Closing on which New PubCo (or its successor) completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of New PubCo’s stockholders(or such
TABLE OF CONTENTS successor’s) shareholders having the right to exchange their equitysecurities for cash, securities or other property (the “Sponsor Lock-UpLock-up Period”), without the consent of New PubCo following the Closing, the Sponsor shall not be entitled to make any voluntary or involuntary, direct or indirect (whether through a change of control of the Transferor or any Person that controls the Transferor, the issuance or transfer of Equity Securities of the Transferor, by operation of law or otherwise), transfer, sale, pledge or hypothecation or other disposition (each, a “Transfer”), or to permit any Transfer, of any (1) New PubCo Common Shares received as a result of the Automatic Conversion or (2) New PubCo Common Shares received as a result of the exercise of the Sponsor Warrants (collectively, the “Restricted Sponsor Shares”); provided, that the Sponsor shall be permitted to distribute the Restricted Sponsor Shares to its members or otherwise to an Affiliate of Sponsor, so long as any member or Affiliate of Sponsor in receipt of Restricted Sponsor Shares prior to or simultaneously with the Transfer enters into a written agreement reasonably acceptable to the Company with the parties hereto agreeing to be bound by the terms of this Side Letter as if a party hereto; and provided, further, that if such written agreement is not executed and delivered to the Company and the SPAC, such distribution of the Restricted Sponsor Shares shall not be permitted hereunder or under the Lock-Up Agreement. Any reduction in the Lock-Up Period defined in the Company Support & Lock-Up Agreement shall be simultaneously and automatically applied to the Sponsor Lock-Up Period.. Notwithstanding the foregoing, if, subsequent to the Closing,Business Combination, the closing price of the New PubcoPubCo Common Shares equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period commencing at least 150 days after the Closing,Business Combination, the SponsorCore Company Securityholder’s Covered Shares shall be released from the transfer restrictions provided by this Section 1.4(b).Core Company Securityholder’s Covered Shares Lock-up. Section 1.5 Further Assurances. SPAC and Sponsor shall take, or cause to be taken, all actions and do, or cause to be done, all things reasonably necessary under applicable Laws to consummate4.02. Dividends, Distributions, Etc. In the transactions contemplated by this Side Letter onevent of any change in the terms and subject to the conditions set forth herein. Section 1.6 No Inconsistent Agreement. The Sponsor hereby represents and covenants that the Sponsor has not entered into, and shall not enter into, any agreement that does or would restrict, limit or interfere with the performanceshares of the Sponsor’s obligations under this Side Letter with respect to the Restricted Sponsor Shares.
Section 1.7 Tax Treatment. The parties to this Side Letter intend that, for U.S. federal and all applicable state and local income tax purposes, (a) the Automatic Conversion qualifies as a “reorganization” within the meaning of Section 368(a)(1)(E) of the Code, and (b) this Side Letter be, and hereby adopt this Side Letter as, a “plan of reorganization” within the meaning of Section 368 of the Code. The parties to this Side Letter shall not take any position inconsistent with the intent set forth in this Section 1.7 except to the extent otherwise required by a “determination” as defined in Section 1313 of the Code. References in this Section 1.7 to the Code shall include references to any similar or analogous provisions of state or local law.
Section 1.9 Sponsor Support. At any meeting of the stockholders of SPAC, however called, or at any adjournment thereof, and in any action by written consent of the stockholders of SPAC distributed by the board of directors of SPAC, or otherwise undertaken as contemplated by the Business Combination Agreement or the transactions contemplated thereby, or in any other circumstance in which the vote, consent or other approval of the stockholders of SPAC is sought, Sponsor hereby unconditionally and irrevocably agrees that it shall (i) appear at each such meeting or otherwise cause all of its Sponsor Shares to be counted as present thereat for purposes of calculating a quorum and (ii) vote (or cause to be voted), or execute and deliver a written consent (or cause a written consent to be executed and delivered) covering, all of its Sponsor Shares: (a) in favor of the SPAC Shareholder Approval Matters and any other matters necessary or reasonably requested by the Company or the SPAC, as the case may be, by reason of any reclassification, recapitalization, reorganization, share split (including a reverse share split) or subdivision or combination, exchange or readjustment of shares, or any dividend or distribution, merger or other similar change in capitalization, the terms “Existing Shares” and “Covered Shares” shall be deemed to refer to and include such shares as well as all such dividends and distributions and any securities into which or for which any or all of such shares may be changed or exchanged or which are received in such transaction.
Section 4.03. Notice of Acquisitions. The Core Company Securityholder agrees to notify the SPAC and the Company as promptly as reasonably practicable of the number of any additional shares of the Company or other securities convertible into or exercisable or exchangeable for shares of the Company of which the Core Company Securityholder acquires Beneficial Ownership on or after the date hereof and prior to the Effective Time. ARTICLE 5
MISCELLANEOUS Section 5.01. Termination. This Agreement shall remain in effect until the Expiration Time, at which time this Agreement shall terminate in its entirety and be of no further force or effect; provided, however, that any proxy granted hereunder shall be automatically and immediately terminated and released at the Effective Time. Neither the provisions of this Section 5.01 nor the termination of this Agreement shall (a) relieve any party hereto from any liability of such party to any other party incurred prior to such termination or expiration, (b) relieve any party hereto from any liability to any other party arising out of or in connection therewith;with any breach of this Agreement prior to such termination or expiration or fraud (c) terminate the obligations under Section 2.01(b). Section 5.02. No Agreement as Director or Officer. Notwithstanding any provision in this Agreement to the contrary, nothing in this Agreement shall (a) limit, restrict or otherwise affect the Core Company Securityholder or any Affiliate or Representative of the Core Company Securityholder in his or her capacity as a director or officer of the Company from acting (or not acting) in such capacity or voting in the capacity as a director in such person’s sole discretion on any matter, including in respect of the BCA, and no such actions or votes shall be deemed a breach of this Agreement, or (b) be construed to prohibit, limit or restrict the Core Company Securityholder or any Affiliates or Representatives of the Core Company Securityholder from exercising fiduciary duties as a director or officer of the Company solely in favortheir capacity as such, and not acting in their capacity as a securityholder. Without limiting the foregoing, it is the intention of the parties that this Agreement shall apply to the Core Company Securityholder solely in the Core Company Securityholder’s capacity as a shareholder of the Company. Section 5.03. No Ownership Interest. The Core Company Securityholder has agreed to enter into this Agreement and act in the manner specified in this Agreement for consideration. Except as expressly set forth in this Agreement, all rights and all ownership and economic benefits of and relating to the Core Company Securityholder’s Covered Shares shall remain vested in and belong to the Core Company Securityholder, and except as expressly set forth in this Agreement, nothing herein shall, or shall be construed to, grant the Company or the SPAC any power, sole or shared, to direct or control the voting or disposition of any proposal to adjourn or postpone any meeting of the shareholders of the SPAC at which any of the foregoing matters are submitted for consideration and vote of the shareholders of the SPAC to a later date if there are not a quorum or sufficient votes for approval of such matters on the date on which the meeting is heldCovered Shares. TABLE OF CONTENTS Section 5.04. Notices. All notices, requests, claims, demands and other communications hereunder shall be given (and shall be deemed to vote upon anyhave been duly received if given) by hand delivery in writing, by facsimile transmission with confirmation of receipt, by email transmission with confirmation of receipt or by recognized overnight or international courier service, as follows: | | | if to Company: | | | | | | | | DevvStream Holdings Inc. | | | | 2133-1177 West Hastings Street | | | | Vancouver, BC V6E 2K3 | | | | Attention: Sunny Trinh | | | | Email: sunny@devvstream.com | | | | | | | | with a copy to (which shall not constitute notice): | | | | | | | | Morrison & Foerster LLP | | | | 12531 High Bluff Drive, Suite 100 | | | | San Diego, CA 92130 | | | | Attention: Shai Kalansky; Omar Pringle; Justin Salon | | | | Email: skalansky@mofo.com; opringle@mofo.com; justinsalon@mofo.com | | | | | | | | if to the SPAC: | | | | | | | | Focus Impact Acquisition Corp. | | | | 1345 Avenue of the Americas | | | | New York, NY 10105 | | | | Attn: Carl Stanton | | | | E-mail: cstanton@focus-impact.com | | | | | | | | with a copy to (which shall not constitute notice): | | | | | | | | Kirkland & Ellis LLP | | | | 601 Lexington Avenue | | | | New York, NY 02210022 | | | | Attn: Lauren M. Colasacco, P.C., Peter Seligson, P.C. | | | | Email: lauren.colasacco@kirkland.com; peter.seligson@kirkland.com |
and if to the foregoing matters; (c) against any proposal relatingCore Company Securityholder, to an alternative Business Combination (as definedthe address set forth on Schedule 1, or to such other address as the Person to whom notice is given may have previously furnished to the others in SPAC’s certificatewriting in the manner set forth above. Section 5.05. Interpretation. When reference is made in this Agreement to a Section, such reference shall be to a Section of incorporation asthis Agreement unless otherwise indicated. Whenever the words “include,” “includes” or “including” are used in effect as of the date hereof); (d) against any proposal, action or agreement that would (1) compete with the transaction contemplatedthis Agreement, they shall be deemed to be followed by the Business Combination Agreement, (2) result in a breachwords “without limitation.” The words “hereof,” “herein,” “hereby” and “hereunder” and words of any covenant, representation or warranty or any other obligation or agreement of the SPAC contained in the Business Combination Agreement, or of the Sponsor containedsimilar import when used in this Side Letter, (3) reasonably be expectedAgreement shall refer to impede, frustrate, prevent or nullifythis Agreement as a whole and not to any particular provision of this Side Letter,Agreement. The word “or” shall not be exclusive. Whenever used in this Agreement, any noun or pronoun shall be deemed to include the Business Combinationplural as well as the singular and to cover all genders. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the Amalgamation and/party drafting or the related plan of arrangement or this Side Letter or the performancecausing any instrument to be drafted. Section 5.06. Counterparts. This Agreement may be executed in counterparts (which may be delivered by the SPAC of its obligations under the Business Combination Agreement or by the Sponsor of its obligations under this Side Letter or (4) change in any manner the dividend policy or capitalization of, including the voting rights of, any class of capital stockfacsimile or other securitieselectronic transmission), each of SPAC (other than, in the casewhich shall be deemed to be an original, but all of this clause (4), pursuant to the Business Combination Agreement or the Ancillary Documentswhich, taken together, shall constitute one and the transactions contemplated thereby). The obligations of the Sponsor specified in this Section 1.9 shall apply whether or not (i) the Business Combination, the Business Combination Agreement, the related plan of arrangement or any action described above is recommended by the Board of Directors of the SPAC or (ii) the Board of Directors of the SPAC has previously recommended the Business Combination, the Business Combination Agreement, the related plan of arrangement or any action described above and subsequently withdrawn or otherwise changed such recommendation. Sponsor Party agrees that it shall not commit, agree, or publicly propose any intention to take any action inconsistent with the foregoing. Sponsor hereby irrevocably waives, and agrees not to exercise, assert or perfect (and agrees to cause not to be exercised, asserted or perfected), any dissenters’ or appraisal rights under Section 262 of the Delaware General Corporation Law and any other similar statute in connection with the Amalgamation or the Business Combination Agreement. Sponsor hereby agrees to take all actions necessary to opt out of, any class action with respect to, any claim, derivative or otherwise, against the SPAC or any of its Affiliates relating to the negotiation, execution or delivery of this Side Letter, the Business Combination Agreement or the consummation of the Business Combination and/or the related plan of arrangement, including any claim (1) challenging the validity of, or seeking to enjoin the operation of, any provision of this Side Letter or (2) alleging a breach of any fiduciary duty of the Board of Directors of the SPAC in connection with this Side Letter, the Business Combination Agreement or the Business Combination and/or the related plan of arrangement. Section 1.10 Stock Transactions. During the period between the execution of this Side Letter and the Closing, the Sponsor acknowledges and agrees that if it acquires any shares or securities convertible into shares of the SPAC (including, without limitation, any warrants issued to Sponsor in connection with the conversion of that certain unsecured promissory note, dated as of May 9, 2023, issued by the SPAC to the Sponsor), the Sponsor agrees that he, she or it will (a) make such acquisition in material compliance with applicable Laws regarding the sale and purchase of securities and material non-public information and (b) not elect to make a Redemption with respect to any such purchased shares or shares issuable upon conversion of securities convertible into shares. All such additional shares or securities acquired shall be subject to the terms of Section 1.9.
Section 1.11 Waiver of Adjustment Provisions. Notwithstanding anything to the contrary in any other document, agreement or contract to which Sponsor is bound, Sponsor (for itself, himself or herself and for its, his or her successors, heirs, assigns and permitted transferees) hereby (but subject to the consummation of the Amalgamation) irrevocably and unconditionally waives and agrees not to exercise or assert, any rights to adjustment or other anti-dilution protections with respect to the rate at which shares of SPAC Class B Shares convert into other shares of SPAC or New PubCo Common Shares in connection with the Automatic Conversion and, in furtherance of the foregoing, Sponsor hereby irrevocably and unconditionally agrees and acknowledges that (a) each SPAC Class B Share (other than those subject to theAutomatic Sponsor Share Forfeiture or the Financing Sponsor Share Forfeiture) shall convert only into New PubCo Common Shares (and not any other SPAC shares prior to the Automatic Conversion) on a one-for-one basis automatically at the Effective Time in connection with the Automatic Conversion and (b) that each Sponsor Warrant shall only convert into the right to exercise such warrants for New PubCo Common Shares, such waiver, agreement and acknowledgement constituting sufficient and necessary waiver under the terms of SPAC’s certificate of incorporation as currently in effect for such purpose, in each case subject to equitable adjustments for any Pre-Closing Splits to provide the same economic effect as contemplated by this Side Letter prior to such Pre-Closing Split.agreement.
TABLE OF CONTENTS Section 5.07. Entire Agreement. This Agreement and, to the extent referenced herein, the BCA, together with the several agreements and other documents and instruments referred to herein or therein or attached hereto or thereto, constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, both oral and written, among the parties with respect to the subject matter hereof and thereof. Except for the representations and warranties expressly contained in Article 3, the Core Company Securityholder makes no express or implied representation or warranty with respect to the Core Company Securityholder or the Covered Shares, or otherwise. Section 5.08. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. (a) This Agreement shall be governed by, construed and enforced in accordance with the Laws of the Province of British Columbia and the federal Laws applicable therein, without regard to any choice of law or conflict of laws principles thereof that would cause the application of the Law of any jurisdiction other than the Province of British Columbia. Each Party irrevocably attorns and submits to the non-exclusive jurisdiction of the British Columbia courts situated in the City of Vancouver and waives objection to the venue of any proceeding in such court or that such court provides an inconvenient forum. (b) EACH PARTY 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 ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO (I) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, SEEK TO ENFORCE THAT FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. Section 5.09. Amendment; Waiver. Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Agreement or, in the case of a waiver, by each party against whom the waiver is to be effective, but such waiver shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Section 5.10. Remedies. The parties hereto agree that irreparable damage would occur and that the parties would not have any adequate remedy at law in the event that any provision of this Agreement were not performed in accordance with their specific terms hereof or were otherwise breached and that it is accordingly agreed that, prior to termination of this Agreement, the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to specific performance of the terms hereof, in addition to any other remedy at law or equity. Section 5.11. Severability. If any term or other provision of this Agreement is held to be invalid, illegal or incapable of being enforced by any rule of law or public policy in any jurisdiction, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect and shall not be affected thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced in any jurisdiction, this Agreement will be reformed, construed and enforced in such jurisdiction so as to effect the original intent of the parties as closely as possible to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible. Section 5.12. Successors and Assigns; Third Party Beneficiaries. Other than by the Core Company Securityholder to a transferee pursuant to a Permitted Transfer or any assignment, delegation or other transfer effected by the Amalgamation or the SPAC Continuance, no party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of each other party hereto. No provision of this Agreement is intended to confer any rights, benefits, remedies, obligations or liabilities hereunder upon any Person other than the parties hereto and their respective heirs, executors, personal legal representatives, successors and permitted assigns. For the avoidance of doubt and without limiting the SPAC’s rights hereunder, the SPAC shall be a beneficiary of, and entitled to enforce, the rights of the Company under Section 2.03 (Proxy) to the extent not being enforced by the Company. Section 5.13. Expenses. All costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense. TABLE OF CONTENTS Section 5.14. Non-Recourse. Notwithstanding anything to the contrary herein or in any other documents delivered pursuant hereto, (a) this Agreement may be enforced only against, and any claim based upon, arising out of or related to a breach of this Agreement by the Core Company Securityholder may be made only against, the Core Company Securityholder (or in each case its Permitted Transferees), and (b) none of the Core Company Securityholder Related Parties shall have any liability for any liabilities of the parties hereto for any such claims (whether in tort, contract or otherwise) for breach of this Agreement or in respect of any oral representations made or alleged to be made in connection herewith (other than any such Permitted Transferee). Section 5.15. Acknowledgment of Counsel. Each party to this Agreement other than the Company hereby (a) acknowledges that (i) Morrison & Foerster LLP and McMillan LLP represent and serve as counsel for only the Company (and no other party to this Agreement) with respect to this Agreement, the BCA and the transactions contemplated hereby or thereby and (ii) such party has either sought the advice of their own counsel or has had the opportunity to seek their own counsel and has chosen not to do so, and (b) gives their informed consent to Morrison & Foerster LLP’s and McMillan LLP’s representation of the Company in connection with this Agreement, the BCA and the transactions contemplated hereby or thereby. Section 5.16. Trust Account Waiver. Section 10.1 of the BCA is incorporated herein by reference mutatis mutandis. [Remainder of this page intentionally left blank] TABLE OF CONTENTS IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed (where applicable, by their respective officers or other authorized Person thereunto duly authorized) as of the date first written above. | | | DEVVSTREAM HOLDINGS INC. | | | | | | | | | | | | | | By: | | | | | | | | | | Name: | | | Sunny Trinh | | | | | | | Title: | | | Chief Executive Officer | | | | | | | | | | | | | | FOCUS IMPACT ACQUISITION CORP. | | | | | | | | | | | | | | By: | | | | | | | | | | Name: | | | Carl Stanton | | | | | | | Title: | | | Chief Executive Officer |
[Signature Page to Support & Lock-up Agreement]
TABLE OF CONTENTS IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed (where applicable, by their respective officers or other authorized Person thereunto duly authorized) as of the date first written above. | | | CORE COMPANY SECURITYHOLDER: | | | | | [] | | | | | | | | | | | | | | | | By: | | | | | | | | | | Name: | | | | | | | | | | | Title: | | | | |
[Signature Page to Support & Lock-up Agreement]
TABLE OF CONTENTS Schedule 1 | [ ] | | | (i) [ ] multiple voting shares of the Company,
(ii) [ ] subordinate voting shares of the Company. | | | [ ] | |
TABLE OF CONTENTS Exhibit A
Consent of Spouse I, , spouse of [Name of Core Company Securityholder], have read and approved that certain Support and Lock-up Agreement (the “Agreement”), dated as of [ ], 2023, by and among DevvStream Holdings Inc., Focus Impact Acquisition Corp. and the Core Company Securityholder. In consideration of the right of my spouse to participate in the transactions described in the Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to the exercise of any rights under the Agreement insofar as I may have any rights under the community property laws of the [jurisdiction] or similar laws relating to marital property in effect in the [state / country] of our residence as of the date of the signing of the foregoing Agreement. Dated: , 2023 | | | By: | | | | | | | Name: | | | |
TABLE OF CONTENTS Arrangement Resolution DevvStream Corp.
2024 Equity Incentive Plan
Adopted by the Board of Directors: [ ], 2024
Approved by the Stockholders: [ ], 2024 (a) Plan Purpose. The purpose of the Plan is to further align the interests of eligible participants with those of the Company’s stockholders by providing incentive compensation opportunities tied to the performance of the Company and its Common Stock. The Plan is intended to advance the interests of the Company and increase stockholder value by attracting, retaining and motivating key personnel upon whose judgment, initiative and effort the successful conduct of the Company’s business is largely dependent. (b) Available Awards. The Plan provides for the grant of the following Awards: (i) Incentive Stock Options; (ii) Nonstatutory Stock Options; (iii) SARs; (iv) Restricted Stock Awards; (v) RSU Awards; (vi) Performance Awards; and (vii) Other Awards. (c) Adoption Date; Effective Date. The Plan will come into existence on the Adoption Date, but no Award may be granted prior to the Effective Date. 2.
| Shares Subject to the Plan. |
(a) Share Reserve. Subject to adjustment in accordance with Section 2(c) and any adjustments as necessary to implement any Capitalization Adjustments, the aggregate number of shares of Common Stock that may be issued pursuant to Awards will be [•] shares; provided, that, commencing the first business day of each fiscal year of the Company, beginning with the Company’s fiscal year following the fiscal year of the Effective Date, the number of Shares available for issuance under the Plan shall be increased by a number equal to the lesser of (i) 5% of the number of Shares outstanding on the last day of the immediately preceding fiscal year of the Company, calculated on a fully diluted basis, or (ii) such lesser number of Shares as determined by the Board. (b) Aggregate Incentive Stock Option Limit. Notwithstanding anything to the contrary in Section 2(a) and subject to any adjustments as necessary to implement any Capitalization Adjustments, the aggregate maximum number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options is [•] shares. (c) Share Reserve Operation. (i) Limit Applies to Common Stock Issued Pursuant to Awards. For clarity, the Share Reserve is a limit on the number of shares of Common Stock that may be issued pursuant to Awards and does not limit the granting of Awards, except that the Company will keep available at all times the number of shares of Common Stock reasonably required to satisfy its obligations to issue shares pursuant to such Awards. Shares may be issued in connection with a merger or acquisition as permitted by, as applicable, Nasdaq Listing Rule 5635(c), NYSE Listed Company Manual Section 303A.08, NYSE American Company Guide Section 711 or other applicable rule, and such issuance will not reduce the number of shares available for issuance under the Plan. (ii) Actions that Do Not Constitute Issuance of Common Stock and Do Not Reduce Share Reserve. The following actions do not result in an issuance of shares under the Plan and accordingly do not reduce the number of shares subject to the Share Reserve and available for issuance under the Plan: (1) the expiration or termination of any portion of an Award without the shares covered by such portion of the Award having been issued; (2) the settlement of any portion of an Award in cash (i.e., the Participant receives cash rather than Common Stock); (3) the withholding of shares that would otherwise be issued by the Company to satisfy the exercise, strike or purchase price of an Award; or (4) the withholding of shares that would otherwise be issued by the Company to satisfy a tax withholding obligation in connection with an Award. TABLE OF CONTENTS (iii) Reversion of Previously Issued Shares of Common Stock to Share Reserve. The following shares of Common Stock previously issued pursuant to an Award and accordingly initially deducted from the Share Reserve will be added back to the Share Reserve and again become available for issuance under the Plan: (1) any shares that are forfeited back to or repurchased by the Company because of a failure to meet a contingency or condition required for the vesting of such shares; (2) any shares that are reacquired by the Company to satisfy the exercise, strike or purchase price of an Award; and (3) any shares that are reacquired by the Company to satisfy a tax withholding obligation in connection with an Award. 3.
| Eligibility and Limitations. |
(a) Eligible Award Recipients. Subject to the terms of the Plan, Employees, Directors and Consultants are eligible to receive Awards. (b) Specific Award Limitations. (i) Limitations on Incentive Stock Option Recipients. Incentive Stock Options may be granted only to Employees of the Company or a “parent corporation” or “subsidiary corporation” thereof (as such terms are defined in Sections 424(e) and (f) of the Code). (ii) Incentive Stock Option $100,000 Limitation. To the extent that the aggregate Fair Market Value (determined at the time of grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of the Company and any Affiliates) exceeds $100,000 (or such other limit established in the Code) or otherwise does not comply with the rules governing Incentive Stock Options, the Options or portions thereof that exceed such limit (according to the order in which they were granted) or otherwise do not comply with such rules will be treated as Nonstatutory Stock Options, notwithstanding any contrary provision of the applicable Option Agreement(s). (iii) Limitations on Incentive Stock Options Granted to Ten Percent Stockholders. A Ten Percent Stockholder may not be granted an Incentive Stock Option unless (1) the exercise price of such Option is at least 110% of the Fair Market Value on the date of grant of such Option and (2) the Option is not exercisable after the expiration of five years from the date of grant of such Option. (iv) Limitations on Nonstatutory Stock Options and SARs. Nonstatutory Stock Options and SARs may not be granted to Employees, Directors and Consultants unless the stock underlying such Awards is treated as “service recipient stock” under Section 409A or unless such Awards otherwise comply with the requirements of Section 409A. (c) Aggregate Incentive Stock Option Limit. The aggregate maximum number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options is the number of shares specified in Section 2(b). 4.
| Options and Stock Appreciation Rights. |
Each Option and SAR will have such terms and conditions as determined by the Board. Each Option will be designated in writing as an Incentive Stock Option or Nonstatutory Stock Option at the time of grant; provided, however, that if an Option is not so designated or if an Option designated as an Incentive Stock Option fails to qualify as an Incentive Stock Option, then such Option will be a Nonstatutory Stock Option, and the shares purchased upon exercise of each type of Option will be separately accounted for. Each SAR will be denominated in shares of Common Stock equivalents. The terms and conditions of separate Options and SARs need not be identical; provided, however, that each Option Agreement and SAR Agreement will conform (through incorporation of provisions hereof by reference in the Award Agreement or otherwise) to the substance of each of the following provisions: (a) Term. Subject to Section 3(b) regarding Ten Percent Stockholders, no Option or SAR will be exercisable after the expiration of ten years from the date of grant of such Award or such shorter period specified in the Award Agreement. (b) Exercise or Strike Price. Subject to Section 3(b) regarding Ten Percent Stockholders, the exercise or strike price of each Option or SAR will not be less than 100% of the Fair Market Value on the TABLE OF CONTENTS date of grant of such Award. Notwithstanding the foregoing, an Option or SAR may be granted with an exercise or strike price lower than 100% of the Fair Market Value on the date of grant of such Award if such Award is granted pursuant to an assumption of or substitution for another option or stock appreciation right pursuant to a Corporate Transaction and in a manner consistent with the provisions of Sections 409A and, if applicable, 424(a) of the Code. (c) Exercise Procedure and Payment of Exercise Price for Options. In order to exercise an Option, the Participant must provide notice of exercise to the Plan Administrator in accordance with the procedures specified in the Option Agreement or otherwise provided by the Company. The Board has the authority to grant Options that do not permit all of the following methods of payment (or otherwise restrict the ability to use certain methods) and to grant Options that require the consent of the Company to utilize a particular method of payment. The exercise price of an Option may be paid, to the extent permitted by Applicable Law and as determined by the Board, by one or more of the following methods of payment to the extent set forth in the Option Agreement: (i) by cash or check, bank draft or money order payable to the Company; (ii) pursuant to a “cashless exercise” program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of the Common Stock subject to the Option, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the exercise price to the Company from the sales proceeds; (iii) by delivery to the Company (either by actual delivery or attestation) of shares of Common Stock that are already owned by the Participant free and clear of any liens, claims, encumbrances or security interests, with a Fair Market Value on the date of exercise that does not exceed the exercise price, provided that (1) at the time of exercise the Common Stock is publicly traded, (2) any remaining balance of the exercise price not satisfied by such delivery is paid by the Participant in cash or other permitted form of payment, (3) such delivery would not violate any Applicable Law or agreement restricting the redemption of the Common Stock, (4) any certificated shares are endorsed or accompanied by an executed assignment separate from certificate, and (5) such shares have been held by the Participant for any minimum period necessary to avoid adverse accounting treatment as a result of such delivery; (iv) if the Option is a Nonstatutory Stock Option, by a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Common Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value on the date of exercise that does not exceed the exercise price, provided that (1) such shares used to pay the exercise price will not be exercisable thereafter and (2) any remaining balance of the exercise price not satisfied by such net exercise is paid by the Participant in cash or other permitted form of payment; or (v) in any other form of consideration that may be acceptable to the Board and permissible under Applicable Law. (d) Exercise Procedure and Payment of Appreciation Distribution for SARs. In order to exercise any SAR, the Participant must provide notice of exercise to the Plan Administrator in accordance with the SAR Agreement. The appreciation distribution payable to a Participant upon the exercise of a SAR will not be greater than an amount equal to the excess of (i) the aggregate Fair Market Value on the date of exercise of a number of shares of Common Stock equal to the number of Common Stock equivalents that are vested and being exercised under such SAR, over (ii) the strike price of such SAR. Such appreciation distribution may be paid to the Participant in the form of Common Stock or cash (or any combination of Common Stock and cash) or in any other form of payment, as determined by the Board and specified in the SAR Agreement. (e) Transferability. Options and SARs may not be transferred to third party financial institutions for value. The Board may impose such additional limitations on the transferability of an Option or SAR as it determines. In the absence of any such determination by the Board, the following restrictions on the TABLE OF CONTENTS transferability of Options and SARs will apply, provided that except as explicitly provided herein, neither an Option nor a SAR may be transferred for consideration and provided, further, that if an Option is an Incentive Stock Option, such Option may be deemed to be a Nonstatutory Stock Option as a result of such transfer: (i) Restrictions on Transfer. An Option or SAR will not be transferable, except by will or by the laws of descent and distribution, and will be exercisable during the lifetime of the Participant only by the Participant; provided, however, that the Board may permit transfer of an Option or SAR in a manner that is not prohibited by applicable tax and securities laws upon the Participant’s request, including to a trust if the Participant is considered to be the sole beneficial owner of such trust (as determined under Section 671 of the Code and applicable state law) while such Option or SAR is held in such trust, provided that the Participant and the trustee enter into a transfer and other agreements required by the Company. (ii) Domestic Relations Orders. Notwithstanding the foregoing, subject to the execution of transfer documentation in a format acceptable to the Company and subject to the approval of the Board or a duly authorized Officer, an Option or SAR may be transferred pursuant to a domestic relations order. (f) Vesting. The Board may impose such restrictions on or conditions to the vesting and/or exercisability of an Option or SAR as determined by the Board. Except as otherwise provided in the Award Agreement or other written agreement between a Participant and the Company or an Affiliate, vesting of Options and SARs will cease upon termination of the Participant’s Continuous Service. (g) Termination of Continuous Service for Cause. Except as explicitly otherwise provided in the Award Agreement or other written agreement between a Participant and the Company or an Affiliate, if a Participant’s Continuous Service is terminated for Cause, the Participant’s Options and SARs will terminate and be forfeited immediately upon such termination of Continuous Service, and the Participant will be prohibited from exercising any portion (including any vested portion) of such Awards on and after the date of such termination of Continuous Service and the Participant will have no further right, title or interest in such forfeited Award, the shares of Common Stock subject to the forfeited Award, or any consideration in respect of the forfeited Award. (h) Post-Termination Exercise Period Following Termination of Continuous Service for Reasons Other than Cause. Subject to Section 4(i), if a Participant’s Continuous Service terminates for any reason other than for Cause, the Participant may exercise his or her Option or SAR to the extent vested, but only within the following period of time or, if applicable, such other period of time provided in the Award Agreement or other written agreement between a Participant and the Company or an Affiliate; provided, however, that in no event may such Award be exercised after the expiration of its maximum term (as set forth in Section 4(a)): (i) three months following the date of such termination if such termination is a termination without Cause (other than any termination due to the Participant’s Disability or death); (ii) 12 months following the date of such termination if such termination is due to the Participant’s Disability; (iii) 12 months following the date of such termination if such termination is due to the Participant’s death; or (iv) 12 months following the date of the Participant’s death if such death occurs following the date of such termination but during the period such Award is otherwise exercisable (as provided in (i) or (ii) above). TABLE OF CONTENTS Following the date of such termination, to the extent the Participant does not exercise such Award within the applicable Post-Termination Exercise Period (or, if earlier, prior to the expiration of the maximum term of such Award), such unexercised portion of the Award will terminate, and the Participant will have no further right, title or interest in the terminated Award, the shares of Common Stock subject to the terminated Award, or any consideration in respect of the terminated Award. (i) Restrictions on Exercise; Extension of Exercisability. A Participant may not exercise an Option or SAR at any time that the issuance of shares of Common Stock upon such exercise would violate Applicable Law. Except as otherwise provided in the Award Agreement or other written agreement between a Participant and the Company or an Affiliate, if a Participant’s Continuous Service terminates for any reason other than for Cause and, at any time during the last thirty days of the applicable Post-Termination Exercise Period: (i) the exercise of the Participant’s Option or SAR would be prohibited solely because the issuance of shares of Common Stock upon such exercise would violate Applicable Law, or (ii) the immediate sale of any shares of Common Stock issued upon such exercise would violate the Company’s Trading Policy, then the applicable Post-Termination Exercise Period will be extended to the last day of the calendar month that commences following the date the Award would otherwise expire, with an additional extension of the exercise period to the last day of the next calendar month to apply if any of the foregoing restrictions apply at any time during such extended exercise period, generally without limitation as to the maximum permitted number of extensions); provided, however, that in no event may such Award be exercised after the expiration of its maximum term (as set forth in Section 4(a)). (j) Non-Exempt Employees. No Option or SAR, whether or not vested, granted to an Employee who is a non-exempt employee for purposes of the Fair Labor Standards Act of 1938, as amended, will be first exercisable for any shares of Common Stock until at least six months following the date of grant of such Award. Notwithstanding the foregoing, in accordance with the provisions of the Worker Economic Opportunity Act, any vested portion of such Award may be exercised earlier than six months following the date of grant of such Award in the event of (i) such Participant’s death or Disability, (ii) a Corporate Transaction in which such Award is not assumed, continued or substituted, or (iii) such Participant’s retirement (as such term may be defined in the Award Agreement or another applicable agreement or, in the absence of any such definition, in accordance with the Company’s then current employment policies and guidelines). This Section 4(j) is intended to operate so that any income derived by a non-exempt employee in connection with the exercise or vesting of an Option or SAR will be exempt from his or her regular rate of pay. (k) Whole Shares. Options and SARs may be exercised only with respect to whole shares of Common Stock or their equivalents. 5.
| Awards Other Than Options and Stock Appreciation Rights. |
(a) Restricted Stock Awards and RSU Awards. Each Restricted Stock Award and RSU Award will have such terms and conditions as determined by the Board; provided, however, that each Restricted Stock Award Agreement and RSU Award Agreement will conform (through incorporation of the provisions hereof by reference in the Award Agreement or otherwise) to the substance of each of the following provisions: (i) Form of Award. (1) Restricted Stock Awards. To the extent consistent with the Company’s Bylaws, at the Board’s election, shares of Common Stock subject to a Restricted Stock Award may be (A) held in book entry form subject to the Company’s instructions until such shares become vested or any other restrictions lapse, or (B) evidenced by a certificate, which certificate will be held in such form and manner as determined by the Board. Unless otherwise determined by the Board, a Participant will have voting and other rights as a stockholder of the Company with respect to any shares subject to a Restricted Stock Award. (2) RSU Awards. An RSU Award represents a Participant’s right to be issued on a future date the number of shares of Common Stock that is equal to the number of restricted stock units subject to the RSU Award. As a holder of an RSU Award, a Participant is an unsecured creditor of the Company with respect to the Company's unfunded obligation, if any, to issue shares of Common Stock in settlement of such Award and nothing contained in the Plan or any RSU TABLE OF CONTENTS Agreement, and no action taken pursuant to its provisions, will create or be construed to create a trust of any kind or a fiduciary relationship between a Participant and the Company or an Affiliate or any other person. A Participant will not have voting or any other rights as a stockholder of the Company with respect to any RSU Award (unless and until shares are actually issued in settlement of a vested RSU Award). (ii) Consideration. (1) Restricted Stock Awards. A Restricted Stock Award may be granted in consideration for (A) cash or check, bank draft or money order payable to the Company, (B) services to the Company or an Affiliate, or (C) any other form of consideration as the Board may determine and permissible under Applicable Law. (2) RSU Awards. Unless otherwise determined by the Board at the time of grant, an RSU Award will be granted in consideration for the Participant’s services to the Company or an Affiliate, such that the Participant will not be required to make any payment to the Company (other than such services) with respect to the grant or vesting of the RSU Award, or the issuance of any shares of Common Stock pursuant to the RSU Award. If, at the time of grant, the Board determines that any consideration must be paid by the Participant (in a form other than the Participant’s services to the Company or an Affiliate) upon the issuance of any shares of Common Stock in settlement of the RSU Award, such consideration may be paid in any form of consideration as the Board may determine and permissible under Applicable Law. (iii) Vesting. The Board may impose such restrictions on or conditions to the vesting of a Restricted Stock Award or RSU Award as determined by the Board. Except as otherwise provided in the Award Agreement or other written agreement between a Participant and the Company or an Affiliate, vesting of Restricted Stock Awards and RSU Awards will cease upon termination of the Participant’s Continuous Service. (iv) Termination of Continuous Service. Except as otherwise provided in the Award Agreement or other written agreement between a Participant and the Company or an Affiliate, if a Participant’s Continuous Service terminates for any reason, (1) the Company may receive through a forfeiture condition or a repurchase right any or all of the shares of Common Stock held by the Participant under his or her Restricted Stock Award that have not vested as of the date of such termination as set forth in the Restricted Stock Award Agreement and the Participant will have no further right, title or interest in the Restricted Stock Award, the shares of Common Stock subject to the Restricted Stock Award, or any consideration in respect of the Restricted Stock Award and (2) any portion of his or her RSU Award that has not vested will be forfeited upon such termination and the Participant will have no further right, title or interest in the RSU Award, the shares of Common Stock issuable pursuant to the RSU Award, or any consideration in respect of the RSU Award. (v) Dividends and Dividend Equivalents. Dividends or dividend equivalents may be paid or credited, as applicable, with respect to any shares of Common Stock subject to a Restricted Stock Award or RSU Award, as determined by the Board and specified in the Award Agreement. (vi) Settlement of RSU Awards. An RSU Award may be settled by the issuance of shares of Common Stock or cash (or any combination thereof) or in any other form of payment, as determined by the Board and specified in the RSU Award Agreement. At the time of grant, the Board may determine to impose such restrictions or conditions that delay such delivery to a date following the vesting of the RSU Award. (b) Performance Awards. With respect to any Performance Award, the length of any Performance Period, the Performance Goals to be achieved during the Performance Period, the other terms and conditions of such Award, and the measure of whether and to what degree such Performance Goals have been attained will be determined by the Board. (c) Other Awards. Other forms of Awards valued in whole or in part by reference to, or otherwise based on, Common Stock, including the appreciation in value thereof, may be granted either alone or in addition to Awards provided for under Section 4 and the preceding provisions of this Section 5. Subject to TABLE OF CONTENTS the provisions of the Plan, the Board will have sole and complete discretion to determine the persons to whom and the time or times at which such Other Awards will be granted, the number of shares of Common Stock (or the cash equivalent thereof) to be granted pursuant to such Other Awards and all other terms and conditions of such Other Awards. 6.
| Adjustments upon Changes in Common Stock; Other Corporate Events. |
(a) Capitalization Adjustments. In the event of a Capitalization Adjustment, the Board shall appropriately and proportionately adjust: (i) the class(es) and maximum number of shares of Common Stock subject to the Plan and the maximum number of shares by which the Share Reserve may annually increase pursuant to Section 2(a); (ii) the class(es) and maximum number of shares that may be issued pursuant to the exercise of Incentive Stock Options pursuant to Section 2(b); and (iii) the class(es) and number of securities and exercise price, strike price or purchase price of Common Stock subject to outstanding Awards. The Board shall make such adjustments, and its determination shall be final, binding and conclusive. Notwithstanding the foregoing, no fractional shares or rights for fractional shares of Common Stock shall be created in order to implement any Capitalization Adjustment. The Board shall determine an appropriate equivalent benefit, if any, for any fractional shares or rights to fractional shares that might be created by the adjustments referred to in the preceding provisions of this Section. (b) Dissolution or Liquidation. Except as otherwise provided in the Award Agreement, in the event of a dissolution or liquidation of the Company, all outstanding Awards (other than Awards consisting of vested and outstanding shares of Common Stock not subject to a forfeiture condition or the Company’s right of repurchase) will terminate immediately prior to the completion of such dissolution or liquidation, and the shares of Common Stock subject to the Company’s repurchase rights or subject to a forfeiture condition may be repurchased or reacquired by the Company notwithstanding the fact that the holder of such Award is providing Continuous Service, provided, however, that the Board may determine to cause some or all Awards to become fully vested, exercisable and/or no longer subject to repurchase or forfeiture (to the extent such Awards have not previously expired or terminated) before the dissolution or liquidation is completed but contingent on its completion. (c) Corporate Transaction. Except as set forth in Section 11, in the event of a Corporate Transaction, a Participant’s Award will be treated, to the extent determined by the Board to be permitted under Section 409A, in accordance with one or more of the following methods as determined by the Board in its sole discretion: (i) settle such Awards for an amount (as determined in the sole discretion of the Board) of cash or securities, where in the case of stock options and stock appreciation rights, the value of such amount, if any, will be equal to the in-the-money spread value (if any) of such Awards; (ii) provide for the assumption of or the issuance of substitute awards that will substantially preserve the otherwise applicable terms of any affected Awards previously granted under the Plan, as determined by the Board in its sole discretion; (iii) modify the terms of such awards to add events, conditions or circumstances (including termination of employment or service within a specified period after a Corporate Transaction) upon which the vesting of such Awards or lapse of restrictions thereon will accelerate; (iv) deem any performance conditions satisfied at target, maximum or actual performance through closing or provide for the performance conditions to continue (as is or as adjusted by the Board) after closing or (v) provide that for a period of at least 20 days prior to the Corporate Transaction, any stock options or stock appreciation rights that would not otherwise become exercisable prior to the Corporate Transaction will be exercisable as to all shares subject thereto (but any such exercise will be contingent upon and subject to the occurrence of the Corporate Transaction and if the Corporate Transaction does not take place within a specified period after giving such notice for any reason whatsoever, the exercise will be null and void) and that any stock options or stock appreciation rights not exercised prior to the consummation of the Corporate Transaction will terminate and be of no further force and effect as of the consummation of the Corporate Transaction. For the avoidance of doubt, in the event of a Corporate Transaction where all Options and SARs are settled for an amount (as determined in the sole discretion of the Corporate Transaction) of cash or securities, the Board may, in its sole discretion, terminate any Option or SAR for which the exercise price is equal to or exceeds the per share value of the consideration to be paid in the Corporate Transaction without payment of consideration therefor. (d) Appointment of Stockholder Representative. As a condition to the receipt of an Award under this Plan, a Participant will be deemed to have agreed that the Award will be subject to the terms of any TABLE OF CONTENTS agreement governing a Corporate Transaction involving the Company, including, without limitation, a provision for the appointment of a stockholder representative that is authorized to act on the Participant’s behalf with respect to any escrow, indemnities and any contingent consideration. (e) No Restriction on Right to Undertake Transactions. The grant of any Award under the Plan and the issuance of shares pursuant to any Award does not affect or restrict in any way the right or power of the Company or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of stock or of options, rights or options to purchase stock or of bonds, debentures, preferred or prior preference stocks whose rights are superior to or affect the Common Stock or the rights thereof or which are convertible into or exchangeable for Common Stock, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise. (a) Administration by Board. The Board will administer the Plan unless and until the Board delegates administration of the Plan to a Committee or Committees, as provided in subsection (c) below. (b) Powers of Board. The Board will have the power, subject to, and within the limitations of, the express provisions of the Plan: (i) To determine from time to time (1) which of the persons eligible under the Plan will be granted Awards; (2) when and how each Award will be granted; (3) what type or combination of types of Award will be granted; (4) the provisions of each Award granted (which need not be identical), including the time or times when a person will be permitted to receive an issuance of Common Stock or other payment pursuant to an Award; (5) the number of shares of Common Stock or cash equivalent with respect to which an Award will be granted to each such person; (6) the Fair Market Value applicable to an Award; and (7) the terms of any Performance Award that is not valued in whole or in part by reference to, or otherwise based on, the Common Stock, including the amount of cash payment or other property that may be earned and the timing of payment. (ii) To construe and interpret the Plan and Awards granted under it, and to establish, amend and revoke rules and regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Award Agreement, in a manner and to the extent it deems necessary or expedient to make the Plan or Award fully effective. (iii) To settle all controversies regarding the Plan and Awards granted under it. (iv) To accelerate the time at which an Award may first be exercised or the time during which an Award or any part thereof will vest, notwithstanding the provisions in the Award Agreement stating the time at which it may first be exercised or the time during which it will vest. (v) To prohibit the exercise of any Option, SAR or other exercisable Award during a period of up to 30 days prior to the consummation of any pending stock dividend, stock split, combination or exchange of shares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets to stockholders, or any other change affecting the shares of Common Stock or the share price of the Common Stock including any Corporate Transaction, for reasons of administrative convenience. (vi) To suspend or terminate the Plan at any time. Suspension or termination of the Plan will not Materially Impair rights and obligations under any Award granted while the Plan is in effect except with the written consent of the affected Participant. (vii) To amend the Plan in any respect the Board deems necessary or advisable; provided, however, that stockholder approval will be required for any amendment to the extent required by Applicable Law. Except as provided above, rights under any Award granted before amendment of the Plan will not be Materially Impaired by any amendment of the Plan unless (1) the Company requests the consent of the affected Participant, and (2) such Participant consents in writing. (viii) To submit any amendment to the Plan for stockholder approval. TABLE OF CONTENTS (ix) To approve forms of Award Agreements for use under the Plan and to amend the terms of any one or more Awards, including, but not limited to, amendments to provide terms more favorable to the Participant than previously provided in the Award Agreement, subject to any specified limits in the Plan that are not subject to Board discretion; provided however, that, a Participant’s rights under any Award will not be Materially Impaired by any such amendment unless (1) the Company requests the consent of the affected Participant, and (2) such Participant consents in writing. (x) Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company and that are not in conflict with the provisions of the Plan or Awards. (xi) To adopt such procedures and sub-plans as are necessary or appropriate to permit and facilitate participation in the Plan by, or take advantage of specific tax treatment for Awards granted to, Employees, Directors or Consultants who are foreign nationals or employed outside the United States (provided that Board approval will not be necessary for immaterial modifications to the Plan or any Award Agreement to ensure or facilitate compliance with the laws of the relevant foreign jurisdiction). (xii) To effect, at any time and from time to time, subject to the consent of any Participant whose Award is Materially Impaired by such action, (1) the reduction of the exercise price (or strike price) of any outstanding Option or SAR; (2) the cancellation of any outstanding Option or SAR and the grant in substitution therefor of (A) a new Option, SAR, Restricted Stock Award, RSU Award or Other Award, under the Plan or another equity plan of the Company, covering the same or a different number of shares of Common Stock, (B) cash and/or (C) other valuable consideration (as determined by the Board); or (3) any other action that is treated as a repricing under generally accepted accounting principles. (c) Delegation to Committee. (i) General. The Board may delegate some or all of the administration of the Plan to a Committee or Committees. If administration of the Plan is delegated to a Committee, the Committee will have, in connection with the administration of the Plan, the powers theretofore possessed by the Board that have been delegated to the Committee, including the power to delegate to another Committee or a subcommittee of the Committee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board will thereafter be to the Committee or subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. Each Committee may retain the authority to concurrently administer the Plan with Committee or subcommittee to which it has delegated its authority hereunder and may, at any time, revest in such Committee some or all of the powers previously delegated. The Board may retain the authority to concurrently administer the Plan with any Committee and may, at any time, revest in the Board some or all of the powers previously delegated. (ii) Rule 16b-3 Compliance. To the extent an Award is intended to qualify for the exemption from Section 16(b) of the Exchange Act that is available under Rule 16b-3 of the Exchange Act, the Award will be granted by the Board or a Committee that consists solely of two or more Non-Employee Directors, as determined under Rule 16b-3(b)(3) of the Exchange Act and thereafter any action establishing or modifying the terms of the Award will be approved by the Board or a Committee meeting such requirements to the extent necessary for such exemption to remain available. (d) Effect of Board’s Decision. All determinations, interpretations and constructions made by the Board or any Committee in good faith will not be subject to review by any person and will be final, binding and conclusive on all persons. (e) Delegation to an Officer. The Board or any Committee may delegate to one or more Officers the authority to do one or both of the following (i) designate Employees who are not Officers to be recipients of Options and SARs (and, to the extent permitted by Applicable Law, other types of Awards) and, to the extent permitted by Applicable Law, the terms thereof, and (ii) determine the number of shares of Common Stock to be subject to such Awards granted to such Employees; provided, however, that the resolutions or charter adopted by the Board or any Committee evidencing such delegation will specify the total number of shares of Common Stock that may be subject to the Awards granted by such Officer and that such Officer TABLE OF CONTENTS may not grant an Award to himself or herself. Any such Awards will be granted on the applicable form of Award Agreement most recently approved for use by the Board or the Committee, unless otherwise provided in the resolutions approving the delegation authority. Notwithstanding anything to the contrary herein, neither the Board nor any Committee may delegate to an Officer who is acting solely in the capacity of an Officer (and not also as a Director) the authority to determine the Fair Market Value. (a) Withholding Authorization. As a condition to acceptance of any Award under the Plan, a Participant authorizes withholding from payroll and any other amounts payable to such Participant, and otherwise agrees to make adequate provision for (including), any sums required to satisfy any U.S. federal, state, local and/or foreign tax or social insurance contribution withholding obligations of the Company or an Affiliate, if any, which arise in connection with the exercise, vesting or settlement of such Award, as applicable. Accordingly, a Participant may not be able to exercise an Award even though the Award is vested, and the Company shall have no obligation to issue shares of Common Stock subject to an Award, unless and until such obligations are satisfied. (b) Satisfaction of Withholding Obligation. To the extent permitted by the terms of an Award Agreement, the Company may, in its sole discretion, satisfy any U.S. federal, state, local and/or foreign tax or social insurance withholding obligation relating to an Award by any of the following means or by a combination of such means: (i) causing the Participant to tender a cash payment; (ii) withholding shares of Common Stock from the shares of Common Stock issued or otherwise issuable to the Participant in connection with the Award; (iii) withholding cash from an Award settled in cash; (iv) withholding payment from any amounts otherwise payable to the Participant; (v) by allowing a Participant to effectuate a “cashless exercise” pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board; or (vi) by such other method as may be set forth in the Award Agreement. (c) No Obligation to Notify or Minimize Taxes; No Liability to Claims. Except as required by Applicable Law the Company has no duty or obligation to any Participant to advise such holder as to the time or manner of exercising such Award. Furthermore, the Company has no duty or obligation to warn or otherwise advise such holder of a pending termination or expiration of an Award or a possible period in which the Award may not be exercised. The Company has no duty or obligation to minimize the tax consequences of an Award to the holder of such Award and will not be liable to any holder of an Award for any adverse tax consequences to such holder in connection with an Award. As a condition to accepting an Award under the Plan, each Participant (i) agrees to not make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates related to tax liabilities arising from such Award or other Company compensation and (ii) acknowledges that such Participant was advised to consult with his or her own personal tax, financial and other legal advisors regarding the tax consequences of the Award and has either done so or knowingly and voluntarily declined to do so. Additionally, each Participant acknowledges any Option or SAR granted under the Plan is exempt from Section 409A only if the exercise or strike price is at least equal to the “fair market value” of the Common Stock on the date of grant as determined by the Internal Revenue Service and there is no other impermissible deferral of compensation associated with the Award. Additionally, as a condition to accepting an Option or SAR granted under the Plan, each Participant agrees not make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates in the event that the Internal Revenue Service asserts that such exercise price or strike price is less than the “fair market value” of the Common Stock on the date of grant as subsequently determined by the Internal Revenue Service. (d) Withholding Indemnification. As a condition to accepting an Award under the Plan, in the event that the amount of the Company’s and/or its Affiliate’s withholding obligation in connection with such Award was greater than the amount actually withheld by the Company and/or its Affiliates, each Participant agrees to indemnify and hold the Company and/or its Affiliates harmless from any failure by the Company and/or its Affiliates to withhold the proper amount. (a) Source of Shares. The stock issuable under the Plan will be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the Company on the open market or otherwise. TABLE OF CONTENTS (b) Use of Proceeds from Sales of Common Stock. Proceeds from the sale of shares of Common Stock pursuant to Awards will constitute general funds of the Company. (c) Corporate Action Constituting Grant of Awards. Corporate action constituting a grant by the Company of an Award to any Participant will be deemed completed as of the date of such corporate action, unless otherwise determined by the Board, regardless of when the instrument, certificate, or letter evidencing the Award is communicated to, or actually received or accepted by, the Participant. In the event that the corporate records (e.g., Board consents, resolutions or minutes) documenting the corporate action approving the grant contain terms (e.g., exercise price, vesting schedule or number of shares) that are inconsistent with those in the Award Agreement or related grant documents as a result of a clerical error in the Award Agreement or related grant documents, the corporate records will control and the Participant will have no legally binding right to the incorrect term in the Award Agreement or related grant documents. (d) Stockholder Rights. No Participant will be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Common Stock subject to such Award unless and until (i) such Participant has satisfied all requirements for exercise of the Award pursuant to its terms, if applicable, and (ii) the issuance of the Common Stock subject to such Award is reflected in the records of the Company. (e) No Employment or Other Service Rights. Nothing in the Plan, any Award Agreement or any other instrument executed thereunder or in connection with any Award granted pursuant thereto will confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Award was granted or affect the right of the Company or an Affiliate to terminate at will and without regard to any future vesting opportunity that a Participant may have with respect to any Award (i) the employment of an Employee with or without notice and with or without cause, (ii) the service of a Consultant pursuant to the terms of such Consultant’s agreement with the Company or an Affiliate, or (iii) the service of a Director pursuant to the Bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state or foreign jurisdiction in which the Company or the Affiliate is incorporated, as the case may be. Further, nothing in the Plan, any Award Agreement or any other instrument executed thereunder or in connection with any Award will constitute any promise or commitment by the Company or an Affiliate regarding the fact or nature of future positions, future work assignments, future compensation or any other term or condition of employment or service or confer any right or benefit under the Award or the Plan unless such right or benefit has specifically accrued under the terms of the Award Agreement and/or Plan. (f) Change in Time Commitment. In the event a Participant’s regular level of time commitment in the performance of his or her services for the Company and any Affiliates is reduced (for example, and without limitation, if the Participant is an Employee of the Company and the Employee has a change in status from a full-time Employee to a part-time Employee or takes an extended leave of absence) after the date of grant of any Award to the Participant, the Board may determine, to the extent permitted by Applicable Law, to (i) make a corresponding reduction in the number of shares or cash amount subject to any portion of such Award that is scheduled to vest or become payable after the date of such change in time commitment, and (ii) in lieu of or in combination with such a reduction, extend the vesting or payment schedule applicable to such Award. In the event of any such reduction, the Participant will have no right with respect to any portion of the Award that is so reduced or extended. (g) Execution of Additional Documents. As a condition to accepting an Award under the Plan, the Participant agrees to execute any additional documents or instruments necessary or desirable, as determined in the Plan Administrator’s sole discretion, to carry out the purposes or intent of the Award, or facilitate compliance with securities and/or other regulatory requirements, in each case at the Plan Administrator’s request. (h) Electronic Delivery and Participation. Any reference herein or in an Award Agreement to a “written” agreement or document will include any agreement or document delivered electronically, filed publicly at www.sec.gov (or any successor website thereto) or posted on the Company’s intranet (or other shared electronic medium controlled by the Company to which the Participant has access). By accepting any Award the Participant consents to receive documents by electronic delivery and to participate in the Plan TABLE OF CONTENTS through any on-line electronic system established and maintained by the Plan Administrator or another third party selected by the Plan Administrator. The form of delivery of any Common Stock (e.g., a stock certificate or electronic entry evidencing such shares) shall be determined by the Company. (i) Clawback/Recovery. All Awards granted under the Plan will be subject to recoupment in accordance with any clawback policy that the Company is required to adopt pursuant to the listing standards of any foreign or national securities exchange or association on which the Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other Applicable Law and any clawback policy that the Company otherwise adopts, to the extent applicable and permissible under Applicable Law. In addition, the Board may impose such other clawback, recovery or recoupment provisions in an Award Agreement as the Board determines necessary or appropriate, including but not limited to a reacquisition right in respect of previously acquired shares of Common Stock or other cash or property upon the occurrence of Cause. No recovery of compensation under such a clawback policy will be an event giving rise to a Participant’s right to voluntarily terminate employment upon a “resignation for good reason,” or for a “constructive termination” or any similar term under any plan of or agreement with the Company. (j) Securities Law Compliance. A Participant will not be issued any shares in respect of an Award unless either (i) the shares are registered under the Securities Act; or (ii) the Company has determined that such issuance would be exempt from the registration requirements of the Securities Act. A Participant will not be issued an Award or any shares in respect of an Award unless either (i) the distribution is qualified by a prospectus in any Province where required under Canadian securities laws, or (ii) the distribution of the shares is exempt from the prospectus requirements of Canadian securities laws. Each Award also must comply with other Applicable Law governing the Award, and a Participant will not receive such shares if the Company determines that such receipt would not be in material compliance with Applicable Law. (k) Transfer or Assignment of Awards; Issued Shares. Except as expressly provided in the Plan or the form of Award Agreement, Awards granted under the Plan may not be transferred or assigned by the Participant. After the vested shares subject to an Award have been issued, or in the case of Restricted Stock and similar awards, after the issued shares have vested, the holder of such shares is free to assign, hypothecate, donate, encumber or otherwise dispose of any interest in such shares provided that any such actions are in compliance with the provisions herein, the terms of the Trading Policy and Applicable Law. (l) Effect on Other Employee Benefit Plans. The value of any Award granted under the Plan, as determined upon grant, vesting or settlement, shall not be included as compensation, earnings, salaries, or other similar terms used when calculating any Participant’s benefits under any employee benefit plan sponsored by the Company or any Affiliate, except as such plan otherwise expressly provides. The Company expressly reserves its rights to amend, modify, or terminate any of the Company's or any Affiliate's employee benefit plans. (m) Deferrals. To the extent permitted by Applicable Law, the Board, in its sole discretion, may determine that the delivery of Common Stock or the payment of cash, upon the exercise, vesting or settlement of all or a portion of any Award may be deferred and may also establish programs and procedures for deferral elections to be made by Participants. Deferrals will be made in accordance with the requirements of Section 409A. (n) Section 409A. Unless otherwise expressly provided for in an Award Agreement, the Plan and Award Agreements will be interpreted to the greatest extent possible in a manner that makes the Plan and the Awards granted hereunder exempt from Section 409A, and, to the extent not so exempt, in compliance with the requirements of Section 409A. If the Board determines that any Award granted hereunder is not exempt from and is therefore subject to Section 409A, the Award Agreement evidencing such Award will incorporate the terms and conditions necessary to avoid the consequences specified in Section 409A(a)(1) of the Code, and to the extent an Award Agreement is silent on terms necessary for compliance, such terms are hereby incorporated by reference into the Award Agreement. Notwithstanding anything to the contrary in this Plan (and unless the Award Agreement specifically provides otherwise), if the shares of Common Stock are publicly traded, and if a Participant holding an Award that constitutes “deferred compensation” under Section 409A is a “specified employee” for purposes of Section 409A, no distribution or payment of any amount that is due because of a “separation from service” (as defined in Section 409A without regard to TABLE OF CONTENTS alternative definitions thereunder) will be issued or paid before the date that is six months and one day following the date of such Participant’s “separation from service” or, if earlier, the date of the Participant’s death, unless such distribution or payment can be made in a manner that complies with Section 409A, and any amounts so deferred will be paid in a lump sum on the day after such six month period elapses, with the balance paid thereafter on the original schedule. (o) Choice of Law. This Plan and any controversy arising out of or relating to this Plan shall be governed by, and construed in accordance with, the internal laws of the State of Delaware, without regard to conflict of law principles that would result in any application of any law other than the law of the State of Delaware. 10.
