Item 1.02 Termination of a Material Definitive Agreement.
Subscription Agreement
As previously announced, on January 18, 2022, ACE Convergence Acquisition Corp.
("ACE") entered into a Subscription Agreement (the "Subscription Agreement")
with Tempo Automation, Inc. ("Tempo Automation"), OCM Tempo Holdings, LLC
("OCM," and collectively with its affiliates or affiliated investment funds
and/or managed or controlled accounts, "Oaktree") and Tor Asia Credit
Opportunity Master Fund II LP ("Tor"). Pursuant to the Subscription Agreement,
among other things, OCM committed to purchase $175 million in aggregate
principal amount of ACE's 15.5% convertible senior notes due 2025 concurrently
with the closing (the "Closing") of the previously announced business
combination between ACE and Tempo Automation. The Subscription Agreement also
provided for the purchase of $25 million in aggregate principal amount of ACE's
15.5% convertible senior notes due 2025 concurrently with the Closing by Tor, an
investment partner of ACE. Section 5 of the Subscription Agreement provided,
among other things, that OCM could terminate the Subscription Agreement if the
closing with respect to OCM under the Subscription Agreement had not occurred
prior to July 18, 2022, which closing did not occur prior to such date.
On July 30, 2022, OCM delivered notice of termination of the Subscription
Agreement to ACE and Tempo Automation, effective immediately.
As a result of the termination of the Subscription Agreement, if ACE consummates
an initial business combination with or among Tempo Automation, Compass AC
Holdings, Inc., Whizz Systems, Inc. or any of their respective affiliates or
subsidiaries, OCM will be entitled to a termination fee of 3.5% of the aggregate
principal amount of the subscribed notes, to be paid by ACE immediately
following and as a condition subsequent to the closing of such initial business
combination.
Side Letters
As previously announced, on January 18, 2022, in connection with the entry into
the Subscription Agreement, ACE and Tempo Automation entered into a Letter
Agreement (the "Oaktree Side Letter") with OCM, pursuant to which, among other
things, Oaktree would have the right (but not the obligation), commencing on the
Closing Date (as defined in the Oaktree Side Letter) and ending on the date
Oaktree no longer held or controlled notes in an aggregate principal amount of
at least 50% of the aggregate principal amount of notes purchased by Oaktree on
the Closing Date, to appoint two individuals to attend, as board observers and
participants in a nonfiduciary and non-voting capacity, each meeting of the
board of directors of ACE (after its domestication as a Delaware corporation)
and any duly authorized committee thereof. The Oaktree Side Letter also provided
for certain liquidity reporting requirements of ACE to Oaktree, and provided
Oaktree with certain access and inspection rights of ACE's or any of its
subsidiaries' respective properties and records.
As previously announced, on January 18, 2022, in connection with the entry into
the Subscription Agreement, ACE and Tempo Automation also entered into an
Information Rights and Confidentiality Agreement (the "Tor Side Letter," and
together with the Oaktree Side Letter, the "Side Letters") with Tor, which
provided for, among other things, certain liquidity reporting requirements of
ACE to Tor, and provided Tor with certain access and inspection rights of ACE's
or any of its subsidiaries' respective properties and records.
Each of the Side Letters automatically terminated on July 30, 2022, upon the
termination of the Subscription Agreement.
The foregoing descriptions of the Subscription Agreement, the Oaktree Side
Letter and the Tor Side Letter do not purport to be complete and are qualified
in their entirety by the terms and