| Covenants of the Company. |
The Company will seek to obtain from each regulatory commission or agency, as may be deemed to be necessary, having jurisdiction over the Plan such authority as may be required to grant Awards and to issue and sell shares of Common Stock upon exercise or vesting of the Awards; provided, however, that this undertaking will not require the Company to register under the Securities Act the Plan, any Award or any Common Stock issued or issuable pursuant to any such Award. If, after reasonable efforts and at a reasonable cost, the Company is unable to obtain from any such regulatory commission or agency the authority that counsel for the Company deems necessary or advisable for the lawful issuance and sale of Common Stock under the Plan, the Company will be relieved from any liability for failure to issue and sell Common Stock upon exercise or vesting of such Awards unless and until such authority is obtained. A Participant is not eligible for the grant of an Award or the subsequent issuance of Common Stock pursuant to the Award if such grant or issuance would be in violation of any Applicable Law. 11.
| Additional Rules for Awards Subject to Section 409A. |
(a) Application. Unless the provisions of this Section of the Plan are expressly superseded by the provisions in the form of Award Agreement, the provisions of this Section shall apply and shall supersede anything to the contrary set forth in the Award Agreement for a Non-Exempt Award. (b) Non-Exempt Awards Subject to Non-Exempt Severance Arrangements. To the extent a Non-Exempt Award is subject to Section 409A due to application of a Non-Exempt Severance Arrangement, the following provisions of this subsection (b) apply. (i) If the Non-Exempt Award vests in the ordinary course during the Participant’s Continuous Service in accordance with the vesting schedule set forth in the Award Agreement, and does not accelerate vesting under the terms of a Non-Exempt Severance Arrangement, in no event will the shares be issued in respect of such Non-Exempt Award any later than the later of: (i) December 31st of the calendar year that includes the applicable vesting date, or (ii) the 60th day that follows the applicable vesting date. (ii) If vesting of the Non-Exempt Award accelerates under the terms of a Non-Exempt Severance Arrangement in connection with the Participant’s Separation from Service, and such vesting acceleration provisions were in effect as of the date of grant of the Non-Exempt Award and, therefore, are part of the terms of such Non-Exempt Award as of the date of grant, then the shares will be earlier issued in settlement of such Non-Exempt Award upon the Participant’s Separation from Service in accordance with the terms of the Non-Exempt Severance Arrangement, but in no event later than the 60th day that follows the date of the Participant’s Separation from Service. However, if at the time the shares would otherwise be issued the Participant is subject to the distribution limitations contained in Section 409A applicable to “specified employees,” as defined in Section 409A(a)(2)(B)(i) of the Code, such shares shall not be issued before the date that is six months following the date of such Participant’s Separation from Service, or, if earlier, the date of the Participant’s death that occurs within such six month period. (iii) If vesting of a Non-Exempt Award accelerates under the terms of a Non-Exempt Severance Arrangement in connection with a Participant’s Separation from Service, and such vesting acceleration provisions were not in effect as of the date of grant of the Non-Exempt Award and, therefore, are not a part of the terms of such Non-Exempt Award on the date of grant, then such acceleration of vesting of TABLE OF CONTENTS the Non-Exempt Award shall not accelerate the issuance date of the shares, but the shares shall instead be issued on the same schedule as set forth in the Grant Notice as if they had vested in the ordinary course during the Participant’s Continuous Service, notwithstanding the vesting acceleration of the Non-Exempt Award. Such issuance schedule is intended to satisfy the requirements of payment on a specified date or pursuant to a fixed schedule, as provided under Treasury Regulations Section 1.409A-3(a)(4). (c) Treatment of Non-Exempt Awards Upon a Corporate Transaction for Employees and Consultants. The provisions of this subsection (c) shall apply and shall supersede anything to the contrary set forth in the Plan with respect to the permitted treatment of any Non-Exempt Award in connection with a Corporate Transaction if the Participant was either an Employee or Consultant upon the applicable date of grant of the Non-Exempt Award. (i) Vested Non-Exempt Awards. The following provisions shall apply to any Vested Non-Exempt Award in connection with a Corporate Transaction: (1) If the Corporate Transaction is also a Section 409A Change in Control then the Acquiring Entity may not assume, continue or substitute the Vested Non-Exempt Award. Upon the Section 409A Change in Control the settlement of the Vested Non-Exempt Award will automatically be accelerated and the shares will be immediately issued in respect of the Vested Non-Exempt Award. Alternatively, the Company may instead provide that the Participant will receive a cash settlement equal to the Fair Market Value of the shares that would otherwise be issued to the Participant upon the Section 409A Change in Control. (2) If the Corporate Transaction is not also a Section 409A Change in Control, then the Acquiring Entity must either assume, continue or substitute each Vested Non-Exempt Award. The shares to be issued in respect of the Vested Non-Exempt Award shall be issued to the Participant by the Acquiring Entity on the same schedule that the shares would have been issued to the Participant if the Corporate Transaction had not occurred. In the Acquiring Entity’s discretion, in lieu of an issuance of shares, the Acquiring Entity may instead substitute a cash payment on each applicable issuance date, equal to the Fair Market Value of the shares that would otherwise be issued to the Participant on such issuance dates, with the determination of the Fair Market Value of the shares made on the date of the Corporate Transaction. (ii) Unvested Non-Exempt Awards. The following provisions shall apply to any Unvested Non-Exempt Award unless otherwise determined by the Board pursuant to subsection (e) of this Section. (1) In the event of a Corporate Transaction, the Acquiring Entity shall assume, continue or substitute any Unvested Non-Exempt Award. Unless otherwise determined by the Board, any Unvested Non-Exempt Award will remain subject to the same vesting and forfeiture restrictions that were applicable to the Award prior to the Corporate Transaction. The shares to be issued in respect of any Unvested Non-Exempt Award shall be issued to the Participant by the Acquiring Entity on the same schedule that the shares would have been issued to the Participant if the Corporate Transaction had not occurred. In the Acquiring Entity’s discretion, in lieu of an issuance of shares, the Acquiring Entity may instead substitute a cash payment on each applicable issuance date, equal to the Fair Market Value of the shares that would otherwise be issued to the Participant on such issuance dates, with the determination of Fair Market Value of the shares made on the date of the Corporate Transaction. (2) If the Acquiring Entity will not assume, substitute or continue any Unvested Non-Exempt Award in connection with a Corporate Transaction, then such Award shall automatically terminate and be forfeited upon the Corporate Transaction with no consideration payable to any Participant in respect of such forfeited Unvested Non-Exempt Award. Notwithstanding the foregoing, to the extent permitted and in compliance with the requirements of Section 409A, the Board may in its discretion determine to elect to accelerate the vesting and settlement of the Unvested Non-Exempt Award upon the Corporate Transaction, or instead substitute a cash payment equal to the Fair Market Value of such shares that would otherwise be issued to the Participant, as further provided in subsection (e)(ii) below. In the absence of such TABLE OF CONTENTS discretionary election by the Board, any Unvested Non-Exempt Award shall be forfeited without payment of any consideration to the affected Participants if the Acquiring Entity will not assume, substitute or continue the Unvested Non-Exempt Awards in connection with the Corporate Transaction. (3) The foregoing treatment shall apply with respect to all Unvested Non-Exempt Awards upon any Corporate Transaction, and regardless of whether or not such Corporate Transaction is also a Section 409A Change in Control. (d) Treatment of Non-Exempt Awards Upon a Corporate Transaction for Non-Employee Directors. The following provisions of this subsection (d) shall apply and shall supersede anything to the contrary that may be set forth in the Plan with respect to the permitted treatment of a Non-Exempt Director Award in connection with a Corporate Transaction. (i) If the Corporate Transaction is also a Section 409A Change in Control then the Acquiring Entity may not assume, continue or substitute the Non-Exempt Director Award. Upon the Section 409A Change in Control the vesting and settlement of any Non-Exempt Director Award will automatically be accelerated and the shares will be immediately issued to the Participant in respect of the Non-Exempt Director Award. Alternatively, the Company may provide that the Participant will instead receive a cash settlement equal to the Fair Market Value of the shares that would otherwise be issued to the Participant upon the Section 409A Change in Control pursuant to the preceding provision. (ii) If the Corporate Transaction is not also a Section 409A Change in Control, then the Acquiring Entity must either assume, continue or substitute the Non-Exempt Director Award. Unless otherwise determined by the Board, the Non-Exempt Director Award will remain subject to the same vesting and forfeiture restrictions that were applicable to the Award prior to the Corporate Transaction. The shares to be issued in respect of the Non-Exempt Director Award shall be issued to the Participant by the Acquiring Entity on the same schedule that the shares would have been issued to the Participant if the Corporate Transaction had not occurred. In the Acquiring Entity’s discretion, in lieu of an issuance of shares, the Acquiring Entity may instead substitute a cash payment on each applicable issuance date, equal to the Fair Market Value of the shares that would otherwise be issued to the Participant on such issuance dates, with the determination of Fair Market Value made on the date of the Corporate Transaction. (e) If the RSU Award is a Non-Exempt Award, then the provisions in this Section 11(e) shall apply and supersede anything to the contrary that may be set forth in the Plan or the Award Agreement with respect to the permitted treatment of such Non-Exempt Award: (i) Any exercise by the Board of discretion to accelerate the vesting of a Non-Exempt Award shall not result in any acceleration of the scheduled issuance dates for the shares in respect of the Non-Exempt Award unless earlier issuance of the shares upon the applicable vesting dates would be in compliance with the requirements of Section 409A. (ii) The Company explicitly reserves the right to earlier settle any Non-Exempt Award to the extent permitted and in compliance with the requirements of Section 409A, including pursuant to any of the exemptions available in Treasury Regulations Section 1.409A-3(j)(4)(ix). (iii) To the extent the terms of any Non-Exempt Award provide that it will be settled upon a Corporate Transaction, to the extent it is required for compliance with the requirements of Section 409A, the Corporate Transaction event triggering settlement must also constitute a Section 409A Change in Control. To the extent the terms of a Non-Exempt Award provides that it will be settled upon a termination of employment or termination of Continuous Service, to the extent it is required for compliance with the requirements of Section 409A, the termination event triggering settlement must also constitute a Separation From Service. However, if at the time the shares would otherwise be issued to a Participant in connection with a “separation from service” such Participant is subject to the distribution limitations contained in Section 409A applicable to “specified employees,” as defined in Section 409A(a)(2)(B)(i) of the Code, such shares shall not be issued before the date that is six months following the date of the Participant’s Separation From Service, or, if earlier, the date of the Participant’s death that occurs within such six month period. TABLE OF CONTENTS (iv) The provisions in this subsection (e) for delivery of the shares in respect of the settlement of an RSU Award that is a Non-Exempt Award are intended to comply with the requirements of Section 409A so that the delivery of the shares to the Participant in respect of such Non-Exempt Award will not trigger the additional tax imposed under Section 409A, and any ambiguities herein will be so interpreted. If all or any part of the Plan or any Award Agreement is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any portion of the Plan or such Award Agreement not declared to be unlawful or invalid. Any Section of the Plan or any Award Agreement (or part of such a Section) so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid. 13.
| Termination of the Plan. |
The Board may suspend or terminate the Plan at any time. No Incentive Stock Options may be granted after the tenth anniversary of the earlier of: (i) the Adoption Date, or (ii) the date the Plan is approved by the Company’s stockholders. No Awards may be granted under the Plan while the Plan is suspended or after it is terminated. As used in the Plan, the following definitions apply to the capitalized terms indicated below: (a) “Acquiring Entity” means the surviving or acquiring corporation (or its parent company) in connection with a Corporate Transaction. (b) “Adoption Date” means the date the Plan is first approved by the Board or Compensation Committee. (c) “Affiliate” means, at the time of determination, any “parent” or “subsidiary” of the Company as such terms are defined in Rule 405 promulgated under the Securities Act. The Board may determine the time or times at which “parent” or “subsidiary” status is determined within the foregoing definition. (d) “Applicable Law” means any applicable securities, federal, state, foreign, material local or municipal or other law, statute, constitution, principle of common law, resolution, ordinance, code, edict, decree, rule, listing rule, regulation, judicial decision, ruling or requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Body (including under the authority of any applicable self-regulating organization such as the Nasdaq Stock Market, New York Stock Exchange, or the Financial Industry Regulatory Authority). (e) “Award” means any right to receive Common Stock, cash or other property granted under the Plan (including an Incentive Stock Option, a Nonstatutory Stock Option, a Restricted Stock Award, an RSU Award, a SAR, a Performance Award or any Other Award). (f) “Award Agreement” means a written or electronic agreement between the Company and a Participant evidencing the terms and conditions of an Award. The Award Agreement generally consists of the Grant Notice and the agreement containing the written summary of the general terms and conditions applicable to the Award and which is provided, including through electronic means, to a Participant along with the Grant Notice. (g) “Board” means the Board of Directors of the Company (or its designee). Any decision or determination made by the Board shall be a decision or determination that is made in the sole discretion of the Board (or its designee), and such decision or determination shall be final and binding on all Participants. (h) “Capitalization Adjustment” means any change that is made in, or other events that occur with respect to, the Common Stock subject to the Plan or subject to any Award after the date the Plan is adopted by the Board without the receipt of consideration by the Company through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, large TABLE OF CONTENTS nonrecurring cash dividend, stock split, reverse stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or any similar equity restructuring transaction, as that term is used in Statement of Financial Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor thereto). Notwithstanding the foregoing, the conversion of any convertible securities of the Company will not be treated as a Capitalization Adjustment. (i) “Cause” has the meaning ascribed to such term in any written agreement between a Participant and the Company defining such term and, in the absence of such agreement, such term means, with respect to a Participant, the occurrence of any of the following events: (i) the Participant’s dishonest statements or acts with respect to the Company or any Affiliate of the Company, or any current or prospective customers, suppliers, vendors or other third parties with which such entity does business that adversely affects the Company or its Affiliates; (ii) the Participant’s commission of (A) a felony or (B) any misdemeanor involving moral turpitude, deceit, dishonesty or fraud; (iii) the Participant’s failure to perform the Participant’s assigned duties and responsibilities to the reasonable satisfaction of the Company which failure continues, in the reasonable judgment of the Company, after written notice given to the Participant by the Company; (iv) the Participant’s gross negligence, willful misconduct or insubordination with respect to the Company or any Affiliate of the Company; or (v) the Participant’s material violation of any provision of any agreement(s) between the Participant and the Company or any Affiliate of the Company relating to noncompetition, nonsolicitation, nondisclosure and/or assignment of inventions. The determination that a termination of the Participant’s Continuous Service is either for Cause or without Cause will be made by the Board with respect to Participants who are executive officers of the Company and by the Company’s Chief Executive Officer with respect to Participants who are not executive officers of the Company. Any determination by the Company that the Continuous Service of a Participant was terminated with or without Cause for the purposes of outstanding Awards held by such Participant will have no effect upon any determination of the rights or obligations of the Company or such Participant for any other purpose. (j) “Code” means the Internal Revenue Code of 1986, as amended, including any applicable regulations and guidance thereunder. (k) “Committee” means the Compensation Committee and any other committee of one or more Directors to whom authority has been delegated by the Board or Compensation Committee in accordance with the Plan. (l) “Common Stock” means the common shares of the Company. (m) “Company” means DevvStream Corp., a company existing under the Laws of the Province of Alberta, Canada, and any successor entity thereto. (n) “Compensation Committee” means the Compensation Committee of the Board. (o) “Consultant” means any person, including an advisor, who is (i) engaged by the Company or an Affiliate to render consulting or advisory services and is compensated for such services, or (ii) serving as a member of the board of directors of an Affiliate and is compensated for such services. However, service solely as a Director, or payment of a fee for such service, will not cause a Director to be considered a “Consultant” for purposes of the Plan. Notwithstanding the foregoing, a person is treated as a Consultant under this Plan only if a Form S-8 Registration Statement under the Securities Act is available to register either the offer or the sale of the Company’s securities to such person. (p) “Continuous Service” means that the Participant’s service with the Company or an Affiliate, whether as an Employee, Director or Consultant, is not interrupted or terminated. A change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee, Director or Consultant or a change in the Entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s service with the Company or an Affiliate, will not terminate a Participant’s Continuous Service; provided, however, that if the Entity for which a Participant is rendering services ceases to qualify as an Affiliate, as determined by the Board, such Participant’s Continuous Service will be considered to have terminated on the date such Entity ceases to qualify as an Affiliate. For example, a change in status from an Employee of the Company to a Consultant of an Affiliate or to a Director will not constitute an interruption of Continuous Service. To the extent permitted by law, the Board or the chief executive officer of the Company, in that party’s sole discretion, may determine whether Continuous Service TABLE OF CONTENTS will be considered interrupted in the case of (i) any leave of absence approved by the Board or chief executive officer, including sick leave, military leave or any other personal leave, or (ii) transfers between the Company, an Affiliate, or their successors. Notwithstanding the foregoing, a leave of absence will be treated as Continuous Service for purposes of vesting in an Award only to such extent as may be provided in the Company’s leave of absence policy, in the written terms of any leave of absence agreement or policy applicable to the Participant, or as otherwise required by law. In addition, to the extent required for exemption from or compliance with Section 409A, the determination of whether there has been a termination of Continuous Service will be made, and such term will be construed, in a manner that is consistent with the definition of “separation from service” as defined under Treasury Regulation Section 1.409A-1(h) (without regard to any alternative definition thereunder). (q) “Corporate Transaction” means any of the following transactions, provided, however, that the Board shall determine under parts (iv) and (v) whether multiple transactions are related, and its determination shall be final, binding and conclusive: (i) a merger, amalgamation or consolidation in which the Company is not the surviving entity; (ii) the sale, transfer or other disposition of all or substantially all of the assets of the Company; (iii) the complete liquidation or dissolution of the Company; (iv) any reverse merger or series of related transactions culminating in a reverse merger (including, but not limited to, a tender offer followed by a reverse merger) in which the Company is the surviving entity but (A) the shares of Common Stock outstanding immediately prior to such merger are converted or exchanged by virtue of the merger into other property, whether in the form of securities, cash or otherwise, or (B) in which securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such merger or the initial transaction culminating in such merger, but excluding any such transaction or series of related transactions that the Board determines shall not be a Corporate Transaction; or (v) acquisition in a single or series of related transactions by any person or related group of persons (other than the Company or by a Company-sponsored employee benefit plan) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities but excluding any such transaction or series of related transactions that the Board determines shall not be a Corporate Transaction. Notwithstanding the foregoing or any other provision of this Plan, (A) the term Corporate Transaction shall not include a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company, (B) the definition of Corporate Transaction (or any analogous term) in an individual written agreement between the Company or any Affiliate and the Participant shall supersede the foregoing definition with respect to Awards subject to such agreement; provided, however, that if no definition of Corporate Transaction or any analogous term is set forth in such an individual written agreement, the foregoing definition shall apply, and (C) with respect to any nonqualified deferred compensation that becomes payable on account of the Corporate Transaction, the transaction or event described in clause (i), (ii), (iii), or (iv) also constitutes a Section 409A Change in Control if required in order for the payment not to violate Section 409A of the Code. (r) “Director” means a member of the Board. (s) “determine” or “determined” means as determined by the Board or the Committee (or its designee) in its sole discretion. (t) “Disability” means, with respect to a Participant, such Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months, as provided in Section 22(e)(3) of the Code, and will be determined by the Board on the basis of such medical evidence as the Board deems warranted under the circumstances. TABLE OF CONTENTS (u) “Effective Date” means the Closing Date as defined in the Business Combination Agreement by and among Focus Impact Acquisition Corp., Focus Impact Amalco Sub Ltd. and the Company, dated September 12, 2023. (v) “Employee” means any person employed by the Company or an Affiliate. However, service solely as a Director, or payment of a fee for such services, will not cause a Director to be considered an “Employee” for purposes of the Plan. (w) “Employer” means the Company or the Affiliate of the Company that employs the Participant. (x) “Entity” means a corporation, partnership, limited liability company or other entity. (y) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. (z) “Exchange Act Person” means any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” will not include (i) the Company or any Subsidiary of the Company, (ii) any employee benefit plan of the Company or any Subsidiary of the Company or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company, (iii) an underwriter temporarily holding securities pursuant to a registered public offering of such securities, (iv) an Entity Owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their Ownership of stock of the Company; or (v) any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of the Effective Date, is the Owner, directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities. (aa) “Fair Market Value” means, as of any date, unless otherwise determined by the Board, the value of the Common Stock (as determined on a per share or aggregate basis, as applicable) determined as follows: (i) If the Common Stock is listed on any established stock exchange or traded on any established market, the Fair Market Value will be the closing sales price for such stock as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the date of determination, as reported in a source the Board deems reliable. (ii) If there is no closing sales price for the Common Stock on the date of determination, then the Fair Market Value will be the closing selling price on the last preceding date for which such quotation exists. (iii) In the absence of such markets for the Common Stock, or if otherwise determined by the Board, the Fair Market Value will be determined by the Board in good faith and in a manner that complies with Sections 409A and 422 of the Code. (bb) “Governmental Body” means any: (i) nation, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature; (ii) federal, state, local, municipal, foreign or other government; (iii) governmental or regulatory body, or quasi-governmental body of any nature (including any governmental division, department, administrative agency or bureau, commission, authority, instrumentality, official, ministry, fund, foundation, center, organization, unit, body or Entity and any court or other tribunal, and for the avoidance of doubt, any Tax authority) or other body exercising similar powers or authority; or (iv) self-regulatory organization (including the Nasdaq Stock Market, New York Stock Exchange, and the Financial Industry Regulatory Authority). (cc) “Grant Notice” means the notice provided to a Participant that he or she has been granted an Award under the Plan and which includes the name of the Participant, the type of Award, the date of grant of the Award, number of shares of Common Stock subject to the Award or potential cash payment right, (if any), the vesting schedule for the Award (if any) and other key terms applicable to the Award. (dd) “Incentive Stock Option” means an option granted pursuant to Section 4 of the Plan that is intended to be, and qualifies as, an “incentive stock option” within the meaning of Section 422 of the Code. TABLE OF CONTENTS (ee) “Materially Impair” means any amendment to the terms of the Award that materially adversely affects the Participant’s rights under the Award. A Participant's rights under an Award will not be deemed to have been Materially Impaired by any such amendment if the Board, in its sole discretion, determines that the amendment, taken as a whole, does not materially impair the Participant's rights. For example, the following types of amendments to the terms of an Award do not Materially Impair the Participant’s rights under the Award: (i) imposition of reasonable restrictions on the minimum number of shares subject to an Option or SAR that may be exercised; (ii) to maintain the qualified status of the Award as an Incentive Stock Option under Section 422 of the Code; (iii) to change the terms of an Incentive Stock Option in a manner that disqualifies, impairs or otherwise affects the qualified status of the Award as an Incentive Stock Option under Section 422 of the Code; (iv) to clarify the manner of exemption from, or to bring the Award into compliance with or qualify it for an exemption from, Section 409A; or (v) to comply with other Applicable Laws. (ff) “Non-Employee Director” means a Director who either (i) is not a current employee or officer of the Company or an Affiliate, does not receive compensation, either directly or indirectly, from the Company or an Affiliate for services rendered as a consultant or in any capacity other than as a Director (except for an amount as to which disclosure would not be required under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act (“Regulation S-K”)), does not possess an interest in any other transaction for which disclosure would be required under Item 404(a) of Regulation S-K, and is not engaged in a business relationship for which disclosure would be required pursuant to Item 404(b) of Regulation S-K; or (ii) is otherwise considered a “non-employee director” for purposes of Rule 16b-3. (gg) “Non-Exempt Award” means any Award that is subject to, and not exempt from, Section 409A, including as the result of (i) a deferral of the issuance of the shares subject to the Award which is elected by the Participant or imposed by the Company, or (ii) the terms of any Non-Exempt Severance Agreement. (hh) “Non-Exempt Director Award” means a Non-Exempt Award granted to a Participant who was a Director but not an Employee on the applicable grant date. (ii) “Non-Exempt Severance Arrangement” means a severance arrangement or other agreement between the Participant and the Company that provides for acceleration of vesting of an Award and issuance of the shares in respect of such Award upon the Participant’s termination of employment or separation from service (as such term is defined in Section 409A(a)(2)(A)(i) of the Code (and without regard to any alternative definition thereunder) (“Separation from Service”) and such severance benefit does not satisfy the requirements for an exemption from application of Section 409A provided under Treasury Regulations Section 1.409A-1(b)(4), 1.409A-1(b)(9) or otherwise. (jj) “Nonstatutory Stock Option” means any option granted pursuant to Section 4 of the Plan that does not qualify as an Incentive Stock Option. (kk) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act. (ll) “Option” means an Incentive Stock Option or a Nonstatutory Stock Option to purchase shares of Common Stock granted pursuant to the Plan. (mm) “Option Agreement” means a written or electronic agreement between the Company and the Optionholder evidencing the terms and conditions of the Option grant. The Option Agreement includes the Grant Notice for the Option and the agreement containing the written summary of the general terms and conditions applicable to the Option and which is provided, including through electronic means, to a Participant along with the Grant Notice. Each Option Agreement will be subject to the terms and conditions of the Plan. (nn) “Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Option. (oo) “Other Award” means an award valued in whole or in part by reference to, or otherwise based on, Common Stock, including the appreciation in value thereof (e.g., options or stock rights with an exercise price or strike price less than 100% of the Fair Market Value at the time of grant) that is not an Incentive Stock Option, Nonstatutory Stock Option, SAR, Restricted Stock Award, RSU Award or Performance Award. TABLE OF CONTENTS (pp) “Other Award Agreement” means a written or electronic agreement between the Company and a holder of an Other Award evidencing the terms and conditions of an Other Award grant. Each Other Award Agreement will be subject to the terms and conditions of the Plan. (qq) “Own,” “Owned,” “Owner,” “Ownership” means that a person or Entity will be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership” of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power, which includes the power to vote or to direct the voting, with respect to such securities. (rr) “Participant” means an Employee, Director or Consultant to whom an Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Award. (ss) “Performance Award” means an Award that may vest or may be exercised or a cash award that may vest or become earned and paid contingent upon the attainment during a Performance Period of certain Performance Goals and which is granted under the terms and conditions of Section 5(b) pursuant to such terms as are approved by the Board. In addition, to the extent permitted by Applicable Law and set forth in the applicable Award Agreement, the Board may determine that cash or other property may be used in payment of Performance Awards. Performance Awards that are settled in cash or other property are not required to be valued in whole or in part by reference to, or otherwise based on, the Common Stock. (tt) “Performance Criteria” means one or more criteria that the Board will select for purposes of establishing the Performance Goals for a Performance Period. The Performance Criteria that will be used to establish such Performance Goals may be based on any one of, or combination of, the following as determined by the Board: earnings (including earnings per share and net earnings); earnings before interest, taxes and depreciation; earnings before interest, taxes, depreciation and amortization; total stockholder return; return on equity or average stockholder’s equity; return on assets, investment, or capital employed; stock price; margin (including gross margin); income (before or after taxes); operating income; operating income after taxes; pre-tax profit; operating cash flow; sales or revenue targets; increases in revenue or product revenue; expenses and cost reduction goals; improvement in or attainment of working capital levels; economic value added (or an equivalent metric); market share; cash flow; cash flow per share; share price performance; debt reduction; customer satisfaction; stockholders’ equity; capital expenditures; debt levels; operating profit or net operating profit; workforce diversity; growth of net income or operating income; billings; financing; regulatory milestones; stockholder liquidity; corporate governance and compliance; intellectual property; personnel matters; progress of internal research; progress of partnered programs; partner satisfaction; budget management; partner or collaborator achievements; internal controls, including those related to the Sarbanes-Oxley Act of 2002; investor relations, analysts and communication; implementation or completion of projects or processes; employee retention; number of users, including unique users; strategic partnerships or transactions (including in-licensing and out-licensing of intellectual property); establishing relationships with respect to the marketing, distribution and sale of the Company’s products; supply chain achievements; co-development, co-marketing, profit sharing, joint venture or other similar arrangements; individual performance goals; corporate development and planning goals; and other measures of performance selected by the Board or Committee whether or not listed herein. (uu) “Performance Goals” means, for a Performance Period, one or more goals established by the Board for the Performance Period based upon the Performance Criteria. Performance Goals may be based on a Company-wide basis, with respect to one or more business units, divisions, Affiliates, or business segments, and in either absolute terms or relative to the performance of one or more comparable companies or the performance of one or more relevant indices. Unless specified otherwise by the Board (i) in the Award Agreement at the time the Award is granted or (ii) in such other document setting forth the Performance Goals at the time the Performance Goals are established, the Board will appropriately make adjustments in the method of calculating the attainment of Performance Goals for a Performance Period as follows: (1) to exclude restructuring and/or other nonrecurring charges; (2) to exclude exchange rate effects; (3) to exclude the effects of changes to generally accepted accounting principles; (4) to exclude the effects of any statutory adjustments to corporate tax rates; (5) to exclude the effects of items that are “unusual” in nature or occur “infrequently” as determined under generally accepted accounting principles; (6) to exclude the dilutive effects of acquisitions or joint ventures; (7) to assume that any business divested by the Company achieved performance objectives at targeted levels during the balance of a Performance Period TABLE OF CONTENTS following such divestiture; (8) to exclude the effect of any change in the outstanding shares of common stock of the Company by reason of any stock dividend or split, stock repurchase, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to common stockholders other than regular cash dividends; (9) to exclude the effects of stock based compensation and the award of bonuses under the Company’s bonus plans; (10) to exclude costs incurred in connection with potential acquisitions or divestitures that are required to be expensed under generally accepted accounting principles; and (11) to exclude the goodwill and intangible asset impairment charges that are required to be recorded under generally accepted accounting principles. In addition, the Board may establish or provide for other adjustment items in the Award Agreement at the time the Award is granted or in such other document setting forth the Performance Goals at the time the Performance Goals are established. In addition, the Board retains the discretion to reduce or eliminate the compensation or economic benefit due upon attainment of Performance Goals and to define the manner of calculating the Performance Criteria it selects to use for such Performance Period. Partial achievement of the specified criteria may result in the payment or vesting corresponding to the degree of achievement as specified in the Award Agreement or the written terms of a Performance Cash Award. (vv) “Performance Period” means the period of time selected by the Board over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to vesting or exercise of an Award. Performance Periods may be of varying and overlapping duration, at the sole discretion of the Board. (ww) “Plan” means this DevvStream Corp. 2024 Equity Incentive Plan, as amended from time to time. (xx) “Plan Administrator” means the person, persons, and/or third-party administrator designated by the Company to administer the day to day operations of the Plan and the Company’s other equity incentive programs. (yy) “Post-Termination Exercise Period” means the period following termination of a Participant’s Continuous Service within which an Option or SAR is exercisable, as specified in Section 4(h). (zz) “Restricted Stock Award” or “RSA” means an Award of shares of Common Stock which is granted pursuant to the terms and conditions of Section 5(a). (aaa) “Restricted Stock Award Agreement” means a written or electronic agreement between the Company and a holder of a Restricted Stock Award evidencing the terms and conditions of a Restricted Stock Award grant. The Restricted Stock Award Agreement includes the Grant Notice for the Restricted Stock Award and the agreement containing the written summary of the general terms and conditions applicable to the Restricted Stock Award and which is provided, including by electronic means, to a Participant along with the Grant Notice. Each Restricted Stock Award Agreement will be subject to the terms and conditions of the Plan. (bbb) “RSU Award” or “RSU” means an Award of restricted stock units representing the right to receive an issuance of shares of Common Stock which is granted pursuant to the terms and conditions of Section 5(a). (ccc) “RSU Award Agreement” means a written or electronic agreement between the Company and a holder of an RSU Award evidencing the terms and conditions of an RSU Award grant. The RSU Award Agreement includes the Grant Notice for the RSU Award and the agreement containing the written summary of the general terms and conditions applicable to the RSU Award and which is provided, including by electronic means, to a Participant along with the Grant Notice. Each RSU Award Agreement will be subject to the terms and conditions of the Plan. (ddd) “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to time. (eee) “Rule 405” means Rule 405 promulgated under the Securities Act. (fff) “Section 409A” means Section 409A of the Code and the regulations and other guidance thereunder. TABLE OF CONTENTS (ggg) “Section 409A Change in Control” means a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the Company’s assets, as provided in Section 409A(a)(2)(A)(v) of the Code and Treasury Regulations Section 1.409A-3(i)(5) (without regard to any alternative definition thereunder). (hhh) “Securities Act” means the Securities Act of 1933, as amended. (iii) “Share Reserve” means the number of shares available for issuance under the Plan as set forth in Section 2(a). (jjj) “Stock Appreciation Right” or “SAR” means a right to receive the appreciation on Common Stock that is granted pursuant to the terms and conditions of Section 4. (kkk) “SAR Agreement” means a written or electronic agreement between the Company and a holder of a SAR evidencing the terms and conditions of a SAR grant. The SAR Agreement includes the Grant Notice for the SAR and the agreement containing the written summary of the general terms and conditions applicable to the SAR and which is provided, including by electronic means, to a Participant along with the Grant Notice. Each SAR Agreement will be subject to the terms and conditions of the Plan. (lll) “Subsidiary” means, with respect to the Company, (i) any corporation of which more than 50% of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, stock of any other class or classes of such corporation will have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any partnership, limited liability company or other entity in which the Company has a direct or indirect interest (whether in the form of voting or participation in profits or capital contribution) of more than 50%. (mmm) “Ten Percent Stockholder” means a person who Owns (or is deemed to Own pursuant to Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any Affiliate. (nnn) “Trading Policy” means the Company’s policy permitting certain individuals to sell Company shares only during certain “window” periods and/or otherwise restricts the ability of certain individuals to transfer or encumber Company shares, as in effect from time to time. (ooo) “Unvested Non-Exempt Award” means the portion of any Non-Exempt Award that had not vested in accordance with its terms upon or prior to the date of any Corporate Transaction. (ppp) “Vested Non-Exempt Award” means the portion of any Non-Exempt Award that had vested in accordance with its terms upon or prior to the date of a Corporate Transaction. TABLE OF CONTENTS PLAN OF ARRANGEMENT UNDER SECTION 288
OF THE BUSINESS CORPORATIONS ACT (BRITISH COLUMBIA) ARTICLE II
1
DEFINITIONS AND INTERPRETATION 1.1 Definitions. Unless indicated otherwise, where used in this Plan of Arrangement, capitalized terms used but not defined shall have the meanings specified in the Business Combination Agreement and the following terms shall have the following meanings (and grammatical variations of such terms shall have corresponding meanings): (a)
| “Amalco” has the meaning specified in Section 2.3(d); |
(b)
| “Amalco Sub” means Focus Impact Amalco Sub Ltd., a company existing under the Laws of the Province of British Columbia, and a wholly-owned subsidiary of the SPAC; |
(c)
| “Amalco Sub Shares” means the common shares in the capital of Amalco Sub; |
(d)
| “Amalgamation” means the amalgamation of Amalco Sub and the Company in accordance with the terms of Section 269 of the BCBCA to form Amalco; |
(e)
| “Amalgamation Consideration Value” means the Equity Value plus the Aggregate Exercise Price; |
(f)
| “Arrangement” means an arrangement under Section 288 of the BCBCA, on the terms set forth in this Plan of Arrangement, subject to any amendment or variations hereto made in accordance with the Business Combination Agreement and this Plan of Arrangement or made at the direction of the Court in the Final Order with the prior written consent of the Company and the SPAC, each acting reasonably; |
(g)
| “Arrangement Resolution” means the special resolution approving the Plan of Arrangement to be considered at the Company Meeting by Company Shareholders, substantially in the form set forth in Exhibit F to the Business Combination Agreement; |
(a)
| “Book-Entry Shares” has the meaning specified in Section 4.1(a); |
(b)
| “Business Combination Agreement” means the Business Combination Agreement dated as of September 12, 2023, among the SPAC, the Company, and Amalco Sub, as the same may be amended, amended and restated or supplemented from time to time; |
(c)
| “Business Day” means any day other than a Saturday, Sunday or a legal holiday on which commercial banking institutions in Delaware or British Columbia are authorized to close for business, excluding as a result of “stay at home,” “shelter- in-place,” “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any Governmental Authority so long as the electronic funds transfer systems, including for wire transfers, of commercially banking institutions in Delaware and British Columbia are generally open for use by customers on such day; |
(d)
| “BCBCA” means the Business Corporations Act (British Columbia), and the regulations made thereunder, as now in effect and as such act and regulations may be promulgated or amended from time to time; |
(e)
| “CDS” means the Canadian Depository for Securities; |
(f)
| “Certificates” has the meaning specified in Section 4.1(a); |
(g)
| “Code” means the U.S. Internal Revenue Code of 1986; |
(h)
| “Common Amalgamation Consideration” means, with respect to the Company Securities, a number of New PubCo Common Shares equal to the Amalgamation Consideration Value divided by $10.20; |
(i)
| “Common Conversion Ratio” means, in respect of a Company Share, the number equal to (i) the Common Amalgamation Consideration divided by (ii) the Fully Diluted Common Shares Outstanding; |
(j)
| “Company” means DevvStream Holdings Inc., a company existing under the laws of the Province of British Columbia; |
TABLE OF CONTENTS (k)
| “Company Convertible Notes” means those certain Company Convertible Notes to be issued by the Company during the Interim Period in accordance with Section 6.2 of the Business Combination Agreement pursuant to the Company Convertible Notes Subscription Agreements; |
(l)
| “Company Convertible Notes Subscription Agreements” means those certain Convertible Note Subscription Agreements to be entered into by the Company during the Interim Period in accordance with Section 6.2 of the Business Combination Agreement with respect to the Company Convertible Notes; |
(m)
| “Company Equity Incentive Plan” means the 2022 Equity Incentive Plan of DevvStream Holdings Inc., as amended and restated from time to time, and the 2022 Non-Qualified Stock Option Plan of DevvStream Inc., as amended and restated from time to time; |
(n)
| “Company Meeting” means the special meeting of Company Shareholders, including any adjournment or postponement thereof in accordance with the terms of the Business Combination Agreement, to be called and held in accordance with the Interim Order to consider the Arrangement Resolution and for any other purpose as may be set forth in the Company Circular and agreed to in writing by the SPAC, acting reasonably; |
(o)
| “Company Option ITM Amount” has the meaning set out in Section 2.3(d)(ii)(A); |
(p)
| “Company Options” means each option (whether vested or unvested) to purchase Company Shares granted under the Company Equity Incentive Plan; |
(q)
| “Company RSUs” means each restricted stock unit representing the right to receive payment in Company Shares or an amount in cash equal to the fair market value of such Company Shares, granted under the Company Equity Incentive Plan or award agreements; |
(r)
| “Company Securities” means, collectively, the Company Shares, the Company Options, and the Company Warrants; |
(s)
| “Company Securityholders” means, collectively, the holders of Company Securities at the Effective Time; |
(t)
| “Company Shareholders” means, collectively, the holders of Company Shares at the Effective Time; |
(u)
| “Company Shares” means the Multiple Voting Company Shares and the Subordinate Voting Company Shares; |
(v)
| “Company Warrants” means the 9,787,343 outstanding common share purchase warrants of the Company, which are exercisable for up to 9,787,343 Subordinate Voting Company Shares; |
(w)
| “Converted Option” has the meaning set out in Section 2.3(d)(ii)(A); |
(x)
| “Converted Option ITM Amount” has the meaning set out in Section 2.3(d)(ii)(A); |
(y)
| “Converted RSU” has the meaning set out in Section 2.3(d)(ii)(B); |
(z)
| “Converted Warrant” has the meaning set out in Section 2.3(d)(iii); |
(aa)
| “Court” means the Supreme Court of British Columbia, or other court as applicable; |
(bb)
| “Dissent Procedures” has the meaning set out in Section 3.1; |
(cc)
| “Dissent Rights” has the meaning set out in Section 3.1; |
(dd)
| “Dissenting Shareholder” means a registered Company Shareholder who dissents in respect of the Arrangement in strict compliance with the Dissent Procedures; |
(ee)
| “DTC” means the Depository Trust Company; |
(ff)
| “Effective Date” means the date on which the Arrangement becomes effective; |
(gg)
| “Effective Time” means 8:01 a.m. (Vancouver time) on the Effective Date or such other time as the Company and the SPAC agree in writing before the Effective Date; |
TABLE OF CONTENTS (hh)
| “Final Order” means the final order of the Court, in a form acceptable to the Parties, each acting reasonably, approving the Arrangement, as such order may be amended by the Court (with the consent of each of the Parties, acting reasonably) at any time prior to the Effective Date or as such order may be affirmed or amended on appeal (provided, that any such amendment is satisfactory to each of the Parties, acting reasonably); |
(ii)
| “Fully Diluted Common Shares Outstanding” means, without duplication, at any measurement time (a)(i) ten (10), multiplied by (ii) the aggregate number of Multiple Voting Company Shares that are then issued and outstanding, plus (b) the aggregate number of Subordinate Voting Company Shares that are then issued and outstanding, plus (c) the aggregate number of Subordinate Voting Company Shares to be issued pursuant to the exercise and conversion of the Company Options in accordance therewith, plus (d) the aggregate number of Subordinate Voting Company Shares to be issued pursuant to the exercise and conversion of the Company Warrants in accordance therewith, plus (e) the aggregate number of Subordinate Voting Company Shares to be issued pursuant to the vesting of the Company RSUs in accordance therewith; |
(jj)
| “holder” means, when used with reference to any Company Shareholder, the holder of such Company Shares as shown from time to time on the register of shareholders maintained by or on behalf of the Company in respect of the Company Shares; |
(kk)
| “Interim Order” means the interim order of the Court contemplated by Section 2.2 of the Business Combination Agreement and made pursuant to Section 291 of the BCBCA in a form acceptable to the Company and the SPAC, each acting reasonably, providing for, among other things, the calling and holding of the Company Meeting, as the same may be amended by the Court or with the consent of the SPAC and the Company, such consent not to be unreasonably withheld, conditioned or delayed; |
(ll)
| “ITA” means the Income Tax Act (Canada); |
(mm)
| “Letter of Transmittal” has the meaning specified in Section 4.1(a); |
(nn)
| “Lien” means any mortgage, pledge, security interest, attachment, right of first refusal, option, proxy, voting trust, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof), restriction (whether on voting, sale, transfer, disposition or otherwise), any subordination arrangement in favor of another Person, license, or any filing or agreement to file a financing statement as debtor under the Uniform Commercial Code or any similar Law (but excluding the conversion restrictions on the Multiple Voting Company Shares); |
(oo)
| “Multiple Voting Company Shares” means the multiple voting shares of the Company, without par value; |
(pp)
| “New PubCo” means the SPAC after the SPAC Continuance; |
(qq)
| “New PubCo Board” means the board of directors of New PubCo; |
(rr)
| “New PubCo Common Shares” means, following the SPAC Continuance, the common shares of New PubCo; |
(ss)
| “New PubCo Organizational Documents” means the amended and restated New PubCo Organizational Documents in substantially the form attached as Exhibit B to the Business Combination Agreement; |
(tt)
| “Party” and “Parties” means, as applicable, the SPAC, Amalco Sub and the Company; |
(uu)
| “Per Common Share Amalgamation Consideration” means, (i) with respect to each Multiple Voting Company Share, an amount of New PubCo Common Shares equal to (A) ten (10), multiplied by (B) the Common Conversion Ratio, and (ii) with respect to each Subordinate Voting Company Share, an amount of New PubCo Common Shares equal to the Common Conversion Ratio; |
(vv)
| “Person” means an individual, corporation, partnership (including a general partnership, limited partnership, or limited liability partnership), limited or unlimited liability company, association, trust or other entity or organization, including a government, domestic or foreign, or political subdivision thereof, or an agency or instrumentality thereof; |
TABLE OF CONTENTS (ww)
| “Plan of Arrangement” means this plan of arrangement and any amendment or variation hereto made in accordance with Article 5 hereto or the Business Combination Agreement or upon the direction of the Court in the Final Order with the prior written consent of the Company and the SPAC, each acting reasonably; |
(xx)
| “Registrar” means the Registrar of Companies appointed pursuant to Section 400 of the BCBCA; |
(yy)
| “SPAC” means Focus Impact Acquisition Corp., a Delaware corporation; |
(zz)
| “SPAC Continuance” means the redomicile or continuance of the SPAC from the State of Delaware under the Delaware General Corporation Law to the Province of Alberta under the Business Corporations Act (Alberta); |
(aaa)
| “Subordinate Voting Company Shares” means the subordinate voting shares of the Company, without par value; and |
(bbb)
| “Transmittal Documents” has the meaning set out in Section 4.1(c). |
1.2 Interpretation Not Affected by Headings, etc. The division of this Plan of Arrangement into sections and other portions and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation hereof. Unless otherwise indicated, all references in this Plan of Arrangement to a “Section” followed by a number and/or a letter refer to the specified section of this Plan of Arrangement. Unless otherwise indicated, the terms “this Plan of Arrangement”, “hereof”, “herein”, “hereunder” and “hereby” and similar expressions refer to this Plan of Arrangement as amended or supplemented from time to time pursuant to the applicable provisions hereof, and not to any particular section or other portion hereof. 1.3 Currency. Unless otherwise stated, all sums of money referred to in this Plan of Arrangement are expressed in lawful money of the United States. 1.4 Number, etc. Unless the context otherwise requires, words importing the singular shall include the plural and vice versa and words importing any gender shall include all genders. 1.5 Construction. In this Plan of Arrangement unless otherwise indicated: (a)
| the words “include”, “including” or “in particular”, when following any general term or statement, shall not be construed as limiting the general term or statement to the specific items or matters set forth or to similar items or matters, but rather as permitting the general term or statement to refer to all other items or matters that could reasonably fall within the broadest possible scope of the general term or statement; |
(b)
| a reference to a statute means that statute, as amended and in effect as of the date of this Plan of Arrangement, and includes each and every regulation and rule made thereunder and in effect as of the date hereof; and |
(c)
| where a word, term or phrase is defined, its derivatives or other grammatical forms have a corresponding meaning. |
1.6 Time. Time shall be of the essence in every matter or action contemplated hereunder. All times expressed herein or in any Letter of Transmittal contemplated herein are local time Vancouver, British Columbia unless otherwise stipulated herein or therein. ARTICLE 2
ARRANGEMENT 2.1 Business Combination Agreement. This Plan of Arrangement is made pursuant to, is subject to the provisions of, and forms a part of, the Business Combination Agreement, except in respect of the sequence of the steps comprising the Arrangement, which shall occur in the order set forth herein. 2.2 Binding Effect. This Plan of Arrangement shall become effective at, and be binding at and immediately after, the Effective Time on: (a) the Company; (b) the Company Securityholders (including Dissenting Shareholders); (c) the SPAC; and (d) Amalco Sub. 2.3 Arrangement. Commencing at the Effective Time, the following shall occur and shall be deemed to occur sequentially, in two-minute intervals, in the following order and without any further authorization, act or formality unless stated otherwise: TABLE OF CONTENTS (a)
| the New PubCo shall adopt the New PubCo Organizational Documents, which shall take effect immediately on the date and time that the New PubCo Organizational Documents are filed in accordance with the ABCA; |
(b)
| each Company Share held by a Dissenting Shareholder in respect of which the Company Shareholder has validly exercised his, her or its Dissent Rights shall be transferred and assigned by such Dissenting Shareholder, without any further act or formality on his, her or its party, to the Company (free and clear of any Liens) in accordance with, and for the consideration set forth in, Section 3.1; |
(c)
| with respect to each Company Share transferred and assigned in accordance with Section 2.3(b): |
(i)
| the registered holder thereof shall cease to be the registered holder of such Company Share and the name of such registered holder shall be removed from the register of Company Shareholders as of the Effective Time; |
(ii)
| the registered holder thereof shall be deemed to have executed and delivered all consents, releases, assignments and waivers, statutory or otherwise, required to transfer and assign such Company Share; and |
(iii)
| such Company Shares shall be cancelled by the Company for no consideration, other than as set forth in Section 3.1(a); |
(d)
| the Company and Amalco Sub shall merge to form one corporate entity (“Amalco”) with the same effect as if they had amalgamated under Section 269 of the BCBCA (except that the Company will be considered the surviving corporation in the Amalgamation) and, for the avoidance of doubt, the Amalgamation is intended to constitute a single integrated transaction, qualifying as a “reorganization” within the meaning of Section 368(a) of the Code and the U.S. Treasury Regulations promulgated thereunder for U.S. federal income tax purposes, and the Amalgamation is intended to qualify as an amalgamation as defined in subsection 87(1) of the ITA, and without limiting the generality of the foregoing, upon and as a consequence of the Amalgamation: |
(i)
| each Company Share shall automatically, without any action on the part of the Parties or the holder thereof, but subject to the requirements of the Letter of Transmittal, be exchanged for that certain number of New PubCo Common Shares equal to the applicable Per Common Share Amalgamation Consideration in respect of each Company Share; |
(ii)
| each outstanding Company Equity Award issued and outstanding immediately prior to the Effective Time shall automatically, without any action on the part of the Parties or the holder thereof, be cancelled and converted as follows: |
(A)
| each outstanding Company Option, whether vested or unvested, shall automatically, without any action on the part of the Parties or the holder thereof, be cancelled and converted into an option to purchase (x) a number of New PubCo Common Shares (rounded down to the nearest whole share) equal to the product of (I) the number of Subordinate Voting Company Shares underlying such Company Option, multiplied by (II) the Common Conversion Ratio, (y) at an exercise price per share (rounded up to the nearest whole cent) equal to the (I) exercise price per share of such Company Option immediately prior to the Effective Time divided by (II) the Common Conversion Ratio (each, a “Converted Option”); provided, however, that such conversion shall occur in a manner intended to comply with the requirements of Section 409A of the Code, and subsection 7(1.4) of the ITA, and therefore, notwithstanding the foregoing, in the event that: (1) the excess of the aggregate fair market value of the New PubCo Common Shares subject to a Converted Option, determined immediately after the Effective Time, over the aggregate option exercise price for such New PubCo Common Shares pursuant to such Converted Option (such excess referred to as the “Converted Option ITM Amount”) would otherwise exceed (2) the excess of the aggregate fair market value of the Subordinate Voting Company Shares subject to the Company Option in exchange for which the Converted Option was granted, determined immediately prior to the Effective Time, over the aggregate option exercise price for the Subordinate Voting Company Shares pursuant to such Company Option (such excess referred to as the “Company Option ITM Amount”), the previous provisions shall be adjusted with effect at and from the Effective Time so that the Converted Option ITM Amount of the |
TABLE OF CONTENTS Converted Option does not exceed the Company Option ITM Amount of the Company Option in accordance with subsection 7(1.4) of the ITA and, to the extent applicable, Section 409A of the Code, but only to the extent necessary and in a manner that does not otherwise (except to the extent necessary to comply with subsection 7(1.4) of the ITA and Section 409A of the Code) adversely affect the holder of the Converted Option. Each Converted Option shall be subject to substantially the same terms and conditions as were applicable under such Company Option and the Company Equity Incentive Plan immediately prior to the Effective Time (including with respect to vesting and restrictions on transfer), except for (1) terms rendered inoperative by reason of the transactions contemplated by the Business Combination Agreement (including the replacement of the counterparty from Company to New PubCo) or (2) such other immaterial administrative or ministerial changes as the New PubCo Board (or the compensation committee of the New PubCo Board) may determine in good faith are appropriate to effectuate the administration of the Converted Options; (B)
| each outstanding Company RSU shall automatically, without any action on the part of the Parties or the holder thereof, be cancelled and converted into an New PubCo restricted stock unit (a “Converted RSU”) representing the right to receive a number of New PubCo Common Shares (rounded to the nearest whole share), or equal to the product of (I) the number of Subordinate Voting Company Shares underlying such Company RSU, multiplied by (II) the Common Conversion Ratio. Each Converted RSU shall be subject to substantially the same terms and conditions as were applicable under such Company RSU and the Company Equity Incentive Plan immediately prior to the Effective Time (including with respect to vesting and restrictions on transfer), except for (1) terms rendered inoperative by reason of the transactions contemplated by the Business Combination Agreement (including the replacement of the counterparty from Company to New PubCo) or (2) such other immaterial administrative or ministerial changes as the New PubCo Board (or the compensation committee of the New PubCo Board) may determine in good faith are appropriate to effectuate the administration of the Converted RSUs; |
(iii)
| each Company Warrant issued and outstanding shall, in accordance with its terms, become exercisable for New PubCo Common Shares (a “Converted Warrant”) and shall provide the holder the right to acquire, subject to substantially the same terms and conditions as were applicable under such Company Warrant, (A) a number of New PubCo Common Shares (rounded down to the nearest whole share) equal to the product of (I) the number of Subordinate Voting Company Shares underlying such Company Warrant, multiplied by (II) the Common Conversion Ratio, (B) at an exercise price per share (rounded up to the nearest whole cent) equal to (I) the exercise price per share of such Company Warrant immediately prior to the Effective Time divided by (II) the Common Conversion Ratio; |
(iv)
| each Company Convertible Note outstanding at the Effective Time shall be fully and finally settled in accordance with its terms and converted first into that number of Company Shares (for the avoidance of doubt, which shall not be included in the Fully Diluted Common Shares Outstanding) and then into that number of New PubCo Common Shares as set forth in the Company Convertible Note Subscription Agreements with respect thereto, which Convertible Note Shares shall be held in accordance with the terms of such Company Convertible Note Subscription Agreements; and |
(v)
| each outstanding share of Amalco Sub shall automatically, without any action on the part of the Parties or the holder thereof, be exchanged for one newly issued, fully paid and non-assessable common share of Amalco; |
(e)
| without limiting the generality of Section 2.3(d), the Company and Amalco Sub shall continue as Amalco and, from and after the Effective Date: |
(i)
| Amalco shall own and hold the property of the Company and Amalco Sub and, without limiting the provisions hereof, all rights of creditors or others shall be unimpaired by such amalgamation; |
(ii)
| all liabilities and obligations of the Company and Amalco Sub, whether arising by contract or otherwise, may be enforced against Amalco to the same extent as if such obligations had been incurred or contracted by it; |
TABLE OF CONTENTS (iii)
| other than the Company Options and the Company RSUs exchanged under Section 2.3(d), all rights, contracts, permits and interests of the Company and Amalco Sub shall continue as rights, contracts, permits and interests of Amalco as if the Company and Amalco Sub continued and, for greater certainty, the amalgamation shall not constitute a transfer or assignment of the rights or obligations of either of the Company or Amalco Sub under any such rights, contracts, permits and interests; |
(iv)
| any existing cause of action, claim or liability to prosecution shall be unaffected; |
(v)
| the Company will be considered the surviving corporation in the Amalgamation; |
(vi)
| a civil, criminal or administrative action or proceeding pending by or against either the Company or Amalco Sub may be continued by or against Amalco; |
(vii)
| a conviction against, or ruling, order or judgment in favour of or against either the Company or Amalco Sub may be enforced by or against Amalco; |
(viii) the name of Amalco shall be “DevvStream Holdings Inc.”; (ix)
| Amalco shall be authorised to issue an unlimited number of common shares; |
(x)
| (A) the chief executive officer and chief financial officer of the Company immediately prior to the Effective Time shall be the directors of Amalco, with each such director to hold office in accordance with the Organizational Documents of Amalco and (B) the officers of the Company immediately prior to the Effective Time shall be the officers of Amalco, with each such officer to hold office in accordance with the Organizational Documents of Amalco; |
(xi)
| the articles and notice of articles of Amalco shall otherwise be substantially in the form of the articles and notice of articles of the Company; |
(xii)
| the capital of the common shares of Amalco shall be an amount equal to the total of: (A) the aggregate paid-up capital (as such term is defined in the ITA) of the Company Shares (which in each case, for greater certainty, does not include any paid-up capital attributable to the Company Shares described in Section 2.3(b)), and (B) the aggregate paid-up capital (as such term is defined in the ITA) of the Amalco Sub Shares described in Section 2.3(d)(iii), in each case as measured at the time immediately prior to the Effective Time; and |
(xiii)
| there shall be added to the stated capital of New PubCo Common Shares an amount equal to the paid-up capital (as such term is defined in the ITA) of the Company Shares (which, for greater certainty, does not include any paid-up capital attributable to the Company Shares described in Section 2.3(b)) as measured at the time immediately prior to the Effective Time. |
(f)
| the exchanges and cancellations provided for in Sections 2.3(b) through 2.3(e) hereof shall be deemed to occur simultaneously at the time on the Effective Date on which such exchanges and cancellations first begin as contemplated therein, notwithstanding certain procedures related thereto that may not be completed until after such Business Day. |
2.4 No Fractional Shares. In no event shall any holder of Company Securities be entitled to a fractional New PubCo Common Share. Where the aggregate number of New PubCo Common Shares to be issued to a former Company Securityholder as consideration under this Arrangement and pursuant to the Business Combination Agreement would result in a fraction of a New PubCo Common Share being issuable, the number of New PubCo Common Shares to be received by such Company Securityholder (after aggregating all fractional New PubCo Common Shares that otherwise would be received by such holder) shall be rounded down to the nearest whole New PubCo Common Share. ARTICLE 3
RIGHTS OF DISSENT 3.1 Rights of Dissent (a)
| Registered holders of Company Shares may exercise dissent rights with respect to any Company Shares held by such holder (“Dissent Rights”) in connection with the Arrangement pursuant to and in the manner set forth in Division 2 of Part 8 of the BCBCA, as modified by the Interim Order, the Final Order and this Section 3.1 (the “Dissent Procedures”); provided that, notwithstanding Section 242 of the BCBCA, the |
TABLE OF CONTENTS written objection to the Arrangement Resolution contemplated by Section 242 of the BCBCA must be received by the Company not later than 5:00 p.m. (Vancouver time) on the Business Day that is two (2) Business Days immediately preceding the date of the Company Meeting (as it may be adjourned or postponed from time to time). Each Dissenting Shareholder who duly exercises such holder’s Dissent Rights shall, notwithstanding anything to the contrary in Section 245 of the BCBCA, be deemed to have transferred for cancellation the Company Shares held by such holder and in respect of which Dissent Rights have been validly exercised to the Company free and clear of all Liens (other than the right to be paid fair value for such Company Shares as set out in this Section 3.1), as provided in Section 2.3(b) and if they: (i)
| ultimately are determined to be entitled to be paid fair value for such Company Shares: (A) shall be deemed not to have participated in the transactions in Article 2 (other than Section 2.3(b) and 2.3(c)); (B) will be entitled to be paid by the Company the fair value of such Company Shares, which fair value shall be determined in accordance with the procedures applicable to the payout value set out in Sections 244 and 245 of the BCBCA and determined as of the close of business on the Business Day before the Arrangement Resolution was adopted; and (C) shall not be entitled to any other payment or consideration, including any payment or consideration that would be payable or issuable under the Arrangement had such holders not exercised their Dissent Rights in respect of such Company Shares; or |
(ii)
| ultimately are not entitled, for any reason, to be paid fair value for their Company Shares, shall be deemed to have participated in the Arrangement on the same basis as a non-dissenting holder of Company Shares and shall be entitled to receive only the New PubCo Common Shares on the basis determined in accordance with Section 2.3(d)(i) that such holder would have received pursuant to the Arrangement if such registered holder had not exercised Dissent Rights; |
but in no case shall the New PubCo, Amalco Sub, the Company, Amalco or any other Person be required to recognize such Persons as holders of Company Shares after the Effective Time, and the names of such Persons shall be deleted from the registers of holders of Company Shares at the Effective Time. (b)
| In addition to any other restrictions set forth in the BCBCA and the Interim Order, Company Shareholders who vote, or who have instructed a proxyholder to vote, in favour of the Arrangement Resolution shall not be entitled to exercise Dissent Rights. |
ARTICLE 4
DELIVERY OF NEW PUBCO COMMON SHARES 4.1 Delivery of New PubCo Common Shares (a)
| At or prior to the Effective Time, New PubCo shall send, or shall cause the Exchange Agent to send, to each Company Shareholder holding Company Securities evidenced by certificates (the “Certificates”) or represented by book- entry (the “Book-Entry Shares”) and not held by DTC or CDS, a letter of transmittal for use in such exchange, in a form to be mutually agreed upon by the Parties (the “Letter of Transmittal”) (which shall specify that the delivery of the exchanged New PubCo Common Shares shall be effected, and risk of loss and title shall pass, only upon proper delivery of a properly completed and duly executed Letter of Transmittal) and, if applicable, the appropriate Certificates, if any (or a Lost Certificate Affidavit), to the Exchange Agent for use in such exchange. |
(b)
| With respect to Book-Entry Shares, including the New PubCo Common Shares, held through the DTC or CDS, the SPAC and the Company shall cooperate to establish procedures with the Exchange Agent, DTC or CDS to ensure that the Exchange Agent will transmit to DTC or CDS, as the case may be (or their respective nominees) as soon as reasonably practicable on or after the Closing Date, upon surrender of Book-Entry Shares held of record by DTC or CDS (or their respective nominees) in accordance with customary surrender procedures, the applicable New PubCo Common Shares to be exchanged for such Book-Entry Shares held through the DTC or CDS, as applicable. |
(c)
| Each Company Shareholder shall be entitled to receive the applicable Common Amalgamation Consideration in respect of the Company Shares tendered for exchange within thirty (30) days after the Effective Time, subject to either, with respect to Book-Entry Shares, the procedures established in accordance with Section 4.1(b) or, with respect to Company Securities evidenced by Certificates, the |
TABLE OF CONTENTS delivery to the Exchange Agent of the following items prior thereto (collectively, the “Transmittal Documents”): (i) the Certificates (or a Lost Certificate Affidavit), (ii) a properly completed and duly executed Letter of Transmittal, and (iii) such other documents as may be reasonably requested by the Exchange Agent or New PubCo. Until so surrendered, each Certificate shall represent after the Effective Time for all purposes only the right to receive the Common Amalgamation Consideration attributable to such Company Shareholder. 4.2 Distributions with Respect to Unsurrendered Certificates. No dividends or other distributions declared or made after the Effective Time with respect to New PubCo Common Shares with a record date after the Effective Time shall be paid to the holder of any unsurrendered Certificate which immediately prior to the Effective Time represented outstanding Company Shares that were exchanged pursuant to Section 2.3 unless and until the holder of record of such Certificate shall surrender such Certificate in accordance with Section 4.1. Subject to applicable law, at the time of such surrender of any such Certificate (or in the case of clause (b) below, at the appropriate payment date), there shall be paid to the holder of record of the Certificates formerly representing whole Company Shares, without interest, (a) the amount of dividends or other distributions with a record date after the Effective Time but prior to surrender and a payment date prior to surrender paid with respect to such whole New PubCo Common Share and (b) on the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time but prior to surrender and a payment date subsequent to surrender payable with respect to such whole New PubCo Common Share. 4.3 Lost Certificates. In the event any Certificate which immediately prior to the Effective Time represented one or more outstanding Company Shares that were exchanged pursuant to Section 2.3(d)(i) shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed, the Exchange Agent will issue in exchange for such lost, stolen or destroyed certificate, one or more certificates or book-entry advice statements representing one or more New PubCo Common Shares (and any dividends or distributions with respect thereto) deliverable in accordance with such holder’s Letter of Transmittal. When authorizing such payment in exchange for any lost, stolen or destroyed certificate, the Person to whom Certificates or book-entry advice statements representing New PubCo Common Shares are to be issued shall, as a condition precedent to the issuance thereof, give a bond satisfactory to New PubCo and its transfer agent and the Exchange Agent in such sum as New PubCo may direct or otherwise indemnify New PubCo, its transfer agent and the Exchange Agent in a manner satisfactory to New PubCo, its transfer agent and the Exchange Agent against any claim that may be made against New PubCo, its transfer agent and/or the Exchange Agent with respect to the certificate alleged to have been lost, stolen or destroyed. 4.4 Extinction of Rights. Any Certificate or book-entry advice statements which immediately prior to the Effective Time represented outstanding Company Shares that were exchanged pursuant to Section 2.3(d)(i) and not deposited, with all other instruments required by Section 4.1 on or prior to the second anniversary of the Effective Date shall cease to represent a claim or interest of any kind or nature as a shareholder of New PubCo or as a former shareholder of the Company. On such date, New PubCo Common Shares to which the former registered holder of the Certificate referred to in the preceding sentence was ultimately entitled shall be deemed to have been surrendered to New PubCo together with all entitlements to dividends, distributions and interest thereon held for such former registered holder. None of New PubCo, Amalco Sub, the Company or the Exchange Agent shall be liable to any person in respect of any New PubCo Common Shares (or dividends, distributions and interest in respect thereof) delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. 4.5 Withholding Rights. The SPAC, New PubCo and the Exchange Agent shall be entitled to deduct and withhold from the Common Amalgamation Consideration and any other amounts otherwise issuable or payable pursuant hereunder (whether in cash or kind) such amounts as the applicable party may be required to deduct and withhold therefrom under any applicable Law in respect of Taxes; provided, however, that before making any deduction or withholding pursuant to this Section 4.5 (other than with respect to compensatory payments or as a result of the Company failing to deliver the certification required by Section 8.3(d)(vi) of the Business Combination Agreement), SPAC and New PubCo shall use commercially reasonable efforts to give the Company at least five (5) Business Days prior written notice of any anticipated deduction or withholding (together with any legal basis thereof) to provide the Company with sufficient opportunity to provide any forms or other documentation from the applicable equity holders or take such other steps in order to avoid such deduction or withholding. SPAC and New PubCo shall reasonably consult and cooperate with the Company or the applicable Company Shareholder in good faith to minimize or eliminate, to the extent permissible under applicable Law, the amount of any such deduction or withholding, TABLE OF CONTENTS including by cooperating with the submission of any certificates or forms to establish an exemption from, reduction in, or refund of any such deduction or withholding. To the extent that any amounts are so deducted, withheld and remitted to the appropriate Governmental Authority, such amounts shall be treated for all purposes hereof as having been paid to the Person to whom such amounts would otherwise have been paid. SPAC, New PubCo and the Exchange Agent, as applicable, may sell or otherwise dispose of such portion of the Common Amalgamation Consideration or other consideration otherwise payable to such holder or former holder in the form of New PubCo Common Shares as is necessary to provide sufficient funds to enable the withholding party to comply with such deduction or withholding requirements, and none of SPAC, New PubCo or the Exchange Agent, as applicable, shall be liable to any Person for any deficiency in respect of any proceeds received (whether in cash or in kind), and New PubCo or the Exchange Agent, as applicable, shall notify the holder thereof and remit to the holder thereof any unapplied balance of the net proceeds of such sale. 4.6 Deemed Fully Paid and Non-Assessable Shares. All Company Shares and New PubCo Shares issued pursuant hereto shall be deemed to be validly issued and outstanding as fully paid and non-assessable shares for all purposes of the BCBCA. ARTICLE 5
AMENDMENTS 5.1 SPAC and the Company reserve the right to amend, modify and/or supplement this Plan of Arrangement at any time and from time to time prior to the Effective Date, provided that each such amendment, modification and/or supplement must be: (a) set out in writing, (b) agreed to in writing by SPAC and the Company, (c) filed with the Court and, if made following the Company Meeting, approved by the Court (to the extent required by the Court), and (d) communicated to holders of Company Shares, if and as required by the Court. 5.2 Any amendment, modification or supplement to this Plan of Arrangement may be proposed by the Company at any time prior to the Company Meeting (provided that SPAC shall have previously consented in writing thereto) with or without any other prior notice or communication, and if so proposed and accepted by the Persons voting at the Company Meeting (other than as may be required under the Interim Order), shall become part of this Plan of Arrangement for all purposes. 5.3 Any amendment, modification or supplement to this Plan of Arrangement that is approved by the Court following the Company Meeting shall be effective only if (a) it is consented to in writing by each of the Company and SPAC, and (b) if required by the Court, it is consented to by holders of the Company Shares voting in the manner directed by the Court. 5.4 Any amendment, modification or supplement to this Plan of Arrangement may be made following the Effective Date by New PubCo and Amalco, provided that it concerns a matter which, in the reasonable opinions of New PubCo and Amalco, each acting reasonably, is of an administrative nature required to better give effect to the implementation of this Plan of Arrangement and is not adverse to the financial or economic interests of any holder of Company Shares. 5.5 The Parties, acting reasonably, agree to make all necessary consequential amendments to the Plan of Arrangement that are reasonably necessary to give effect to the foregoing. ARTICLE 6
FURTHER ASSURANCES 6.1 Notwithstanding that the transactions and events set out herein shall occur and be deemed to occur in the order set out in this Plan of Arrangement without any further act or formality, each of the parties to the Business Combination Agreement shall make, do and execute, or cause to be made, done or executed, all such further acts, deeds, agreements, transfers, assurances, instruments or documents as may reasonably be required by any of them in order further to document or evidence any of the transactions or events set out herein. TABLE OF CONTENTS RESOLUTIONS OF THE SOLE SHAREHOLDER
OF
FOCUS IMPACT AMALCO SUB LTD.
(the “Company”) The following resolutions are consented to in writing by the sole shareholder of the Company pursuant to the Business Corporations Act (British Columbia) (the “Act”) as of September 12, 2023. RECITALS: A.
| The Company wishes to enter into a business combination agreement dated as of September 12, 2023 by and among DevvStream Holdings Inc., Focus Impact Acquisition Corp. (the “SPAC”) and the Company, in substantially the form attached hereto as Exhibit “A” (the “Business Combination Agreement”), pursuant to which the parties intends to carry out an initial business combination (as such term is used in the final prospectus of the SPAC dated as of October 27, 2021), which shall include an amalgamation between the Company and DevvStream Holdings Inc., as part of an arrangement (the “Arrangement”) on the terms and subject to the conditions set forth in a plan of arrangement under Section 288 of the Act. |
NOW THEREFORE BE IT RESOLVED THAT: The Business Combination Agreement 1.
| Entry into the Business Combination Agreement by the Company, substantially in the form presented to the sole shareholder, is hereby authorized and approved. |
2.
| The Company is authorized to carry out the transactions contemplated by the Business Combination Agreement, including those set forth in the Plan of Arrangement. |
Ancillary Documents 3.
| Entry into any ancillary agreements, deeds, other instruments and other documents relating to the Arrangement and the transactions contemplated by the Business Combination Agreement (collectively, the “Ancillary Documents”) by the Company is hereby authorized and approved. |
General 4.
| All prior acts and deeds of any of the officers or directors of the Company taken to carry out the intent and accomplish the purposes of the foregoing resolutions are hereby approved, adopted, ratified and confirmed in all respects as the respective acts and deeds of the Company. |
[Signature page follows] TABLE OF CONTENTS These resolutions may be executed by inserting, attaching, or otherwise associating such person’s electronic signature in, to or with such resolution (including causing any of the foregoing to occur), and the insertion, attachment or other association of such person’s electronic signature will be conclusive evidence of such person’s authorization of the foregoing. | | | | | | FOCUS IMPACT ACQUISITION CORP. | | | | | | | | | | | | | | By: | | | /s/ Carl Stanton | | | | | | | Name: | | | Carl Stanton | | | | | | | Title: | | | Chief Executive Officer |
[Signature Page to the Amalco Sub Shareholder Resolutions Authorizing Arrangement]
TABLE OF CONTENTS Exhibit “A”
Business Combination Agreement See attached. TABLE OF CONTENTS REPRESENTATIONS AND WARRANTIES The Core Company Securityholder hereby represents and warrants to the SPAC and the Company as to, and only as to, the Core Company Securityholder as follows: Section 3.01. Authorization; Validity of Agreement. If the Core Company Securityholder is not an individual, the Core Company Securityholder is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. The Core Company Securityholder has the requisite capacity and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. This Agreement has been duly authorized (to the extent authorization is required), executed and delivered by the Core Company Securityholder and, assuming this Agreement constitutes a valid and binding obligation of the SPAC and the Company, constitutes a legal, valid and binding obligation of the Core Company Securityholder, enforceable against the Core Company Securityholder in accordance with its terms (subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws affecting creditors’ rights generally and general principles of equity). [If the Core Company Securityholder is married and the Core Company Securityholder’s Covered Shares constitute community property under applicable Law, a spousal consent in substantially the form attached hereto as Exhibit A has been duly executed and delivered by, and constitutes the valid and binding agreement of, the Core Company Securityholder’s spouse (subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws affecting creditors’ rights generally and general principles of equity).]1 Section 3.02. Ownership. Except as otherwise set forth on Schedule 1, unless Transferred pursuant to a Permitted Transfer, (a) the Core Company Securityholder’s Existing Shares, if any, are, and all of the Covered Shares Beneficially Owned by the Core Company Securityholder from the date hereof through and at the Effective Time will be, Beneficially Owned by the Core Company Securityholder, and (b) the Core Company Securityholder has good and valid title to the Core Company Securityholder’s Existing Shares, if any, free and clear of any Encumbrances other than pursuant to this Agreement, or under applicable federal, provincial or state securities laws. The Core Company Securityholder has and will have at all times through the Effective Time sole voting power (including the right to control such vote as contemplated herein), sole power of disposition, sole power to issue instructions with respect to the matters set forth in Article 2, and sole power to agree to all of the matters set forth in this Agreement, in each case with respect to all of the Core Company Securityholder’s Existing Shares, except with respect to any Existing Shares that are Transferred pursuant to a Permitted Transfer. Section 3.03. No Violation. The execution and delivery of this Agreement by the Core Company Securityholder does not, and the performance by the Core Company Securityholder of its obligations under this Agreement will not, (a) conflict with or violate any applicable Law or, if applicable, any certificate, notice of articles or articles of incorporation, as applicable, or bylaws or other equivalent organizational documents of the Core Company Securityholder, or (b) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or result in the creation of any Encumbrance upon any of the properties or assets of the Core Company Securityholder under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which the Core Company Securityholder is a party or by which the Core Company Securityholder or any of its, his or her properties or assets may be bound, except in each case as would not prevent or delay consummation of the Business Combination and the other transactions contemplated by the BCA or impair the ability of the Core Company Securityholder to perform its, his or her obligations hereunder or to consummate the transactions contemplated hereby on a timely basis. TABLE OF CONTENTS Section 3.04. Consents and Approvals. The execution and delivery of this Agreement by the Core Company Securityholder does not, and the performance by the Core Company Securityholder of its, his or her obligations under this Agreement and the consummation by the Core Company Securityholder of the transactions contemplated hereby will not, require the Core Company Securityholder to obtain any consent, approval, authorization or permit of, or to make any filing with or notification to, any Governmental Authority. Section 3.05. Absence of Litigation. As of the date hereof, there is no litigation, action, suit or proceeding pending or, to the knowledge of the Core Company Securityholder, threatened against or affecting the Core Company Securityholder and/or any of its Affiliates before or by any Governmental Authority that would reasonably be expected to impair the ability of the Core Company Securityholder to perform its, his or her obligations hereunder or to consummate the transactions contemplated hereby on a timely basis. Section 3.06. Reliance by Company and SPAC. The Core Company Securityholder understands and acknowledges that the Company and the SPAC are entering into the BCA in reliance upon the execution and delivery of this Agreement by the Core Company Securityholder and the representations and warranties of the Core Company Securityholder contained herein. The Core Company Securityholder understands and acknowledges that the BCA governs the terms of the Business Combination and the other transactions contemplated thereby. Section 3.07. Adequate Information. The Core Company Securityholder is a sophisticated holder with respect to the Covered Shares and has adequate information concerning the transactions contemplated by the BCA and concerning the business and financial condition of the SPAC and the Company to make an informed decision regarding the matters referred to herein and has independently, based on such information as the Core Company Securityholder has deemed appropriate, made the Core Company Securityholder’s own analysis and decision to enter into this Agreement. ARTICLE 4
OTHER COVENANTS Section 4.01. Prohibition on Transfers; Other Actions. (a) The Core Company Securityholder agrees that, from the date hereof until the Effective Time (and without limitation of the provisions set forth in Section 4.01(b)), the Core Company Securityholder shall not (i) Transfer or permit the Transfer of the Core Company Securityholder’s Covered Shares, Beneficial Ownership thereof or any other interest therein unless such Transfer is a Permitted Transfer effected in accordance with the terms of this Agreement; (ii) enter into any agreement, arrangement or understanding with any Person, or take any other action, that violates or would reasonably be expected to violate or conflict, or result in or give rise to a violation of, the Core Company Securityholder’s representations, warranties, covenants and obligations under this Agreement; or (iii) take any action that would restrict or otherwise adversely affect the Core Company Securityholder’s legal power, authority and right to comply with and perform its covenants and obligations under this Agreement. Any Transfer in violation of this provision shall be void ab initio. Until the earlier of the termination of the BCA in accordance with its terms and the Effective Time (and without limitation of the provisions set forth in Section 4.01(b)), the Core Company Securityholder (A) shall not request that the Company register the transfer (book-entry or otherwise) of any of the Core Company Securityholder’s Covered Shares or any certificate in respect thereof and (B) hereby consents to the entry of stop transfer instructions by the Company with respect to any transfer of the Core Company Securityholder’s Covered Shares, unless, in each case, such transfer is a Permitted Transfer effected in accordance with the terms of this Agreement. Notwithstanding anything in this Agreement to the contrary, nothing in this Agreement shall require any action, or restrict the Core Company Securityholder, with respect to any Covered Shares subject to any pledge or security interest in effect as of the date hereof as set forth on Schedule 1 to the extent such action or restriction is inconsistent with the terms of such pledge or security interest; provided that, unless and until there is a bona fide foreclosure with respect to such pledge or security interest, the Core Company Securityholder agrees that there are no terms of any such pledge or security interest that will prevent or impair the Core Company Securityholder from complying with any obligation, agreement or covenant set forth herein. (b) The Core Company Securityholder shall not Transfer, or permit any Transfer, of the Core Company Securityholder’s Covered Shares (unless such Transfer is a Permitted Transfer effected in accordance with the terms of this Agreement) until the earlier of (i) three hundred and sixty (360) days after the completion of the Business Combination and (ii) the date on which New PubCo (or its successor) completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of New PubCo’s (or such TABLE OF CONTENTS successor’s) shareholders having the right to exchange their securities for cash, securities or other property (the “Lock-up Period”). Notwithstanding the foregoing, if, subsequent to the Business Combination, the closing price of the New PubCo Common Shares equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period commencing at least 150 days after the Business Combination, the Core Company Securityholder’s Covered Shares shall be released from the Core Company Securityholder’s Covered Shares Lock-up. Section 4.02. Dividends, Distributions, Etc. In the event of any change in the shares of the Company or the SPAC, as the case may be, by reason of any reclassification, recapitalization, reorganization, share split (including a reverse share split) or subdivision or combination, exchange or readjustment of shares, or any dividend or distribution, merger or other similar change in capitalization, the terms “Existing Shares” and “Covered Shares” shall be deemed to refer to and include such shares as well as all such dividends and distributions and any securities into which or for which any or all of such shares may be changed or exchanged or which are received in such transaction. Section 4.03. Notice of Acquisitions. The Core Company Securityholder agrees to notify the SPAC and the Company as promptly as reasonably practicable of the number of any additional shares of the Company or other securities convertible into or exercisable or exchangeable for shares of the Company of which the Core Company Securityholder acquires Beneficial Ownership on or after the date hereof and prior to the Effective Time. ARTICLE 5
MISCELLANEOUS Section 5.01. Termination. This Agreement shall remain in effect until the Expiration Time, at which time this Agreement shall terminate in its entirety and be of no further force or effect; provided, however, that any proxy granted hereunder shall be automatically and immediately terminated and released at the Effective Time. Neither the provisions of this Section 5.01 nor the termination of this Agreement shall (a) relieve any party hereto from any liability of such party to any other party incurred prior to such termination or expiration, (b) relieve any party hereto from any liability to any other party arising out of or in connection with any breach of this Agreement prior to such termination or expiration or fraud (c) terminate the obligations under Section 2.01(b). Section 5.02. No Agreement as Director or Officer. Notwithstanding any provision in this Agreement to the contrary, nothing in this Agreement shall (a) limit, restrict or otherwise affect the Core Company Securityholder or any Affiliate or Representative of the Core Company Securityholder in his or her capacity as a director or officer of the Company from acting (or not acting) in such capacity or voting in the capacity as a director in such person’s sole discretion on any matter, including in respect of the BCA, and no such actions or votes shall be deemed a breach of this Agreement, or (b) be construed to prohibit, limit or restrict the Core Company Securityholder or any Affiliates or Representatives of the Core Company Securityholder from exercising fiduciary duties as a director or officer of the Company solely in their capacity as such, and not acting in their capacity as a securityholder. Without limiting the foregoing, it is the intention of the parties that this Agreement shall apply to the Core Company Securityholder solely in the Core Company Securityholder’s capacity as a shareholder of the Company. Section 5.03. No Ownership Interest. The Core Company Securityholder has agreed to enter into this Agreement and act in the manner specified in this Agreement for consideration. Except as expressly set forth in this Agreement, all rights and all ownership and economic benefits of and relating to the Core Company Securityholder’s Covered Shares shall remain vested in and belong to the Core Company Securityholder, and except as expressly set forth in this Agreement, nothing herein shall, or shall be construed to, grant the Company or the SPAC any power, sole or shared, to direct or control the voting or disposition of any of such Covered Shares. TABLE OF CONTENTS Section 5.04. Notices. All notices, requests, claims, demands and other communications hereunder shall be given (and shall be deemed to have been duly received if given) by hand delivery in writing, by facsimile transmission with confirmation of receipt, by email transmission with confirmation of receipt or by recognized overnight or international courier service, as follows: | | | if to Company: | | | | | | | | DevvStream Holdings Inc. | | | | 2133-1177 West Hastings Street | | | | Vancouver, BC V6E 2K3 | | | | Attention: Sunny Trinh | | | | Email: sunny@devvstream.com | | | | | | | | with a copy to (which shall not constitute notice): | | | | | | | | Morrison & Foerster LLP | | | | 12531 High Bluff Drive, Suite 100 | | | | San Diego, CA 92130 | | | | Attention: Shai Kalansky; Omar Pringle; Justin Salon | | | | Email: skalansky@mofo.com; opringle@mofo.com; justinsalon@mofo.com | | | | | | | | if to the SPAC: | | | | | | | | Focus Impact Acquisition Corp. | | | | 1345 Avenue of the Americas | | | | New York, NY 10105 | | | | Attn: Carl Stanton | | | | E-mail: cstanton@focus-impact.com | | | | | | | | with a copy to (which shall not constitute notice): | | | | | | | | Kirkland & Ellis LLP | | | | 601 Lexington Avenue | | | | New York, NY 02210022 | | | | Attn: Lauren M. Colasacco, P.C., Peter Seligson, P.C. | | | | Email: lauren.colasacco@kirkland.com; peter.seligson@kirkland.com |
and if to the Core Company Securityholder, to the address set forth on Schedule 1, or to such other address as the Person to whom notice is given may have previously furnished to the others in writing in the manner set forth above. Section 5.05. Interpretation. When reference is made in this Agreement to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The words “hereof,” “herein,” “hereby” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The word “or” shall not be exclusive. Whenever used in this Agreement, any noun or pronoun shall be deemed to include the plural as well as the singular and to cover all genders. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted. Section 5.06. Counterparts. This Agreement may be executed in counterparts (which may be delivered by facsimile or other electronic transmission), each of which shall be deemed to be an original, but all of which, taken together, shall constitute one and the same agreement. TABLE OF CONTENTS Section 5.07. Entire Agreement. This Agreement and, to the extent referenced herein, the BCA, together with the several agreements and other documents and instruments referred to herein or therein or attached hereto or thereto, constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, both oral and written, among the parties with respect to the subject matter hereof and thereof. Except for the representations and warranties expressly contained in Article 3, the Core Company Securityholder makes no express or implied representation or warranty with respect to the Core Company Securityholder or the Covered Shares, or otherwise. Section 5.08. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. (a) This Agreement shall be governed by, construed and enforced in accordance with the Laws of the Province of British Columbia and the federal Laws applicable therein, without regard to any choice of law or conflict of laws principles thereof that would cause the application of the Law of any jurisdiction other than the Province of British Columbia. Each Party irrevocably attorns and submits to the non-exclusive jurisdiction of the British Columbia courts situated in the City of Vancouver and waives objection to the venue of any proceeding in such court or that such court provides an inconvenient forum. (b) EACH PARTY 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 ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO (I) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, SEEK TO ENFORCE THAT FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. Section 5.09. Amendment; Waiver. Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Agreement or, in the case of a waiver, by each party against whom the waiver is to be effective, but such waiver shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Section 5.10. Remedies. The parties hereto agree that irreparable damage would occur and that the parties would not have any adequate remedy at law in the event that any provision of this Agreement were not performed in accordance with their specific terms hereof or were otherwise breached and that it is accordingly agreed that, prior to termination of this Agreement, the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to specific performance of the terms hereof, in addition to any other remedy at law or equity. Section 5.11. Severability. If any term or other provision of this Agreement is held to be invalid, illegal or incapable of being enforced by any rule of law or public policy in any jurisdiction, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect and shall not be affected thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced in any jurisdiction, this Agreement will be reformed, construed and enforced in such jurisdiction so as to effect the original intent of the parties as closely as possible to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible. Section 5.12. Successors and Assigns; Third Party Beneficiaries. Other than by the Core Company Securityholder to a transferee pursuant to a Permitted Transfer or any assignment, delegation or other transfer effected by the Amalgamation or the SPAC Continuance, no party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of each other party hereto. No provision of this Agreement is intended to confer any rights, benefits, remedies, obligations or liabilities hereunder upon any Person other than the parties hereto and their respective heirs, executors, personal legal representatives, successors and permitted assigns. For the avoidance of doubt and without limiting the SPAC’s rights hereunder, the SPAC shall be a beneficiary of, and entitled to enforce, the rights of the Company under Section 2.03 (Proxy) to the extent not being enforced by the Company. Section 5.13. Expenses. All costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense. TABLE OF CONTENTS Section 5.14. Non-Recourse. Notwithstanding anything to the contrary herein or in any other documents delivered pursuant hereto, (a) this Agreement may be enforced only against, and any claim based upon, arising out of or related to a breach of this Agreement by the Core Company Securityholder may be made only against, the Core Company Securityholder (or in each case its Permitted Transferees), and (b) none of the Core Company Securityholder Related Parties shall have any liability for any liabilities of the parties hereto for any such claims (whether in tort, contract or otherwise) for breach of this Agreement or in respect of any oral representations made or alleged to be made in connection herewith (other than any such Permitted Transferee). Section 5.15. Acknowledgment of Counsel. Each party to this Agreement other than the Company hereby (a) acknowledges that (i) Morrison & Foerster LLP and McMillan LLP represent and serve as counsel for only the Company (and no other party to this Agreement) with respect to this Agreement, the BCA and the transactions contemplated hereby or thereby and (ii) such party has either sought the advice of their own counsel or has had the opportunity to seek their own counsel and has chosen not to do so, and (b) gives their informed consent to Morrison & Foerster LLP’s and McMillan LLP’s representation of the Company in connection with this Agreement, the BCA and the transactions contemplated hereby or thereby. Section 5.16. Trust Account Waiver. Section 10.1 of the BCA is incorporated herein by reference mutatis mutandis. [Remainder of this page intentionally left blank] TABLE OF CONTENTS IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed (where applicable, by their respective officers or other authorized Person thereunto duly authorized) as of the date first written above. | | | DEVVSTREAM HOLDINGS INC. | | | | | | | | | | | | | | By: | | | | | | | | | | Name: | | | Sunny Trinh | | | | | | | Title: | | | Chief Executive Officer | | | | | | | | | | | | | | FOCUS IMPACT ACQUISITION CORP. | | | | | | | | | | | | | | By: | | | | | | | | | | Name: | | | Carl Stanton | | | | | | | Title: | | | Chief Executive Officer |
[Signature Page to Support & Lock-up Agreement]
TABLE OF CONTENTS IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed (where applicable, by their respective officers or other authorized Person thereunto duly authorized) as of the date first written above. | | | CORE COMPANY SECURITYHOLDER: | | | | | [] | | | | | | | | | | | | | | | | By: | | | | | | | | | | Name: | | | | | | | | | | | Title: | | | | |
[Signature Page to Support & Lock-up Agreement]
TABLE OF CONTENTS Schedule 1 | [ ] | | | (i) [ ] multiple voting shares of the Company,
(ii) [ ] subordinate voting shares of the Company. | | | [ ] | |
TABLE OF CONTENTS Exhibit A
Consent of Spouse I, , spouse of [Name of Core Company Securityholder], have read and approved that certain Support and Lock-up Agreement (the “Agreement”), dated as of [ ], 2023, by and among DevvStream Holdings Inc., Focus Impact Acquisition Corp. and the Core Company Securityholder. In consideration of the right of my spouse to participate in the transactions described in the Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to the exercise of any rights under the Agreement insofar as I may have any rights under the community property laws of the [jurisdiction] or similar laws relating to marital property in effect in the [state / country] of our residence as of the date of the signing of the foregoing Agreement. Dated: , 2023 | | | By: | | | | | | | Name: | | | |
TABLE OF CONTENTS Arrangement Resolution DevvStream Corp.
2024 Equity Incentive Plan
Adopted by the Board of Directors: [ ], 2024
Approved by the Stockholders: [ ], 2024 (a) Plan Purpose. The purpose of the Plan is to further align the interests of eligible participants with those of the Company’s stockholders by providing incentive compensation opportunities tied to the performance of the Company and its Common Stock. The Plan is intended to advance the interests of the Company and increase stockholder value by attracting, retaining and motivating key personnel upon whose judgment, initiative and effort the successful conduct of the Company’s business is largely dependent. (b) Available Awards. The Plan provides for the grant of the following Awards: (i) Incentive Stock Options; (ii) Nonstatutory Stock Options; (iii) SARs; (iv) Restricted Stock Awards; (v) RSU Awards; (vi) Performance Awards; and (vii) Other Awards. (c) Adoption Date; Effective Date. The Plan will come into existence on the Adoption Date, but no Award may be granted prior to the Effective Date. 2.
| Shares Subject to the Plan. |
(a) Share Reserve. Subject to adjustment in accordance with Section 2(c) and any adjustments as necessary to implement any Capitalization Adjustments, the aggregate number of shares of Common Stock that may be issued pursuant to Awards will be [•] shares; provided, that, commencing the first business day of each fiscal year of the Company, beginning with the Company’s fiscal year following the fiscal year of the Effective Date, the number of Shares available for issuance under the Plan shall be increased by a number equal to the lesser of (i) 5% of the number of Shares outstanding on the last day of the immediately preceding fiscal year of the Company, calculated on a fully diluted basis, or (ii) such lesser number of Shares as determined by the Board. (b) Aggregate Incentive Stock Option Limit. Notwithstanding anything to the contrary in Section 2(a) and subject to any adjustments as necessary to implement any Capitalization Adjustments, the aggregate maximum number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options is [•] shares. (c) Share Reserve Operation. (i) Limit Applies to Common Stock Issued Pursuant to Awards. For clarity, the Share Reserve is a limit on the number of shares of Common Stock that may be issued pursuant to Awards and does not limit the granting of Awards, except that the Company will keep available at all times the number of shares of Common Stock reasonably required to satisfy its obligations to issue shares pursuant to such Awards. Shares may be issued in connection with a merger or acquisition as permitted by, as applicable, Nasdaq Listing Rule 5635(c), NYSE Listed Company Manual Section 303A.08, NYSE American Company Guide Section 711 or other applicable rule, and such issuance will not reduce the number of shares available for issuance under the Plan. (ii) Actions that Do Not Constitute Issuance of Common Stock and Do Not Reduce Share Reserve. The following actions do not result in an issuance of shares under the Plan and accordingly do not reduce the number of shares subject to the Share Reserve and available for issuance under the Plan: (1) the expiration or termination of any portion of an Award without the shares covered by such portion of the Award having been issued; (2) the settlement of any portion of an Award in cash (i.e., the Participant receives cash rather than Common Stock); (3) the withholding of shares that would otherwise be issued by the Company to satisfy the exercise, strike or purchase price of an Award; or (4) the withholding of shares that would otherwise be issued by the Company to satisfy a tax withholding obligation in connection with an Award. TABLE OF CONTENTS (iii) Reversion of Previously Issued Shares of Common Stock to Share Reserve. The following shares of Common Stock previously issued pursuant to an Award and accordingly initially deducted from the Share Reserve will be added back to the Share Reserve and again become available for issuance under the Plan: (1) any shares that are forfeited back to or repurchased by the Company because of a failure to meet a contingency or condition required for the vesting of such shares; (2) any shares that are reacquired by the Company to satisfy the exercise, strike or purchase price of an Award; and (3) any shares that are reacquired by the Company to satisfy a tax withholding obligation in connection with an Award. 3.
| Eligibility and Limitations. |
(a) Eligible Award Recipients. Subject to the terms of the Plan, Employees, Directors and Consultants are eligible to receive Awards. (b) Specific Award Limitations. (i) Limitations on Incentive Stock Option Recipients. Incentive Stock Options may be granted only to Employees of the Company or a “parent corporation” or “subsidiary corporation” thereof (as such terms are defined in Sections 424(e) and (f) of the Code). (ii) Incentive Stock Option $100,000 Limitation. To the extent that the aggregate Fair Market Value (determined at the time of grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of the Company and any Affiliates) exceeds $100,000 (or such other limit established in the Code) or otherwise does not comply with the rules governing Incentive Stock Options, the Options or portions thereof that exceed such limit (according to the order in which they were granted) or otherwise do not comply with such rules will be treated as Nonstatutory Stock Options, notwithstanding any contrary provision of the applicable Option Agreement(s). (iii) Limitations on Incentive Stock Options Granted to Ten Percent Stockholders. A Ten Percent Stockholder may not be granted an Incentive Stock Option unless (1) the exercise price of such Option is at least 110% of the Fair Market Value on the date of grant of such Option and (2) the Option is not exercisable after the expiration of five years from the date of grant of such Option. (iv) Limitations on Nonstatutory Stock Options and SARs. Nonstatutory Stock Options and SARs may not be granted to Employees, Directors and Consultants unless the stock underlying such Awards is treated as “service recipient stock” under Section 409A or unless such Awards otherwise comply with the requirements of Section 409A. (c) Aggregate Incentive Stock Option Limit. The aggregate maximum number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options is the number of shares specified in Section 2(b). 4.
| Options and Stock Appreciation Rights. |
Each Option and SAR will have such terms and conditions as determined by the Board. Each Option will be designated in writing as an Incentive Stock Option or Nonstatutory Stock Option at the time of grant; provided, however, that if an Option is not so designated or if an Option designated as an Incentive Stock Option fails to qualify as an Incentive Stock Option, then such Option will be a Nonstatutory Stock Option, and the shares purchased upon exercise of each type of Option will be separately accounted for. Each SAR will be denominated in shares of Common Stock equivalents. The terms and conditions of separate Options and SARs need not be identical; provided, however, that each Option Agreement and SAR Agreement will conform (through incorporation of provisions hereof by reference in the Award Agreement or otherwise) to the substance of each of the following provisions: (a) Term. Subject to Section 3(b) regarding Ten Percent Stockholders, no Option or SAR will be exercisable after the expiration of ten years from the date of grant of such Award or such shorter period specified in the Award Agreement. (b) Exercise or Strike Price. Subject to Section 3(b) regarding Ten Percent Stockholders, the exercise or strike price of each Option or SAR will not be less than 100% of the Fair Market Value on the TABLE OF CONTENTS date of grant of such Award. Notwithstanding the foregoing, an Option or SAR may be granted with an exercise or strike price lower than 100% of the Fair Market Value on the date of grant of such Award if such Award is granted pursuant to an assumption of or substitution for another option or stock appreciation right pursuant to a Corporate Transaction and in a manner consistent with the provisions of Sections 409A and, if applicable, 424(a) of the Code. (c) Exercise Procedure and Payment of Exercise Price for Options. In order to exercise an Option, the Participant must provide notice of exercise to the Plan Administrator in accordance with the procedures specified in the Option Agreement or otherwise provided by the Company. The Board has the authority to grant Options that do not permit all of the following methods of payment (or otherwise restrict the ability to use certain methods) and to grant Options that require the consent of the Company to utilize a particular method of payment. The exercise price of an Option may be paid, to the extent permitted by Applicable Law and as determined by the Board, by one or more of the following methods of payment to the extent set forth in the Option Agreement: (i) by cash or check, bank draft or money order payable to the Company; (ii) pursuant to a “cashless exercise” program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of the Common Stock subject to the Option, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the exercise price to the Company from the sales proceeds; (iii) by delivery to the Company (either by actual delivery or attestation) of shares of Common Stock that are already owned by the Participant free and clear of any liens, claims, encumbrances or security interests, with a Fair Market Value on the date of exercise that does not exceed the exercise price, provided that (1) at the time of exercise the Common Stock is publicly traded, (2) any remaining balance of the exercise price not satisfied by such delivery is paid by the Participant in cash or other permitted form of payment, (3) such delivery would not violate any Applicable Law or agreement restricting the redemption of the Common Stock, (4) any certificated shares are endorsed or accompanied by an executed assignment separate from certificate, and (5) such shares have been held by the Participant for any minimum period necessary to avoid adverse accounting treatment as a result of such delivery; (iv) if the Option is a Nonstatutory Stock Option, by a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Common Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value on the date of exercise that does not exceed the exercise price, provided that (1) such shares used to pay the exercise price will not be exercisable thereafter and (2) any remaining balance of the exercise price not satisfied by such net exercise is paid by the Participant in cash or other permitted form of payment; or (v) in any other form of consideration that may be acceptable to the Board and permissible under Applicable Law. (d) Exercise Procedure and Payment of Appreciation Distribution for SARs. In order to exercise any SAR, the Participant must provide notice of exercise to the Plan Administrator in accordance with the SAR Agreement. The appreciation distribution payable to a Participant upon the exercise of a SAR will not be greater than an amount equal to the excess of (i) the aggregate Fair Market Value on the date of exercise of a number of shares of Common Stock equal to the number of Common Stock equivalents that are vested and being exercised under such SAR, over (ii) the strike price of such SAR. Such appreciation distribution may be paid to the Participant in the form of Common Stock or cash (or any combination of Common Stock and cash) or in any other form of payment, as determined by the Board and specified in the SAR Agreement. (e) Transferability. Options and SARs may not be transferred to third party financial institutions for value. The Board may impose such additional limitations on the transferability of an Option or SAR as it determines. In the absence of any such determination by the Board, the following restrictions on the TABLE OF CONTENTS transferability of Options and SARs will apply, provided that except as explicitly provided herein, neither an Option nor a SAR may be transferred for consideration and provided, further, that if an Option is an Incentive Stock Option, such Option may be deemed to be a Nonstatutory Stock Option as a result of such transfer: (i) Restrictions on Transfer. An Option or SAR will not be transferable, except by will or by the laws of descent and distribution, and will be exercisable during the lifetime of the Participant only by the Participant; provided, however, that the Board may permit transfer of an Option or SAR in a manner that is not prohibited by applicable tax and securities laws upon the Participant’s request, including to a trust if the Participant is considered to be the sole beneficial owner of such trust (as determined under Section 671 of the Code and applicable state law) while such Option or SAR is held in such trust, provided that the Participant and the trustee enter into a transfer and other agreements required by the Company. (ii) Domestic Relations Orders. Notwithstanding the foregoing, subject to the execution of transfer documentation in a format acceptable to the Company and subject to the approval of the Board or a duly authorized Officer, an Option or SAR may be transferred pursuant to a domestic relations order. (f) Vesting. The Board may impose such restrictions on or conditions to the vesting and/or exercisability of an Option or SAR as determined by the Board. Except as otherwise provided in the Award Agreement or other written agreement between a Participant and the Company or an Affiliate, vesting of Options and SARs will cease upon termination of the Participant’s Continuous Service. (g) Termination of Continuous Service for Cause. Except as explicitly otherwise provided in the Award Agreement or other written agreement between a Participant and the Company or an Affiliate, if a Participant’s Continuous Service is terminated for Cause, the Participant’s Options and SARs will terminate and be forfeited immediately upon such termination of Continuous Service, and the Participant will be prohibited from exercising any portion (including any vested portion) of such Awards on and after the date of such termination of Continuous Service and the Participant will have no further right, title or interest in such forfeited Award, the shares of Common Stock subject to the forfeited Award, or any consideration in respect of the forfeited Award. (h) Post-Termination Exercise Period Following Termination of Continuous Service for Reasons Other than Cause. Subject to Section 4(i), if a Participant’s Continuous Service terminates for any reason other than for Cause, the Participant may exercise his or her Option or SAR to the extent vested, but only within the following period of time or, if applicable, such other period of time provided in the Award Agreement or other written agreement between a Participant and the Company or an Affiliate; provided, however, that in no event may such Award be exercised after the expiration of its maximum term (as set forth in Section 4(a)): (i) three months following the date of such termination if such termination is a termination without Cause (other than any termination due to the Participant’s Disability or death); (ii) 12 months following the date of such termination if such termination is due to the Participant’s Disability; (iii) 12 months following the date of such termination if such termination is due to the Participant’s death; or (iv) 12 months following the date of the Participant’s death if such death occurs following the date of such termination but during the period such Award is otherwise exercisable (as provided in (i) or (ii) above). TABLE OF CONTENTS Following the date of such termination, to the extent the Participant does not exercise such Award within the applicable Post-Termination Exercise Period (or, if earlier, prior to the expiration of the maximum term of such Award), such unexercised portion of the Award will terminate, and the Participant will have no further right, title or interest in the terminated Award, the shares of Common Stock subject to the terminated Award, or any consideration in respect of the terminated Award. (i) Restrictions on Exercise; Extension of Exercisability. A Participant may not exercise an Option or SAR at any time that the issuance of shares of Common Stock upon such exercise would violate Applicable Law. Except as otherwise provided in the Award Agreement or other written agreement between a Participant and the Company or an Affiliate, if a Participant’s Continuous Service terminates for any reason other than for Cause and, at any time during the last thirty days of the applicable Post-Termination Exercise Period: (i) the exercise of the Participant’s Option or SAR would be prohibited solely because the issuance of shares of Common Stock upon such exercise would violate Applicable Law, or (ii) the immediate sale of any shares of Common Stock issued upon such exercise would violate the Company’s Trading Policy, then the applicable Post-Termination Exercise Period will be extended to the last day of the calendar month that commences following the date the Award would otherwise expire, with an additional extension of the exercise period to the last day of the next calendar month to apply if any of the foregoing restrictions apply at any time during such extended exercise period, generally without limitation as to the maximum permitted number of extensions); provided, however, that in no event may such Award be exercised after the expiration of its maximum term (as set forth in Section 4(a)). (j) Non-Exempt Employees. No Option or SAR, whether or not vested, granted to an Employee who is a non-exempt employee for purposes of the Fair Labor Standards Act of 1938, as amended, will be first exercisable for any shares of Common Stock until at least six months following the date of grant of such Award. Notwithstanding the foregoing, in accordance with the provisions of the Worker Economic Opportunity Act, any vested portion of such Award may be exercised earlier than six months following the date of grant of such Award in the event of (i) such Participant’s death or Disability, (ii) a Corporate Transaction in which such Award is not assumed, continued or substituted, or (iii) such Participant’s retirement (as such term may be defined in the Award Agreement or another applicable agreement or, in the absence of any such definition, in accordance with the Company’s then current employment policies and guidelines). This Section 4(j) is intended to operate so that any income derived by a non-exempt employee in connection with the exercise or vesting of an Option or SAR will be exempt from his or her regular rate of pay. (k) Whole Shares. Options and SARs may be exercised only with respect to whole shares of Common Stock or their equivalents. 5.
| Awards Other Than Options and Stock Appreciation Rights. |
(a) Restricted Stock Awards and RSU Awards. Each Restricted Stock Award and RSU Award will have such terms and conditions as determined by the Board; provided, however, that each Restricted Stock Award Agreement and RSU Award Agreement will conform (through incorporation of the provisions hereof by reference in the Award Agreement or otherwise) to the substance of each of the following provisions: (i) Form of Award. (1) Restricted Stock Awards. To the extent consistent with the Company’s Bylaws, at the Board’s election, shares of Common Stock subject to a Restricted Stock Award may be (A) held in book entry form subject to the Company’s instructions until such shares become vested or any other restrictions lapse, or (B) evidenced by a certificate, which certificate will be held in such form and manner as determined by the Board. Unless otherwise determined by the Board, a Participant will have voting and other rights as a stockholder of the Company with respect to any shares subject to a Restricted Stock Award. (2) RSU Awards. An RSU Award represents a Participant’s right to be issued on a future date the number of shares of Common Stock that is equal to the number of restricted stock units subject to the RSU Award. As a holder of an RSU Award, a Participant is an unsecured creditor of the Company with respect to the Company's unfunded obligation, if any, to issue shares of Common Stock in settlement of such Award and nothing contained in the Plan or any RSU TABLE OF CONTENTS Agreement, and no action taken pursuant to its provisions, will create or be construed to create a trust of any kind or a fiduciary relationship between a Participant and the Company or an Affiliate or any other person. A Participant will not have voting or any other rights as a stockholder of the Company with respect to any RSU Award (unless and until shares are actually issued in settlement of a vested RSU Award). (ii) Consideration. (1) Restricted Stock Awards. A Restricted Stock Award may be granted in consideration for (A) cash or check, bank draft or money order payable to the Company, (B) services to the Company or an Affiliate, or (C) any other form of consideration as the Board may determine and permissible under Applicable Law. (2) RSU Awards. Unless otherwise determined by the Board at the time of grant, an RSU Award will be granted in consideration for the Participant’s services to the Company or an Affiliate, such that the Participant will not be required to make any payment to the Company (other than such services) with respect to the grant or vesting of the RSU Award, or the issuance of any shares of Common Stock pursuant to the RSU Award. If, at the time of grant, the Board determines that any consideration must be paid by the Participant (in a form other than the Participant’s services to the Company or an Affiliate) upon the issuance of any shares of Common Stock in settlement of the RSU Award, such consideration may be paid in any form of consideration as the Board may determine and permissible under Applicable Law. (iii) Vesting. The Board may impose such restrictions on or conditions to the vesting of a Restricted Stock Award or RSU Award as determined by the Board. Except as otherwise provided in the Award Agreement or other written agreement between a Participant and the Company or an Affiliate, vesting of Restricted Stock Awards and RSU Awards will cease upon termination of the Participant’s Continuous Service. (iv) Termination of Continuous Service. Except as otherwise provided in the Award Agreement or other written agreement between a Participant and the Company or an Affiliate, if a Participant’s Continuous Service terminates for any reason, (1) the Company may receive through a forfeiture condition or a repurchase right any or all of the shares of Common Stock held by the Participant under his or her Restricted Stock Award that have not vested as of the date of such termination as set forth in the Restricted Stock Award Agreement and the Participant will have no further right, title or interest in the Restricted Stock Award, the shares of Common Stock subject to the Restricted Stock Award, or any consideration in respect of the Restricted Stock Award and (2) any portion of his or her RSU Award that has not vested will be forfeited upon such termination and the Participant will have no further right, title or interest in the RSU Award, the shares of Common Stock issuable pursuant to the RSU Award, or any consideration in respect of the RSU Award. (v) Dividends and Dividend Equivalents. Dividends or dividend equivalents may be paid or credited, as applicable, with respect to any shares of Common Stock subject to a Restricted Stock Award or RSU Award, as determined by the Board and specified in the Award Agreement. (vi) Settlement of RSU Awards. An RSU Award may be settled by the issuance of shares of Common Stock or cash (or any combination thereof) or in any other form of payment, as determined by the Board and specified in the RSU Award Agreement. At the time of grant, the Board may determine to impose such restrictions or conditions that delay such delivery to a date following the vesting of the RSU Award. (b) Performance Awards. With respect to any Performance Award, the length of any Performance Period, the Performance Goals to be achieved during the Performance Period, the other terms and conditions of such Award, and the measure of whether and to what degree such Performance Goals have been attained will be determined by the Board. (c) Other Awards. Other forms of Awards valued in whole or in part by reference to, or otherwise based on, Common Stock, including the appreciation in value thereof, may be granted either alone or in addition to Awards provided for under Section 4 and the preceding provisions of this Section 5. Subject to TABLE OF CONTENTS the provisions of the Plan, the Board will have sole and complete discretion to determine the persons to whom and the time or times at which such Other Awards will be granted, the number of shares of Common Stock (or the cash equivalent thereof) to be granted pursuant to such Other Awards and all other terms and conditions of such Other Awards. 6.
| Adjustments upon Changes in Common Stock; Other Corporate Events. |
(a) Capitalization Adjustments. In the event of a Capitalization Adjustment, the Board shall appropriately and proportionately adjust: (i) the class(es) and maximum number of shares of Common Stock subject to the Plan and the maximum number of shares by which the Share Reserve may annually increase pursuant to Section 2(a); (ii) the class(es) and maximum number of shares that may be issued pursuant to the exercise of Incentive Stock Options pursuant to Section 2(b); and (iii) the class(es) and number of securities and exercise price, strike price or purchase price of Common Stock subject to outstanding Awards. The Board shall make such adjustments, and its determination shall be final, binding and conclusive. Notwithstanding the foregoing, no fractional shares or rights for fractional shares of Common Stock shall be created in order to implement any Capitalization Adjustment. The Board shall determine an appropriate equivalent benefit, if any, for any fractional shares or rights to fractional shares that might be created by the adjustments referred to in the preceding provisions of this Section. (b) Dissolution or Liquidation. Except as otherwise provided in the Award Agreement, in the event of a dissolution or liquidation of the Company, all outstanding Awards (other than Awards consisting of vested and outstanding shares of Common Stock not subject to a forfeiture condition or the Company’s right of repurchase) will terminate immediately prior to the completion of such dissolution or liquidation, and the shares of Common Stock subject to the Company’s repurchase rights or subject to a forfeiture condition may be repurchased or reacquired by the Company notwithstanding the fact that the holder of such Award is providing Continuous Service, provided, however, that the Board may determine to cause some or all Awards to become fully vested, exercisable and/or no longer subject to repurchase or forfeiture (to the extent such Awards have not previously expired or terminated) before the dissolution or liquidation is completed but contingent on its completion. (c) Corporate Transaction. Except as set forth in Section 11, in the event of a Corporate Transaction, a Participant’s Award will be treated, to the extent determined by the Board to be permitted under Section 409A, in accordance with one or more of the following methods as determined by the Board in its sole discretion: (i) settle such Awards for an amount (as determined in the sole discretion of the Board) of cash or securities, where in the case of stock options and stock appreciation rights, the value of such amount, if any, will be equal to the in-the-money spread value (if any) of such Awards; (ii) provide for the assumption of or the issuance of substitute awards that will substantially preserve the otherwise applicable terms of any affected Awards previously granted under the Plan, as determined by the Board in its sole discretion; (iii) modify the terms of such awards to add events, conditions or circumstances (including termination of employment or service within a specified period after a Corporate Transaction) upon which the vesting of such Awards or lapse of restrictions thereon will accelerate; (iv) deem any performance conditions satisfied at target, maximum or actual performance through closing or provide for the performance conditions to continue (as is or as adjusted by the Board) after closing or (v) provide that for a period of at least 20 days prior to the Corporate Transaction, any stock options or stock appreciation rights that would not otherwise become exercisable prior to the Corporate Transaction will be exercisable as to all shares subject thereto (but any such exercise will be contingent upon and subject to the occurrence of the Corporate Transaction and if the Corporate Transaction does not take place within a specified period after giving such notice for any reason whatsoever, the exercise will be null and void) and that any stock options or stock appreciation rights not exercised prior to the consummation of the Corporate Transaction will terminate and be of no further force and effect as of the consummation of the Corporate Transaction. For the avoidance of doubt, in the event of a Corporate Transaction where all Options and SARs are settled for an amount (as determined in the sole discretion of the Corporate Transaction) of cash or securities, the Board may, in its sole discretion, terminate any Option or SAR for which the exercise price is equal to or exceeds the per share value of the consideration to be paid in the Corporate Transaction without payment of consideration therefor. (d) Appointment of Stockholder Representative. As a condition to the receipt of an Award under this Plan, a Participant will be deemed to have agreed that the Award will be subject to the terms of any TABLE OF CONTENTS agreement governing a Corporate Transaction involving the Company, including, without limitation, a provision for the appointment of a stockholder representative that is authorized to act on the Participant’s behalf with respect to any escrow, indemnities and any contingent consideration. (e) No Restriction on Right to Undertake Transactions. The grant of any Award under the Plan and the issuance of shares pursuant to any Award does not affect or restrict in any way the right or power of the Company or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of stock or of options, rights or options to purchase stock or of bonds, debentures, preferred or prior preference stocks whose rights are superior to or affect the Common Stock or the rights thereof or which are convertible into or exchangeable for Common Stock, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise. (a) Administration by Board. The Board will administer the Plan unless and until the Board delegates administration of the Plan to a Committee or Committees, as provided in subsection (c) below. (b) Powers of Board. The Board will have the power, subject to, and within the limitations of, the express provisions of the Plan: (i) To determine from time to time (1) which of the persons eligible under the Plan will be granted Awards; (2) when and how each Award will be granted; (3) what type or combination of types of Award will be granted; (4) the provisions of each Award granted (which need not be identical), including the time or times when a person will be permitted to receive an issuance of Common Stock or other payment pursuant to an Award; (5) the number of shares of Common Stock or cash equivalent with respect to which an Award will be granted to each such person; (6) the Fair Market Value applicable to an Award; and (7) the terms of any Performance Award that is not valued in whole or in part by reference to, or otherwise based on, the Common Stock, including the amount of cash payment or other property that may be earned and the timing of payment. (ii) To construe and interpret the Plan and Awards granted under it, and to establish, amend and revoke rules and regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Award Agreement, in a manner and to the extent it deems necessary or expedient to make the Plan or Award fully effective. (iii) To settle all controversies regarding the Plan and Awards granted under it. (iv) To accelerate the time at which an Award may first be exercised or the time during which an Award or any part thereof will vest, notwithstanding the provisions in the Award Agreement stating the time at which it may first be exercised or the time during which it will vest. (v) To prohibit the exercise of any Option, SAR or other exercisable Award during a period of up to 30 days prior to the consummation of any pending stock dividend, stock split, combination or exchange of shares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets to stockholders, or any other change affecting the shares of Common Stock or the share price of the Common Stock including any Corporate Transaction, for reasons of administrative convenience. (vi) To suspend or terminate the Plan at any time. Suspension or termination of the Plan will not Materially Impair rights and obligations under any Award granted while the Plan is in effect except with the written consent of the affected Participant. (vii) To amend the Plan in any respect the Board deems necessary or advisable; provided, however, that stockholder approval will be required for any amendment to the extent required by Applicable Law. Except as provided above, rights under any Award granted before amendment of the Plan will not be Materially Impaired by any amendment of the Plan unless (1) the Company requests the consent of the affected Participant, and (2) such Participant consents in writing. (viii) To submit any amendment to the Plan for stockholder approval. TABLE OF CONTENTS (ix) To approve forms of Award Agreements for use under the Plan and to amend the terms of any one or more Awards, including, but not limited to, amendments to provide terms more favorable to the Participant than previously provided in the Award Agreement, subject to any specified limits in the Plan that are not subject to Board discretion; provided however, that, a Participant’s rights under any Award will not be Materially Impaired by any such amendment unless (1) the Company requests the consent of the affected Participant, and (2) such Participant consents in writing. (x) Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company and that are not in conflict with the provisions of the Plan or Awards. (xi) To adopt such procedures and sub-plans as are necessary or appropriate to permit and facilitate participation in the Plan by, or take advantage of specific tax treatment for Awards granted to, Employees, Directors or Consultants who are foreign nationals or employed outside the United States (provided that Board approval will not be necessary for immaterial modifications to the Plan or any Award Agreement to ensure or facilitate compliance with the laws of the relevant foreign jurisdiction). (xii) To effect, at any time and from time to time, subject to the consent of any Participant whose Award is Materially Impaired by such action, (1) the reduction of the exercise price (or strike price) of any outstanding Option or SAR; (2) the cancellation of any outstanding Option or SAR and the grant in substitution therefor of (A) a new Option, SAR, Restricted Stock Award, RSU Award or Other Award, under the Plan or another equity plan of the Company, covering the same or a different number of shares of Common Stock, (B) cash and/or (C) other valuable consideration (as determined by the Board); or (3) any other action that is treated as a repricing under generally accepted accounting principles. (c) Delegation to Committee. (i) General. The Board may delegate some or all of the administration of the Plan to a Committee or Committees. If administration of the Plan is delegated to a Committee, the Committee will have, in connection with the administration of the Plan, the powers theretofore possessed by the Board that have been delegated to the Committee, including the power to delegate to another Committee or a subcommittee of the Committee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board will thereafter be to the Committee or subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. Each Committee may retain the authority to concurrently administer the Plan with Committee or subcommittee to which it has delegated its authority hereunder and may, at any time, revest in such Committee some or all of the powers previously delegated. The Board may retain the authority to concurrently administer the Plan with any Committee and may, at any time, revest in the Board some or all of the powers previously delegated. (ii) Rule 16b-3 Compliance. To the extent an Award is intended to qualify for the exemption from Section 16(b) of the Exchange Act that is available under Rule 16b-3 of the Exchange Act, the Award will be granted by the Board or a Committee that consists solely of two or more Non-Employee Directors, as determined under Rule 16b-3(b)(3) of the Exchange Act and thereafter any action establishing or modifying the terms of the Award will be approved by the Board or a Committee meeting such requirements to the extent necessary for such exemption to remain available. (d) Effect of Board’s Decision. All determinations, interpretations and constructions made by the Board or any Committee in good faith will not be subject to review by any person and will be final, binding and conclusive on all persons. (e) Delegation to an Officer. The Board or any Committee may delegate to one or more Officers the authority to do one or both of the following (i) designate Employees who are not Officers to be recipients of Options and SARs (and, to the extent permitted by Applicable Law, other types of Awards) and, to the extent permitted by Applicable Law, the terms thereof, and (ii) determine the number of shares of Common Stock to be subject to such Awards granted to such Employees; provided, however, that the resolutions or charter adopted by the Board or any Committee evidencing such delegation will specify the total number of shares of Common Stock that may be subject to the Awards granted by such Officer and that such Officer TABLE OF CONTENTS may not grant an Award to himself or herself. Any such Awards will be granted on the applicable form of Award Agreement most recently approved for use by the Board or the Committee, unless otherwise provided in the resolutions approving the delegation authority. Notwithstanding anything to the contrary herein, neither the Board nor any Committee may delegate to an Officer who is acting solely in the capacity of an Officer (and not also as a Director) the authority to determine the Fair Market Value. (a) Withholding Authorization. As a condition to acceptance of any Award under the Plan, a Participant authorizes withholding from payroll and any other amounts payable to such Participant, and otherwise agrees to make adequate provision for (including), any sums required to satisfy any U.S. federal, state, local and/or foreign tax or social insurance contribution withholding obligations of the Company or an Affiliate, if any, which arise in connection with the exercise, vesting or settlement of such Award, as applicable. Accordingly, a Participant may not be able to exercise an Award even though the Award is vested, and the Company shall have no obligation to issue shares of Common Stock subject to an Award, unless and until such obligations are satisfied. (b) Satisfaction of Withholding Obligation. To the extent permitted by the terms of an Award Agreement, the Company may, in its sole discretion, satisfy any U.S. federal, state, local and/or foreign tax or social insurance withholding obligation relating to an Award by any of the following means or by a combination of such means: (i) causing the Participant to tender a cash payment; (ii) withholding shares of Common Stock from the shares of Common Stock issued or otherwise issuable to the Participant in connection with the Award; (iii) withholding cash from an Award settled in cash; (iv) withholding payment from any amounts otherwise payable to the Participant; (v) by allowing a Participant to effectuate a “cashless exercise” pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board; or (vi) by such other method as may be set forth in the Award Agreement. (c) No Obligation to Notify or Minimize Taxes; No Liability to Claims. Except as required by Applicable Law the Company has no duty or obligation to any Participant to advise such holder as to the time or manner of exercising such Award. Furthermore, the Company has no duty or obligation to warn or otherwise advise such holder of a pending termination or expiration of an Award or a possible period in which the Award may not be exercised. The Company has no duty or obligation to minimize the tax consequences of an Award to the holder of such Award and will not be liable to any holder of an Award for any adverse tax consequences to such holder in connection with an Award. As a condition to accepting an Award under the Plan, each Participant (i) agrees to not make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates related to tax liabilities arising from such Award or other Company compensation and (ii) acknowledges that such Participant was advised to consult with his or her own personal tax, financial and other legal advisors regarding the tax consequences of the Award and has either done so or knowingly and voluntarily declined to do so. Additionally, each Participant acknowledges any Option or SAR granted under the Plan is exempt from Section 409A only if the exercise or strike price is at least equal to the “fair market value” of the Common Stock on the date of grant as determined by the Internal Revenue Service and there is no other impermissible deferral of compensation associated with the Award. Additionally, as a condition to accepting an Option or SAR granted under the Plan, each Participant agrees not make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates in the event that the Internal Revenue Service asserts that such exercise price or strike price is less than the “fair market value” of the Common Stock on the date of grant as subsequently determined by the Internal Revenue Service. (d) Withholding Indemnification. As a condition to accepting an Award under the Plan, in the event that the amount of the Company’s and/or its Affiliate’s withholding obligation in connection with such Award was greater than the amount actually withheld by the Company and/or its Affiliates, each Participant agrees to indemnify and hold the Company and/or its Affiliates harmless from any failure by the Company and/or its Affiliates to withhold the proper amount. (a) Source of Shares. The stock issuable under the Plan will be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the Company on the open market or otherwise. TABLE OF CONTENTS (b) Use of Proceeds from Sales of Common Stock. Proceeds from the sale of shares of Common Stock pursuant to Awards will constitute general funds of the Company. (c) Corporate Action Constituting Grant of Awards. Corporate action constituting a grant by the Company of an Award to any Participant will be deemed completed as of the date of such corporate action, unless otherwise determined by the Board, regardless of when the instrument, certificate, or letter evidencing the Award is communicated to, or actually received or accepted by, the Participant. In the event that the corporate records (e.g., Board consents, resolutions or minutes) documenting the corporate action approving the grant contain terms (e.g., exercise price, vesting schedule or number of shares) that are inconsistent with those in the Award Agreement or related grant documents as a result of a clerical error in the Award Agreement or related grant documents, the corporate records will control and the Participant will have no legally binding right to the incorrect term in the Award Agreement or related grant documents. (d) Stockholder Rights. No Participant will be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Common Stock subject to such Award unless and until (i) such Participant has satisfied all requirements for exercise of the Award pursuant to its terms, if applicable, and (ii) the issuance of the Common Stock subject to such Award is reflected in the records of the Company. (e) No Employment or Other Service Rights. Nothing in the Plan, any Award Agreement or any other instrument executed thereunder or in connection with any Award granted pursuant thereto will confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Award was granted or affect the right of the Company or an Affiliate to terminate at will and without regard to any future vesting opportunity that a Participant may have with respect to any Award (i) the employment of an Employee with or without notice and with or without cause, (ii) the service of a Consultant pursuant to the terms of such Consultant’s agreement with the Company or an Affiliate, or (iii) the service of a Director pursuant to the Bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state or foreign jurisdiction in which the Company or the Affiliate is incorporated, as the case may be. Further, nothing in the Plan, any Award Agreement or any other instrument executed thereunder or in connection with any Award will constitute any promise or commitment by the Company or an Affiliate regarding the fact or nature of future positions, future work assignments, future compensation or any other term or condition of employment or service or confer any right or benefit under the Award or the Plan unless such right or benefit has specifically accrued under the terms of the Award Agreement and/or Plan. (f) Change in Time Commitment. In the event a Participant’s regular level of time commitment in the performance of his or her services for the Company and any Affiliates is reduced (for example, and without limitation, if the Participant is an Employee of the Company and the Employee has a change in status from a full-time Employee to a part-time Employee or takes an extended leave of absence) after the date of grant of any Award to the Participant, the Board may determine, to the extent permitted by Applicable Law, to (i) make a corresponding reduction in the number of shares or cash amount subject to any portion of such Award that is scheduled to vest or become payable after the date of such change in time commitment, and (ii) in lieu of or in combination with such a reduction, extend the vesting or payment schedule applicable to such Award. In the event of any such reduction, the Participant will have no right with respect to any portion of the Award that is so reduced or extended. (g) Execution of Additional Documents. As a condition to accepting an Award under the Plan, the Participant agrees to execute any additional documents or instruments necessary or desirable, as determined in the Plan Administrator’s sole discretion, to carry out the purposes or intent of the Award, or facilitate compliance with securities and/or other regulatory requirements, in each case at the Plan Administrator’s request. (h) Electronic Delivery and Participation. Any reference herein or in an Award Agreement to a “written” agreement or document will include any agreement or document delivered electronically, filed publicly at www.sec.gov (or any successor website thereto) or posted on the Company’s intranet (or other shared electronic medium controlled by the Company to which the Participant has access). By accepting any Award the Participant consents to receive documents by electronic delivery and to participate in the Plan TABLE OF CONTENTS through any on-line electronic system established and maintained by the Plan Administrator or another third party selected by the Plan Administrator. The form of delivery of any Common Stock (e.g., a stock certificate or electronic entry evidencing such shares) shall be determined by the Company. (i) Clawback/Recovery. All Awards granted under the Plan will be subject to recoupment in accordance with any clawback policy that the Company is required to adopt pursuant to the listing standards of any foreign or national securities exchange or association on which the Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other Applicable Law and any clawback policy that the Company otherwise adopts, to the extent applicable and permissible under Applicable Law. In addition, the Board may impose such other clawback, recovery or recoupment provisions in an Award Agreement as the Board determines necessary or appropriate, including but not limited to a reacquisition right in respect of previously acquired shares of Common Stock or other cash or property upon the occurrence of Cause. No recovery of compensation under such a clawback policy will be an event giving rise to a Participant’s right to voluntarily terminate employment upon a “resignation for good reason,” or for a “constructive termination” or any similar term under any plan of or agreement with the Company. (j) Securities Law Compliance. A Participant will not be issued any shares in respect of an Award unless either (i) the shares are registered under the Securities Act; or (ii) the Company has determined that such issuance would be exempt from the registration requirements of the Securities Act. A Participant will not be issued an Award or any shares in respect of an Award unless either (i) the distribution is qualified by a prospectus in any Province where required under Canadian securities laws, or (ii) the distribution of the shares is exempt from the prospectus requirements of Canadian securities laws. Each Award also must comply with other Applicable Law governing the Award, and a Participant will not receive such shares if the Company determines that such receipt would not be in material compliance with Applicable Law. (k) Transfer or Assignment of Awards; Issued Shares. Except as expressly provided in the Plan or the form of Award Agreement, Awards granted under the Plan may not be transferred or assigned by the Participant. After the vested shares subject to an Award have been issued, or in the case of Restricted Stock and similar awards, after the issued shares have vested, the holder of such shares is free to assign, hypothecate, donate, encumber or otherwise dispose of any interest in such shares provided that any such actions are in compliance with the provisions herein, the terms of the Trading Policy and Applicable Law. (l) Effect on Other Employee Benefit Plans. The value of any Award granted under the Plan, as determined upon grant, vesting or settlement, shall not be included as compensation, earnings, salaries, or other similar terms used when calculating any Participant’s benefits under any employee benefit plan sponsored by the Company or any Affiliate, except as such plan otherwise expressly provides. The Company expressly reserves its rights to amend, modify, or terminate any of the Company's or any Affiliate's employee benefit plans. (m) Deferrals. To the extent permitted by Applicable Law, the Board, in its sole discretion, may determine that the delivery of Common Stock or the payment of cash, upon the exercise, vesting or settlement of all or a portion of any Award may be deferred and may also establish programs and procedures for deferral elections to be made by Participants. Deferrals will be made in accordance with the requirements of Section 409A. (n) Section 409A. Unless otherwise expressly provided for in an Award Agreement, the Plan and Award Agreements will be interpreted to the greatest extent possible in a manner that makes the Plan and the Awards granted hereunder exempt from Section 409A, and, to the extent not so exempt, in compliance with the requirements of Section 409A. If the Board determines that any Award granted hereunder is not exempt from and is therefore subject to Section 409A, the Award Agreement evidencing such Award will incorporate the terms and conditions necessary to avoid the consequences specified in Section 409A(a)(1) of the Code, and to the extent an Award Agreement is silent on terms necessary for compliance, such terms are hereby incorporated by reference into the Award Agreement. Notwithstanding anything to the contrary in this Plan (and unless the Award Agreement specifically provides otherwise), if the shares of Common Stock are publicly traded, and if a Participant holding an Award that constitutes “deferred compensation” under Section 409A is a “specified employee” for purposes of Section 409A, no distribution or payment of any amount that is due because of a “separation from service” (as defined in Section 409A without regard to TABLE OF CONTENTS alternative definitions thereunder) will be issued or paid before the date that is six months and one day following the date of such Participant’s “separation from service” or, if earlier, the date of the Participant’s death, unless such distribution or payment can be made in a manner that complies with Section 409A, and any amounts so deferred will be paid in a lump sum on the day after such six month period elapses, with the balance paid thereafter on the original schedule. (o) Choice of Law. This Plan and any controversy arising out of or relating to this Plan shall be governed by, and construed in accordance with, the internal laws of the State of Delaware, without regard to conflict of law principles that would result in any application of any law other than the law of the State of Delaware. 10.
| Covenants of the Company. |
The Company will seek to obtain from each regulatory commission or agency, as may be deemed to be necessary, having jurisdiction over the Plan such authority as may be required to grant Awards and to issue and sell shares of Common Stock upon exercise or vesting of the Awards; provided, however, that this undertaking will not require the Company to register under the Securities Act the Plan, any Award or any Common Stock issued or issuable pursuant to any such Award. If, after reasonable efforts and at a reasonable cost, the Company is unable to obtain from any such regulatory commission or agency the authority that counsel for the Company deems necessary or advisable for the lawful issuance and sale of Common Stock under the Plan, the Company will be relieved from any liability for failure to issue and sell Common Stock upon exercise or vesting of such Awards unless and until such authority is obtained. A Participant is not eligible for the grant of an Award or the subsequent issuance of Common Stock pursuant to the Award if such grant or issuance would be in violation of any Applicable Law. 11.
| Additional Rules for Awards Subject to Section 409A. |
(a) Application. Unless the provisions of this Section of the Plan are expressly superseded by the provisions in the form of Award Agreement, the provisions of this Section shall apply and shall supersede anything to the contrary set forth in the Award Agreement for a Non-Exempt Award. (b) Non-Exempt Awards Subject to Non-Exempt Severance Arrangements. To the extent a Non-Exempt Award is subject to Section 409A due to application of a Non-Exempt Severance Arrangement, the following provisions of this subsection (b) apply. (i) If the Non-Exempt Award vests in the ordinary course during the Participant’s Continuous Service in accordance with the vesting schedule set forth in the Award Agreement, and does not accelerate vesting under the terms of a Non-Exempt Severance Arrangement, in no event will the shares be issued in respect of such Non-Exempt Award any later than the later of: (i) December 31st of the calendar year that includes the applicable vesting date, or (ii) the 60th day that follows the applicable vesting date. (ii) If vesting of the Non-Exempt Award accelerates under the terms of a Non-Exempt Severance Arrangement in connection with the Participant’s Separation from Service, and such vesting acceleration provisions were in effect as of the date of grant of the Non-Exempt Award and, therefore, are part of the terms of such Non-Exempt Award as of the date of grant, then the shares will be earlier issued in settlement of such Non-Exempt Award upon the Participant’s Separation from Service in accordance with the terms of the Non-Exempt Severance Arrangement, but in no event later than the 60th day that follows the date of the Participant’s Separation from Service. However, if at the time the shares would otherwise be issued the Participant is subject to the distribution limitations contained in Section 409A applicable to “specified employees,” as defined in Section 409A(a)(2)(B)(i) of the Code, such shares shall not be issued before the date that is six months following the date of such Participant’s Separation from Service, or, if earlier, the date of the Participant’s death that occurs within such six month period. (iii) If vesting of a Non-Exempt Award accelerates under the terms of a Non-Exempt Severance Arrangement in connection with a Participant’s Separation from Service, and such vesting acceleration provisions were not in effect as of the date of grant of the Non-Exempt Award and, therefore, are not a part of the terms of such Non-Exempt Award on the date of grant, then such acceleration of vesting of TABLE OF CONTENTS the Non-Exempt Award shall not accelerate the issuance date of the shares, but the shares shall instead be issued on the same schedule as set forth in the Grant Notice as if they had vested in the ordinary course during the Participant’s Continuous Service, notwithstanding the vesting acceleration of the Non-Exempt Award. Such issuance schedule is intended to satisfy the requirements of payment on a specified date or pursuant to a fixed schedule, as provided under Treasury Regulations Section 1.409A-3(a)(4). (c) Treatment of Non-Exempt Awards Upon a Corporate Transaction for Employees and Consultants. The provisions of this subsection (c) shall apply and shall supersede anything to the contrary set forth in the Plan with respect to the permitted treatment of any Non-Exempt Award in connection with a Corporate Transaction if the Participant was either an Employee or Consultant upon the applicable date of grant of the Non-Exempt Award. (i) Vested Non-Exempt Awards. The following provisions shall apply to any Vested Non-Exempt Award in connection with a Corporate Transaction: (1) If the Corporate Transaction is also a Section 409A Change in Control then the Acquiring Entity may not assume, continue or substitute the Vested Non-Exempt Award. Upon the Section 409A Change in Control the settlement of the Vested Non-Exempt Award will automatically be accelerated and the shares will be immediately issued in respect of the Vested Non-Exempt Award. Alternatively, the Company may instead provide that the Participant will receive a cash settlement equal to the Fair Market Value of the shares that would otherwise be issued to the Participant upon the Section 409A Change in Control. (2) If the Corporate Transaction is not also a Section 409A Change in Control, then the Acquiring Entity must either assume, continue or substitute each Vested Non-Exempt Award. The shares to be issued in respect of the Vested Non-Exempt Award shall be issued to the Participant by the Acquiring Entity on the same schedule that the shares would have been issued to the Participant if the Corporate Transaction had not occurred. In the Acquiring Entity’s discretion, in lieu of an issuance of shares, the Acquiring Entity may instead substitute a cash payment on each applicable issuance date, equal to the Fair Market Value of the shares that would otherwise be issued to the Participant on such issuance dates, with the determination of the Fair Market Value of the shares made on the date of the Corporate Transaction. (ii) Unvested Non-Exempt Awards. The following provisions shall apply to any Unvested Non-Exempt Award unless otherwise determined by the Board pursuant to subsection (e) of this Section. (1) In the event of a Corporate Transaction, the Acquiring Entity shall assume, continue or substitute any Unvested Non-Exempt Award. Unless otherwise determined by the Board, any Unvested Non-Exempt Award will remain subject to the same vesting and forfeiture restrictions that were applicable to the Award prior to the Corporate Transaction. The shares to be issued in respect of any Unvested Non-Exempt Award shall be issued to the Participant by the Acquiring Entity on the same schedule that the shares would have been issued to the Participant if the Corporate Transaction had not occurred. In the Acquiring Entity’s discretion, in lieu of an issuance of shares, the Acquiring Entity may instead substitute a cash payment on each applicable issuance date, equal to the Fair Market Value of the shares that would otherwise be issued to the Participant on such issuance dates, with the determination of Fair Market Value of the shares made on the date of the Corporate Transaction. (2) If the Acquiring Entity will not assume, substitute or continue any Unvested Non-Exempt Award in connection with a Corporate Transaction, then such Award shall automatically terminate and be forfeited upon the Corporate Transaction with no consideration payable to any Participant in respect of such forfeited Unvested Non-Exempt Award. Notwithstanding the foregoing, to the extent permitted and in compliance with the requirements of Section 409A, the Board may in its discretion determine to elect to accelerate the vesting and settlement of the Unvested Non-Exempt Award upon the Corporate Transaction, or instead substitute a cash payment equal to the Fair Market Value of such shares that would otherwise be issued to the Participant, as further provided in subsection (e)(ii) below. In the absence of such TABLE OF CONTENTS discretionary election by the Board, any Unvested Non-Exempt Award shall be forfeited without payment of any consideration to the affected Participants if the Acquiring Entity will not assume, substitute or continue the Unvested Non-Exempt Awards in connection with the Corporate Transaction. (3) The foregoing treatment shall apply with respect to all Unvested Non-Exempt Awards upon any Corporate Transaction, and regardless of whether or not such Corporate Transaction is also a Section 409A Change in Control. (d) Treatment of Non-Exempt Awards Upon a Corporate Transaction for Non-Employee Directors. The following provisions of this subsection (d) shall apply and shall supersede anything to the contrary that may be set forth in the Plan with respect to the permitted treatment of a Non-Exempt Director Award in connection with a Corporate Transaction. (i) If the Corporate Transaction is also a Section 409A Change in Control then the Acquiring Entity may not assume, continue or substitute the Non-Exempt Director Award. Upon the Section 409A Change in Control the vesting and settlement of any Non-Exempt Director Award will automatically be accelerated and the shares will be immediately issued to the Participant in respect of the Non-Exempt Director Award. Alternatively, the Company may provide that the Participant will instead receive a cash settlement equal to the Fair Market Value of the shares that would otherwise be issued to the Participant upon the Section 409A Change in Control pursuant to the preceding provision. (ii) If the Corporate Transaction is not also a Section 409A Change in Control, then the Acquiring Entity must either assume, continue or substitute the Non-Exempt Director Award. Unless otherwise determined by the Board, the Non-Exempt Director Award will remain subject to the same vesting and forfeiture restrictions that were applicable to the Award prior to the Corporate Transaction. The shares to be issued in respect of the Non-Exempt Director Award shall be issued to the Participant by the Acquiring Entity on the same schedule that the shares would have been issued to the Participant if the Corporate Transaction had not occurred. In the Acquiring Entity’s discretion, in lieu of an issuance of shares, the Acquiring Entity may instead substitute a cash payment on each applicable issuance date, equal to the Fair Market Value of the shares that would otherwise be issued to the Participant on such issuance dates, with the determination of Fair Market Value made on the date of the Corporate Transaction. (e) If the RSU Award is a Non-Exempt Award, then the provisions in this Section 11(e) shall apply and supersede anything to the contrary that may be set forth in the Plan or the Award Agreement with respect to the permitted treatment of such Non-Exempt Award: (i) Any exercise by the Board of discretion to accelerate the vesting of a Non-Exempt Award shall not result in any acceleration of the scheduled issuance dates for the shares in respect of the Non-Exempt Award unless earlier issuance of the shares upon the applicable vesting dates would be in compliance with the requirements of Section 409A. (ii) The Company explicitly reserves the right to earlier settle any Non-Exempt Award to the extent permitted and in compliance with the requirements of Section 409A, including pursuant to any of the exemptions available in Treasury Regulations Section 1.409A-3(j)(4)(ix). (iii) To the extent the terms of any Non-Exempt Award provide that it will be settled upon a Corporate Transaction, to the extent it is required for compliance with the requirements of Section 409A, the Corporate Transaction event triggering settlement must also constitute a Section 409A Change in Control. To the extent the terms of a Non-Exempt Award provides that it will be settled upon a termination of employment or termination of Continuous Service, to the extent it is required for compliance with the requirements of Section 409A, the termination event triggering settlement must also constitute a Separation From Service. However, if at the time the shares would otherwise be issued to a Participant in connection with a “separation from service” such Participant is subject to the distribution limitations contained in Section 409A applicable to “specified employees,” as defined in Section 409A(a)(2)(B)(i) of the Code, such shares shall not be issued before the date that is six months following the date of the Participant’s Separation From Service, or, if earlier, the date of the Participant’s death that occurs within such six month period. TABLE OF CONTENTS (iv) The provisions in this subsection (e) for delivery of the shares in respect of the settlement of an RSU Award that is a Non-Exempt Award are intended to comply with the requirements of Section 409A so that the delivery of the shares to the Participant in respect of such Non-Exempt Award will not trigger the additional tax imposed under Section 409A, and any ambiguities herein will be so interpreted. If all or any part of the Plan or any Award Agreement is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any portion of the Plan or such Award Agreement not declared to be unlawful or invalid. Any Section of the Plan or any Award Agreement (or part of such a Section) so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid. 13.
| Termination of the Plan. |
The Board may suspend or terminate the Plan at any time. No Incentive Stock Options may be granted after the tenth anniversary of the earlier of: (i) the Adoption Date, or (ii) the date the Plan is approved by the Company’s stockholders. No Awards may be granted under the Plan while the Plan is suspended or after it is terminated. As used in the Plan, the following definitions apply to the capitalized terms indicated below: (a) “Acquiring Entity” means the surviving or acquiring corporation (or its parent company) in connection with a Corporate Transaction. (b) “Adoption Date” means the date the Plan is first approved by the Board or Compensation Committee. (c) “Affiliate” means, at the time of determination, any “parent” or “subsidiary” of the Company as such terms are defined in Rule 405 promulgated under the Securities Act. The Board may determine the time or times at which “parent” or “subsidiary” status is determined within the foregoing definition. (d) “Applicable Law” means any applicable securities, federal, state, foreign, material local or municipal or other law, statute, constitution, principle of common law, resolution, ordinance, code, edict, decree, rule, listing rule, regulation, judicial decision, ruling or requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Body (including under the authority of any applicable self-regulating organization such as the Nasdaq Stock Market, New York Stock Exchange, or the Financial Industry Regulatory Authority). (e) “Award” means any right to receive Common Stock, cash or other property granted under the Plan (including an Incentive Stock Option, a Nonstatutory Stock Option, a Restricted Stock Award, an RSU Award, a SAR, a Performance Award or any Other Award). (f) “Award Agreement” means a written or electronic agreement between the Company and a Participant evidencing the terms and conditions of an Award. The Award Agreement generally consists of the Grant Notice and the agreement containing the written summary of the general terms and conditions applicable to the Award and which is provided, including through electronic means, to a Participant along with the Grant Notice. (g) “Board” means the Board of Directors of the Company (or its designee). Any decision or determination made by the Board shall be a decision or determination that is made in the sole discretion of the Board (or its designee), and such decision or determination shall be final and binding on all Participants. (h) “Capitalization Adjustment” means any change that is made in, or other events that occur with respect to, the Common Stock subject to the Plan or subject to any Award after the date the Plan is adopted by the Board without the receipt of consideration by the Company through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, large TABLE OF CONTENTS nonrecurring cash dividend, stock split, reverse stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or any similar equity restructuring transaction, as that term is used in Statement of Financial Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor thereto). Notwithstanding the foregoing, the conversion of any convertible securities of the Company will not be treated as a Capitalization Adjustment. (i) “Cause” has the meaning ascribed to such term in any written agreement between a Participant and the Company defining such term and, in the absence of such agreement, such term means, with respect to a Participant, the occurrence of any of the following events: (i) the Participant’s dishonest statements or acts with respect to the Company or any Affiliate of the Company, or any current or prospective customers, suppliers, vendors or other third parties with which such entity does business that adversely affects the Company or its Affiliates; (ii) the Participant’s commission of (A) a felony or (B) any misdemeanor involving moral turpitude, deceit, dishonesty or fraud; (iii) the Participant’s failure to perform the Participant’s assigned duties and responsibilities to the reasonable satisfaction of the Company which failure continues, in the reasonable judgment of the Company, after written notice given to the Participant by the Company; (iv) the Participant’s gross negligence, willful misconduct or insubordination with respect to the Company or any Affiliate of the Company; or (v) the Participant’s material violation of any provision of any agreement(s) between the Participant and the Company or any Affiliate of the Company relating to noncompetition, nonsolicitation, nondisclosure and/or assignment of inventions. The determination that a termination of the Participant’s Continuous Service is either for Cause or without Cause will be made by the Board with respect to Participants who are executive officers of the Company and by the Company’s Chief Executive Officer with respect to Participants who are not executive officers of the Company. Any determination by the Company that the Continuous Service of a Participant was terminated with or without Cause for the purposes of outstanding Awards held by such Participant will have no effect upon any determination of the rights or obligations of the Company or such Participant for any other purpose. (j) “Code” means the Internal Revenue Code of 1986, as amended, including any applicable regulations and guidance thereunder. (k) “Committee” means the Compensation Committee and any other committee of one or more Directors to whom authority has been delegated by the Board or Compensation Committee in accordance with the Plan. (l) “Common Stock” means the common shares of the Company. (m) “Company” means DevvStream Corp., a company existing under the Laws of the Province of Alberta, Canada, and any successor entity thereto. (n) “Compensation Committee” means the Compensation Committee of the Board. (o) “Consultant” means any person, including an advisor, who is (i) engaged by the Company or an Affiliate to render consulting or advisory services and is compensated for such services, or (ii) serving as a member of the board of directors of an Affiliate and is compensated for such services. However, service solely as a Director, or payment of a fee for such service, will not cause a Director to be considered a “Consultant” for purposes of the Plan. Notwithstanding the foregoing, a person is treated as a Consultant under this Plan only if a Form S-8 Registration Statement under the Securities Act is available to register either the offer or the sale of the Company’s securities to such person. (p) “Continuous Service” means that the Participant’s service with the Company or an Affiliate, whether as an Employee, Director or Consultant, is not interrupted or terminated. A change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee, Director or Consultant or a change in the Entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s service with the Company or an Affiliate, will not terminate a Participant’s Continuous Service; provided, however, that if the Entity for which a Participant is rendering services ceases to qualify as an Affiliate, as determined by the Board, such Participant’s Continuous Service will be considered to have terminated on the date such Entity ceases to qualify as an Affiliate. For example, a change in status from an Employee of the Company to a Consultant of an Affiliate or to a Director will not constitute an interruption of Continuous Service. To the extent permitted by law, the Board or the chief executive officer of the Company, in that party’s sole discretion, may determine whether Continuous Service TABLE OF CONTENTS will be considered interrupted in the case of (i) any leave of absence approved by the Board or chief executive officer, including sick leave, military leave or any other personal leave, or (ii) transfers between the Company, an Affiliate, or their successors. Notwithstanding the foregoing, a leave of absence will be treated as Continuous Service for purposes of vesting in an Award only to such extent as may be provided in the Company’s leave of absence policy, in the written terms of any leave of absence agreement or policy applicable to the Participant, or as otherwise required by law. In addition, to the extent required for exemption from or compliance with Section 409A, the determination of whether there has been a termination of Continuous Service will be made, and such term will be construed, in a manner that is consistent with the definition of “separation from service” as defined under Treasury Regulation Section 1.409A-1(h) (without regard to any alternative definition thereunder). (q) “Corporate Transaction” means any of the following transactions, provided, however, that the Board shall determine under parts (iv) and (v) whether multiple transactions are related, and its determination shall be final, binding and conclusive: (i) a merger, amalgamation or consolidation in which the Company is not the surviving entity; (ii) the sale, transfer or other disposition of all or substantially all of the assets of the Company; (iii) the complete liquidation or dissolution of the Company; (iv) any reverse merger or series of related transactions culminating in a reverse merger (including, but not limited to, a tender offer followed by a reverse merger) in which the Company is the surviving entity but (A) the shares of Common Stock outstanding immediately prior to such merger are converted or exchanged by virtue of the merger into other property, whether in the form of securities, cash or otherwise, or (B) in which securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such merger or the initial transaction culminating in such merger, but excluding any such transaction or series of related transactions that the Board determines shall not be a Corporate Transaction; or (v) acquisition in a single or series of related transactions by any person or related group of persons (other than the Company or by a Company-sponsored employee benefit plan) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities but excluding any such transaction or series of related transactions that the Board determines shall not be a Corporate Transaction. Notwithstanding the foregoing or any other provision of this Plan, (A) the term Corporate Transaction shall not include a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company, (B) the definition of Corporate Transaction (or any analogous term) in an individual written agreement between the Company or any Affiliate and the Participant shall supersede the foregoing definition with respect to Awards subject to such agreement; provided, however, that if no definition of Corporate Transaction or any analogous term is set forth in such an individual written agreement, the foregoing definition shall apply, and (C) with respect to any nonqualified deferred compensation that becomes payable on account of the Corporate Transaction, the transaction or event described in clause (i), (ii), (iii), or (iv) also constitutes a Section 409A Change in Control if required in order for the payment not to violate Section 409A of the Code. (r) “Director” means a member of the Board. (s) “determine” or “determined” means as determined by the Board or the Committee (or its designee) in its sole discretion. (t) “Disability” means, with respect to a Participant, such Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months, as provided in Section 22(e)(3) of the Code, and will be determined by the Board on the basis of such medical evidence as the Board deems warranted under the circumstances. TABLE OF CONTENTS (u) “Effective Date” means the Closing Date as defined in the Business Combination Agreement by and among Focus Impact Acquisition Corp., Focus Impact Amalco Sub Ltd. and the Company, dated September 12, 2023. (v) “Employee” means any person employed by the Company or an Affiliate. However, service solely as a Director, or payment of a fee for such services, will not cause a Director to be considered an “Employee” for purposes of the Plan. (w) “Employer” means the Company or the Affiliate of the Company that employs the Participant. (x) “Entity” means a corporation, partnership, limited liability company or other entity. (y) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. (z) “Exchange Act Person” means any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” will not include (i) the Company or any Subsidiary of the Company, (ii) any employee benefit plan of the Company or any Subsidiary of the Company or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company, (iii) an underwriter temporarily holding securities pursuant to a registered public offering of such securities, (iv) an Entity Owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their Ownership of stock of the Company; or (v) any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of the Effective Date, is the Owner, directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities. (aa) “Fair Market Value” means, as of any date, unless otherwise determined by the Board, the value of the Common Stock (as determined on a per share or aggregate basis, as applicable) determined as follows: (i) If the Common Stock is listed on any established stock exchange or traded on any established market, the Fair Market Value will be the closing sales price for such stock as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the date of determination, as reported in a source the Board deems reliable. (ii) If there is no closing sales price for the Common Stock on the date of determination, then the Fair Market Value will be the closing selling price on the last preceding date for which such quotation exists. (iii) In the absence of such markets for the Common Stock, or if otherwise determined by the Board, the Fair Market Value will be determined by the Board in good faith and in a manner that complies with Sections 409A and 422 of the Code. (bb) “Governmental Body” means any: (i) nation, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature; (ii) federal, state, local, municipal, foreign or other government; (iii) governmental or regulatory body, or quasi-governmental body of any nature (including any governmental division, department, administrative agency or bureau, commission, authority, instrumentality, official, ministry, fund, foundation, center, organization, unit, body or Entity and any court or other tribunal, and for the avoidance of doubt, any Tax authority) or other body exercising similar powers or authority; or (iv) self-regulatory organization (including the Nasdaq Stock Market, New York Stock Exchange, and the Financial Industry Regulatory Authority). (cc) “Grant Notice” means the notice provided to a Participant that he or she has been granted an Award under the Plan and which includes the name of the Participant, the type of Award, the date of grant of the Award, number of shares of Common Stock subject to the Award or potential cash payment right, (if any), the vesting schedule for the Award (if any) and other key terms applicable to the Award. (dd) “Incentive Stock Option” means an option granted pursuant to Section 4 of the Plan that is intended to be, and qualifies as, an “incentive stock option” within the meaning of Section 422 of the Code. TABLE OF CONTENTS (ee) “Materially Impair” means any amendment to the terms of the Award that materially adversely affects the Participant’s rights under the Award. A Participant's rights under an Award will not be deemed to have been Materially Impaired by any such amendment if the Board, in its sole discretion, determines that the amendment, taken as a whole, does not materially impair the Participant's rights. For example, the following types of amendments to the terms of an Award do not Materially Impair the Participant’s rights under the Award: (i) imposition of reasonable restrictions on the minimum number of shares subject to an Option or SAR that may be exercised; (ii) to maintain the qualified status of the Award as an Incentive Stock Option under Section 422 of the Code; (iii) to change the terms of an Incentive Stock Option in a manner that disqualifies, impairs or otherwise affects the qualified status of the Award as an Incentive Stock Option under Section 422 of the Code; (iv) to clarify the manner of exemption from, or to bring the Award into compliance with or qualify it for an exemption from, Section 409A; or (v) to comply with other Applicable Laws. (ff) “Non-Employee Director” means a Director who either (i) is not a current employee or officer of the Company or an Affiliate, does not receive compensation, either directly or indirectly, from the Company or an Affiliate for services rendered as a consultant or in any capacity other than as a Director (except for an amount as to which disclosure would not be required under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act (“Regulation S-K”)), does not possess an interest in any other transaction for which disclosure would be required under Item 404(a) of Regulation S-K, and is not engaged in a business relationship for which disclosure would be required pursuant to Item 404(b) of Regulation S-K; or (ii) is otherwise considered a “non-employee director” for purposes of Rule 16b-3. (gg) “Non-Exempt Award” means any Award that is subject to, and not exempt from, Section 409A, including as the result of (i) a deferral of the issuance of the shares subject to the Award which is elected by the Participant or imposed by the Company, or (ii) the terms of any Non-Exempt Severance Agreement. (hh) “Non-Exempt Director Award” means a Non-Exempt Award granted to a Participant who was a Director but not an Employee on the applicable grant date. (ii) “Non-Exempt Severance Arrangement” means a severance arrangement or other agreement between the Participant and the Company that provides for acceleration of vesting of an Award and issuance of the shares in respect of such Award upon the Participant’s termination of employment or separation from service (as such term is defined in Section 409A(a)(2)(A)(i) of the Code (and without regard to any alternative definition thereunder) (“Separation from Service”) and such severance benefit does not satisfy the requirements for an exemption from application of Section 409A provided under Treasury Regulations Section 1.409A-1(b)(4), 1.409A-1(b)(9) or otherwise. (jj) “Nonstatutory Stock Option” means any option granted pursuant to Section 4 of the Plan that does not qualify as an Incentive Stock Option. (kk) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act. (ll) “Option” means an Incentive Stock Option or a Nonstatutory Stock Option to purchase shares of Common Stock granted pursuant to the Plan. (mm) “Option Agreement” means a written or electronic agreement between the Company and the Optionholder evidencing the terms and conditions of the Option grant. The Option Agreement includes the Grant Notice for the Option and the agreement containing the written summary of the general terms and conditions applicable to the Option and which is provided, including through electronic means, to a Participant along with the Grant Notice. Each Option Agreement will be subject to the terms and conditions of the Plan. (nn) “Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Option. (oo) “Other Award” means an award valued in whole or in part by reference to, or otherwise based on, Common Stock, including the appreciation in value thereof (e.g., options or stock rights with an exercise price or strike price less than 100% of the Fair Market Value at the time of grant) that is not an Incentive Stock Option, Nonstatutory Stock Option, SAR, Restricted Stock Award, RSU Award or Performance Award. TABLE OF CONTENTS (pp) “Other Award Agreement” means a written or electronic agreement between the Company and a holder of an Other Award evidencing the terms and conditions of an Other Award grant. Each Other Award Agreement will be subject to the terms and conditions of the Plan. (qq) “Own,” “Owned,” “Owner,” “Ownership” means that a person or Entity will be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership” of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power, which includes the power to vote or to direct the voting, with respect to such securities. (rr) “Participant” means an Employee, Director or Consultant to whom an Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Award. (ss) “Performance Award” means an Award that may vest or may be exercised or a cash award that may vest or become earned and paid contingent upon the attainment during a Performance Period of certain Performance Goals and which is granted under the terms and conditions of Section 5(b) pursuant to such terms as are approved by the Board. In addition, to the extent permitted by Applicable Law and set forth in the applicable Award Agreement, the Board may determine that cash or other property may be used in payment of Performance Awards. Performance Awards that are settled in cash or other property are not required to be valued in whole or in part by reference to, or otherwise based on, the Common Stock. (tt) “Performance Criteria” means one or more criteria that the Board will select for purposes of establishing the Performance Goals for a Performance Period. The Performance Criteria that will be used to establish such Performance Goals may be based on any one of, or combination of, the following as determined by the Board: earnings (including earnings per share and net earnings); earnings before interest, taxes and depreciation; earnings before interest, taxes, depreciation and amortization; total stockholder return; return on equity or average stockholder’s equity; return on assets, investment, or capital employed; stock price; margin (including gross margin); income (before or after taxes); operating income; operating income after taxes; pre-tax profit; operating cash flow; sales or revenue targets; increases in revenue or product revenue; expenses and cost reduction goals; improvement in or attainment of working capital levels; economic value added (or an equivalent metric); market share; cash flow; cash flow per share; share price performance; debt reduction; customer satisfaction; stockholders’ equity; capital expenditures; debt levels; operating profit or net operating profit; workforce diversity; growth of net income or operating income; billings; financing; regulatory milestones; stockholder liquidity; corporate governance and compliance; intellectual property; personnel matters; progress of internal research; progress of partnered programs; partner satisfaction; budget management; partner or collaborator achievements; internal controls, including those related to the Sarbanes-Oxley Act of 2002; investor relations, analysts and communication; implementation or completion of projects or processes; employee retention; number of users, including unique users; strategic partnerships or transactions (including in-licensing and out-licensing of intellectual property); establishing relationships with respect to the marketing, distribution and sale of the Company’s products; supply chain achievements; co-development, co-marketing, profit sharing, joint venture or other similar arrangements; individual performance goals; corporate development and planning goals; and other measures of performance selected by the Board or Committee whether or not listed herein. (uu) “Performance Goals” means, for a Performance Period, one or more goals established by the Board for the Performance Period based upon the Performance Criteria. Performance Goals may be based on a Company-wide basis, with respect to one or more business units, divisions, Affiliates, or business segments, and in either absolute terms or relative to the performance of one or more comparable companies or the performance of one or more relevant indices. Unless specified otherwise by the Board (i) in the Award Agreement at the time the Award is granted or (ii) in such other document setting forth the Performance Goals at the time the Performance Goals are established, the Board will appropriately make adjustments in the method of calculating the attainment of Performance Goals for a Performance Period as follows: (1) to exclude restructuring and/or other nonrecurring charges; (2) to exclude exchange rate effects; (3) to exclude the effects of changes to generally accepted accounting principles; (4) to exclude the effects of any statutory adjustments to corporate tax rates; (5) to exclude the effects of items that are “unusual” in nature or occur “infrequently” as determined under generally accepted accounting principles; (6) to exclude the dilutive effects of acquisitions or joint ventures; (7) to assume that any business divested by the Company achieved performance objectives at targeted levels during the balance of a Performance Period TABLE OF CONTENTS following such divestiture; (8) to exclude the effect of any change in the outstanding shares of common stock of the Company by reason of any stock dividend or split, stock repurchase, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to common stockholders other than regular cash dividends; (9) to exclude the effects of stock based compensation and the award of bonuses under the Company’s bonus plans; (10) to exclude costs incurred in connection with potential acquisitions or divestitures that are required to be expensed under generally accepted accounting principles; and (11) to exclude the goodwill and intangible asset impairment charges that are required to be recorded under generally accepted accounting principles. In addition, the Board may establish or provide for other adjustment items in the Award Agreement at the time the Award is granted or in such other document setting forth the Performance Goals at the time the Performance Goals are established. In addition, the Board retains the discretion to reduce or eliminate the compensation or economic benefit due upon attainment of Performance Goals and to define the manner of calculating the Performance Criteria it selects to use for such Performance Period. Partial achievement of the specified criteria may result in the payment or vesting corresponding to the degree of achievement as specified in the Award Agreement or the written terms of a Performance Cash Award. (vv) “Performance Period” means the period of time selected by the Board over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to vesting or exercise of an Award. Performance Periods may be of varying and overlapping duration, at the sole discretion of the Board. (ww) “Plan” means this DevvStream Corp. 2024 Equity Incentive Plan, as amended from time to time. (xx) “Plan Administrator” means the person, persons, and/or third-party administrator designated by the Company to administer the day to day operations of the Plan and the Company’s other equity incentive programs. (yy) “Post-Termination Exercise Period” means the period following termination of a Participant’s Continuous Service within which an Option or SAR is exercisable, as specified in Section 4(h). (zz) “Restricted Stock Award” or “RSA” means an Award of shares of Common Stock which is granted pursuant to the terms and conditions of Section 5(a). (aaa) “Restricted Stock Award Agreement” means a written or electronic agreement between the Company and a holder of a Restricted Stock Award evidencing the terms and conditions of a Restricted Stock Award grant. The Restricted Stock Award Agreement includes the Grant Notice for the Restricted Stock Award and the agreement containing the written summary of the general terms and conditions applicable to the Restricted Stock Award and which is provided, including by electronic means, to a Participant along with the Grant Notice. Each Restricted Stock Award Agreement will be subject to the terms and conditions of the Plan. (bbb) “RSU Award” or “RSU” means an Award of restricted stock units representing the right to receive an issuance of shares of Common Stock which is granted pursuant to the terms and conditions of Section 5(a). (ccc) “RSU Award Agreement” means a written or electronic agreement between the Company and a holder of an RSU Award evidencing the terms and conditions of an RSU Award grant. The RSU Award Agreement includes the Grant Notice for the RSU Award and the agreement containing the written summary of the general terms and conditions applicable to the RSU Award and which is provided, including by electronic means, to a Participant along with the Grant Notice. Each RSU Award Agreement will be subject to the terms and conditions of the Plan. (ddd) “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to time. (eee) “Rule 405” means Rule 405 promulgated under the Securities Act. (fff) “Section 409A” means Section 409A of the Code and the regulations and other guidance thereunder. TABLE OF CONTENTS (ggg) “Section 409A Change in Control” means a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the Company’s assets, as provided in Section 409A(a)(2)(A)(v) of the Code and Treasury Regulations Section 1.409A-3(i)(5) (without regard to any alternative definition thereunder). (hhh) “Securities Act” means the Securities Act of 1933, as amended. (iii) “Share Reserve” means the number of shares available for issuance under the Plan as set forth in Section 2(a). (jjj) “Stock Appreciation Right” or “SAR” means a right to receive the appreciation on Common Stock that is granted pursuant to the terms and conditions of Section 4. (kkk) “SAR Agreement” means a written or electronic agreement between the Company and a holder of a SAR evidencing the terms and conditions of a SAR grant. The SAR Agreement includes the Grant Notice for the SAR and the agreement containing the written summary of the general terms and conditions applicable to the SAR and which is provided, including by electronic means, to a Participant along with the Grant Notice. Each SAR Agreement will be subject to the terms and conditions of the Plan. (lll) “Subsidiary” means, with respect to the Company, (i) any corporation of which more than 50% of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, stock of any other class or classes of such corporation will have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any partnership, limited liability company or other entity in which the Company has a direct or indirect interest (whether in the form of voting or participation in profits or capital contribution) of more than 50%. (mmm) “Ten Percent Stockholder” means a person who Owns (or is deemed to Own pursuant to Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any Affiliate. (nnn) “Trading Policy” means the Company’s policy permitting certain individuals to sell Company shares only during certain “window” periods and/or otherwise restricts the ability of certain individuals to transfer or encumber Company shares, as in effect from time to time. (ooo) “Unvested Non-Exempt Award” means the portion of any Non-Exempt Award that had not vested in accordance with its terms upon or prior to the date of any Corporate Transaction. (ppp) “Vested Non-Exempt Award” means the portion of any Non-Exempt Award that had vested in accordance with its terms upon or prior to the date of a Corporate Transaction. TABLE OF CONTENTS PLAN OF ARRANGEMENT UNDER SECTION 288
OF THE BUSINESS CORPORATIONS ACT (BRITISH COLUMBIA) ARTICLE 1
DEFINITIONS AND INTERPRETATION 1.1 Definitions. Unless indicated otherwise, where used in this Plan of Arrangement, capitalized terms used but not defined shall have the meanings specified in the Business Combination Agreement and the following terms shall have the following meanings (and grammatical variations of such terms shall have corresponding meanings): (a)
| “Amalco” has the meaning specified in Section 2.3(d); |
(b)
| “Amalco Sub” means Focus Impact Amalco Sub Ltd., a company existing under the Laws of the Province of British Columbia, and a wholly-owned subsidiary of the SPAC; |
(c)
| “Amalco Sub Shares” means the common shares in the capital of Amalco Sub; |
(d)
| “Amalgamation” means the amalgamation of Amalco Sub and the Company in accordance with the terms of Section 269 of the BCBCA to form Amalco; |
(e)
| “Amalgamation Consideration Value” means the Equity Value plus the Aggregate Exercise Price; |
(f)
| “Arrangement” means an arrangement under Section 288 of the BCBCA, on the terms set forth in this Plan of Arrangement, subject to any amendment or variations hereto made in accordance with the Business Combination Agreement and this Plan of Arrangement or made at the direction of the Court in the Final Order with the prior written consent of the Company and the SPAC, each acting reasonably; |
(g)
| “Arrangement Resolution” means the special resolution approving the Plan of Arrangement to be considered at the Company Meeting by Company Shareholders, substantially in the form set forth in Exhibit F to the Business Combination Agreement; |
(a)
| “Book-Entry Shares” has the meaning specified in Section 4.1(a); |
(b)
| “Business Combination Agreement” means the Business Combination Agreement dated as of September 12, 2023, among the SPAC, the Company, and Amalco Sub, as the same may be amended, amended and restated or supplemented from time to time; |
(c)
| “Business Day” means any day other than a Saturday, Sunday or a legal holiday on which commercial banking institutions in Delaware or British Columbia are authorized to close for business, excluding as a result of “stay at home,” “shelter- in-place,” “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any Governmental Authority so long as the electronic funds transfer systems, including for wire transfers, of commercially banking institutions in Delaware and British Columbia are generally open for use by customers on such day; |
(d)
| “BCBCA” means the Business Corporations Act (British Columbia), and the regulations made thereunder, as now in effect and as such act and regulations may be promulgated or amended from time to time; |
(e)
| “CDS” means the Canadian Depository for Securities; |
(f)
| “Certificates” has the meaning specified in Section 4.1(a); |
(g)
| “Code” means the U.S. Internal Revenue Code of 1986; |
(h)
| “Common Amalgamation Consideration” means, with respect to the Company Securities, a number of New PubCo Common Shares equal to the Amalgamation Consideration Value divided by $10.20; |
(i)
| “Common Conversion Ratio” means, in respect of a Company Share, the number equal to (i) the Common Amalgamation Consideration divided by (ii) the Fully Diluted Common Shares Outstanding; |
(j)
| “Company” means DevvStream Holdings Inc., a company existing under the laws of the Province of British Columbia; |
TABLE OF CONTENTS (k)
| “Company Convertible Notes” means those certain Company Convertible Notes to be issued by the Company during the Interim Period in accordance with Section 6.2 of the Business Combination Agreement pursuant to the Company Convertible Notes Subscription Agreements; |
(l)
| “Company Convertible Notes Subscription Agreements” means those certain Convertible Note Subscription Agreements to be entered into by the Company during the Interim Period in accordance with Section 6.2 of the Business Combination Agreement with respect to the Company Convertible Notes; |
(m)
| “Company Equity Incentive Plan” means the 2022 Equity Incentive Plan of DevvStream Holdings Inc., as amended and restated from time to time, and the 2022 Non-Qualified Stock Option Plan of DevvStream Inc., as amended and restated from time to time; |
(n)
| “Company Meeting” means the special meeting of Company Shareholders, including any adjournment or postponement thereof in accordance with the terms of the Business Combination Agreement, to be called and held in accordance with the Interim Order to consider the Arrangement Resolution and for any other purpose as may be set forth in the Company Circular and agreed to in writing by the SPAC, acting reasonably; |
(o)
| “Company Option ITM Amount” has the meaning set out in Section 2.3(d)(ii)(A); |
(p)
| “Company Options” means each option (whether vested or unvested) to purchase Company Shares granted under the Company Equity Incentive Plan; |
(q)
| “Company RSUs” means each restricted stock unit representing the right to receive payment in Company Shares or an amount in cash equal to the fair market value of such Company Shares, granted under the Company Equity Incentive Plan or award agreements; |
(r)
| “Company Securities” means, collectively, the Company Shares, the Company Options, and the Company Warrants; |
(s)
| “Company Securityholders” means, collectively, the holders of Company Securities at the Effective Time; |
(t)
| “Company Shareholders” means, collectively, the holders of Company Shares at the Effective Time; |
(u)
| “Company Shares” means the Multiple Voting Company Shares and the Subordinate Voting Company Shares; |
(v)
| “Company Warrants” means the 9,787,343 outstanding common share purchase warrants of the Company, which are exercisable for up to 9,787,343 Subordinate Voting Company Shares; |
(w)
| “Converted Option” has the meaning set out in Section 2.3(d)(ii)(A); |
(x)
| “Converted Option ITM Amount” has the meaning set out in Section 2.3(d)(ii)(A); |
(y)
| “Converted RSU” has the meaning set out in Section 2.3(d)(ii)(B); |
(z)
| “Converted Warrant” has the meaning set out in Section 2.3(d)(iii); |
(aa)
| “Court” means the Supreme Court of British Columbia, or other court as applicable; |
(bb)
| “Dissent Procedures” has the meaning set out in Section 3.1; |
(cc)
| “Dissent Rights” has the meaning set out in Section 3.1; |
(dd)
| “Dissenting Shareholder” means a registered Company Shareholder who dissents in respect of the Arrangement in strict compliance with the Dissent Procedures; |
(ee)
| “DTC” means the Depository Trust Company; |
(ff)
| “Effective Date” means the date on which the Arrangement becomes effective; |
(gg)
| “Effective Time” means 8:01 a.m. (Vancouver time) on the Effective Date or such other time as the Company and the SPAC agree in writing before the Effective Date; |
TABLE OF CONTENTS (hh)
| “Final Order” means the final order of the Court, in a form acceptable to the Parties, each acting reasonably, approving the Arrangement, as such order may be amended by the Court (with the consent of each of the Parties, acting reasonably) at any time prior to the Effective Date or as such order may be affirmed or amended on appeal (provided, that any such amendment is satisfactory to each of the Parties, acting reasonably); |
(ii)
| “Fully Diluted Common Shares Outstanding” means, without duplication, at any measurement time (a)(i) ten (10), multiplied by (ii) the aggregate number of Multiple Voting Company Shares that are then issued and outstanding, plus (b) the aggregate number of Subordinate Voting Company Shares that are then issued and outstanding, plus (c) the aggregate number of Subordinate Voting Company Shares to be issued pursuant to the exercise and conversion of the Company Options in accordance therewith, plus (d) the aggregate number of Subordinate Voting Company Shares to be issued pursuant to the exercise and conversion of the Company Warrants in accordance therewith, plus (e) the aggregate number of Subordinate Voting Company Shares to be issued pursuant to the vesting of the Company RSUs in accordance therewith; |
(jj)
| “holder” means, when used with reference to any Company Shareholder, the holder of such Company Shares as shown from time to time on the register of shareholders maintained by or on behalf of the Company in respect of the Company Shares; |
(kk)
| “Interim Order” means the interim order of the Court contemplated by Section 2.2 of the Business Combination Agreement and made pursuant to Section 291 of the BCBCA in a form acceptable to the Company and the SPAC, each acting reasonably, providing for, among other things, the calling and holding of the Company Meeting, as the same may be amended by the Court or with the consent of the SPAC and the Company, such consent not to be unreasonably withheld, conditioned or delayed; |
(ll)
| “ITA” means the Income Tax Act (Canada); |
(mm)
| “Letter of Transmittal” has the meaning specified in Section 4.1(a); |
(nn)
| “Lien” means any mortgage, pledge, security interest, attachment, right of first refusal, option, proxy, voting trust, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof), restriction (whether on voting, sale, transfer, disposition or otherwise), any subordination arrangement in favor of another Person, license, or any filing or agreement to file a financing statement as debtor under the Uniform Commercial Code or any similar Law (but excluding the conversion restrictions on the Multiple Voting Company Shares); |
(oo)
| “Multiple Voting Company Shares” means the multiple voting shares of the Company, without par value; |
(pp)
| “New PubCo” means the SPAC after the SPAC Continuance; |
(qq)
| “New PubCo Board” means the board of directors of New PubCo; |
(rr)
| “New PubCo Common Shares” means, following the SPAC Continuance, the common shares of New PubCo; |
(ss)
| “New PubCo Organizational Documents” means the amended and restated New PubCo Organizational Documents in substantially the form attached as Exhibit B to the Business Combination Agreement; |
(tt)
| “Party” and “Parties” means, as applicable, the SPAC, Amalco Sub and the Company; |
(uu)
| “Per Common Share Amalgamation Consideration” means, (i) with respect to each Multiple Voting Company Share, an amount of New PubCo Common Shares equal to (A) ten (10), multiplied by (B) the Common Conversion Ratio, and (ii) with respect to each Subordinate Voting Company Share, an amount of New PubCo Common Shares equal to the Common Conversion Ratio; |
(vv)
| “Person” means an individual, corporation, partnership (including a general partnership, limited partnership, or limited liability partnership), limited or unlimited liability company, association, trust or other entity or organization, including a government, domestic or foreign, or political subdivision thereof, or an agency or instrumentality thereof; |
TABLE OF CONTENTS (ww)
| “Plan of Arrangement” means this plan of arrangement and any amendment or variation hereto made in accordance with Article 5 hereto or the Business Combination Agreement or upon the direction of the Court in the Final Order with the prior written consent of the Company and the SPAC, each acting reasonably; |
(xx)
| “Registrar” means the Registrar of Companies appointed pursuant to Section 400 of the BCBCA; |
(yy)
| “SPAC” means Focus Impact Acquisition Corp., a Delaware corporation; |
(zz)
| “SPAC Continuance” means the redomicile or continuance of the SPAC from the State of Delaware under the Delaware General Corporation Law to the Province of Alberta under the Business Corporations Act (Alberta); |
(aaa)
| “Subordinate Voting Company Shares” means the subordinate voting shares of the Company, without par value; and |
(bbb)
| “Transmittal Documents” has the meaning set out in Section 4.1(c). |
1.2 Interpretation Not Affected by Headings, etc. The division of this Plan of Arrangement into sections and other portions and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation hereof. Unless otherwise indicated, all references in this Plan of Arrangement to a “Section” followed by a number and/or a letter refer to the specified section of this Plan of Arrangement. Unless otherwise indicated, the terms “this Plan of Arrangement”, “hereof”, “herein”, “hereunder” and “hereby” and similar expressions refer to this Plan of Arrangement as amended or supplemented from time to time pursuant to the applicable provisions hereof, and not to any particular section or other portion hereof. 1.3 Currency. Unless otherwise stated, all sums of money referred to in this Plan of Arrangement are expressed in lawful money of the United States. 1.4 Number, etc. Unless the context otherwise requires, words importing the singular shall include the plural and vice versa and words importing any gender shall include all genders. 1.5 Construction. In this Plan of Arrangement unless otherwise indicated: (a)
| the words “include”, “including” or “in particular”, when following any general term or statement, shall not be construed as limiting the general term or statement to the specific items or matters set forth or to similar items or matters, but rather as permitting the general term or statement to refer to all other items or matters that could reasonably fall within the broadest possible scope of the general term or statement; |
(b)
| a reference to a statute means that statute, as amended and in effect as of the date of this Plan of Arrangement, and includes each and every regulation and rule made thereunder and in effect as of the date hereof; and |
(c)
| where a word, term or phrase is defined, its derivatives or other grammatical forms have a corresponding meaning. |
1.6 Time. Time shall be of the essence in every matter or action contemplated hereunder. All times expressed herein or in any Letter of Transmittal contemplated herein are local time Vancouver, British Columbia unless otherwise stipulated herein or therein. ARTICLE 2
ARRANGEMENT 2.1 Business Combination Agreement. This Plan of Arrangement is made pursuant to, is subject to the provisions of, and forms a part of, the Business Combination Agreement, except in respect of the sequence of the steps comprising the Arrangement, which shall occur in the order set forth herein. 2.2 Binding Effect. This Plan of Arrangement shall become effective at, and be binding at and immediately after, the Effective Time on: (a) the Company; (b) the Company Securityholders (including Dissenting Shareholders); (c) the SPAC; and (d) Amalco Sub. 2.3 Arrangement. Commencing at the Effective Time, the following shall occur and shall be deemed to occur sequentially, in two-minute intervals, in the following order and without any further authorization, act or formality unless stated otherwise: TABLE OF CONTENTS (a)
| the New PubCo shall adopt the New PubCo Organizational Documents, which shall take effect immediately on the date and time that the New PubCo Organizational Documents are filed in accordance with the ABCA; |
(b)
| each Company Share held by a Dissenting Shareholder in respect of which the Company Shareholder has validly exercised his, her or its Dissent Rights shall be transferred and assigned by such Dissenting Shareholder, without any further act or formality on his, her or its party, to the Company (free and clear of any Liens) in accordance with, and for the consideration set forth in, Section 3.1; |
(c)
| with respect to each Company Share transferred and assigned in accordance with Section 2.3(b): |
(i)
| the registered holder thereof shall cease to be the registered holder of such Company Share and the name of such registered holder shall be removed from the register of Company Shareholders as of the Effective Time; |
(ii)
| the registered holder thereof shall be deemed to have executed and delivered all consents, releases, assignments and waivers, statutory or otherwise, required to transfer and assign such Company Share; and |
(iii)
| such Company Shares shall be cancelled by the Company for no consideration, other than as set forth in Section 3.1(a); |
(d)
| the Company and Amalco Sub shall merge to form one corporate entity (“Amalco”) with the same effect as if they had amalgamated under Section 269 of the BCBCA (except that the Company will be considered the surviving corporation in the Amalgamation) and, for the avoidance of doubt, the Amalgamation is intended to constitute a single integrated transaction, qualifying as a “reorganization” within the meaning of Section 368(a) of the Code and the U.S. Treasury Regulations promulgated thereunder for U.S. federal income tax purposes, and the Amalgamation is intended to qualify as an amalgamation as defined in subsection 87(1) of the ITA, and without limiting the generality of the foregoing, upon and as a consequence of the Amalgamation: |
(i)
| each Company Share shall automatically, without any action on the part of the Parties or the holder thereof, but subject to the requirements of the Letter of Transmittal, be exchanged for that certain number of New PubCo Common Shares equal to the applicable Per Common Share Amalgamation Consideration in respect of each Company Share; |
(ii)
| each outstanding Company Equity Award issued and outstanding immediately prior to the Effective Time shall automatically, without any action on the part of the Parties or the holder thereof, be cancelled and converted as follows: |
(A)
| each outstanding Company Option, whether vested or unvested, shall automatically, without any action on the part of the Parties or the holder thereof, be cancelled and converted into an option to purchase (x) a number of New PubCo Common Shares (rounded down to the nearest whole share) equal to the product of (I) the number of Subordinate Voting Company Shares underlying such Company Option, multiplied by (II) the Common Conversion Ratio, (y) at an exercise price per share (rounded up to the nearest whole cent) equal to the (I) exercise price per share of such Company Option immediately prior to the Effective Time divided by (II) the Common Conversion Ratio (each, a “Converted Option”); provided, however, that such conversion shall occur in a manner intended to comply with the requirements of Section 409A of the Code, and subsection 7(1.4) of the ITA, and therefore, notwithstanding the foregoing, in the event that: (1) the excess of the aggregate fair market value of the New PubCo Common Shares subject to a Converted Option, determined immediately after the Effective Time, over the aggregate option exercise price for such New PubCo Common Shares pursuant to such Converted Option (such excess referred to as the “Converted Option ITM Amount”) would otherwise exceed (2) the excess of the aggregate fair market value of the Subordinate Voting Company Shares subject to the Company Option in exchange for which the Converted Option was granted, determined immediately prior to the Effective Time, over the aggregate option exercise price for the Subordinate Voting Company Shares pursuant to such Company Option (such excess referred to as the “Company Option ITM Amount”), the previous provisions shall be adjusted with effect at and from the Effective Time so that the Converted Option ITM Amount of the |
TABLE OF CONTENTS Converted Option does not exceed the Company Option ITM Amount of the Company Option in accordance with subsection 7(1.4) of the ITA and, to the extent applicable, Section 409A of the Code, but only to the extent necessary and in a manner that does not otherwise (except to the extent necessary to comply with subsection 7(1.4) of the ITA and Section 409A of the Code) adversely affect the holder of the Converted Option. Each Converted Option shall be subject to substantially the same terms and conditions as were applicable under such Company Option and the Company Equity Incentive Plan immediately prior to the Effective Time (including with respect to vesting and restrictions on transfer), except for (1) terms rendered inoperative by reason of the transactions contemplated by the Business Combination Agreement (including the replacement of the counterparty from Company to New PubCo) or (2) such other immaterial administrative or ministerial changes as the New PubCo Board (or the compensation committee of the New PubCo Board) may determine in good faith are appropriate to effectuate the administration of the Converted Options; (B)
| each outstanding Company RSU shall automatically, without any action on the part of the Parties or the holder thereof, be cancelled and converted into an New PubCo restricted stock unit (a “Converted RSU”) representing the right to receive a number of New PubCo Common Shares (rounded to the nearest whole share), or equal to the product of (I) the number of Subordinate Voting Company Shares underlying such Company RSU, multiplied by (II) the Common Conversion Ratio. Each Converted RSU shall be subject to substantially the same terms and conditions as were applicable under such Company RSU and the Company Equity Incentive Plan immediately prior to the Effective Time (including with respect to vesting and restrictions on transfer), except for (1) terms rendered inoperative by reason of the transactions contemplated by the Business Combination Agreement (including the replacement of the counterparty from Company to New PubCo) or (2) such other immaterial administrative or ministerial changes as the New PubCo Board (or the compensation committee of the New PubCo Board) may determine in good faith are appropriate to effectuate the administration of the Converted RSUs; |
(iii)
| each Company Warrant issued and outstanding shall, in accordance with its terms, become exercisable for New PubCo Common Shares (a “Converted Warrant”) and shall provide the holder the right to acquire, subject to substantially the same terms and conditions as were applicable under such Company Warrant, (A) a number of New PubCo Common Shares (rounded down to the nearest whole share) equal to the product of (I) the number of Subordinate Voting Company Shares underlying such Company Warrant, multiplied by (II) the Common Conversion Ratio, (B) at an exercise price per share (rounded up to the nearest whole cent) equal to (I) the exercise price per share of such Company Warrant immediately prior to the Effective Time divided by (II) the Common Conversion Ratio; |
(iv)
| each Company Convertible Note outstanding at the Effective Time shall be fully and finally settled in accordance with its terms and converted first into that number of Company Shares (for the avoidance of doubt, which shall not be included in the Fully Diluted Common Shares Outstanding) and then into that number of New PubCo Common Shares as set forth in the Company Convertible Note Subscription Agreements with respect thereto, which Convertible Note Shares shall be held in accordance with the terms of such Company Convertible Note Subscription Agreements; and |
(v)
| each outstanding share of Amalco Sub shall automatically, without any action on the part of the Parties or the holder thereof, be exchanged for one newly issued, fully paid and non-assessable common share of Amalco; |
(e)
| without limiting the generality of Section 2.3(d), the Company and Amalco Sub shall continue as Amalco and, from and after the Effective Date: |
(i)
| Amalco shall own and hold the property of the Company and Amalco Sub and, without limiting the provisions hereof, all rights of creditors or others shall be unimpaired by such amalgamation; |
(ii)
| all liabilities and obligations of the Company and Amalco Sub, whether arising by contract or otherwise, may be enforced against Amalco to the same extent as if such obligations had been incurred or contracted by it; |
TABLE OF CONTENTS (iii)
| other than the Company Options and the Company RSUs exchanged under Section 2.3(d), all rights, contracts, permits and interests of the Company and Amalco Sub shall continue as rights, contracts, permits and interests of Amalco as if the Company and Amalco Sub continued and, for greater certainty, the amalgamation shall not constitute a transfer or assignment of the rights or obligations of either of the Company or Amalco Sub under any such rights, contracts, permits and interests; |
(iv)
| any existing cause of action, claim or liability to prosecution shall be unaffected; |
(v)
| the Company will be considered the surviving corporation in the Amalgamation; |
(vi)
| a civil, criminal or administrative action or proceeding pending by or against either the Company or Amalco Sub may be continued by or against Amalco; |
(vii)
| a conviction against, or ruling, order or judgment in favour of or against either the Company or Amalco Sub may be enforced by or against Amalco; |
(viii) the name of Amalco shall be “DevvStream Holdings Inc.”; (ix)
| Amalco shall be authorised to issue an unlimited number of common shares; |
(x)
| (A) the chief executive officer and chief financial officer of the Company immediately prior to the Effective Time shall be the directors of Amalco, with each such director to hold office in accordance with the Organizational Documents of Amalco and (B) the officers of the Company immediately prior to the Effective Time shall be the officers of Amalco, with each such officer to hold office in accordance with the Organizational Documents of Amalco; |
(xi)
| the articles and notice of articles of Amalco shall otherwise be substantially in the form of the articles and notice of articles of the Company; |
(xii)
| the capital of the common shares of Amalco shall be an amount equal to the total of: (A) the aggregate paid-up capital (as such term is defined in the ITA) of the Company Shares (which in each case, for greater certainty, does not include any paid-up capital attributable to the Company Shares described in Section 2.3(b)), and (B) the aggregate paid-up capital (as such term is defined in the ITA) of the Amalco Sub Shares described in Section 2.3(d)(iii), in each case as measured at the time immediately prior to the Effective Time; and |
(xiii)
| there shall be added to the stated capital of New PubCo Common Shares an amount equal to the paid-up capital (as such term is defined in the ITA) of the Company Shares (which, for greater certainty, does not include any paid-up capital attributable to the Company Shares described in Section 2.3(b)) as measured at the time immediately prior to the Effective Time. |
(f)
| the exchanges and cancellations provided for in Sections 2.3(b) through 2.3(e) hereof shall be deemed to occur simultaneously at the time on the Effective Date on which such exchanges and cancellations first begin as contemplated therein, notwithstanding certain procedures related thereto that may not be completed until after such Business Day. |
2.4 No Fractional Shares. In no event shall any holder of Company Securities be entitled to a fractional New PubCo Common Share. Where the aggregate number of New PubCo Common Shares to be issued to a former Company Securityholder as consideration under this Arrangement and pursuant to the Business Combination Agreement would result in a fraction of a New PubCo Common Share being issuable, the number of New PubCo Common Shares to be received by such Company Securityholder (after aggregating all fractional New PubCo Common Shares that otherwise would be received by such holder) shall be rounded down to the nearest whole New PubCo Common Share. ARTICLE 3
RIGHTS OF DISSENT 3.1 Rights of Dissent (a)
| Registered holders of Company Shares may exercise dissent rights with respect to any Company Shares held by such holder (“Dissent Rights”) in connection with the Arrangement pursuant to and in the manner set forth in Division 2 of Part 8 of the BCBCA, as modified by the Interim Order, the Final Order and this Section 3.1 (the “Dissent Procedures”); provided that, notwithstanding Section 242 of the BCBCA, the |
TABLE OF CONTENTS written objection to the Arrangement Resolution contemplated by Section 242 of the BCBCA must be received by the Company not later than 5:00 p.m. (Vancouver time) on the Business Day that is two (2) Business Days immediately preceding the date of the Company Meeting (as it may be adjourned or postponed from time to time). Each Dissenting Shareholder who duly exercises such holder’s Dissent Rights shall, notwithstanding anything to the contrary in Section 245 of the BCBCA, be deemed to have transferred for cancellation the Company Shares held by such holder and in respect of which Dissent Rights have been validly exercised to the Company free and clear of all Liens (other than the right to be paid fair value for such Company Shares as set out in this Section 3.1), as provided in Section 2.3(b) and if they: (i)
| ultimately are determined to be entitled to be paid fair value for such Company Shares: (A) shall be deemed not to have participated in the transactions in Article 2 (other than Section 2.3(b) and 2.3(c)); (B) will be entitled to be paid by the Company the fair value of such Company Shares, which fair value shall be determined in accordance with the procedures applicable to the payout value set out in Sections 244 and 245 of the BCBCA and determined as of the close of business on the Business Day before the Arrangement Resolution was adopted; and (C) shall not be entitled to any other payment or consideration, including any payment or consideration that would be payable or issuable under the Arrangement had such holders not exercised their Dissent Rights in respect of such Company Shares; or |
(ii)
| ultimately are not entitled, for any reason, to be paid fair value for their Company Shares, shall be deemed to have participated in the Arrangement on the same basis as a non-dissenting holder of Company Shares and shall be entitled to receive only the New PubCo Common Shares on the basis determined in accordance with Section 2.3(d)(i) that such holder would have received pursuant to the Arrangement if such registered holder had not exercised Dissent Rights; |
but in no case shall the New PubCo, Amalco Sub, the Company, Amalco or any other Person be required to recognize such Persons as holders of Company Shares after the Effective Time, and the names of such Persons shall be deleted from the registers of holders of Company Shares at the Effective Time. (b)
| In addition to any other restrictions set forth in the BCBCA and the Interim Order, Company Shareholders who vote, or who have instructed a proxyholder to vote, in favour of the Arrangement Resolution shall not be entitled to exercise Dissent Rights. |
ARTICLE 4
DELIVERY OF NEW PUBCO COMMON SHARES 4.1 Delivery of New PubCo Common Shares (a)
| At or prior to the Effective Time, New PubCo shall send, or shall cause the Exchange Agent to send, to each Company Shareholder holding Company Securities evidenced by certificates (the “Certificates”) or represented by book- entry (the “Book-Entry Shares”) and not held by DTC or CDS, a letter of transmittal for use in such exchange, in a form to be mutually agreed upon by the Parties (the “Letter of Transmittal”) (which shall specify that the delivery of the exchanged New PubCo Common Shares shall be effected, and risk of loss and title shall pass, only upon proper delivery of a properly completed and duly executed Letter of Transmittal) and, if applicable, the appropriate Certificates, if any (or a Lost Certificate Affidavit), to the Exchange Agent for use in such exchange. |
(b)
| With respect to Book-Entry Shares, including the New PubCo Common Shares, held through the DTC or CDS, the SPAC and the Company shall cooperate to establish procedures with the Exchange Agent, DTC or CDS to ensure that the Exchange Agent will transmit to DTC or CDS, as the case may be (or their respective nominees) as soon as reasonably practicable on or after the Closing Date, upon surrender of Book-Entry Shares held of record by DTC or CDS (or their respective nominees) in accordance with customary surrender procedures, the applicable New PubCo Common Shares to be exchanged for such Book-Entry Shares held through the DTC or CDS, as applicable. |
(c)
| Each Company Shareholder shall be entitled to receive the applicable Common Amalgamation Consideration in respect of the Company Shares tendered for exchange within thirty (30) days after the Effective Time, subject to either, with respect to Book-Entry Shares, the procedures established in accordance with Section 4.1(b) or, with respect to Company Securities evidenced by Certificates, the |
TABLE OF CONTENTS delivery to the Exchange Agent of the following items prior thereto (collectively, the “Transmittal Documents”): (i) the Certificates (or a Lost Certificate Affidavit), (ii) a properly completed and duly executed Letter of Transmittal, and (iii) such other documents as may be reasonably requested by the Exchange Agent or New PubCo. Until so surrendered, each Certificate shall represent after the Effective Time for all purposes only the right to receive the Common Amalgamation Consideration attributable to such Company Shareholder. 4.2 Distributions with Respect to Unsurrendered Certificates. No dividends or other distributions declared or made after the Effective Time with respect to New PubCo Common Shares with a record date after the Effective Time shall be paid to the holder of any unsurrendered Certificate which immediately prior to the Effective Time represented outstanding Company Shares that were exchanged pursuant to Section 2.3 unless and until the holder of record of such Certificate shall surrender such Certificate in accordance with Section 4.1. Subject to applicable law, at the time of such surrender of any such Certificate (or in the case of clause (b) below, at the appropriate payment date), there shall be paid to the holder of record of the Certificates formerly representing whole Company Shares, without interest, (a) the amount of dividends or other distributions with a record date after the Effective Time but prior to surrender and a payment date prior to surrender paid with respect to such whole New PubCo Common Share and (b) on the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time but prior to surrender and a payment date subsequent to surrender payable with respect to such whole New PubCo Common Share. 4.3 Lost Certificates. In the event any Certificate which immediately prior to the Effective Time represented one or more outstanding Company Shares that were exchanged pursuant to Section 2.3(d)(i) shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed, the Exchange Agent will issue in exchange for such lost, stolen or destroyed certificate, one or more certificates or book-entry advice statements representing one or more New PubCo Common Shares (and any dividends or distributions with respect thereto) deliverable in accordance with such holder’s Letter of Transmittal. When authorizing such payment in exchange for any lost, stolen or destroyed certificate, the Person to whom Certificates or book-entry advice statements representing New PubCo Common Shares are to be issued shall, as a condition precedent to the issuance thereof, give a bond satisfactory to New PubCo and its transfer agent and the Exchange Agent in such sum as New PubCo may direct or otherwise indemnify New PubCo, its transfer agent and the Exchange Agent in a manner satisfactory to New PubCo, its transfer agent and the Exchange Agent against any claim that may be made against New PubCo, its transfer agent and/or the Exchange Agent with respect to the certificate alleged to have been lost, stolen or destroyed. 4.4 Extinction of Rights. Any Certificate or book-entry advice statements which immediately prior to the Effective Time represented outstanding Company Shares that were exchanged pursuant to Section 2.3(d)(i) and not deposited, with all other instruments required by Section 4.1 on or prior to the second anniversary of the Effective Date shall cease to represent a claim or interest of any kind or nature as a shareholder of New PubCo or as a former shareholder of the Company. On such date, New PubCo Common Shares to which the former registered holder of the Certificate referred to in the preceding sentence was ultimately entitled shall be deemed to have been surrendered to New PubCo together with all entitlements to dividends, distributions and interest thereon held for such former registered holder. None of New PubCo, Amalco Sub, the Company or the Exchange Agent shall be liable to any person in respect of any New PubCo Common Shares (or dividends, distributions and interest in respect thereof) delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. 4.5 Withholding Rights. The SPAC, New PubCo and the Exchange Agent shall be entitled to deduct and withhold from the Common Amalgamation Consideration and any other amounts otherwise issuable or payable pursuant hereunder (whether in cash or kind) such amounts as the applicable party may be required to deduct and withhold therefrom under any applicable Law in respect of Taxes; provided, however, that before making any deduction or withholding pursuant to this Section 4.5 (other than with respect to compensatory payments or as a result of the Company failing to deliver the certification required by Section 8.3(d)(vi) of the Business Combination Agreement), SPAC and New PubCo shall use commercially reasonable efforts to give the Company at least five (5) Business Days prior written notice of any anticipated deduction or withholding (together with any legal basis thereof) to provide the Company with sufficient opportunity to provide any forms or other documentation from the applicable equity holders or take such other steps in order to avoid such deduction or withholding. SPAC and New PubCo shall reasonably consult and cooperate with the Company or the applicable Company Shareholder in good faith to minimize or eliminate, to the extent permissible under applicable Law, the amount of any such deduction or withholding, TABLE OF CONTENTS including by cooperating with the submission of any certificates or forms to establish an exemption from, reduction in, or refund of any such deduction or withholding. To the extent that any amounts are so deducted, withheld and remitted to the appropriate Governmental Authority, such amounts shall be treated for all purposes hereof as having been paid to the Person to whom such amounts would otherwise have been paid. SPAC, New PubCo and the Exchange Agent, as applicable, may sell or otherwise dispose of such portion of the Common Amalgamation Consideration or other consideration otherwise payable to such holder or former holder in the form of New PubCo Common Shares as is necessary to provide sufficient funds to enable the withholding party to comply with such deduction or withholding requirements, and none of SPAC, New PubCo or the Exchange Agent, as applicable, shall be liable to any Person for any deficiency in respect of any proceeds received (whether in cash or in kind), and New PubCo or the Exchange Agent, as applicable, shall notify the holder thereof and remit to the holder thereof any unapplied balance of the net proceeds of such sale. 4.6 Deemed Fully Paid and Non-Assessable Shares. All Company Shares and New PubCo Shares issued pursuant hereto shall be deemed to be validly issued and outstanding as fully paid and non-assessable shares for all purposes of the BCBCA. ARTICLE 5
AMENDMENTS 5.1 SPAC and the Company reserve the right to amend, modify and/or supplement this Plan of Arrangement at any time and from time to time prior to the Effective Date, provided that each such amendment, modification and/or supplement must be: (a) set out in writing, (b) agreed to in writing by SPAC and the Company, (c) filed with the Court and, if made following the Company Meeting, approved by the Court (to the extent required by the Court), and (d) communicated to holders of Company Shares, if and as required by the Court. 5.2 Any amendment, modification or supplement to this Plan of Arrangement may be proposed by the Company at any time prior to the Company Meeting (provided that SPAC shall have previously consented in writing thereto) with or without any other prior notice or communication, and if so proposed and accepted by the Persons voting at the Company Meeting (other than as may be required under the Interim Order), shall become part of this Plan of Arrangement for all purposes. 5.3 Any amendment, modification or supplement to this Plan of Arrangement that is approved by the Court following the Company Meeting shall be effective only if (a) it is consented to in writing by each of the Company and SPAC, and (b) if required by the Court, it is consented to by holders of the Company Shares voting in the manner directed by the Court. 5.4 Any amendment, modification or supplement to this Plan of Arrangement may be made following the Effective Date by New PubCo and Amalco, provided that it concerns a matter which, in the reasonable opinions of New PubCo and Amalco, each acting reasonably, is of an administrative nature required to better give effect to the implementation of this Plan of Arrangement and is not adverse to the financial or economic interests of any holder of Company Shares. 5.5 The Parties, acting reasonably, agree to make all necessary consequential amendments to the Plan of Arrangement that are reasonably necessary to give effect to the foregoing. ARTICLE 6
FURTHER ASSURANCES 6.1 Notwithstanding that the transactions and events set out herein shall occur and be deemed to occur in the order set out in this Plan of Arrangement without any further act or formality, each of the parties to the Business Combination Agreement shall make, do and execute, or cause to be made, done or executed, all such further acts, deeds, agreements, transfers, assurances, instruments or documents as may reasonably be required by any of them in order further to document or evidence any of the transactions or events set out herein. TABLE OF CONTENTS RESOLUTIONS OF THE SOLE SHAREHOLDER
OF
FOCUS IMPACT AMALCO SUB LTD.
(the “Company”) The following resolutions are consented to in writing by the sole shareholder of the Company pursuant to the Business Corporations Act (British Columbia) (the “Act”) as of September 12, 2023. RECITALS: A.
| The Company wishes to enter into a business combination agreement dated as of September 12, 2023 by and among DevvStream Holdings Inc., Focus Impact Acquisition Corp. (the “SPAC”) and the Company, in substantially the form attached hereto as Exhibit “A” (the “Business Combination Agreement”), pursuant to which the parties intends to carry out an initial business combination (as such term is used in the final prospectus of the SPAC dated as of October 27, 2021), which shall include an amalgamation between the Company and DevvStream Holdings Inc., as part of an arrangement (the “Arrangement”) on the terms and subject to the conditions set forth in a plan of arrangement under Section 288 of the Act. |
NOW THEREFORE BE IT RESOLVED THAT: The Business Combination Agreement 1.
| Entry into the Business Combination Agreement by the Company, substantially in the form presented to the sole shareholder, is hereby authorized and approved. |
2.
| The Company is authorized to carry out the transactions contemplated by the Business Combination Agreement, including those set forth in the Plan of Arrangement. |
Ancillary Documents 3.
| Entry into any ancillary agreements, deeds, other instruments and other documents relating to the Arrangement and the transactions contemplated by the Business Combination Agreement (collectively, the “Ancillary Documents”) by the Company is hereby authorized and approved. |
General 4.
| All prior acts and deeds of any of the officers or directors of the Company taken to carry out the intent and accomplish the purposes of the foregoing resolutions are hereby approved, adopted, ratified and confirmed in all respects as the respective acts and deeds of the Company. |
[Signature page follows] TABLE OF CONTENTS These resolutions may be executed by inserting, attaching, or otherwise associating such person’s electronic signature in, to or with such resolution (including causing any of the foregoing to occur), and the insertion, attachment or other association of such person’s electronic signature will be conclusive evidence of such person’s authorization of the foregoing. | | | | | | FOCUS IMPACT ACQUISITION CORP. | | | | | | | | | | | | | | By: | | | /s/ Carl Stanton | | | | | | | Name: | | | Carl Stanton | | | | | | | Title: | | | Chief Executive Officer |
[Signature Page to the Amalco Sub Shareholder Resolutions Authorizing Arrangement]
TABLE OF CONTENTS Exhibit “A”
Business Combination Agreement See attached. TABLE OF CONTENTS SPONSOR SIDE LETTER This letter agreement (this “Side Letter”) is dated as of September 12, 2023, by and among Focus Impact Sponsor, LLC, a Delaware limited liability company (the “Sponsor”) and Focus Impact Acquisition Corp., a Delaware corporation (“SPAC”). Capitalized terms used but not defined in this Side Letter shall have the respective meanings ascribed to such terms in the Business Combination Agreement (as defined below), except as otherwise provided in this Side Letter. RECITALS WHEREAS, as of the date hereof, the Sponsor is the holder of record of 5,750,000 SPAC Class B Shares (the “Sponsor Shares”) and 11,200,000 Private Placement Warrants (the “Sponsor Warrants” and, together with the Sponsor Shares, the “Sponsor Equity”); WHEREAS, contemporaneously with the execution and delivery of this Side Letter, SPAC has entered into a Business Combination Agreement with DevvStream Holdings Inc., a company existing under the Laws of the Province of British Columbia (the “Company”), Focus Impact Amalco Sub Ltd., a company existing under the Laws of the Province of British Columbia (“Amalco Sub”), dated as of the date hereof (as amended or modified from time to time in accordance with the terms of such agreement, the “Business Combination Agreement”), pursuant to which, among other things, (i) immediately prior to the Closing, SPAC shall continue as an Alberta corporation (the “SPAC Continuance”, and following such SPAC Continuance the SPAC is referred to herein for the periods following the effectiveness of the SPAC Continuance as the “New PubCo”) and, at the Closing in accordance with the Plan of Arrangement, Amalco Sub and the Company will amalgamate (the “Amalgamation”) to form one corporate entity which is a wholly owned subsidiary of the New PubCo (“Amalco”); WHEREAS, in connection with the SPAC Continuance and the occurrence of the Closing, each Sponsor Share will automatically be converted into one share of common stock of New PubCo (“New PubCo Common Shares”) pursuant to the Governing Documents of SPAC and each Sponsor Warrant will be assumed by New PubCo and be converted into the right to exercise such warrants for New PubCo Common Shares (collectively, the “Automatic Conversion”); WHEREAS, in accordance with the terms of this Side Letter, in lieu of the Automatic Conversion: (i) 575,000 Sponsor Shares (the “Automatic Forfeiture Sponsor Shares”) which shares will automatically be canceled upon the occurrence of the Closing for no consideration therefor and (ii) to the extent agreed by the Sponsor in accordance with Section 1.2 of this Side Letter (a) up to 1,725,000 Sponsor Shares (the “Financing Sponsor Share Cap”) and (b) up to 3,360,000 Sponsor Warrants (the “Financing Sponsor Warrant Cap”) will automatically be canceled upon the occurrence of the Closing for no consideration therefor; WHEREAS, the Sponsor Shares and Sponsor Warrants not forfeited hereunder shall continue to be subject to the Automatic Conversion; and WHEREAS, as an inducement to the Company to enter into the Business Combination Agreement and to consummate the transactions contemplated therein, the parties hereto desire to agree to certain matters as set forth herein, including making the Company an express third party beneficiary of this Side Letter to the extent set forth herein. AGREEMENT NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, and intending to be legally bound hereby, the parties hereto hereby agree as follows: ARTICLE I
COVENANTS Section 1.1 Automatic Forfeiture of Certain Sponsor Shares. Effective as of the consummation of the SPAC Continuance at the Closing, in accordance with the Business Combination Agreement, the Sponsor hereby consents to the automatic forfeiture of the Automatic Forfeiture Sponsor Shares in lieu of the Automatic Conversion, in accordance with the terms and conditions of this Side Letter (such automatic forfeiture, the “Automatic Sponsor Share Forfeiture”). The Sponsor shall receive no consideration in respect of the Automatic Forfeiture Sponsor Shares. TABLE OF CONTENTS Section 1.2 Financing Forfeiture. In the event the Company and the SPAC agree to issue Financing Incentive Shares pursuant to the Business Combination Agreement, and the Sponsor has provided its written consent thereto, effective as of the consummation of the SPAC Continuance at the Closing, in accordance with the Business Combination Agreement, the Sponsor hereby consents to the automatic forfeiture of a number of Sponsor Shares equal to the number of Financing Incentive Shares, in no event to exceed a number equal to the Financing Sponsor Share Cap (the “Financing Forfeiture Sponsor Shares”) in lieu of the Automatic Conversion, in accordance with the terms and conditions of this Side Letter (such automatic forfeiture, the “Financing Sponsor Share Forfeiture”). The Sponsor shall receive no consideration in respect of the Financing Forfeiture Sponsor Shares. In the event the Company and the SPAC agree to issue Financing Incentive Warrants pursuant to the Business Combination Agreement, and the Sponsor has provided its written consent thereto, effective as of the consummation of the SPAC Continuance at the Closing, in accordance with the Business Combination Agreement, the Sponsor hereby consents to the automatic forfeiture of a number of Sponsor Warrants equal to the number of Financing Incentive Warrants, in no event to exceed a number equal to the Financing Sponsor Warrant Cap (the “Financing Forfeiture Sponsor Warrants”) in lieu of the Automatic Conversion, in accordance with the terms and conditions of this Side Letter (such automatic forfeiture, the “Financing Sponsor Warrant Forfeiture”). The Sponsor shall receive no consideration in respect of the Financing Forfeiture Sponsor Warrants. Alternatively (and for the avoidance of doubt, without limiting the Automatic Sponsor Share Forfeiture contemplated by Section 1.1), the Sponsor may agree to transfer (in lieu of forfeiting) all of its right, title and interest in, to and under certain Sponsor Shares and/or Sponsor Warrants to Financing Investors in and as a part of the Financing, in which case (i) such transferred Sponsor Shares and/or transferred Sponsor Warrants shall not be forfeited, (ii) upon such transfer, such Sponsor Shares and Sponsor Warrants shall be deemed to have been elected to be converted in Class A Shares per SPAC’s certificate of incorporation and cease to be considered Sponsor Shares and Sponsor Warrants, and shall instead be treated for all purposes as Class A Shares and Public Warrants of the SPAC and (iii) any shares or warrants so transferred shall reduce, on a share for share or warrant for warrant basis, the Financing Sponsor Share Cap or the Financing Sponsor Warrant Cap, respectively, as appropriate. The Sponsor shall receive no consideration in respect of such transferred Sponsor Shares or Sponsor Warrants. At the Closing in connection with the SPAC Continuance, (i) all of the Sponsor Shares, other than the Automatic Forfeiture Sponsor Shares and the Financing Forfeiture Sponsor Shares, shall be converted into New PubCo Common Shares and (ii) all of the Sponsor Warrants, other than the Financing Forfeiture Sponsor Warrants, shall continue to be obligations of New PubCo and exercisable for New PubCo Common Shares. Notwithstanding anything to the contrary in that certain Warrant Agreement, dated as of November 1, 2021, by and between the SPAC and Continental Stock Transfer & Trust Company, the Sponsor agrees that it will not elect its right to exercise the Private Placement Warrants on a “cashless basis” pursuant to Section 3.1 or Section 3.3.1(c) thereof. Notwithstanding anything to the contrary herein, this sentence and the immediately preceding sentence shall survive any termination of the Sponsor Lock-Up Period and the termination of this Agreement pursuant to Section 3.1(i) or 3.1(ii) (and the Company shall have the right to enforce the immediately preceding sentence notwithstanding termination of this Agreement pursuant to Section 3.1(i) or 3.1(ii)). Section 1.3 Adjustments. In the event that any stock dividend, stock split, reverse stock split, recapitalization, reclassification, combination or exchange of shares of the SPAC occurs with respect to any Sponsor Shares or Sponsor Warrants before the Closing, but excluding for the avoidance of doubt the Automatic Conversion and the Automatic Sponsor Share Forfeiture, the Financing Sponsor Share Forfeiture and Financing Sponsor Warrant Forfeiture, (each, a “Pre-Closing Split”), then the number of Sponsor Shares and Sponsor Warrants that are subject to forfeiture hereunder shall be adjusted as a result of such Pre-Closing Split to provide the same economic effect as contemplated by this Side Letter prior to such Pre-Closing Split. Section 1.4 Transfer Restrictions. (a) The Sponsor hereby acknowledges and agrees that, during the period between the execution of this Side Letter and the Closing (and without limitation of the provisions set forth in Section 1.4(b)), the Sponsor Shares and Sponsor Warrants shall remain subject to and bound by the provisions of, and may only be Transferred (as defined in the Lock-Up Agreement) in accordance with, Section 5 of that certain letter agreement (the “Lock-Up Agreement”), dated as of November 1, 2021, by and among SPAC, the Sponsor and certain members of SPAC’s board of directors and/or management signatory thereto, a copy of which is attached hereto as Exhibit A. Sponsor also agrees not to (i) enter into any agreement, arrangement or understanding with any Person, or take any other action, that violates or would reasonably be expected to violate or conflict, or result in or give rise to a violation of, the Sponsor’s representations, warranties, covenants and obligations under this Side Letter; or (ii) take any action that would restrict or otherwise adversely affect the Sponsor’s legal power, authority and TABLE OF CONTENTS right to comply with and perform its covenants and obligations under this Side Letter. Any Transfer in violation of this provision shall be void ab initio. Any transferee of Sponsor Shares or Sponsor Warrants (a “Sponsor Party”) must enter into a written agreement reasonably acceptable to the Company with the parties hereto agreeing to be bound by the terms of this Side Letter as if a party hereto and if such written agreement is not executed and delivered to the Company and the SPAC, such Transfer shall not be permitted hereunder or under the Lock-Up Agreement. (b) Until the earlier of (i) 360 days after the Closing and (ii) the date following the Closing on which New PubCo completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of New PubCo’s stockholders having the right to exchange their equity for cash, securities or other property (the “Sponsor Lock-Up Period”), without the consent of New PubCo following the Closing, the Sponsor shall not be entitled to make any voluntary or involuntary, direct or indirect (whether through a change of control of the Transferor or any Person that controls the Transferor, the issuance or transfer of Equity Securities of the Transferor, by operation of law or otherwise), transfer, sale, pledge or hypothecation or other disposition (each, a “Transfer”), or to permit any Transfer, of any (1) New PubCo Common Shares received as a result of the Automatic Conversion or (2) New PubCo Common Shares received as a result of the exercise of the Sponsor Warrants (collectively, the “Restricted Sponsor Shares”); provided, that the Sponsor shall be permitted to distribute the Restricted Sponsor Shares to its members or otherwise to an Affiliate of Sponsor, so long as any member or Affiliate of Sponsor in receipt of Restricted Sponsor Shares prior to or simultaneously with the Transfer enters into a written agreement reasonably acceptable to the Company with the parties hereto agreeing to be bound by the terms of this Side Letter as if a party hereto; and provided, further, that if such written agreement is not executed and delivered to the Company and the SPAC, such distribution of the Restricted Sponsor Shares shall not be permitted hereunder or under the Lock-Up Agreement. Any reduction in the Lock-Up Period defined in the Company Support & Lock-Up Agreement shall be simultaneously and automatically applied to the Sponsor Lock-Up Period. Notwithstanding the foregoing, if, subsequent to the Closing, the closing price of the New PubCo Common Shares equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period commencing at least 150 days after the Closing, the Sponsor Shares shall be released from the transfer restrictions provided by this Section 1.4(b). Section 1.5 Further Assurances. SPAC and Sponsor shall take, or cause to be taken, all actions and do, or cause to be done, all things reasonably necessary under applicable Laws to consummate the transactions contemplated by this Side Letter on the terms and subject to the conditions set forth herein. Section 1.6 No Inconsistent Agreement. The Sponsor hereby represents and covenants that the Sponsor has not entered into, and shall not enter into, any agreement that does or would restrict, limit or interfere with the performance of the Sponsor’s obligations under this Side Letter with respect to the Restricted Sponsor Shares. Section 1.7 Tax Treatment. The parties to this Side Letter intend that, for U.S. federal and all applicable state and local income tax purposes, (a) the Automatic Conversion qualifies as a “reorganization” within the meaning of Section 368(a)(1)(E) of the Code, and (b) this Side Letter be, and hereby adopt this Side Letter as, a “plan of reorganization” within the meaning of Section 368 of the Code. The parties to this Side Letter shall not take any position inconsistent with the intent set forth in this Section 1.7 except to the extent otherwise required by a “determination” as defined in Section 1313 of the Code. References in this Section 1.7 to the Code shall include references to any similar or analogous provisions of state or local law. Section 1.9 Sponsor Support. At any meeting of the stockholders of SPAC, however called, or at any adjournment thereof, and in any action by written consent of the stockholders of SPAC distributed by the board of directors of SPAC, or otherwise undertaken as contemplated by the Business Combination Agreement or the transactions contemplated thereby, or in any other circumstance in which the vote, consent or other approval of the stockholders of SPAC is sought, Sponsor hereby unconditionally and irrevocably agrees that it shall (i) appear at each such meeting or otherwise cause all of its Sponsor Shares to be counted as present thereat for purposes of calculating a quorum and (ii) vote (or cause to be voted), or execute and deliver a written consent (or cause a written consent to be executed and delivered) covering, all of its Sponsor Shares: (a) in favor of the SPAC Shareholder Approval Matters and any other matters necessary or reasonably requested by the Company or the SPAC in connection therewith; (b) in favor of any proposal to adjourn or postpone any meeting of the shareholders of the SPAC at which any of the foregoing matters are submitted for consideration and vote of the shareholders of the SPAC to a later date if there are not a quorum or sufficient votes for approval of such matters on the date on which the meeting is held TABLE OF CONTENTS to vote upon any of the foregoing matters; (c) against any proposal relating to an alternative Business Combination (as defined in SPAC’s certificate of incorporation as in effect as of the date hereof); (d) against any proposal, action or agreement that would (1) compete with the transaction contemplated by the Business Combination Agreement, (2) result in a breach of any covenant, representation or warranty or any other obligation or agreement of the SPAC contained in the Business Combination Agreement, or of the Sponsor contained in this Side Letter, (3) reasonably be expected to impede, frustrate, prevent or nullify any provision of this Side Letter, the Business Combination Agreement or the Amalgamation and/or the related plan of arrangement or this Side Letter or the performance by the SPAC of its obligations under the Business Combination Agreement or by the Sponsor of its obligations under this Side Letter or (4) change in any manner the dividend policy or capitalization of, including the voting rights of, any class of capital stock or other securities of SPAC (other than, in the case of this clause (4), pursuant to the Business Combination Agreement or the Ancillary Documents and the transactions contemplated thereby). The obligations of the Sponsor specified in this Section 1.9 shall apply whether or not (i) the Business Combination, the Business Combination Agreement, the related plan of arrangement or any action described above is recommended by the Board of Directors of the SPAC or (ii) the Board of Directors of the SPAC has previously recommended the Business Combination, the Business Combination Agreement, the related plan of arrangement or any action described above and subsequently withdrawn or otherwise changed such recommendation. Sponsor Party agrees that it shall not commit, agree, or publicly propose any intention to take any action inconsistent with the foregoing. Sponsor hereby irrevocably waives, and agrees not to exercise, assert or perfect (and agrees to cause not to be exercised, asserted or perfected), any dissenters’ or appraisal rights under Section 262 of the Delaware General Corporation Law and any other similar statute in connection with the Amalgamation or the Business Combination Agreement. Sponsor hereby agrees to take all actions necessary to opt out of, any class action with respect to, any claim, derivative or otherwise, against the SPAC or any of its Affiliates relating to the negotiation, execution or delivery of this Side Letter, the Business Combination Agreement or the consummation of the Business Combination and/or the related plan of arrangement, including any claim (1) challenging the validity of, or seeking to enjoin the operation of, any provision of this Side Letter or (2) alleging a breach of any fiduciary duty of the Board of Directors of the SPAC in connection with this Side Letter, the Business Combination Agreement or the Business Combination and/or the related plan of arrangement. Section 1.10 Stock Transactions. During the period between the execution of this Side Letter and the Closing, the Sponsor acknowledges and agrees that if it acquires any shares or securities convertible into shares of the SPAC (including, without limitation, any warrants issued to Sponsor in connection with the conversion of that certain unsecured promissory note, dated as of May 9, 2023, issued by the SPAC to the Sponsor), the Sponsor agrees that he, she or it will (a) make such acquisition in material compliance with applicable Laws regarding the sale and purchase of securities and material non-public information and (b) not elect to make a Redemption with respect to any such purchased shares or shares issuable upon conversion of securities convertible into shares. All such additional shares or securities acquired shall be subject to the terms of Section 1.9. Section 1.11 Waiver of Adjustment Provisions. Notwithstanding anything to the contrary in any other document, agreement or contract to which Sponsor is bound, Sponsor (for itself, himself or herself and for its, his or her successors, heirs, assigns and permitted transferees) hereby (but subject to the consummation of the Amalgamation) irrevocably and unconditionally waives and agrees not to exercise or assert, any rights to adjustment or other anti-dilution protections with respect to the rate at which shares of SPAC Class B Shares convert into other shares of SPAC or New PubCo Common Shares in connection with the Automatic Conversion and, in furtherance of the foregoing, Sponsor hereby irrevocably and unconditionally agrees and acknowledges that (a) each SPAC Class B Share (other than those subject to theAutomatic Sponsor Share Forfeiture or the Financing Sponsor Share Forfeiture) shall convert only into New PubCo Common Shares (and not any other SPAC shares prior to the Automatic Conversion) on a one-for-one basis automatically at the Effective Time in connection with the Automatic Conversion and (b) that each Sponsor Warrant shall only convert into the right to exercise such warrants for New PubCo Common Shares, such waiver, agreement and acknowledgement constituting sufficient and necessary waiver under the terms of SPAC’s certificate of incorporation as currently in effect for such purpose, in each case subject to equitable adjustments for any Pre-Closing Splits to provide the same economic effect as contemplated by this Side Letter prior to such Pre-Closing Split. TABLE OF CONTENTS ARTICLE II
REPRESENTATIONS AND WARRANTIES The Sponsor represents and warrants to SPAC as follows: Section 2.1 Organization; Due Authorization. The Sponsor is duly organized, validly existing and in good standing under the Laws of the jurisdiction in which it is incorporated, formed, organized or constituted, and the execution, delivery and performance of this Side Letter and the consummation of the transactions contemplated hereby are within the Sponsor’s corporate, limited liability company or organizational powers and have been duly authorized by all necessary corporate, limited liability company or organizational actions on the part of such Sponsor Party. The Sponsor has full legal capacity, right and authority to execute and deliver this Sponsor Agreement and to perform his or her obligations hereunder. This Side Letter has been duly executed and delivered by the Sponsor and, assuming due authorization, execution and delivery by the other parties to this Side Letter, this Side Letter constitutes a legally valid and binding obligation of the Sponsor, enforceable against the Sponsor in accordance with the terms hereof (except as enforceability may be limited by bankruptcy Laws, other similar Laws affecting creditors’ rights and general principles of equity affecting the availability of specific performance and other equitable remedies). If this Side Letter is being executed in a representative or fiduciary capacity, the Person signing this Side Letter has full power and authority to enter into this Side Letter on behalf of the Sponsor. Section 2.2 Ownership. The Sponsor is the holder of record of all of the Sponsor Equity as set forth in this Side Letter, and there exist no Liens or any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such Sponsor Equity, other than transfer restrictions under the Securities Act) affecting any such Sponsor Shares, other than any Permitted Liens or pursuant to (i) this Side Letter, (ii) the Sponsor’s organizational documents or the organizational documents of SPAC, (iii) the Registration Rights Agreement to be executed by the Company, SPAC, the Sponsor and other parties thereto following the signing of the Business Combination Agreement or (iv) the Lock-Up Agreement. Section 2.3 No Conflicts. The execution and delivery of this Side Letter by the Sponsor does not, and the performance by the Sponsor of his, her or its obligations hereunder will not, (i) if such Sponsor Party is not an individual, conflict with or result in a violation of the organizational documents of the Sponsor or (ii) require any consent or approval that has not been given or other action that has not been taken by any Person (including under any Contract binding upon the Sponsor), in each case to the extent such consent, approval or other action would prevent, enjoin or delay the performance by the Sponsor of its, his or her obligations under this Side Letter. Section 2.4 Litigation. There are no Proceedings pending against the Sponsor, or to the knowledge of the Sponsor threatened against the Sponsor, which in any manner challenges or seeks to prevent, enjoin or delay the performance by the Sponsor of its obligations under this Side Letter. ARTICLE III
MISCELLANEOUS Section 3.1 Termination. This Side Letter and all of its provisions shall terminate and be of no further force or effect upon the earliest to occur of (i) the first day on which the Lock-Up Agreement expires, (ii) the first day on which the Lock-Up Period defined in the Company Support & Lock-Up Agreement expires and (iii) the termination of the Business Combination Agreement in accordance with Article IX thereof. Except as expressly set forth herein, upon such termination of this Side Letter, all obligations of the parties under this Side Letter will terminate, without any liability or other obligation on the part of any party hereto to any Person in respect hereof or the transactions contemplated hereby, and no party hereto shall have any claim against another (and no Person shall have any rights against such party), whether under contract, tort or otherwise, with respect to the subject matter hereof. This Article III shall survive the termination of this Side Letter. Neither the provisions of this Section 3.1 nor the termination of this Side Letter shall (a) relieve any party hereto from any liability of such party to any other party incurred prior to such termination or expiration, (b) relieve any party hereto from any liability to any other party arising out of or in connection with any breach of this Side Letter prior to such termination or expiration or fraud or (c) terminate the obligations under the last sentence of Section 1.10. Section 3.2 Amendment and Waiver. No amendment of any provision of this Side Letter shall be valid unless (a) the same shall be in writing and signed by SPAC and the Sponsor and (b) in compliance with Section 3.3. No waiver of any provision or condition of this Side Letter shall be valid unless (i) the same shall be in writing and signed by the party against which such waiver is to be enforced and (ii) in compliance with Section 3.3. No waiver by any party of any default, breach of representation or warranty or breach of covenant hereunder, whether intentional or not, TABLE OF CONTENTS shall be deemed to extend to any other, prior or subsequent default or breach or affect in any way any rights arising by virtue of any other, prior or subsequent such occurrence. Section 3.3 Assignment; Third Party Beneficiaries. This Side Letter and all of the provisions hereof will be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns. Neither this Side Letter nor any of the rights, interests or obligations hereunder will be assigned (including by operation of law) without the prior written consent of the parties hereto, other than in respect of the dissolution of the Sponsor to the members of the Sponsor in receipt of Restricted Sponsor Shares as a result thereof. This Side Letter is for the sole benefit of the parties hereto and their permitted assigns and nothing herein expressed or implied shall give or be construed to give any Person, other than the parties and such permitted assigns, any legal or equitable rights hereunder. Notwithstanding anything to the contrary contained in this Side Letter, the parties hereto hereby acknowledge and agree that from the execution of this Side Letter until the occurrence of the Closing or the termination of this Side Letter in accordance with Section 3.1 of this Side Letter (provided that, solely with respect to Section 1.2, Section 1.2 will survive as set forth in the final sentence of Section 1.2): (a) the Company is an express third-party beneficiary of this Side Letter, including, for the avoidance of doubt, with respect to (i) the covenants of Sponsor and SPAC set forth in Article I (as well as any Sponsor Party or other transferee that becomes bound by this Side Letter) as if the Company were a party hereto and (ii) the representations and warranties of Sponsor given to SPAC (as well as any Sponsor Party or other transferee that becomes bound by this Side Letter) and set forth in Article II as if the Company were the SPAC with respect thereto, (b) no amendment of this Side Letter, waiver of any provision or condition of this Side Letter, assignment of this Side Letter or termination of this Side Letter (except as expressly contemplated in Section 3.1 of this Side Letter) shall be made without the prior written consent of the Company, and (c) the Company shall be entitled to enforce the terms of this Side Letter as if they were a party hereto, and the Company shall be entitled to exercise any remedies for breaches by any party of, or failure of any party to perform, this Side Letter, including without limitation injunctive or other equitable relief or an Order of specific performance (or any other equitable remedy) to enforce the terms hereof and to prevent breaches of this Side Letter, in addition to any other remedy at law or in equity, and shall not be required to provide any bond or other security in connection with any such Order or injunctive relief. Section 3.4 Notices. All notices, demands and other communications to be given or delivered under this Side Letter shall be in writing and shall be deemed to have been given (a) when personally delivered (or, if delivery is refused, upon presentment) or received by email (with confirmation of transmission) prior to 5:00 p.m. eastern time on a Business Day and, if otherwise, on the next Business Day, (b) one (1) Business Day following delivery by reputable overnight express courier (charges prepaid) or (c) three (3) days following mailing by certified or registered mail, postage prepaid and return receipt requested. Any notice, demand and other communications to be given or delivered under this Side Letter to either party shall be simultaneously provided to the Company in accordance with Section 11.1 (Notices) of the Business Combination Agreement. Unless another address is specified in writing pursuant to the provisions of this Section 3.4, notices, demands and other communications to the parties hereto shall be sent to the addresses indicated below: Notices to SPAC or the Sponsor and following the Closing, the Company: | | | with a copy to (which shall not constitute notice): | | | | | | | | Focus Impact Acquisition Corp. | | | Kirkland & Ellis LLP | 1345 Avenue of the Americas | | | 601 Lexington Avenue | New York, NY 10105 | | | New York, NY 10022 | Attention: Carl Stanton | | | Attention: Lauren M. Colasacco, P.C. | Email: cstanton@focus-impact.com | | | Peter Seligson, P.C. | | | | | | | | | | | E-mail: | | | lauren.colasacco@kirkland.com
peter.seligson@kirkland | | | | | | | | | | | with a copy to (which shall not constitute notice): | | | | | | | | | | | Morrison & Foerster LLP | | | | 12531 High Bluff Drive | | | | San Diego, CA 92130 |
TABLE OF CONTENTS | | | Attention: | | | Shai Kalansky;
Omar Pringle; | | | | | | | Justin Salon | | | | | | | | | | | Email: | | | skalansky@mofo.com
opringle@mofo.com
justinsalon@mofo.com |
Section 3.5 Entire Agreement. This Side Letter and the exhibits and schedule hereto constitute the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and supersede all prior understandings, agreements or representations by or among the parties hereto to the extent they relate in any way to the subject matter hereof. Section 3.6 Miscellaneous. The provisions of Sections 11.4 (Governing Law; Jurisdiction), 11.5 (Waiver of Jury Trial), 11.7 (Severability), 11.9 (No Recourse), 11.11 (Interpretation) and 11.12 (Counterparts) of the Business Combination Agreement shall apply mutatis mutandis. [THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK] TABLE OF CONTENTS IN WITNESS WHEREOF, the SPAC and Sponsor have duly executed this Side Letter as of the date first written above. | | | SPAC: | | | | | | | | | | | FOCUS IMPACT ACQUISITION CORP. | | | | | | | | | | | By: | | | /s/ Carl Stanton | | | | Name: | | | Carl Stanton | | | | Title: | | | Chief Executive Officer | | | | | | | | | | | SPONSOR: | | | | | | | | | | | FOCUS IMPACT SPONSOR LLC | | | | | | | | | | | By: | | | /s/ Carl Stanton | | | | Name: | | | Carl Stanton | | | | Title: | | | Authorized Signatory |
[Signature Page to Letter Agreement]
TABLE OF CONTENTS EXHIBIT A
LOCK-UP AGREEMENT TABLE OF CONTENTS November 1, 2021 Focus Impact Acquisition Corp.
250 Park Avenue Ste 911
New York, NY, 10177 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 Focus Impact Acquisition Corp., a Delaware corporation (the “Company”) and Citigroup Global Markets Inc. and Goldman Sachs & Co. LLC, as representatives of the several underwriters (the “Underwriters”), relating to an underwritten initial public offering (the “Public Offering”) of 25,000,000 of the Company’s units (including 3,750,000 units that may be purchased pursuant to the Underwriters’ option to purchase additional units, the “Units”), each consisting 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 warrant (each whole warrant, a “Warrant”). Each Warrant entitles the holder thereof to purchase one 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 Underwriters 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, Focus Impact Sponsor, 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, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination, involving the Company and one or more businesses; (ii) “Founder Shares” shall mean the 7,187,500 shares of Class B Common Stock of the Company, par value $0.0001 per share, outstanding prior to the consummation of the Public Offering; (iii) “Private Placement Warrants” shall mean the warrants to purchase shares of Common Stock of the Company that will be acquired by the Sponsor for an aggregate purchase price of $ 7,500,000 (or up to $ 8,250,000 if the Underwriters’ exercise their option to purchase additional units), or $1.00 per Warrant, in a private placement that shall close simultaneously with the consummation of the Public Offering (including Common Stock issuable upon conversion thereof); (iv) “Public Stockholders” shall mean the holders of Common Stock included in the Units issued in the Public Offering; (v) “Public Shares” shall mean the 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) sale of, offer to sell, contract or agreement to sell, hypothecate, pledge, grant of any option to purchase or otherwise dispose 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, 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 Director (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. TABLE OF CONTENTS (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. It is acknowledged and agreed that the Company shall not enter into a definitive agreement regarding a proposed Business Combination without the prior consent of the Sponsor. 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 outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ 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 other provision relating to the rights of holders of Public Shares unless the Company provides its Public Stockholders 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 franchise and income taxes, if any, divided by the number of then-outstanding Public Shares. (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 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 TABLE OF CONTENTS 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 other 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 or shares of Common Stock issuable upon conversion thereof (the “Founder Shares Lock-up”) until the earlier 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, capital stock exchange, reorganization or other similar transaction that results in all of the Company’s stockholders having the right to exchange their 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 Common Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, 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 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 and Private Placement Warrants and any shares of Common Stock issued upon conversion or exercise thereof are permitted (a) to the Company’s officers or directors, any affiliates or family members of any of the Company’s officers or directors, any members or partners of the Sponsor or their affiliates, or any affiliates of the Sponsor or any employees of such affiliates; (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 Common Stock, as applicable, were originally purchased; (f) by pro rata distributions from the Sponsor to its members, partners, or shareholders pursuant to the Sponsor’s organizational documents; (g) by virtue of the laws of Delaware or the Sponsor’s organizational documents upon liquidation or dissolution of the Sponsor; (h) to the Company for no value for cancellation in connection with the consummation of an initial Business Combination, (i) in the event of the Company’s liquidation prior to the completion of a Business Combination; or (j) in the event of completion of a liquidation, merger, capital stock exchange, reorganization or other similar transaction which results in all of the Company’s Public Stockholders having the right to exchange their 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 (g) these permitted transferees must enter into a written agreement agreeing to be bound by these transfer restrictions and the other restrictions contained in this Letter Agreement. (d) During the period commencing on the effective date of the Underwriting Agreement and ending 180 days after such date, the Sponsor and each Insider shall not, without the prior written consent of Citigroup Global Markets Inc., Transfer any Units, Common Stock, Warrants or any other securities convertible into, or exercisable or exchangeable for, Common Stock held by it, her or him, as applicable, subject to certain exceptions enumerated in Section 5(h) of the Underwriting Agreement. 6. Remedies. The Sponsor and each of the Insiders hereby agree and acknowledge that (i) each of the Underwriters 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. TABLE OF CONTENTS 7. Payments by the Company. Except as disclosed in the Prospectus, none of the Sponsor, the holders of our Founder Shares, any director or officer of the Company nor any of their respective affiliates 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 Underwriters 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. 11. Forfeiture of Founder Shares. To the extent that the Underwriters do not exercise their 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 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 stock split, stock dividend, reverse stock split or stock 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 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. TABLE OF CONTENTS 14. Counterparts; Electronic Signatures. 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. The words “execution,” “signed,” “signature,” and words of like import in this Letter Agreement or in any other certificate, agreement or document related to this Letter Agreement shall include images of manually executed signatures transmitted by facsimile or other electronic format (including, without limitation, “pdf,” “tif” or “jpg”) and other electronic signatures (including, without limitation, DocuSign and AdobeSign). The use of electronic signatures and electronic records (including, without limitation, any contract or other record created, generated, sent, communicated, received, or stored by electronic means) shall be of the same legal effect, validity and enforceability as a manually executed signature or use of a paper-based record-keeping system to the fullest extent permitted by applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act and any other applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act or the Uniform Commercial Code. 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] TABLE OF CONTENTS | | | Sincerely, | | | | | | | | | | | FOCUS IMPACT SPONSOR, LLC | | | | | | | | | | | By: | | | Carl Stanton | | | | Its: | | | Managing Member | | | | | | | | | | | By: | | | /s/ Carl Stanton | | | | | | | Name: Carl Stanton |
| | | /s/ Westley Moore | | | | Westley Moore |
| | | /s/ Carl Stanton | | | | Carl Stanton |
| | | /s/ Ernest Lyles | | | | Ernest Lyles |
| | | /s/ Wray Thorn | | | | Wray Thorn |
| | | /s/ Howard Sanders | | | | Howard Sanders |
| | | /s/ Troy Carter | | | | Troy Carter |
| | | /s/ Jerri DeVard | | | | Jerri DeVard |
| | | /s/ Dawanna Williams | | | | Dawanna Williams |
| | | Acknowledged and Agreed: | | | | | | | | | | | FOCUS IMPACT ACQUISITION CORP. | | | | | | | | | | | By: | | | /s/ Carl Stanton | | | | | | | Name: Carl Stanton | | | | | | | Title: Chief Execuive Officer |
[Signature Page to Letter Agreement]
TABLE OF CONTENTS September 12, 2023January 30, 2024
| | | PRIVATE & CONFIDENTIAL |
Board of Directors
Focus Impact Acquisition Corp. Ladies and Gentlemen: Houlihan Capital, LLC (“Houlihan Capital”) understands that Focus Impact Acquisition Corp. (the “Client” or the “Company” or “Focus Impact”) is contemplating a transaction that involves a business combination whereby the Company will combine with DevvStream Holdings Inc. (“DevvStream” or the “Target”) based on a pre-money equity valuation of Target of $145.0 million. At the closing of the Transaction (“Closing”), all existing Target capital equity will be converted into newly issued shares of common stock of the combined company (“PubCo”), valued at $10.20 per share. Pursuant to an engagement letter dated August 8, 2023, the Board of Directors of the Company (the “Board”) engaged Houlihan Capital as its financial advisor to render a written opinion, as to whether, as of the date of this Opinion, the Transaction is fair to the holders of shares of Class A common stock of the Company from a financial point of view. In completing our analysis for purposes of the Opinion set forth herein, Houlihan Capital’s investigation included, among other things, the following: Held discussions with certain members of Company management (“Company Management”) and Target management (“Target Management”) regarding the Transaction, the historical performance and financial projections of the Target, and the future outlook for the Target; Review of information provided by Client and Target including, but not limited to: ° | 2022 calendar year end unaudited financial statements for DevvStream; |
° | Projected financial statements for DevvStream for the calendar years ended 2023 through 2025; |
° | Executed letter of intent between Focus Impact and DevvStream, effective May 8, 2023; |
° | Focus Impact Board presentation draft, dated August 8, 2023; |
° | Business Combination Agreement by and among Focus Impact Acquisition Corp. and DevvStream Holdings Inc., dated September 12, 2023; |
° | Reasonable Basis Review of Projections for DevvStream Holdings Inc. prepared by Zukin Certification Services, dated September 6, 2023; |
° | Cap table pro forma for the Transaction. |
Discussed with Company Management and Target Management the status of current outstanding legal and environmental claims (if any) and confirmed that any potential related financial exposure has been properly disclosed; Reviewed the industry in which the Target operates, which included a review of (i) certain industry research, (ii) certain comparable publicly traded companies and (iii) certain mergers and acquisitions of comparable businesses; 200 West Madison Suite 2150 Chicago, IL 60606
Tel: 312.450.8600 Fax: 312.277.7599
www.houlihan.com TABLE OF CONTENTS The Board of Directors of Focus Impact Acquisition Corp.
September 12, 2023
January 30, 2024
Fairness Opinion - Confidential Developed indications of value for the Target using generally accepted valuation methodologies; and Reviewed certain other relevant, publicly available information, including economic, industry, and Target specific information. Our analyses contained herein are confidential and addressed to, and provided exclusively for use by, the Board of Directors. Our written opinion may be used (i) by the Board of Directors in evaluating the Transaction, (ii) in disclosure materials to shareholders of the Company, (iii) in filings with the Securities and Exchange Commission (the “SEC”) (including the filing of the fairness opinion and the data and analysis presented by Houlihan Capital to the Board of Directors), and (iv) in any litigation pertaining to matters relating to the Transaction and covered in the Opinion. No opinion, counsel, or interpretation was intended or should be inferred with respect to matters that require legal, regulatory, accounting, insurance, tax, or other similar professional advice. Furthermore, the Opinion does not address any aspect of the Board’s recommendation to its shareholders with respect to the adoption of the Transaction or how any shareholder of the Company should vote with respect to such adoption or the statutory or other method by which the Company is seeking such vote in accordance with the terms of the Transaction, applicable law, and the Company’s organizational instruments. This Opinion is delivered to each recipient subject to the conditions, scope of engagement, limitations and understandings set forth in the Opinion and subject to the understanding that the obligations of Houlihan Capital and any of its affiliates in the Transaction are solely corporate obligations, and no officer, director, principal, employee, affiliate, or member of Houlihan Capital or their successors or assigns shall be subjected to any personal liability whatsoever (other than for intentional misconduct, fraud, or gross negligence), nor will any such claim be asserted by or on behalf of you or your affiliates against any such person with respect to the Opinion other than Houlihan Capital. We have relied upon and assumed, without independent verification, the accuracy, completeness and reasonableness of the financial, legal, tax, and other information discussed with or reviewed by us and have assumed such accuracy and completeness for purposes of rendering an opinion. In addition, we have not made any independent evaluation or appraisal of any of the assets or liabilities (contingent or otherwise) of the Company or Target, nor, except as stated herein, have we been furnished with any such evaluation or appraisal. We have further relied upon the assurances and representations from Company Management that they are unaware of any facts that would make the information provided to us to be incomplete or misleading in any material respect for the purposes of the Opinion. Company Management has represented: (i) that it directed Houlihan Capital to rely on certain forecasted financial information prepared by Target Management as adjusted by Company Management (the “Forecast”); (ii) Houlihan Capital had no role whatsoever in the preparation of the Forecast; (iii) Houlihan Capital was not asked to provide an outside “reasonableness review” of the Forecast; (iv), the Company did not engage Houlihan Capital to audit or otherwise validate any of the Forecast’s underlying inputs and assumptions; and (v) that Houlihan Capital accurately summarized and presented the Forecast. We have not assumed responsibility for any independent verification of this information nor have we assumed any obligation to verify this information. Nothing has come to our attention in the course of this engagement which would lead us to believe that (i) any information provided to us or assumptions made by us are insufficient or inaccurate in any material respect or (ii) it is unreasonable for us to use and rely upon such information or make such assumptions. Several analytical methodologies have been employed herein, and no one method of analysis should be regarded as critical to the overall conclusion reached. Each analytical technique has inherent strengths and weaknesses, and the nature of the available information may further affect the value of particular techniques. In arriving at the Opinion, Houlihan Capital did not attribute any particular weight to any single analysis or factor, but instead, made certain qualitative and subjective judgments as to the significance and relevance of each analysis and factor relative to all other analyses and factors performed and considered by us and in the context of the circumstances of the Transaction. Accordingly, Houlihan Capital believes that its analyses must be considered as a whole, because considering any portion of such analyses and factors, without considering all analyses and factors in their entirety, could create a misleading or incomplete view of the process underlying, and used by Houlihan Capital as support for, the conclusion set forth in the Opinion. TABLE OF CONTENTS The Board of Directors of Focus Impact Acquisition Corp.
September 12, 2023
January 30, 2024
Fairness Opinion - Confidential The conclusions we have reached are based on all the analyses and factors presented herein taken as a whole and also on application of our own experience and judgment. Such conclusions may involve significant elements of subjective judgment or qualitative analysis. We therefore give no opinion as to the value or merit standing alone of any one or more parts of the material that follows. Our only opinion is the formal written opinion Houlihan Capital has expressed as to whether the Transaction is fair to the holders of shares of Class A common stock of the Company from a financial point of view. The Opinion does not constitute a recommendation to proceed with the Transaction. Houlihan Capital was not requested to opine as to, and the Opinion does not address, the (i) underlying business decision of the Company, its shareholders, or any other party to proceed with or effect the proposed Transaction, (ii) financial fairness of any aspect of the proposed Transaction not expressly addressed in the Opinion, (iii) terms of the Transaction (except with respect to financial fairness), including, without limitation, the closing conditions and any of the other provisions thereof, (iv) fairness of any portion or aspect of the proposed Transaction to the holders of any securities, creditors, or other constituencies of the Company, or any other party, other than those set forth in the Opinion, (v) relative corporate or other merits of the proposed Transaction as compared to any alternative business strategies that might exist for the Company, or (vi) tax, accounting, or legal consequences of the proposed Transaction to either the Company, its shareholders, or any other party. In our analysis and in connection with the preparation of the Opinion, Houlihan Capital has made numerous assumptions with respect to industry performance, general business, market and economic conditions and other matters, many of which are beyond the control of any party involved in the Transaction. Houlihan Capital’s Opinion is necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to it as of, the date of the Opinion. Houlihan Capital is under no obligation, to update, revise, reaffirm or withdraw the Opinion, or otherwise comment on or consider events occurring after the date of the Opinion. Houlihan Capital, a Financial Industry Regulatory Authority (FINRA) member, as part of its investment banking services, is regularly engaged in the valuation of businesses and securities in connection with mergers and acquisitions, private placements, bankruptcy, capital restructuring, solvency analyses, stock buybacks, and valuations for corporate and other purposes. Neither Houlihan Capital, nor any of its principals or affiliates, has any ownership or other beneficial interests in any party to the Transaction or any of their affiliates and has provided no previous investment banking or consulting services to any party to the Transaction or any of their affiliates. There is no current agreement between Houlihan Capital, its principals, or affiliates and any party to the Transaction or any of their affiliates providing for the provision of future services by Houlihan Capital, its principals, or any of its affiliates to or for the benefit of any party to the Transaction or any of their affiliates. Houlihan Capital was not requested to, and did not (i) initiate any discussions with, or solicit any indications of interest from, third parties with respect to the Transaction or any alternatives to the proposed Transaction, (ii) negotiate or recommend the terms of the proposed Transaction, or (iii) advise the Board with respect to alternatives to the proposed Transaction. Houlihan Capital was engaged on a fixed fee basis. In an engagement letter dated August 8, 2023, the Company has agreed to indemnify Houlihan Capital for certain specified matters in connection with Houlihan Capital’s services relating to the Opinion. As of the date hereof, it is Houlihan Capital’s opinion that the Transaction is fair to the holders of shares of Class A common stock of the Company from a financial point of view. Respectfully submitted, /s/ Houlihan Capital, LLC Houlihan Capital, LLC TABLE OF CONTENTS EVANS & EVANS, INC. SUITE 130, 3RD FLOOR, BENTALL II, 555 BURRARD STREET | | | 19TH FLOOR, 700 2ND STREET SW | | | 6TH FLOOR, 176 YONGE STREET | VANCOUVER, BRITISH COLUMBIA | | | CALGARY, ALBERTA | | | TORONTO, ONTARIO | CANADA V7X 1M8 | | | CANADA T2P 2W2 | | | CANADA M5C 2L7 |
September 12, 2023 DEVVSTREAM HOLDINGS INC.
2133-1177 W. Hastings Street
Vancouver, British Columbia V6E 2K3 Attention: Board of Directors Dear Sirs/Mesdames: Subject: Fairness Opinion 1.01
| Evans & Evans, Inc. (“Evans & Evans” or the “authors of the Opinion”) was engaged by the Board of Directors (the “Board”) of DevvStream Holdings Inc. (“DevvStream” or “Company”) of Vancouver, British Columbia to prepare a Fairness Opinion (the “Opinion”) with respect to the proposed business combination (the “Proposed Transaction”) with Focus Impact Partners LLC on behalf of Focus Impact Acquisition Corporation (“Focus Impact” and together with DevvStream the “Companies”). Evans & Evans understands that the Companies entered into a non-binding letter of intent (the “LOI”) dated May 8, 2023, setting out the terms of the Proposed Transaction. The Proposed Transaction is summarized in section 1.03 of this Opinion.
|
DevvStream is a carbon stream investment company that provides capital for sustainability projects in exchange for carbon credit rights. DevvStream is a reporting issuer whose shares are listed for trading on the NEO Exchange (“NEO”) under the symbol “DESG”. The Company changed its name from “1319738 B.C. Ltd.” to “DevvStream Holdings Inc.” on November 4, 2022. Focus Impact is a special purpose acquisition company incorporated in Delaware. Focus Impact’s securities are listed for trading on the NASDAQ under the symbols “FIAC”. Given the planned completion of the Proposed Transaction, the Board has requested Evans & Evans prepare the Opinion to provide an independent opinion as to the fairness of the Proposed Transaction, from a financial point of view, to the DevvStream shareholders (“DevvStream Shareholders”). The effective date of the Opinion is September 12, 2023. 1.02
| Unless otherwise noted, all monetary amounts referenced herein are US dollars. |
1.03
| Evans & Evans reviewed the LOI and a draft of the Business Combination Agreement (the “Agreement”) setting out the terms of the Proposed Transaction. A summary of the key terms of the Proposed Transaction is outlined below1. |
1)
| The Agreement will be made and entered into by and among Focus Impact, Focus Impact Amalco Sub Ltd., a newly incorporated company under the Laws of the Province of British Columbia (“Amalco Sub”), and DevvStream. Amalco Sub is a wholly-owned, direct subsidiary of Focus Impact, and was formed for the sole purpose of consummating the Proposed Transaction. |
2)
| Immediately prior to the Closing, Focus Impact will continue (the “Continuance”) from the State of Delaware under the Delaware General Corporation Law (“DGCL”) to the Province of Alberta under the Business Corporations Act (Alberta) (the “ABCA”) (Focus Impact is referred to herein for the periods following the effectiveness of the Continuance as the “New PubCo”). |
TABLE OF CONTENTS 3)
| Following the Continuance, on the Closing Date, Amalco Sub and the Company will amalgamate (the “Amalgamation”) by way of a plan of arrangement (the “Plan of Arrangement”) under Section 288 of the Business Corporations Act (British Columbia) (the “BCBCA”) to form one corporate entity (“Amalco”). |
4)
| Immediately prior to the close of the Proposed Transaction the following will occur: (i) each Company Share issued and outstanding will be automatically exchanged for a certain number of New PubCo Common Shares, (ii) each Company Option and Company Restricted Stock Unit (“RSU”) issued and outstanding will be assumed by New PubCo and shall be converted into Converted Options and Converted RSUs, respectively, (iii) each Company Warrant will be assumed by New PubCo, and upon exercise, they will entitle the holder to receive New PubCo Common Shares, (iv) each holder of Convertible Notes will receive New PubCo Common Shares in accordance with the terms of such Convertible Notes, and (v) each common share of Amalco Sub will be automatically exchanged for a common share of Amalco. |
The Common Conversion Ratio means, in respect of a Company Share, the number equal to (a) the Common Amalgamation Consideration divided by (b) the Fully Diluted Comm Shares Outstanding. The Common Conversion Ratio for the Subordinated Common Voting Shares is approximately 0.1579 at the close of the Proposed Transaction. 5)
| Focus Impact shall provide an opportunity for Focus Impact Shareholders to have their issued and outstanding Focus Impact shares redeemed. |
6)
| In connection with the Continuance and the Plan of Arrangement under the Agreement, the following shall occur: |
a)
| Focus Impact shall effect the Redemption in accordance with its organizational documents, including following the Continuance at the Close of the Proposed Transaction. |
b)
| Pursuant to the Continuance: |
All of the issued and outstanding Focus Impact Securities, which are Focus Impact Class A Shares, shall remain outstanding and automatically convert into New PubCo Common Shares on a one-for-one basis. However, each issued and outstanding Focus Impact Unit that has not been previously separated into Focus Impact Class A Shares and Focus Impact Public Warrants prior to the Continuance shall be converted into securities of New PubCo, identical to one (1) New PubCo Common Share and one-half of one New PubCo Public Warrant. Focus Impact Securities that are Focus Impact Class B Shares shall either convert into New PubCo Common Shares on a one-for-one basis or be forfeited. Focus Impact Public Warrants and Focus Impact Private Placement Warrants will be assumed by New PubCo and converted into the right to exercise such Warrants for New PubCo Common Shares. c)
| Amalco Sub and the Company will, as part of the Plan of Arrangement, consummate the Amalgamation, pursuant to which Amalco Sub and the Company will amalgamate in accordance with the provisions of the BCBCA. |
d)
| Pursuant to the Plan of Arrangement, each Company Option and each Company RSU issued and outstanding immediately prior to the Effective Time will automatically, be cancelled and converted as follows: |
Each outstanding Company Option, whether vested or unvested, will automatically be canceled and converted into a Converted Option. The number of New PubCo Common Shares that the Converted Option allows to purchase will be determined by multiplying the number of outstanding Company Shares associated with the outstanding Company Option by the applicable Common Conversion Ratio. The exercise price per share for the Converted Option will be calculated by dividing the exercise price per share of the original outstanding Company Option by the same Common Conversion Ratio. TABLE OF CONTENTS Each outstanding Company RSU will automatically, without any action on the part of the Parties or the holder thereof, be cancelled and converted into a New PubCo Restricted Stock Unit (a “Converted RSU”) representing the right to receive a number of New PubCo Common Shares equal to the product of (i) the number of Company Shares underlying such Company RSU, multiplied by (ii) the Common Conversion Ratio. Each Company Warrant issued and outstanding immediately prior to the Effective Time will become exercisable for New PubCo Common Shares (a “Converted Warrant”) and will provide the holder the right to acquire (i) a number of New PubCo Common Shares equal to the product of (A) the number of Company Shares underlying such Company Warrant, multiplied by (B) the applicable Common Conversion Ratio, (ii) at an exercise price per share equal to (A) the exercise price per share of such Company Warrant immediately prior to the Effective Time divided by (B) the applicable Common Conversion Ratio. Each Convertible Note outstanding at the Effective Time shall be fully and finally settled in accordance with its terms and converted into a number of New PubCo Common Shares as set forth therein (the “Convertible Note Shares”), which Convertible Note Shares shall be held in accordance with the terms of such Company Convertible Note and the applicable Company Convertible Note Subscription Agreement. Each share of Amalco Sub issued and outstanding immediately prior to the Effective Time shall be exchanged for one newly issued, fully paid and non- assessable common share of Amalco. Prior to the Effective Time, the Company shall take all necessary actions to terminate the Company Equity Incentive Plan, effective as of immediately prior to the Effective Time; provided, that the Converted Options and Converted RSUs shall continue to be governed by the terms of the Company Equity Incentive Plan. 7)
| At the Effective Time, if there are any Company Securities that are owned by the Company as treasury securities, such securities shall be canceled without any conversion or exchange thereof and no payment or distribution shall be made with respect thereto. |
8)
| Amalgamation Consideration Value is the total consideration resulting from the sum of the “Equity Value” which is $145,000,000, and the “Aggregate Exercise Price”, encompassing the in-the-money Company options and Company warrants that are outstanding immediately prior to the close of the Proposed Transaction. |
9)
| Common Amalgamation Consideration, with respect to the Company Securities, is the number of New PubCo Common Shares calculated by dividing the Amalgamation Consideration Value by $10.20. |
10)
| The Proposed Transaction will result in the issued shares of Focus Impact, the combined entity (the “New PubCo”) being held as to 54.0% by the current shareholders of Focus Impact, 11.05% by Other Investors, 2.13% by the DevvStream Convertible Note holders (raise of $7.5 million by issuing convertible notes), and 32.82% by the current shareholders of DevvStream (without including any shares issued in connection with financing transactions taking place after signing and before Closing) on a fully- diluted basis. Other Investors represent up to 30% of SPAC Sponsor shares and warrants that may be forfeited due to financing incentives/arrangements. This does not impact the fully diluted shares post the close of the Proposed Transaction. |
11)
| In connection with the Proposed Transaction, Focus Impact intends to raise $30.0 million via issuance of 3,000,000 common shares at a price of $10 per share under the private investment in public equity (the “PIPE Financing”). The obligations of the parties to consummate the closing are not conditioned upon the consummation of a specific minimum amount of PIPE Financing. |
12)
| In connection with the Proposed Transaction, the Company intends to raise $7,500,000 via the sale of the Convertible Notes. The obligations of the parties are not conditioned upon the consummation of a specific minimum amount of financing via the Convertible Notes. |
TABLE OF CONTENTS 1.04
| DevvStream was incorporated under the BCBCA on August 13, 2021. On November 4, 2022, DevvStream completed a reverse takeover (“RTO”) with DevvStream Inc. (“DES”) and DevvESG Streaming Finco Ltd. (“Finco”). Under the RTO, the Company, a wholly- owned Canadian subsidiary of the Company (“BC Subco”), a wholly-owned Delaware subsidiary of the company (“Delaware Subco”), DES and Finco entered into an amalgamation agreement. Pursuant to the amalgamation agreement, the Company consolidated all of its issued and outstanding common shares on a 28.09:1 basis and amended its articles to redesignate the common shares as subordinate voting shares (“Subordinate Voting Shares” or “SVS”) and create a new class of multiple voting shares (“Multiple Voting Shares” or “MVS”). Delaware Subco amalgamated with DES and BC Subco amalgamated with Finco. |
Also, in connection with the RTO, the Company completed a consolidation of its outstanding Subordinate Voting Shares on the basis of one (1) post-Consolidation Subordinate Voting Share for each 28.09 pre-Consolidation Subordinate Voting Shares (the “Consolidation”). The below diagram shows organizational chart of DevvStream:
DevvStream is an environmental, social, governance (“ESG”) principled, technology- based, impact investing company focused on high quality and high return carbon credit generating projects. DevvStream has two wholly owned subsidiaries, DES and Finco. DevvStream through its operating subsidiary DES, offers investors exposure to carbon credits which are a key instrument to offset emissions of carbon dioxide and other greenhouse gases from industrial activities to reduce the effects of global warming. DES was incorporated under General Corporation Law of Delaware on August 27, 2021 under the name “18798 Corp.”. DES’s name was changed from 18798 Corp. to DevvESG Streaming Inc. on October 7, 2021 and subsequently changed its name to DevvStrean Inc., on February 1, 2022. DES is an ESG principled, technology-based, impact-investing company focused on high quality and high return carbon credit generating project. It intends to invest in projects generating environmental offsets which include but are not limited to carbon such as plastic credits, water credits, methane credits and other environmental benefits (“Green Credits”). DES’sbusiness model is focused on investing in a diversified portfolio of high-quality projects and/or companies that generate or are actively involved, directly or indirectly, with voluntary and/or compliance carbon credits. Through carbon credit streaming arrangements, DevvStream funds these projects and/or companies in exchange for the rights to the carbon credits created by the projects and/or companies, for the duration of 10-30 years. Through this model, DES seeks to incentivize and accelerate the creation of carbon offset projects by providing capital to projects thereby acquiring the rights to carbon credits which may be held for investment or sold to prospective buyers. On November 28, 2021, DES and Devvio Inc. (“Devvio”) entered into a strategic partnership agreement under which DES would become Devvio’s principal business partner to source project financing for Devvio’s clients in connection with acquiring rights related to Green Credits. Also, Devvio and DES partnered to provide Devvio’s clients with carbon footprint reduction solutions through the purchase of Green Credits, and provide validation, storage and certification services to DES TABLE OF CONTENTS for its Green Credit assets, particularly where those efforts can lead to carbon offsets and Green Credits that DES can leverage under their streaming business. Under the terms of the strategic partnership agreement, DES acquired a non-exclusive, non-transferable, non-sublicensable, royalty free right and license to the platform (the “Devvio Platform”). On November 10, 2022, the Company entered into an agreement (the “JV Agreement”) to form a joint venture, Marmota Solutions Incorporated (“Marmota”) in order to establish carbon credit streams in collaboration with Canadian municipalities and provincial organizations. DevvStream holds 50% interest in Marmota. Devvio Devvio is a blockchain company that focuses on the development of large-scale, enterprise blockchain applications deployable globally. Devvio provides blockchain solutions for asset management, automation, the internet of things (“IOT”) integration, ESG, payments, supply chain, video games, non-fungible tokens (“NFT”), workplace safety, identity, and records management. Devvio provides solutions for industries including construction, education, energy & utilities, ESG & sustainability, financial services, healthcare, insurance, manufacturing, public safety, public sector, retail, government, technology, professional services, and transportation and distribution. Devvio Platform The Devvio Platform runs on blockchain technology and offers a global-scale, regulatory compliant framework designed to track, transfer, and maintain the value of assets, records, cryptocurrencies, tokens, payments, identities, and NFT. The Platform was developed by Devvio as a result of over five years of research and development to engineer a distributed ledger framework that can process more than eight million transactions per second while adhering to the fundamental regulatory requirements of real-world businesses. The Platform offers immutability, data protection, Byzantine fault tolerance, patented theft and loss protection and a representational state transfer application programming interface (“RESTful API”) interface for easy integration into existing systems. The Platform is energy efficient and provides blockchain solutions for enterprises including ESG, NFT, payments, supply chain, IOT, occupational safety, identity, and asset / records management. The affiliation of DES with Devvio and the Devvio Platform is expected to enhance the ability of DES to access to additional investment opportunities, as the Devvio Platform will have an ongoing list of companies which are keen on improving their carbon footprint along with their ESG score. In addition to this, some of the companies may also want to purchase carbon credits to improve their carbon footprint by offsetting their emissions. The below diagram outlines the DevvStream ecosystem: TABLE OF CONTENTS Financial Model DevvStream has two main lines of revenue: (i)
| Carbon Investment: In this category the Company makes direct investments in carbon projects and retains ownership of 90% to 100% of the generated carbon credit stream. The projects typically have a targeted payback period of 2 years and an expected stream of income spanning over 10 years. |
(ii)
| Carbon Management Services: In this category DevvStream earns revenue by delivering carbon management services to businesses relating to their carbon emissions. Within this service framework, DevvStream retains 25% to 50% of the generated carbon credit stream, without necessitating any upfront investment from the company. In this revenue category, DevvStream'sDevvStream’s emphasis is on selecting projects with substantial potential for profitability. |
Financial Results DevvStream’s financial year (“FY”) end is July 31. The Company has not generated any revenues as of the date of Opinion. In terms of profitability, the Company’s net loss for the period from August 13, 2021 to July 31, 2022 was C$125,465. For the nine months ended April 30, 2023, the Company’s net loss was C$6,337,149, of which C$1,313,453 were listing expenses related to the RTO. The Company’s revenues and net losses from FY2020 to FY2022, and for the period ended April 30, 2023 are outlined in the following table. (Canadian Dollars) Revenue | | | — | | | — | Net Loss for the period | | | (6,337,149) | | | (125,465) |
Financial Position The key ratios for the Company are outlined in the table below. (Canadian Dollars) Debt-Free Net Working Capital | | | 1,586,966 | | | (52,058) | % of Revenues | | | n/a | | | n/a | Current ratio | | | 3.9 x | | | 0.0 x | Long Term Debt (excl. lease) to Equity | | | 0.0 x | | | 0.0 x | Total Debt (excl. lease) to Equity | | | 0.0 x | | | 0.0 x |
As of August 15, 2023, the Company had a cash balance of approximately $325,000 and no debt. TABLE OF CONTENTS Capital Structure As of the date of the Opinion, DevvStream had 29,436,431 SVS and 4,650,000 MVS issued and outstanding. Each MVS carries 10 votes and may be converted into SVS on a 10:1 basis at the option of the holder. Combining MVS and SVS, the total outstanding trading securities amount to 75,936,461 (the “Securities”). Additionally, the Company had 19,740,680 dilutive securities, resulting in a total of 95,677,141 fully diluted shares outstanding as outlined in the table below. Multiple Voting Share | | | 4,650,000 | Subordinate Voting Shares | | | 29,436,461 | Basic shares outstanding* | | | 75,936,461 | Warrants | | | 8,855,680 | Stock options | | | 4,105,000 | Restricted stock units | | | 6,780,000 | Fully diluted shares outstanding | | | 95,677,141 |
*
| Each MVS can be converted into SVS at a rate of one MVS to 10 SVS and carries 10 voting rights per MVS |
The 4,105,000 stock options have an average exercise price of C$0.85, and 8,855,680 warrants have an average exercise price of C$0.98. Financing History The Company has raised C$11,555,407 as date of the Opinion as follows: -
| On September 29, 2021, the Company issued 8,000,001 units at a price of C$0.02 per unit for gross proceeds of C$160,000.02. |
-
| On October 20, 2021, the Company issued 1,950,000 SVS at a price of $0.06 per SVS for gross proceeds of C$117,000. |
-
| On October 22, 2021, the Company issued 1,050,000 SVS at a price of C$0.20 per SVS for gross proceeds of C$210,000. |
-
| On November 26, 2021, the Company issued 2,500,000 SVS at a price of C$0.40 per SVS for gross proceeds of C$1,000,000. |
-
| On January 17, 2022, the Company completed a private placement for gross proceeds of C$5,635,000 through the issuance of 7,043,750 units at $0.80 per unit. |
-
| On January 21, 2022, Finco, a wholly owned subsidiary of the Company, completed a private placement (the “Finco Concurrent Financing”), pursuant to which it issued an aggregate of 5,456,250 special warrants of Finco (the “Finco Special Warrants”) at a price of C$0.80 per Finco Special Warrant for aggregate gross proceeds of C$4,365,000. In connection with the Finco Concurrent Financing, Finco issued 269,850 warrants. |
-
| On March 14, 2022, the Company completed a private placement offering, pursuant to which it issued an aggregate of 85,494 securities at a price of C$0.80 per security for gross proceeds of C$68,406.72 (the “March 2022 Financing”). |
1.05
| Focus Impact was incorporated under the laws of the state of Delaware on February 23, 2021. Focus Impact was formed with a dual purpose, firstly, to facilitate potential mergers, capital stock exchanges, asset acquisitions, stock purchases, reorganizations, or similar business combinations with one or more businesses, and secondly, Focus Impact aims to promote the development, deployment, and amplification of financially and socially valuable operational practices and policies within the post-combination business. |
TABLE OF CONTENTS Financial Results Focus Impact’s FY end is December 31. In terms of profitability, Focus Impact’s net income increased from $3.82 million for the period ended December 31, 2021 to $11.53 million in FY2022. For the six months ended June 30, 2023, Focus Impact’s net income was $1.05 million. Focus Impact generates income from its cash and marketable securities. Loss from operations | | | (1,541,770) | | | (1,934,832) | | | (431,275) | Net Income | | | 1,051,665 | | | 11,530,114 | | | 3,829,169 |
Financial Position As of June 30, 2023, Focus Impact had cash and cash equivalents of approximately $60.89 million. The cash balance, held as marketable securities in a trust account, is expected to be reduced to approximately $5.7 million as at the close of the Proposed Transaction. The reduction in cash balance is based on the assumed redemption of 90% of Class A common stock. Capital Structure As at the date the Opinion, Focus Impact had 5,745,279 common shares outstanding, which included 570,279 Class A common stock and 5,175,000 Class B common stock. 2.0
| Engagement of Evans & Evans, Inc. |
2.01
| Evans & Evans was formally engaged by the Board pursuant to an engagement letter signed July 12, 2023 (the “Engagement Letter”) to prepare the Opinion. |
2.02
| The Engagement Letter provides the terms upon which Evans & Evans has agreed to provide the Opinion to the Board. The terms of the Engagement Letter provide that Evans & Evans is to be paid a fixed professional fee for its services. In addition, Evans & Evans is to be reimbursed for its reasonable out-of-pocket expenses and to be indemnified by DevvStream in certain circumstances. The fee established for the Opinion is not contingent upon the opinions presented. Furthermore, concerning the Estimate Valuation Report created by Evans & Evans on September 2, 2022, pertaining to the fair market value of the Devvio Platform license (the “License”), Evans & Evans was paid a fixed professional fee for its services. Evans & Evans prepared the Estimate Valuation Report independently and had no prospective interest in DevvStream or any agreements to provide future work. |
2.03
| Evans & Evans has no past, present or prospective interest in the Companies or any entity that is the subject of this Opinion, and we have no personal interest with respect to the parties involved. |
3.01
| In connection with preparing the Opinion, Evans & Evans reviewed agreements between DevvStream and third parties. For confidentiality reasons certain names have been redacted, however, full versions of the below noted agreements are contained in Evans & Evans working paper files. Evans & Evans has reviewed and relied upon, or carried out, among other things, the following: |
Draft Business Combination Agreement between the Companies. Executed LOI between Focus Impact and DevvStream dated May 8, 2023. Documents related to transaction between DevvStream and Focus Impact: (i) Focus Impact organizational materials (summary): proposed transaction overview- key terms; (ii) capital raise – illustrative sources and uses document; and (iii) press release titled - “DevvStream well-positioned in the ESG industry and looking to go to the NASDAQ” provided by management. Interviews with management to understand the current position of DevvStream, short- term expectations and the rationale for the Proposed Transaction. TABLE OF CONTENTS The Company’s website https:// www.devvstream.com. The Company’s corporate organizational chart as of March 2023. The corporate presentation of DevvStream dated February 2023. Response by DevvStream’s management to Evans & Evans initial and follow up questions. DevvStream'sDevvStream’s capitalization table as of March 31, 2023, with subsequent revisions on July 21, 2023, August 8, 2023, and August 29, 2023.
Consideration calculation for DevvStream provided by management including the Focus Impact capitalization table and DevvStream’s change in shareholder ownership post the Proposed Transaction as of July 21, 2023, with subsequent revision on August 8, 2023, and August 29, 2023. DevvStream’s model for financial forecast for the years ending July 31, 2023 to July 31, 2046, prepared by management dated July 14, 2023. DevvStream’s audited financial statements for the period from incorporation (August 13, 2021) to July 31, 2022, as audited by Stern & Loverics LLP, Toronto, Ontario. DevvStream’s unaudited financial statements for the three months ended October 31, 2022, the six months ended January 31, 2023, and the nine months ended April 30, 2023. DevvStream corporate presentation-2023, new flow model and an executive summary document which describes the DevvStream. DevvStream’s patent - programmatic approach document: methods and systems to generate and monetize environmental benefits from multiple activities using a programmatic approach dated December 29, 2022. The latest executive-summary of DevvStream provided by management as of the date of the Opinion. DevvStream’s management discussion & analysis for the nine months ended April 30, 2023, dated June 14, 2023. Focus Impact’s audited financial statements for the year ended December 31, 2022, as audited by Marcum LLP, New York, NY, and unaudited financial statements for the three months ended March 31, 2023. The Company’s annual information form for the financial year ended July 31, 2022. The Company’s articles of incorporation dated August 13, 2021. DevvStream’s charter of the audit committee, charter of the compensation committee, charter of the nominating and corporate governance committee, and majority voting policy. The business combination agreement between 1319738 B.C. Ltd., DevvESG Streaming Inc., DevvESG Streaming Finco Ltd., 1338292 B.C. Ltd., and Devv Subco Inc. dated December 17, 2021, amendment to business combination agreement dated March 30, 2022, second amending agreement dated May 18, 2022, and third amending agreement dated August 11, 2022. DevvStream’s record book of closing documents- reverse takeover of 1319738 B.C. Ltd. and listing on the Neo Exchange. The Estimate Valuation Report prepared by Evans & Evans with respect to the fair market value of the license for the Devvio Platform dated September 2, 2022. Shareholders’ agreement 1824400 Alberta Limited and DevvStream Holdings Inc. dated November 10, 2022. Certificate of incorporation of Marmota dated October 27, 2022 and corporation information sheet dated October 28, 2022. TABLE OF CONTENTS One sheet flyer document of Marmota related to the revenue generation via carbon credit provided by management. Strategic partnership agreement dated November 28, 2021 between Devvio, Inc. and DevvESG Streaming, Inc. Memorandum of understanding between DevvStream, Inc. and Global Green dated December 27, 2022. Letter of intent between DevvStream and Global Green dated January 30, 2023 in relation to financial obligations related to the jointly signed Memorandum of Understanding (“MOU”) on December 27, 2022. DevvStream’s project pipeline with details pertaining to deal name, value, and stream start date, dated February 2023. The Global Green earth day pledge document and Global Green sustainable neighborhood assessment summary deck in relation to raising pledges. Global Green and DevvStream, Inc. NOLA program letter in relation to collaboration with New Orleans to help the city generate revenue. Carbon market opportunities marketing presentation involving Global Green and DevvStream dated March 1, 2023 in relation to credit services and client credits. Global Green energy efficient carbon credit program presentation and Global Green pipeline opportunities provided by management. The following documents in relation to DevvStream (i) minutes of the annual general meeting of the shareholders of Devvstream Holdings Inc. dated April 4, 2023; (ii) minutes of board of directors May 2, 2023; and (iii) directors register, articles of DevvStream. Documents submitted to BC Registry Services by DevvStream which are as follows (i) incorporation applications dated August 13, 2021; and (ii) notice of change of directors. DevvStream documents pertaining to consent to act as director by the following individuals: (i) Ray Quintana; (ii) Stephen Kukucha; (iii) Tom Anderson; and (iv) Jamilla Piracci. BC Registry Services- Form 2 for notice of change of address, LOI: proposed acquisition of DevvESG Streaming, Inc. by 1319738 B.C. Ltd, directors’ resolutions approving AGM dates, shareholders special meeting minutes, notice of alteration dated November 4, 2022. Various board resolutions of the DevvStream board of directors covering the period December 2022 to May 2023. Partnership agreement between DevvESG Streaming, Inc. and a global program that creates and builds sustainable and net zero smart cities and communities for investment opportunities in sustainable and net zero (smart) cities and communities for carbon credit streams dated December 01, 2021. Presentation related to the use of carbon credits to achieve sustainable development goals & lower inflation provided by management. Document related to United Nation (“UN”) Africa credit program: United Nations Framework Convention on Climate Change (COP27) action plan for the development of an African carbon credit market sponsored by UN economic commission for Africa(“UNECA”) and sustainable energy for all organization (“SEforALL”) dated September 2022. Letter of intent dated December 26, 2022 and carbon credit management agreement dated February 23, 2023 between DevvStream, Inc. to cleantech solution company. Letter of intent dated April 18, 2022, and carbon credit management agreement dated March 8, 2023, between DevvStream, Inc. and a Canadian non-profit organization representing road building and maintenance industry in Britch Columbia. TABLE OF CONTENTS Proposal for carbon monetization support from DevvStream Inc. to a carbon capture infrastructure company (dated July 18, 2022), and Port of Goderich- assessment overview. Carbon credit management agreement dated April 11, 2022 and letter of intent dated October 19, 2021, between DevvStream, Inc. and a LED bulbs manufacturing and distribution company and a Equatorial Guinea evaluation under ISO 14064-2 guidance presentation by the same company. Carbon credit management agreement between DevvStream, Inc. and a wastewater management and marine environment restoration company, dated March 16, 2023. Carbon credit streaming agreement dated April 22, 2022 between DevvStream, Devvio Inc., and a polymer nanocomposite sealants manufacturing and installation company. An Alberta corporation- voluntary emission reduction program schedule to multi- system master environmental instrument purchase and sale agreement, multi-system master environmental instrument purchase and sale agreement, Alberta tier compliance instrument program schedule to multi-system master environmental instrument purchase and sale agreement. Carbon credit management agreement dated March 8, 2023, between DevvStream, Inc. and a company engaged in the business of developing agricultural products and services, and a related summary presentation. Letter of Intent between DevvStream, Inc. and partners as follows: (i) a startup airline, (dated January 10, 2023), according to which DevvStream shall be responsible for the development, maintenance and commercialization of credits generated by the startup airline; (ii) a technology company (dated April 23, 2022), for obtaining rights to the carbon credits produced by the use of the technology company’s products ; (iii) a solar energy manufacturing and distribution company (dated November 21, 2021) for management of the creation, validation, certification, storage, security and liquidation of all carbon credits from solar projects; (iv) a spirits distillation technology company (dated October 12, 2022), for development, maintenance and commercialization of credits generated; (vi) a wind farm operations company (dated May 10, 2022); (vii) a plastics repurposing company (dated November 5, 2021), for financing plastic repurposing projects in exchange for carbon credit rights; and (ix) an energy management equipment company and Global Green (dated May 26, 2023), for entering into an agreement for carbon credit trading services provided by DevvStream. Memorandum of Understanding (“MOU”) provided by management: (i) between DevvStream Corporation and a solar energy generation company to create an EV charger program which captures carbon credit units; and (ii) between DevvStream Inc. and a forestry based carbon projects development company, to develop high quality carbon credit project. Term sheet between (i) DevvESG and a solar energy manufacturing and distribution company (dated January 19, 2022), for carbon credits of solar projects; (ii) DevvStream, Inc. and sustainable water provider (dated January 4, 2023), for streaming agreement to collaborate on monetization of sustainable provision of water across Africa; (iii) DevvStream, Inc. and a waterbody clean-up company (dated May 15, 2022); (iv) DevvStream Inc. and a carbon credits conversion company (dated October 5, 2022) for collaborating to create a new US based carbon offset project; (iv) DevvStream Inc. and building solutions company (dated September 28, 2022) for entering into an offset carbon credit streaming agreement; and (v) DevvStream, Inc. and a renewable energy company (dated March 4, 2022), for carbon streaming agreement pertaining to carbon credits generated. Documents pertaining of solar generation and electrical storage company which include (i) company overview presentation dated September 13, 2022; (ii) areas of collaboration presentation dated November 15, 2022; (iv) document related to carbon offset from EV charging stations; and (v) voluntary carbon credit project presentation dated December 9, 2022. TABLE OF CONTENTS BC Compliance term sheet between DevvStream Holdings Inc. and an Alberta corporation. dated June 3, 2023, a related credit purchase term sheet, dated February 17, 2023, and an AB Compliance term sheet, dated March 6, 2023. Shareholders agreement between an Alberta Limited company and DevvStream Holdings Inc. dated November 10, 2022. Document related to the following (i) proposals: consulting services for carbon offset and credit strategy for a city in Ontario; (ii) marketing presentation to two Canadian municipalities in Ontario. Documents pertaining to programmatic development approach of: (i) Well Sealing Project, GHG project plan by DevvStream for carbon offset. The project involves the plugging of orphaned oil and gas wells in different sites located in Canada and the United States; (ii) building energy efficiency program. This includes energy efficiency, renewable energy, and EV charging in large multifamily buildings in the US. Presentation regarding the use of carbon credit revenue by International Federation of Association Football (“FIFA”) dated May 2023. DevvStream’s plastic project prospectus and low carbon roads innovation program document. Document introducing DevvStream’s buildings carbon offset program and presentation on carbon monetization in the real estate sector. DevvStream’s documents in relation to its program offering to corporations which are as follows: (i) program offering document for proposed carbon credit program to accelerate decarbonization efforts for an organization; (ii) document prepared for a healthcare company to accelerate decarbonization efforts; and (iii) program offering document for energy efficiency and waste management in small and medium enterprise. Assessment summary prepared by DevvStream for a semiconductor manufacturing company’s carbon credit project evaluation and greenhouse gas quantification summary. Presentation of DevvStream’s and Global Green’s industry energy efficiency carbon credit program in partnership with an energy management equipment manufacturing company. DevvStream’s presentation and documents of Sub-Saharan Africa efficient lighting carbon offset program: Sub-Saharan Africa efficient lighting carbon offset program, DevvStream project overview - DevvStream project overview, distribution of LED lighting systems in Sub Saharan African Households, Global Carbon Council (“GCC”) project submission form. DevvStream’s low carbon roads innovation program for road transportation (construction, maintenance use) to be used in Canada. DevvStream’s documents pertaining to intellectual property, which are as follows: (i) application to the U.S. Patent and Trademark Office for the invention of methods and systems to generate and monetize environmental benefits from multiple activities using a programmatic approach, drawing filed with the application and document providing the background and description of the invention.; (ii) US patent issued for electric vehicle charging methods, battery charging methods, electric vehicle charging systems, energy device control apparatuses, and electric vehicle, having patent number US 8,319,358 B2, dated November 27, 2012; (iii) US patent application publication for minimum cost demand charge management by electric vehicles having publication number US 2021/0370795 A1, dated December 2, 2021; (iv) US patent application publication for carbon dioxide capture products incorporating or produced using captured carbon dioxide, and economic benefits associated with such products having publication number US 2020/0407222 A1, dated December 31, 2020; (v) US patent issued for method and system for tracking and managing various operating parameters of enterprise assets having patent number US 7,877,235 B2, dated January 25, 2011; (vi) world intellectual property organization in relation to blockchain tracking of carbon credits for materials with sequestered carbon publication number 2020/252013 A1 dated December 17, 2020. TABLE OF CONTENTS Studies related to the carbon offset markets, which are as follows: (i) report titled “Carbon markets in BC” by Vancouver Economic Commission; (ii) report titled “State, and trends of carbon pricing” for the year 2021 and 2022 by the World Bank; (iii) report titled “Emissions trading worldwide -2022” by the International Carbon Action Partnership; Carbon basics: May 2022 presentation, state, and trends of carbon pricing 2021, Marketing analysis documents which include the following documents: (i) DevvESG carbon credit calculation document; (ii) DevvESG carbon offset quality score 2021; (iii) DevvESG EV carbon credit equations and calculations; and (iv) DevvStream’s presentation on financing climate progress with technology-driven offsets. Literature related to the carbon offset markets which is as follows: (i) the Paris agreement and frequently asked questions on Article 6 of the Paris Agreement and internationally transferred mitigation options; (ii) report titled “Taskforce on scaling voluntary carbon markets” dated January 2021; (iii) report titled “Making sense of the voluntary carbon market - a comparison of carbon offset standards” published by World Wildlife Fund, Germany. DevvStream project brief assessment tool documents related to assessment of project feasibility of thirty of DevvStream’s projects. Under this project feasibility is assessed based on certain criteria which are: (i) proponent and solution; (ii) technical; (iii) legal; (iv) financial; and (v) commercial considerations. Greenhouse gas project evaluation report completed by GHG Accounting Services Ltd. for DevvStream for projects dated June 2022, dated October 2022 and three projects reports dated July 2022. Greenhouse gas project potential estimate completed by GHG Accounting Services Ltd. for DevvStream for projects dated June 2022, dated October 2022 and three projects reports dated July 2022. Trading history of DevvStream for the period February 8, 2023 to September 11, 2023. As can be seen from the following chart, the trading price of DevvStream has declined from a high of C$1.48 in April of 2023 to the closing price in the range of C$1.10 as at September 11, 2023. Over the 30-trading days leading up to the Opinion date, the average daily trading volume has been less than 60,000 shares. (Canadian Dollars)
Financial and stock market trading data on the following companies: Brookfield Renewable Corporation; Carbon Streaming Corporation; Base Carbon Inc.; Altius Minerals Corporation; Lithium Royalty Corp.; Gold Royalty Corp.; Metalla Royalty & Streaming Ltd.; Altius Renewable Royalties Corp.; EMX Royalty Corporation; Morien Resources Corp.; Star Royalties Ltd.; Diversified Royalty Corp.; Freedom Internet Group Inc.; Eat Well Investment Group Inc.; Spirit Blockchain Capital Inc.; Topaz Energy Corp.; Freehold Royalties Ltd.; Monumental Minerals Corp.; and Greenlane Renewables Inc. TABLE OF CONTENTS Focus Impact’s audited financial statements for the years ended December 31, 2020 to 2022, prepared by Marcum LLP, Houston, Texas; and unaudited financial statements for three months ended March 31, 2023, prepared by the management. Reviewed the trading history of Focus Impact for the period September 8, 2022 to September 11, 2023 as outlined in the chart below.
Information on the Companies’ markets from a variety of sources. • | Limitation and Qualification: Evans & Evans did not visit the offices of either of the Companies. |
4.01
| In assessing the fairness of the Proposed Transaction, Evans & Evans reviewed information on DevvStream’s market. As a special purpose acquisition corporation, Focus Impact has no operations and as such no market to review. |
4.02
| A carbon credit is a way to measure, value, and trade a verifiable and quantifiable amount of greenhouse gas (“GHG”) emissions with one credit universally understood to mean one ton of carbon dioxide or equivalent (“tCO2e”). A carbon credit represents the right to emit a measured amount of GHG. Carbon credits work as a certification that business or individuals owning them is counterbalancing the emission of GHGs. In this way, the system of carbon credits works as a compensation method assuring a balance between GHG emissions and the respective amounts of certified mitigations. The ultimate purpose of carbon credits is, therefore, to reduce the emission of GHG into the atmosphere. In other words, carbon credits are traded within a carbon market, often known as the cap-and-trade market, where businesses have the opportunity to exchange their pollution rights. Carbon credits can help fund projects that reduce global emissions. |
Article 6 of the Paris Agreement provides a framework for the use of carbon credits, which can increase demand for them. In addition, the Paris Agreement requires countries to regularly update and enhance their nationally determined contribution which can lead to increased demand for carbon credits as countries seek to meet more ambitious emissions reduction targets. There is increasing regulatory and stakeholder pressure on global corporations to lower emissions. This trend has driven demand for carbon credits, giving rise to two sets of markets, which could grow meaningfully in the coming decades. At present, the overall carbon market is mainly characterized by the degree of regulation, namely the regulated compliance carbon market (“CCM”) and the unregulated voluntary carbon market (“VCM”). The CCM is more mature and has historically generated stronger mitigation actions and incentives to decarbonize the economy than the VCM. CCM most commonly takes the form of an Emissions Trading System (“ETS”), which is also known as a cap and trade program, the largest of which is the European Union ETS. Article 6 of the Paris Agreement also contemplates an international market that allows for voluntary cooperation between two or more countries on emissions reductions. TABLE OF CONTENTS The global carbon credit market traded value was estimated to be $978.56 billion in 2022. This market is expected to reach $2.68 trillion in 2028. The global carbon credit market traded value is forecast to grow at a compound annual growth rate (“CAGR”) of 18.23% during the forecast period of 2023-2028. The global carbon credit market traded volume reached 13.22 gigatonnes of equivalent carbon dioxide (“GtCO2e”) in 2022. The traded volume is expected to reach 19.57 GtCO2e by 2028. At the same time, the carbon credit market traded volume is expected to grow at a CAGR of 6.78%2. The CCM is approximately 98% of the carbon market while the VCM amounts to only about 2% of the carbon market as can be seen in the figure below.
The global VCM was valued at $535.60 million in 2021 and is projected to reach $2,655.75 million by 2028, exhibiting a CAGR of 25.70% during this period3. In this market companies, organizations or individuals purchase carbon credits generated from projects to reduce emissions. Voluntary carbon credits market typically direct private financing to climate-action projects. These projects can have additional benefits such as biodiversity protection, pollution prevention, public-health improvements, and job creation. The market is projected to grow going forward due to the increase in the number of companies worldwide taking carbon neutrality goals and other climate commitments that involve the use of carbon offsets as outlined in the chart below. Carbon credits are traceable, tradable, and finite. When they are purchased, they are retired forever. Carbon credits can be retired from either the compliance or voluntary markets. When a credit is retired, the carbon offset it represents is permanently removed from market circulation. This means that only the entity retiring the credit can ever claim to have reduced emissions and only they have released the credits'credits’ positive impacts. Retiring carbon credits is therefore the critical step to achieving net-zero emissions. Carbon credit retirements increased in 2022 while the issuance decreased slightly as compared to previous years. The charts below show carbon credit issuances and retirements: TABLE OF CONTENTS The rate of carbon credit retirements is anticipated to surpass issuances by 2024 thereby decreasing total inventories of carbon credits. This is depicted in the chart below:
Organizations such as Science Based Targets initiatives (“SBTi”) or the Voluntary Carbon Market Integrity Initiative (“VCMI”) are expected to play a significant role in providing guidance and target setting resources for corporations to purchase carbon credits. Emerging guidance from such organizations Avoidance credits represent the avoidance or reduction of a ton of CO2 emissions which would have been emitted into the atmosphere. Examples include nature-based solutions like avoiding deforestation and technology-based solutions such as renewable energy generation. Removal credits represent the drawdown of CO2 emissions through nature- based solutions such as biochar production or ecosystem like or ecosystem restoration. In recent years there has been a shift in preference towards removal credits. Removal credits are increasingly becoming a proxy for high quality credits. The chart below shows removal and avoidance credits supply from 2020 to 2030: TABLE OF CONTENTS
Corporations view spending on carbon credits as non-discretionary and therefore demand is expected to grow. The demand for carbon credits could continue to rise as the efforts to decarbonize the global economy increases. Factors including the rise in carbon emissions, expanding corporate commitment to carbon offsetting, the growing adoption of net zero targets, increasing demand for natural climate solutions, and the establishment of programs like the Carbon Offsetting and Reduction Scheme for International Aviation (“CORSIA”) contribute to this trend. Strong price actions across the world’s most liquid carbon markets put a spotlight on carbon as a barometer for global climate policy actions and as an emerging asset class. High carbon prices are required for carbon removal forestry projects; for blue hydrogen to reach cost parity with grey hydrogen; to decarbonize the hard-to-abate sectors such as steel and cement. The longer nations defer taking action, the higher and faster carbon prices would have to rise to achieve the current climate objectives. The chart below show rise in carbon prices:
The challenges attached to the potential supply of carbon credits reaching the market include the significant growth in the ramp-up of development projects, addressing the long lags time between the initial investment and the eventual sale of credits in order to attract financing. Also, the scarcity of high-quality carbon credits owing to differences in accounting and verification methodologies and because credits’ co-benefits (such as community economic development and biodiversity protection) are seldom well defined, and limited pricing data make it challenging for buyers to know whether they are paying a fair price, and for suppliers to manage the risk they take on by financing and working on carbon-reduction projects without knowing how much buyers will ultimately pay for carbon credits. 4.03
| Carbon offsets are a key tool in the energy transition, and demand for them is expected to increase |
TABLE OF CONTENTS rapidly as companies that have set climate aligned goals work to achieve their goals. Demand for carbon offsets has been predicted to grow exponentially in the future by 15x by 2030 and up to 100x by 2050.4 A Bloomberg NEF report released January 23, 2023 estimates the carbon market to grow and, under one potential scenario, to approach $1.0 trillion by 2037.5 The United States carbon credit market size was valued at $107.44 billion in 2022 and is expected to reach $324.57 billion in 2030 with a CAGR of 14.82% for the forecast period between 2023 and 20306. The market for carbon credits is primarily driven by a combination of state-level programs and voluntary markets. In particular, several states have established cap-and-trade programs, placing limits on greenhouse gas emissions and mandating companies to procure carbon credits for emission offsets. Meanwhile, voluntary markets allow companies to voluntarily purchase carbon credits for emissions reduction, frequently used by firms aiming to decrease their carbon footprint without regulatory mandates. This sustained demand for carbon credits is driven by the growing recognition of sustainability'ssustainability’s significance and the drive to reduce environmental impact, coupled with escalating concerns regarding the impending effects of climate change in the foreseeable future. In Canada, on June 8, 2022, the federal government introduced Canada’s Greenhouse Gas Offset Credit System (“Credit System”). This initiative establishes market-based incentives for various entities, including municipalities, indigenous communities, industries, and individuals, to implement innovative measures for reducing Greenhouse Gas (“GHG”) emissions and sequestering GHG from the atmosphere. Within the Credit System framework, registered participants could generate credits equivalent to the emissions they cut or remove. These credits can then be traded to aid other Canadian entities in fulfilling compliance requirements or emission reduction targets. The Federal Benchmark mandates an initial offset credit price of CA$65 per tonne CO2e in 2023, rising by CA$15 per annum to reach CA$170 per tonne CO2e in 2030, subject to further updates beyond that point7. 4.03
| Investments in cleaner energy sources, such as renewables, grids, and low-emission fuels, play a pivotal role in carbon emission reduction. According to the International Energy Agency (“IEA”), global energy investment was expected to rise to $2.8 trillion in 2023. Over $1.7 trillion is going to clean energy which includes renewable power, nuclear, grids, storage, low-emission fuels, efficiency improvements and end-use renewables and electrification. The remaining amount, which is a little over |
TABLE OF CONTENTS $1.0 trillion, is allocated to unabated fossil fuel supply and power, of which around 15% is to coal and the rest to oil and gas. This shows that for every $1 spent on fossil fuels, $1.7 is now spent on clean energy. Five years ago, this ratio was 1:1.8 The chart below depicts global energy investments in fossil fuels and clean energy.
Clean energy investments have been supported by a variety of factors such as improved economics at a time of high and volatile fossil fuel prices, enhanced policy support through instruments like the US and new initiatives in Europe, Japan, and Asia. Also, there is a strong alignment of climate and energy security goals, especially in import-dependent economies; and a focus on industrial strategy as countries seek to strengthen their footholds in the emerging clean energy economy. Renewables, led by solar, and EVs are leading the expected increase in clean energy investment in 2023. Solar energy investments are expected to receive more than US$1 billion per day 2023 and an approximate total of US$380 billion for the year, edging this spending above that in upstream oil for the first time.8 The chart below shows annual clean energy investments from 2015 to 2023: TABLE OF CONTENTS The year 2022 marked the end of an era in the low-carbon energy transition, in more ways than one. At the beginning of the year, it was already clear that clean energy costs were on the rise for the first time in memory, and supply chain issues emerged as a key challenge for the transition. 2022 still saw a remarkable acceleration in the energy transition, in part because of the energy crisis, with record renewable energy installations and electric vehicle (“EV”) sales worldwide. The year saw an investment of US$ 1.1 trillion, which was an increase of 31% from the previous year. Renewable energy remained the largest sector at $495 billion with an increase of up to 17% year-on-year, electrified transport grew much faster and investments hit $466 billion with an increase of 54% year on year.9 The chart below depicts global energy transition investment by sector:
In the energy efficiency segment, in 2022, strong overall growth continued, with transport overtaking buildings as the main sector for increased spending, driving total efficiency- related investment up by 16% to just over US$560 billion. However, inflation and rising costs are offsetting around half of the growth in efficiency-related investment due to supply chain pressures, rising labor costs and higher material prices. Clean energy investments – comprised of energy efficiency and end-use spending –continue to be significantly lower in emerging markets and developing economies than in advanced economies.10 The chart below shows global energy efficiency- related investment:
TABLE OF CONTENTS In terms of energy transition investment, China leads as the primary funding destination, directing $546 billion into this sector in 2022. The United States ranks second, investing $141 billion in 2022, followed by Germany with a $55 billion commitment to energy transition initiatives. The below graph outlines the top 10 countries for energy for transition investment across sectors in 202211. In 2022, the global energy management system (“EMS”) market was estimated at US$ 55.2 billion in 2022. This market is expected to grow at a CAGR of 14.6% between 2023 to 2032 to the value of US$208.4 billion. The diagram below depicts global energy management system market:
The growth in the EMS market is developing in response to rising concerns about pollution and carbon emissions, the increasing usage of renewable energy sources and growing government initiatives. Adoption of such systems also leads to a reduction in costs. The North America region dominates the EMS market with a market share of 33.6% and has an EMS market valued at US$10.12 billion in 2022.12,13 4.04
| Sustainable funds prioritize investments in environmentally conscious and socially responsible enterprises, contributing to the financing of projects aimed at reducing carbon emissions and promoting sustainable practices. The global sustainable funds market witnessed a slowdown in 2022. The number of sustainable funds launched in 2022 was around 900, a decline of 10% from 2021 levels. Europe dominates the market, with over 5,300 sustainable funds or 76% of the sustainable fund universe14. The US and China account for 12% and 2% of the sustainable funds market respectively. The total value of sustainable fund assets decreased from $2.7 trillion in 2021 to $2.5 trillion in 2022, at a negative |
TABLE OF CONTENTS growth of 7% due to depressed asset values and investor withdrawals amid persistent market uncertainties, including high inflation, rising interest rates, poor market returns and the looming risk of a recession. In Canada, the total assets invested in sustainable funds decreased from $38.6 billion as of December 31, 2021 to $33.7 billion in June 202315. In the US, the value of sustainable fund assets decreased from $357 billion in 2021 to $313 billion in June 202316. The below chart outlines the Sustainable funds and assets under management, by region, 2012–2022 (in billions of dollars and number) as follows:
The below chart outlines the US sustainable Fund Asset as of June 30, 2023 as follows:
4.05
| The United States government has designed policies to speed the country’s clean energy transition and incentivize investments in projects and companies which help battle climate change. Canada was first with significant incentives for systems that would keep carbon from entering the atmosphere, but the United States now has the size advantage, and oilpatch leaders with capital to invest in green |
TABLE OF CONTENTS technology are investing in the United States. In August 2022, the US Congress passed the Inflation Reduction Act (“IRA”), which included provisions to hike subsidies for projects to capture carbon dioxide emissions and sequester them deep underground. The new law put into action a climate and tax deal which will funnel billions of dollars into programs designed to speed the transition to clean energy. The enhanced tax credits included in the IRA are expected to accelerate voluntary action toward lowering emissions as many companies are beginning to see the value in lowering their emissions to generate revenue streams from carbon credits or reduce their compliance costs. Previously carbon emitters in the US could access a production tax credit known as 45Q as per the section 45Q of the Unites States Internal Revenue Code, which provided $50 per metric tonne of carbon dioxide that was captured and permanently stored. Now, under the IRA, that credit’s value has increased to $85, which is an upgrade that could cover nearly two-thirds of a project’s total capital and operating costs. In contrast, the 50 percent Canadian investment tax credit (“ITC”), announced in the last federal budget, approximately covers less than 25 percent of total projected costs for facilities sanctioned by 2030. Also, the ITC doesn’t shield investors from potential changes in future carbon prices. The 45Q, on the other hand, provides a guaranteed price for carbon offsets generated by eligible projects over a 12-year period, effectively de-risking large investments in carbon capture, utilization and storage (“CCUS”). The Regional Greenhouse Gas Initiative (“RGGI”), established in December 2005, stands as the United States'States’ inaugural mandatory cap-and-trade program to restrict carbon dioxide emissions from the power sector. The program involves California and eleven Northeastern states: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont, and Virginia. California introduced the pioneering multi-sector cap-and-trade initiative in North America. Furthermore, Massachusetts has initiated regulations for an additional power sector cap-and-trade program concurrent with RGGI, extending until 2050. Washington state recently enacted new cap-and-invest legislation set to take effect from 2023. With a collective population exceeding a quarter of the U.S. and contributing a third of its GDP, these twelve states have active carbon-pricing programs and are successfully reducing emissions.17 4.06
| Evans & Evans also reviewed information on recent investments and financings in the carbon offset and technology space (North America market). These transactions indicate the increasing demand for the carbon offset market, primarily driven by sustainability initiatives. As sustainability becomes a focal point, US investors may increasingly channel capital into sustainable projects going forward. |
-
| On March 29, 2023, Svante Inc., a Canadian company, closed a $323 million financing, to advance its Vancouver facility's production of carbon capture technology filters, with the goal of supplying sufficient filter modules to capture millions of tons of CO2 annually across various large-scale carbon capture and storage facilities. |
-
| On March 27, 2023, Carbon Neutral Royalty Ltd. (“CNR”) raised C$25 million in funding from new lender Beedie Capital, with the goal of accelerating climate and biodiversity action by financing and supporting high integrity decarbonization projects, as well as funding commitments with existing partners and pipeline projects aligned with CNR'sCNR’s mission of mitigating climate change and supporting local communities. |
-
| On February 10, 2023, LanzaTech, a carbon capture and transformation (“CCT”) company, made its public debut through a special purpose acquisition company deal, valuing the company at $1.8 billion and projecting gross proceeds of $240 million. This capital infusion will play a pivotal role in scaling LanzaTech's revolutionary CCT technology beyond the United States to a global scale. |
-
| On November 29, 2022, Rubicon Carbon Services, LLC (“Rubicon”), a California company, announced to raise $1 billion. Bank of America, JetBlue Ventures, and NGP ETP were expected to participate in the equity financing. Rubicon focuses on providing easier access to the CO2 market by vetting projects and their credits. |
-
| In July 2022, Xpansiv Limited (“Xpansiv”) secured $525 million in funding through two tranches, primarily spearheaded by Blackstone Energy Transition Partners (“BETP”). The funds are |
TABLE OF CONTENTS earmarked to support the expansion of Xpansiv's service portfolio and technological platforms. Xpansiv operates as a vertically integrated carbon and environmental commodity market infrastructure platform, delivering comprehensive solutions across the spectrum. -
| On May 5, 2022, Pachama, Inc. successfully secured $55 million in funding to advance their technologically rigorous approach to forest carbon credit verification, aiming to enhance carbon market quality, facilitate talent acquisition, expand outreach to corporate and forest developer sectors, accelerate research and development, initiate fresh forest projects, and scale transformative carbon market technology for improved integrity and impact. |
-
| In May 2022, Alphabet Inc., Microsoft Corporation, and Salesforce.com, Inc. pledged to obtain $500 million in carbon removal credits by 2030. These three technology giants are key participants in the First Movers Coalition, a leading alliance driving industry and transportation sector decarbonization efforts. |
-
| In May 2022, Summit Carbon Solutions, LLC, a US company, successfully secured $1 billion in equity funding for its carbon capture project aiming to annually capture and store up to 20 million tons of CO2 from various industrial facilities in the Midwestern US. |
-
| In May 2022, Intercontinental Exchange, Inc. (“ICE”) introduced a futures contract for nature-based solutions carbon credits, known as the NBS future (contract code: NBT), facilitating the trading of verified carbon unit (“VCU”) credits through this innovative offering. |
-
| In May 2023, the US government unveiled a $251 million allocation for carbon capture and storage initiatives across seven states, targeting the mitigation of climate-altering emissions from power plants and industrial sites. A substantial portion of the fund will support nine new or expanded large-scale carbon storage projects with a combined capacity of storing at least 50 million metric tons of carbon dioxide. |
-
| In February 2023, the US government, through the U.S. Department of Energy announced US$2.52 billion in funding for two carbon management programs- Carbon Capture Large-Scale Pilots and Carbon Capture Demonstration Projects Program to catalyze investments in transformative carbon capture systems and carbon transport and storage technologies18. |
4.07
| Evans & Evans also conducted a review of De-SPecialized Acquisition Company (“DeSPAC”)19 transactions. A SPAC is a special purpose acquisition company (“SPAC”) investment vehicle that provides access to funds or an alternative route to growth capital. Through this vehicle, early-stage growth companies can raise capital and gain liquidity in the public market, enhancing their visibility and credibility, and potentially attracting more investors and customers. Thus, a special purpose acquisition company cash balance provides an immediate infusion of capital to a company, supporting its growth and expansion endeavors. However, excessive pre-merger shareholder redemptions in the SPAC may affect a transaction as the investment vehicle may not have sufficient cash on hand to complete the transaction with a target company and limited available capital for a target company post the transaction. |
In the US, as of March 24, 2023, the average return of top 10 SPACs post-merger was 348%. The number of SPAC deals increased from 23 in 2018 to 199 in 2021, and then decreased to 102 in 2022. In 2023, the number of SPAC deals is expected to reach 158. Also, the number of SPACs Initial Public Offerings (“IPOs”) increased from 46 in 2018 to 613 in 2021, and then decreased to 86 in 2022, and are expected to reach 49 in 2023. The slowdown in SPACs is due to increasing challenges and scrutiny applied by investors, regulators, and courts to SPAC transactions. The below chart outlines the number of SPACs and their value. TABLE OF CONTENTS
The below chart outlines the SPACs pipeline in March 2023 as follows: A de-SPAC transaction involves private companies merging with SPACs, which are shell companies with no tangible assets other than the cash from investors, typically sponsored by private equity, venture capital, or asset management professionals seeking positive returns through acquisitions or mergers with promising private companies.
The average redemption rate in the US has increased significantly since the 2021, with over 90% of investors voting no on proposed deals in 2023 as outlined the chart below20. SPACs are commonly subject to litigation, with about 20% of completed deSPAC mergers between 2019 and late 2022 facing securities class actions (“SCAs”) against deal participants. The deSPAC SCA rate is nearly double that of traditional IPOs and more than triple the rate of SCAs against public companies in general.21 In Q1 2023, only ten SPAC IPOs were priced, raising approximately $738 million, a significant decrease compared to Q1 2022 with 55 IPOs raising $9 billion. Additionally, 21 IPOs were withdrawn TABLE OF CONTENTS in Q1 2023, reflecting ongoing uncertainty in the SPAC market. De-SPAC transaction values also declined, with an aggregate equity value of around $22.5 billion and an average value of about $479 million per transaction in Q1 2023, compared to $41.8 billion and an average value of $1.23 billion per transaction in Q1 2022. Furthermore, 71 SPACs were dissolved in Q1 2023, up from a total of 145 in 2022. As of Q1 2023, about 90% of deSPACed companies were trading below their IPO price. 5.01
| Evans & Evans prepared an Estimate Valuation Report with respect to the fair market value of the license (the “License”) for the Devvio Platform dated September 2, 2022. |
5.02
| Management of DevvStream represented to Evans & Evans that there have been no formal valuations or appraisals relating to the Companies or any affiliate or any of their material assets or liabilities made in the preceding three years, except as otherwise noted, which are in the possession or control of DevvStream. |
6.0
| Conditions and Restrictions |
6.01
| The Opinion is intended for internal purposes of the Board and may be shared with management of DevvStream at the discretion of the Board. The Opinion is intended for placement on DevvStream’s file and may be included in any materials provided to DevvStream’s Shareholders. The final Opinion may be submitted to the US Securities and Exchange Commission (“SEC”) and appropriate securities commissions in Canada, if required. The final Opinion may be shared with the court approving the Proposed Transaction. |
6.02
| The Opinion must not be submitted to any tax authorities, except where DevvStream, or any of its directors or officers, becomes compelled or required by law, regulation, or legal or regulatory process (including by oral questions, interrogations, requests for information or documents, subpoena, civil investigative demand, or similar process) to so disclose the Opinion. In the case of such a legally compelled or required disclosure, DevvStream will provide written notice of the material particulars of the disclosure to Evans & Evans (unless prohibited by applicable law). |
6.03
| Any use beyond that defined above is done so without the consent of Evans & Evans and readers are advised of such restricted use as set out above. |
6.05
| The Opinion should not be construed as a formal valuation or appraisal of the Companies or their respective securities or assets. Evans & Evans has, however, conducted such analyses as we considered necessary in the circumstances. |
6.06
| In preparing the Opinion, Evans & Evans has relied upon and assumed, without independent verification, the truthfulness, accuracy and completeness of the information and the financial data provided by the Company. Evans & Evans has therefore relied upon all specific information as received and declines any responsibility should the results presented be affected by the lack of completeness or truthfulness of such information. Publicly available information deemed relevant for the purpose of the analyses contained in the Opinion has also been used. The Opinion is based on: (i) our interpretation of the information which the Companies, as well as their representatives and advisers, have supplied to-date; (ii) our understanding of the terms of the Proposed Transaction; and (iii) the assumption that the Proposed Transaction will be consummated in accordance with the expected terms. |
6.07
| The Opinion is necessarily based on economic, market and other conditions as of the date hereof, and the written and oral information made available to us until the date of the Opinion. It is understood that subsequent developments may affect the conclusions of the Opinion, and that, in addition, Evans & Evans has no obligation to update, revise or reaffirm the Opinion. |
6.08
| Evans & Evans denies any responsibility, financial, legal or other, for any use and/or improper use of the Opinion however occasioned. |
6.09
| Evans & Evans expresses no opinion as to the price at which any securities of the Company, Focus Impact or the resulting combined entity will trade on any stock exchange at any time. |
TABLE OF CONTENTS 6.10
| Evans & Evans is expressing no opinion as to whether any alternative transaction might have been more beneficial to the DevvStream Shareholders. |
6.11
| Evans & Evans reserves the right to review all information and calculations included or referred to in the Opinion and, if it considers it necessary, to revise part and/or its entire Opinion and conclusion in light of any information which becomes known to Evans & Evans during or after the date of the Opinion. |
6.12
| In preparing the Opinion, Evans & Evans has relied upon a letter from management of DevvStream confirming to Evans & Evans in writing that the information and management's representations made to Evans & Evans in preparing the Opinion are accurate, correct, and complete, and that there are no material omissions of information that would affect the conclusions contained in the Opinion. |
6.13
| Evans & Evans has based its Opinion upon a variety of factors. Accordingly, Evans & Evans believes that its analyses must be considered as a whole. Selecting portions of its analyses or the factors considered by Evans & Evans, without considering all factors and analyses together, could create a misleading view of the process underlying the Opinion. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Any attempt to do so could lead to undue emphasis on any particular factor or analysis. Evans & Evans’ conclusions as to the fairness, from a financial point of view, to the DevvStream Shareholders of the Proposed Transaction were based on its review of the Proposed Transaction taken as a whole, in the context of all of the matters described under “Scope of Review”, rather than on any particular element of the Proposed Transaction or the Proposed Transaction outside the context of the matters described under “Scope of Review”. The Opinion should be read in its entirety. |
6.14
| Evans & Evans was not requested to, and we did not, solicit indications of interest or proposals from third parties regarding a possible acquisition of or merger with the Company. Our opinion also does not address the relative merits of the Proposed Transaction as compared to any alternative business strategies or transactions that might exist for the Company, the underlying business decision of the Company to proceed with Proposed Transaction, or the effects of any other transaction in which the Company will or might engage. |
6.15
| Evans & Evans expresses no opinion or recommendation as to how any shareholder of the Company should vote or act in connection with the Proposed Transaction, any related matter or any other transactions. We are not experts in, nor do we express any opinion, counsel or interpretation with respect to, legal, regulatory, accounting or tax matters. We have assumed that such opinions, counsel or interpretation have been or will be obtained by the Company from the appropriate professional sources. Furthermore, we have relied, with the Company’s consent, on the assessments by the Company and its advisors, as to all legal, regulatory, accounting and tax matters with respect to the Company and the Proposed Transaction, and accordingly we are not expressing any opinion as to the value of the Company’s tax attributes or the effect of the Proposed Transaction thereon. |
6.16
| No claim shall be brought against Evans & Evans and all of its Principal’s, Partner’s, staff or associates’ total liability for any errors, omissions or negligent acts, whether they are in contract or in tort or in breach of fiduciary duty or otherwise, arising from any professional services performed or not performed by Evans & Evans, its Principal, Partner, any of its directors, officers, shareholders or employees, more than two years after the date of the Opinion. |
7.01
| In preparing the Opinion, Evans & Evans has made certain assumptions as outlined below. |
7.02
| With the approval of the Board and as provided for in the Engagement Letter, Evans & Evans has relied upon, and has assumed the completeness, accuracy and fair presentation of, all financial information, business plans, forecasts and other information, data, advice, opinions and representations obtained by it from public sources or provided by the Company or its affiliates or any of their respective officers, directors, consultants, advisors or representatives (collectively, the “Information”). The Opinion is conditional upon such completeness, accuracy and fair presentation of the Information. |
TABLE OF CONTENTS In accordance with the terms of the Engagement Letter, but subject to the exercise of its professional judgment, and except as expressly described herein, Evans & Evans has not attempted to verify independently the completeness, accuracy or fair presentation of any of the Information. 7.03
| Senior officers of DevvStream represented to Evans & Evans that, among other things: (i) the Information (other than estimates or budgets) provided orally by, an officer or employee of DevvStream or in writing by DevvStream (including, in each case, affiliates and their respective directors, officers, consultants, advisors and representatives) to Evans & Evans relating to DevvStream, its affiliates or the Proposed Transaction, for the purposes of the Engagement Letter, including in particular preparing the Opinion was, at the date the Information was provided to Evans & Evans, fairly and reasonably presented and complete, true and correct in all material respects, and did not, and does not, contain any untrue statement of a material fact in respect of DevvStream, its affiliates or the Proposed Transaction and did not and does not omit to state a material fact in respect DevvStream, its affiliates or the Proposed Transaction that is necessary to make the Information not misleading in light of the circumstances under which the Information was made or provided; (ii) with respect to portions of the Information that constitute financial estimates or budgets, they have been fairly and reasonably presented and reasonably prepared on bases reflecting the best currently available estimates and judgments of management of DevvStream or its associates and affiliates as to the matters covered thereby and such financial estimates and budgets reasonably represent the views of management of DevvStream; and (iii) since the dates on which the Information was provided to Evans & Evans, except as disclosed in writing to Evans & Evans, there has been no material change, financial or otherwise, in the financial condition, assets, liabilities (contingent or otherwise), business, operations or prospects of the Company or any of its affiliates and no material change has occurred in the Information or any part thereof which would have, or which would reasonably be expected to have, a material effect on the Opinion. |
7.04
| In preparing the Opinion, we have made several assumptions, including that all final or executed versions of documents will conform in all material respects to the drafts provided to us, all of the conditions required to implement the Proposed Transaction will be met, all consents, permissions, exemptions or orders of relevant third parties or regulating authorities will be obtained without adverse condition or qualification, the procedures being followed to implement the Proposed Transaction are valid and effective and that the disclosure provided or (if applicable) incorporated by reference in any documents provided to shareholders with respect to DevvStream and the Proposed Transaction will be accurate in all material respects and will comply with the requirements of applicable law. Evans & Evans also made numerous assumptions with respect to industry performance, general business, market and economic conditions and other matters, many of which are beyond the control of Evans & Evans and any party involved in the Proposed Transaction. Although Evans & Evans believes that the assumptions used in preparing the Opinion are appropriate in the circumstances, some or all of these assumptions may nevertheless prove to be incorrect. |
7.05
| The Companies and all of their related parties and their principals had no contingent liabilities, unusual contractual arrangements, or substantial commitments, other than in the ordinary course of business, nor litigation pending or threatened, nor judgments rendered against, other than those disclosed by management that would affect the evaluation or comment. |
7.06
| As of April 30, 2023 all assets and liabilities of DevvStream have been recorded in their accounts and financial statements and follow International Financial Reporting Standards. |
7.07
| As of March 31, 2023 all assets and liabilities of Focus Impact have been recorded in their accounts and financial statements and follow U.S. Generally Accepted Accounting Principles. |
7.08
| There were no material changes in the financial position of the Companies between the date of the financial statements and the date of the Opinion unless noted in the Opinion. |
7.09
| Representations made by the Companies as to the number of shares and derivative securities issued and outstanding are accurate. |
8.0
| Analysis of DevvStream |
8.01
| In assessing the equity value (“Equity Value”) of DevvStream, Evans & Evans considered the |
TABLE OF CONTENTS following analyses and factors, amongst others: (1) historical financings; (2) a trading price analysis; (3) discounted cash flow (“DCF”) analysis; (4) guideline public company (“GPC”) analysis; and (5) other considerations. The Equity Value for DevvStream as implied by the Proposed Transaction is $145 million as calculated below. Multiple Voting Share | | | 4,650,000 | Subordinate Voting Shares | | | 29,436,461 | Basic Shares Outstanding* | | | 75,936,461 | Warrants | | | 8,855,680 | Stock options | | | 4,105,000 | Restricted stock units | | | 6,780,000 | Fully Diluted Shares Outstanding | | | 95,677,141 | Exchange ratio | | | 0.1579 | Proforma Shares Outstanding | | | 15,109,252 | Share Price | | | $10.20 | Diluted Market Capitalization | | | 154,114,368 | Less Aggregate Exercise Price (Stock Options & Warrants) | | | 9,114,368 | Equity Value | | | 145,000,000 |
*
| Each MVS carries 10 votes and may be converted into an SVS on a 10:1 basis at the option of the holder. |
8.02
| Evans & Evans reviewed the financial position of DevvStream as of the date of the Opinion as discuss in section 1.04 above. The Company does require additional funding to roll out its planned business model. |
8.03
| In assessing the fairness of the Equity Value implied by the Proposed Transaction, Evans & Evans considered the value of the Company based on a review of past equity financing. The Company had not completed any material financings in the 12 months preceding the date of the Opinion. |
8.04
| Evans & Evans reviewed the market capitalization of DevvStream on the NEO for the 10, 30, 90 and 180-trading days preceding the date of the Opinion. As can be seen from the following tables (in US dollars), the average closing trading price of DevvStream remained consistent around $0.81 per security over the 180-trading days preceding the date of the Opinion. Based on approximately 75.9 million Securities outstanding, the implied market capitalization of DevvStream has ranged from $59.91 million to $63.34 million. While Evans & Evans reviewed data over a 180-day trading period, the analysis focused on the 30 to 90-days preceding the date of the Opinion. |
10-Days Preceding | | | $0.733 | | | $0.789 | | | $0.854 | 30-Days Preceding | | | $0.695 | | | $0.803 | | | $0.922 | 90-Days Preceding | | | $0.695 | | | $0.834 | | | $0.998 | 180-Days Preceding | | | $0.552 | | | $0.810 | | | $1.119 |
10-Days Preceding | | | 1,750 | | | 20,077 | | | 78,131 | | | 200,767 | | | 0.3% | 30-Days Preceding | | | 0 | | | 54,415 | | | 209,380 | | | 1,632,440 | | | 2.1% | 90-Days Preceding | | | 0 | | | 46,703 | | | 209,380 | | | 4,109,849 | | | 5.4% | 180-Days Preceding | | | 0 | | | 65,176 | | | 281,317 | | | 8,929,141 | | | 11.8% |
TABLE OF CONTENTS | | | 10 | | | 30 | | | 90 | | | 180 | | | | $59,910,000 | | | $61,000,000 | | | $63,340,000 | | | $61,520,000 |
In reviewing trading volumes, Evans & Evans found that on average less than 100,000 Securities traded per day over the 180-day period preceding the Opinion and there was trading activity on 139 days of the 180-day period. However, in total only 5.4% of the Company’s Securities outstanding traded in the 90 trading days preceding the Opinion indicating large numbers of shareholders’ actual ability to realize their shares at the current trading price is unlikely. Given the limited trading volumes on the NEO, Evans & Evans calculated DevvStream’s VWAP over the 5, 10, 15, 20, 30, and 60 days preceding the date of the Opinion as summarized in the following table. The Company’s VWAP ranged between $0.7730 and $0.8642 over the 60 trading days preceding the date of the Opinion. 5-Day VWAP | | | $0.7730 | | | 20-Day VWAP | | | $0.8642 | 10-Day VWAP | | | $0.7774 | | | 30-Day VWAP | | | $0.8225 | 15-Day VWAP | | | $0.8193 | | | 60-Day VWAP | | | $0.8200 |
8.05
| Evans & Evans compared the Equity Value implied by the Proposed Transaction of approximately $145,000,000 to the value of DevvStream based on a DCF analysis. Evans & Evans reviewed the Company’s financial projections for the years ending July 31, 2024 to 2044 under both the conservative scenario and management scenario. Evans & Evans selected the conservative scenario as the basis for the Opinion due to its more cautious assumptions and risk considerations. In the view of Evans & Evans, the conservative scenario provided a more prudent perspective on the Company's financial outlook for the years ending July 31, 2024, to 2044. |
Evans & Evans noted that revenues were declining beyond 2035 and capital expenditure was not assumed beyond FY2029 by management in the model considering the difficulty in developing reliable long-term forecasts. Therefore, Evans & Evans considered the financial projections for the years ending July 31, 2024 to 2030 and discounted the net after-tax cash flows to the present using a risk adjusted discount rate. The below table outlines the revenue projections and EBITDA margins for the projected period. Revenues | | | 2,571,854 | | | 34,773,213 | | | 70,951,197 | | | 95,734,731 | | | 122,058,634 | | | 148,063,415 | | | 158,315,555 | Growth | | | n/a | | | 1252.1% | | | 104.0% | | | 34.9% | | | 27.5% | | | 21.3% | | | 6.9% | EBITDA | | | (825,551) | | | 28,793,376 | | | 60,592,893 | | | 82,424,957 | | | 103,881,041 | | | 124,646,327 | | | 130,770,867 | Margin | | | -32.1% | | | 82.8% | | | 85.4% | | | 86.1% | | | 85.1% | | | 84.2% | | | 82.6% |
Evans & Evans also performed a sensitivity analysis on DevvStream’s enterprise value using a range of discount rates and terminal growth rates. The chart below illustrates the sensitivity of enterprise value to changes in discount rates. TABLE OF CONTENTS Enterprise Value Discount rate | | | 45% | | | 85,660,000 | | | 85,970,000 | | | 86,280,000 | | | 86,600,000 | | 43% | | | 92,260,000 | | | 92,620,000 | | | 92,990,000 | | | 93,370,000 | | 41% | | | 99,660,000 | | | 100,090,000 | | | 100,540,000 | | | 100,990,000 | | 39% | | | 108,010,000 | | | 108,530,000 | | | 109,060,000 | | | 109,610,000 | | 37% | | | 117,490,000 | | | 118,120,000 | | | 118,760,000 | | | 119,430,000 | | 35% | | | 128,300,000 | | | 129,070,000 | | | 129,860,000 | | | 130,680,000 |
In undertaking this analysis, Evans & Evans found the Equity Value to be supportive of the calculated net present value of future cash flows of the Company. 8.06
| Evans & Evans also assessed the reasonableness of the Equity Value implied by the Proposed Transaction of approximately $145,000,000 by comparing certain of the related valuation metrics to the metrics indicated for referenced guideline public companies (“GPCs”). The identified guideline companies selected were considered reasonably comparable to DevvStream. |
Evans & Evans used a multiple of EV to next financial year +1 (“NFY +1”) revenues as a mean of deriving the value of the Company as at the date of the Opinion. Evans & Evans believed the use of forward (NFY+1) revenue multiple was appropriate given the Company is expecting to generate reasonable revenues from FY2024 and to factor in the short-term growth of the Company. Evans & Evans identified a list of 19 companies that were similar to DevvStream in terms of business model and operate in the carbon streaming, mining (royalty streaming), oil and gas exploration (royalty streaming) space. Thereafter, based on the consideration of business operations, size, and product offerings of DevvStream and the identified GPCs, Evans & Evans selected the and utilized nine companies (i) Base Carbon Inc.; (ii) Gold Royalty Corp.; (iii) Metalla Royalty & Streaming Ltd.; (iv) Altius Renewable Royalties Corp.; (v) EMX Royalty Corporation; (vi) Morien Resources Corp.; (vii) Star Royalties Ltd.; (viii) Eat Well Investment Group Inc.; and (ix) Greenlane Renewables Inc. The reader of the Opinion should note that although the comparable companies may not be direct competitors to the Company, they do or may offer similar products and/or services to their target markets and embody similar business, technical and financial risk/reward characteristics that a notional investor would consider as being comparable. Evans & Evans noted that the selected guideline companies had EV to NFY revenue multiple ranging from 0.4x to 21.5x with a mean and median of 11.7x and 15.8x, respectively; and the EV to NFY+1 revenue multiple ranging from 0.3x to 21.1x with a mean and median of 10.0x and 12.3x, respectively. Further, Evans & Evans noted that using the Company’s forecasted revenues, DevvStream’s trading NFY+1 revenue multiple would be 1.7x. In assessing the reasonableness of the above, we considered the following: there are a limited number of directly comparable public companies, when one considers differentiating factors such as size and market niche; no company considered in the analysis is identical to DevvStream; an analysis of the results of the foregoing necessarily involves complex considerations and judgments concerning the differences in the financial and operating characteristics of DevvStream, the Proposed Transaction and other factors that could affect the trading value and aggregate transaction values of the companies to which they are being compared; and the Company is operating in losses as of the date of the Opinion and will require cash to operate going forward. TABLE OF CONTENTS Given the above-noted factors and our analysis of the observed multiples of selected public companies, Evans & Evans considered this approach with the DCF, trading price analysis in making the final determination of the EV of DevvStream. 9.0
| Analysis of Focus Impact |
9.01
| In assessing the fairness of the Proposed Transaction and the associated position the DevvStream Shareholders will hold in Focus Impact post-Proposed Transaction, Evans & Evans considered the net asset value (“NAV”) of Focus Impact, among other factors. |
Evans & Evans noted that as at the date of the Opinion, Focus Impact had approximately $5.70 million in cash and considered the cash to be representative of the NAV. A premium to the NAV would also be appropriate as Focus Impact is listed on the NASDAQ and would likely offer DevvStream Shareholders increased liquidity over the relatively new NEO. 10.01
| In considering fairness, from a financial point of view, Evans & Evans considered the Proposed Transaction from the perspective of the DevvStream Shareholders as a group and did not consider the specific circumstances of any particular shareholder, including with regard to income tax considerations. |
10.02
| Based upon and subject to the foregoing and such other matters as we consider relevant, it is our opinion, as of the date of the Opinion, that the Proposed Transaction and Exchange Ratio are fair, from a financial point of view, to the DevvStream Shareholders. In arriving at this conclusion, Evans & Evans considered the following qualitative and quantitative factors. |
a.
| DevvStream has not generated revenues as at the Date of the Opinion. The Company has retained losses of C$13.91 million and a cash balance of C$1.61 million as at April 30, 2023. There is no assurance DevvStream will be able to continue to raise funding as a listed entity on the NEO. |
b.
| As of June 2023, the value of sustainable fund assets in the US was $313 billion, in contrast to Canada's $33.7 billion, indicating that the US market has greater accessibility and presence within the sustainable funds market. Also, the US market is actively participating in sustainable investment and carbon credit initiatives through financing, initial public offers (“IPOs”), and government investments as highlighted in section 4.04 and 4.05 of the Report. |
c.
| The Equity Value of DevvStream as implied by the Proposed Transaction is supported by the net present value of the future cash flows of DevvStream under the DCF analysis as calculated by Evans & Evans. |
d.
| The Equity Value of DevvStream as implied by the Proposed Transaction is supported by the fair market value Equity for DevvStream under the GPC analysis using NFY and NFY+1 revenues of DevvStream as assessed by Evans & Evans. |
e.
| As shown in the below table, the value implied by the Proposed Transaction and DevvStream’s ownership in the combined entity post-transaction is a significant premium to the current market capitalization of DevvStream as well as the assessed value as outlined in section 8.0 of the Opinion. Given the uncertainty associated with the pricing of the PIPE Financing, Evans & Evans conducted a sensitivity analysis at a variety of prices. |
SPAC Sponsor Shares | | | 12,790,000 | | | 3,450,000 | | | 3,450,000 | | | 3,450,000 | | | 3,450,000 | | | 3,450,000 | | | 3,450,000 | | | 3,450,000 | | | 3,450,000 | SPAC Shareholders | | | 12,070,279 | | | 570,279 | | | 570,279 | | | 570,279 | | | 570,279 | | | 570,279 | | | 570,279 | | | 570,279 | | | 570,279 | Other Investors* | | | 5,085,000 | | | 1,725,000 | | | 1,725,000 | | | 1,725,000 | | | 1,725,000 | | | 1,725,000 | | | 1,725,000 | | | 1,725,000 | | | 1,725,000 | DevvStream Shares | | | 15,109,252 | | | 15,109,252 | | | 15,109,252 | | | 15,109,252 | | | 15,109,252 | | | 15,109,252 | | | 15,109,252 | | | 15,109,252 | | | 13,062,513 | Convertible Note Holders | | | 980,392 | | | 980,392 | | | 980,392 | | | 980,392 | | | 980,392 | | | 980,392 | | | 980,392 | | | 980,392 | | | 980,392 | PIPE Shares | | | 2,500,000 | | | 2,727,273 | | | 3,000,000 | | | 3,333,333 | | | 3,750,000 | | | 4,285,714 | | | 5,000,000 | | | 6,000,000 | | | 7,500,000 | Total Shares O/S | | | 48,534,923 | | | 24,562,196 | | | 24,834,923 | | | 25,168,256 | | | 25,584,923 | | | 26,120,637 | | | 26,834,923 | | | 27,834,923 | | | 27,288,184 | Implied Market Capitalization | | | 582,419,077 | | | 270,184,154 | | | 248,349,231 | | | 226,514,308 | | | 204,679,385 | | | 182,844,462 | | | 161,009,539 | | | 139,174,616 | | | 109,152,736 | Implied Value per DevvStream Share | | | 1.895 | | | 1.737 | | | 1.579 | | | 1.421 | | | 1.263 | | | 1.105 | | | 0.948 | | | 0.790 | | | 0.632 | Premium to 20-Day VWAP | | | 120.5% | | | 102.1% | | | 83.7% | | | 65.4% | | | 47.0% | | | 28.6% | | | 10.2% | | | -8.1% | | | -26.5% |
TABLE OF CONTENTS % Ownership of DevvStream | | | 31.13% | | | 61.51% | | | 60.84% | | | 60.03% | | | 59.06% | | | 57.84% | | | 56.30% | | | 54.28% | | | 47.87% | % Ownership of Focus Impact | | | 51.22% | | | 16.37% | | | 16.19% | | | 15.97% | | | 15.71% | | | 15.39% | | | 14.98% | | | 14.44% | | | 14.73% | % Ownership of Convertible Note Holders | | | 2.02% | | | 3.99% | | | 3.95% | | | 3.90% | | | 3.83% | | | 3.75% | | | 3.65% | | | 3.52% | | | 3.59% | % Ownership of PIPE Shares | | | 5.15% | | | 11.10% | | | 12.08% | | | 13.24% | | | 14.66% | | | 16.41% | | | 18.63% | | | 21.56% | | | 27.48% | Market Cap Attributable to DevvStream | | | 181,311,024 | | | 166,201,772 | | | 151,092,520 | | | 135,983,268 | | | 120,874,016 | | | 105,764,764 | | | 90,655,512 | | | 75,546,260 | | | 52,250,052 | 20-Day VWAP Market Cap of DevvStream | | | 82,230,000 | | | 82,230,000 | | | 82,230,000 | | | 82,230,000 | | | 82,230,000 | | | 82,230,000 | | | 82,230,000 | | | 82,230,000 | | | 82,230,000 | Increase in value | | | 99,081,024 | | | 83,971,772 | | | 68,862,520 | | | 53,753,268 | | | 38,644,016 | | | 23,534,764 | | | 8,425,512 | | | -6,683,740 | | | -29,979,948 | Implied Value - Focus Impact | | | 298,323,349 | | | 44,223,070 | | | 40,202,791 | | | 36,182,512 | | | 32,162,233 | | | 28,141,954 | | | 24,121,675 | | | 20,101,396 | | | 16,081,116 | Current Focus Impact NAV | | | 5,702,791 | | | 5,702,791 | | | 5,702,791 | | | 5,702,791 | | | 5,702,791 | | | 5,702,791 | | | 5,702,791 | | | 5,702,791 | | | 5,702,791 | Focus Impact Premium / Discount | | | 292,620,558 | | | 38,520,279 | | | 34,500,000 | | | 30,479,721 | | | 26,459,442 | | | 22,439,163 | | | 18,418,884 | | | 14,398,605 | | | 10,378,325 |
*
| Other Investors represent up to 30% of SPAC Sponsor shares and warrants that may be forfeited due to financing incentives/arrangements. This does not impact the fully diluted shares post-Transaction. |
f.
| The Company, through a SPAC, is likely to have the access to growth capital and liquidity in the market for seeking funding for expansion and development, which could enhance its visibility and credibility, potentially attracting more investors. |
g.
| There remains risk with respect to the cash in Focus Impact at the close of the Proposed Transaction. When Focus Impact presents the Proposed Transaction to its shareholders for approval, they have the option to redeem their shares (or cash out) at the full IPO price of $10.2. Evans & Evans found in its research that redemption rates on deSPAC transactions increased in 2022 and have remained elevated in 2023. Please refer to section 4.0 for details. |
h.
| There is a risk associated with completing the PIPE Financing as private investment in public equity participation in de-SPAC transactions declined in the first quarter of 2023, with only 20% of deSPAC transactions compared to 59% in Q1 2022. As of the end of Q1 2023, approximately 90% of de-SPAC companies that went public between 2019 and Q1 2023 were trading below their IPO price. However, with respect to DevvStream, there is significant headroom for a decline in share price given the premium implied by the Proposed Transaction. |
11.0
| Qualifications & Certification |
11.01
| The Opinion preparation was carried out by Jennifer Lucas and thereafter reviewed by Michael Evans. |
Mr. Michael A. Evans, MBA, CFA, CBV, ASA, Principal, founded Evans & Evans, Inc. in 1989. For the past 37 years, he has been extensively involved in the financial services and management consulting fields in Vancouver, where he was a Vice-President of two firms, The Genesis Group (1986-1989) and Western Venture Development Corporation (1989-1990). Over this period, he has been involved in the preparation of over 3,000 technical and assessment reports, business plans, business valuations, and feasibility studies for submission to various Canadian stock exchanges and securities commissions as well as for private purposes. Mr. Michael A. Evans holds: a Bachelor of Business Administration degree from Simon Fraser University, British Columbia (1981); a Master’s degree in Business Administration from the University of Portland, Oregon (1983) where he graduated with honors; the professional designations of Chartered Financial Analyst (CFA), Chartered Business Valuator (CBV) and Accredited Senior Appraiser. Mr. Evans is a member of the CFA Institute, the Canadian Institute of Chartered Business Valuators (“CICBV”) and the American Society of Appraisers (“ASA”). Ms. Jennifer Lucas, MBA, CBV, ASA, Partner, joined Evans & Evans in 1997. Ms. Lucas possesses several years of relevant experience as an analyst in the public and private sector in British Columbia and Saskatchewan. Her background includes working for the Office of the Superintendent of Financial Institutions of British Columbia as a Financial Analyst. Ms. Lucas has also gained experience in the Personal Security and Telecommunications industries. Since joining Evans & Evans Ms. Lucas has been involved in writing and reviewing over 2,500 valuation and due diligence reports for public and private transactions. TABLE OF CONTENTS Ms. Lucas holds: a Bachelor of Commerce degree from the University of Saskatchewan (1993), a Master’s in Business Administration degree from the University of British Columbia (1995). Ms. Lucas holds the professional designations of Chartered Business Valuator and Accredited Senior Appraiser. She is a member of the CICBV and the ASA. 11.02
| The analyses, opinions, calculations and conclusions were developed, and the Opinion has been prepared in accordance with the standards set forth by the Canadian Institute of Chartered Business Valuators. |
11.03
| The authors of the Opinion have no present or prospective interest in DevvStream, Focus Impact or any entity that is the subject of the Opinion, and we have no personal interest with respect to the parties involved. |
Yours very truly, /s/ Evans & Evans, Inc. EVANS & EVANS, INC. TABLE OF CONTENTS PART II
INFORMATION NOT REQUIRED IN PROSPECTUS Item 20.
| Indemnification of Directors and Officers. |
The FIAC Charter provides that FIAC’s officers and directors will be indemnified by FIAC to the fullest extent authorized by Delaware law, as it now exists or may in the future be amended. In addition, the FIAC Charter provides that FIAC’s directors will not be personally liable for monetary damages to FIAC or FIAC’s stockholders for breaches of their fiduciary duty as directors, unless they violated their duty of loyalty to FIAC or the FIAC stockholders, acted in bad faith, knowingly or intentionally violated the law, authorized unlawful payments of dividends, unlawful stock purchases or unlawful redemptions, or derived an improper personal benefit from their actions as directors. FIAC has entered into agreements with its officers and directors to provide contractual indemnification in addition to the indemnification provided for in the FIAC Charter. FIAC’s bylaws also permit FIAC to secure insurance on behalf of any officer, director or employee for any liability arising out of his or her actions, regardless of whether Delaware law would permit such indemnification. FIAC has purchased a policy of directors’ and officers’ liability insurance that insures its officers and directors against the cost of defense, settlement or payment of a judgment in some circumstances and insures FIAC against its obligations to indemnify its officers and directors. These provisions may discourage stockholders from bringing a lawsuit against FIAC’s directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against FIAC’s officers and directors, even though such an action, if successful, might otherwise benefit FIAC and its stockholders. Furthermore, a FIAC stockholder’s investment may be adversely affected to the extent that FIAC pays the costs of settlement and damage awards against officers and directors pursuant to these indemnification provisions. FIAC believes that these provisions, the insurance and the indemnity agreements are necessary to attract and retain talented and experienced officers and directors. Item 21.
| Exhibits and Financial Statement Schedules. |
(a)
| The following exhibits are filed as part of this Registration Statement: |
EXHIBIT INDEX | | | Business Combination Agreement, dated as of September 12, 2023, by and among FIAC, Focus Impact Amalco Sub Ltd., and DevvStream Holdings Inc. (included as Annex A to the proxy statement/prospectus which is part of this Registration Statement). | | | | Amended and Restated Certificate of Incorporation of FIAC (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, filed by FIAC on November 1, 2021). | | | | Amendment to the Amended and Restated Certificate of Incorporation of FIAC (Extension Amendment) (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, filed by FIAC on April 27, 2023). | | | | Amendment to the Amended and Restated Certificate of Incorporation of FIAC (Redemption Limitation Amendment) (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K, filed by FIAC on April 27, 2023). | | | | Form of Articles of Continuance of New PubCo, to become effective upon the SPAC Continuance (included as Annex B to the proxy statement/prospectus which is part of this Registration Statement). | | | | Form of Bylaws of New PubCo, to become effective in connection with the Business Combination (included as Annex C to the proxy statement/prospectus which is part of this Registration Statement). | | | | Warrant Agreement, dated November 1, 2021, by and between FIAC and Continental Stock Transfer & Trust Company, as warrant agent (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K, filed by FIAC on November 1, 2021). |
TABLE OF CONTENTS | | | Specimen Unit Certificate (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-1, filed by FIAC on June 3, 2021). | | | | Specimen Class A Common Stock Certificate (incorporated by reference to Exhibit 4.2 to the Registration Statement on Form S-1, filed by FIAC on June 3, 2021). | | | | Specimen Warrant Certificate (incorporated by reference to Exhibit 4.3 to the Registration Statement on Form S-1, filed by FIAC on June 3, 2021). | | | | Opinion of .Stikeman Elliot LLP. | | | | Opinion of Kirkland & Ellis LLP. | | | | Private Placement Warrants Purchase Agreement, dated October 27, 2021, by and among FIAC and Focus Impact Sponsor, LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed by FIAC on November 1, 2021). | | | | Investment Management Trust Account Agreement, dated November 1, 2021, by and between FIAC and Continental Stock Transfer & Trust Company, as trustee (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed by FIAC on November 1, 2021). | | | | Registration and Stockholder Rights Agreement, dated November 1, 2021, by and among FIAC, Focus Impact Sponsor, LLC and certain holders party thereto (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed by FIAC on November 1, 2021). | | | | Letter Agreement, dated November 1, 2021, by and among FIAC, Focus Impact Sponsor, LLC and each of the officers and directors of FIAC (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K, filed by FIAC on November 1, 2021). | | | | Administrative Services Agreement, dated October 27, 2021, between FIAC and Focus Impact Sponsor, LLC (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K, filed by FIAC on November 1, 2021). | | | | Strategic Partnership Agreement, dated November 28, 2021, between Devvio, Inc. and DevvESG Streaming, Inc. | | | | Amendment No. 1 to the Strategic Partnership Agreement, dated November 30, 2021, between Devvio, Inc. and DevvESG Streaming, Inc. | | | | Amendment No. 2 to the Strategic Partnership Agreement, dated September 12, 2023, between Devvio, Inc. and DevvStream, Inc. (f/k/a DevvESG Streaming, Inc.). | | | | DevvStream, Inc. (f/k/a DevvESG Streaming, Inc.) 2022 Non-Qualified Stock Option Plan. | | | | DevvStream Holdings Inc. 2022 Equity Incentive Plan. | | | | DevvStream Corp. 20232024 Equity Incentive Plan (included as Annex F to the proxy statement/prospectus which is part of this Registration Statement). | | | | Plan of Arrangement (included as Annex G to the proxy statement/prospectus which is part of this Registration Statement). | | | | Arrangement Resolution (included as Annex H to the proxy statement/prospectus which is part of this Registration Statement). | | | | Sponsor Side Letter, dated as of September 12, 2023, by and among FIAC and Focus Impact Sponsor, LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed by FIAC on September 13, 2023) (included as Annex I to the proxy statement/prospectus which is part of this Registration Statement). | | | | Form of New PubCo Indemnification Agreement. | | | | Consent of Marcum LLP, independent registered public accounting firm for FIAC. | | | | Consent of MNP LLP, independent registered public accounting firm for DevvStream. | | | | Consent of Stikeman Elliot LLP (included in Exhibit 5.1). | | | | Consent of Kirkland & Ellis LLP (included as part of Exhibit 5.2). | | | | Power of Attorney (included as part of the signature page to the initial filing of this registration statement). | | | | Consent of Houlihan Capital, LLC. | | | | Consent of Evans & Evans Inc. | | | | Consent of Carl Stanton to be named as a director nominee. | | | | Consent of Wray Thorn to be named as a director nominee. | | | | Consent of Tom Anderson to be named as a director nominee. | 99.6**
| | | Form of Proxy Card.
| 101.INS
| | | Inline XBRL Instance Document.
|
TABLE OF CONTENTS | | | Consent of Michael Max Bühler to be named as a director nominee. | | | | Consent of Stephen Kukucha to be named as a director nominee. | | | | Consent of Jamila Piracci to be named as a director nominee. | | | | Consent of Ray Quintana to be named as a director nominee. | | | | Form of Proxy Card. | 101.INS* | | | Inline XBRL Instance Document. | 101.SCH* | | | Inline XBRL Taxonomy Extension Schema Document. | 101.CAL101.CAL*
| | | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | 101.DEF101.DEF*
| | | Inline XBRL Taxonomy Extension Definition Linkbase Document. | 101.LAB101.LAB*
| | | Inline XBRL Taxonomy Extension Label Linkbase Document. | 101.PRE101.PRE*
| | | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | 104104*
| | | Cover Page Interactive Data File (Embedded as Inline XBRL document and contained in Exhibit 101). | | | | Calculation of Registration Fee. |
*
| Filed herewith.Previously filed. |
**
| To be filed by amendment. |
†
| Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request. |
The undersigned registrant hereby undertakes: (1)
| To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
i.
| To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the “Securities Act”); |
ii.
| To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement. |
iii.
| To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. |
(2)
| That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
(3)
| To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
(4)
| To file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A of Form 20-F at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Securities Act need not be furnished, provided that the registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (4) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements. |
TABLE OF CONTENTS Act need not be furnished, provided that the registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (4) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such TABLE OF CONTENTS
liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and shall be governed by the final adjudication of such issue. That, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. The undersigned registrant hereby undertakes as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus shall contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. The registrant undertakes that every prospectus: (i) that is filed pursuant to the immediately preceding paragraph, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Securities Act and is used in connection with an offering of securities subject to Rule 415, shall be filed as a part of an amendment to the registration statement and shall not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. TABLE OF CONTENTS Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the State of Delaware, on December 1, 2023.March 11, 2024. | | | Focus Impact Acquisition Corp. | | | | | | | | | | | By: | | | /s/ Carl Stanton | | | | Name: | | | Carl Stanton | | | | Title: | | | Chief Executive Officer |
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Carl Stanton, Ernest Lyles and Wray Thorn and each one of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for them and in their name, place and stead, in any and all capacities, to sign one or more Registration Statements on Form S-4, or other appropriate form, and all amendments thereto, including post-effective amendments, of FIAC and to file the same, with any exhibits thereto, with the Securities and Exchange Commission, and/or any state securities department or any other federal or state agency or governmental authority granting unto such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated. | | | | | | | /s/ Carl Stanton | | | Chief Executive Officer and Director
(Principal Executive Officer) | | | December 1, 2023March 11, 2024
| Carl Stanton | | | | | | | | | | | /s/ Ernest Lyles*
| | | Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer) | | | December 1, 2023March 11, 2024
| Ernest Lyles | | | | | | | | | | | * | | | Lead Director | | | March 11, 2024 | Howard Sanders | | | | | | | | | | | /s/ Troy Carter*
| | | Director | | | December 1, 2023March 11, 2024
| Troy Carter | | | | | | | | | | | /s/ Dawanna Williams*
| | | Director | | | December 1, 2023March 11, 2024
| Dawanna Williams | | | | | | | | | | | /s/ Dia Simms*
| | | Director | | | December 1, 2023March 11, 2024
| Dia Simms | | | |
*
| The undersigned, by signing his name hereto, signs and executes this Amendment No. 2 to the Registration Statement pursuant to the Powers of Attorney executed by the above named signatories and previously filed with the Securities and Exchange Commission on December 4, 2023. |
/s/ Carl Stanton | | | Attorney-in-fact | Carl Stanton | |
|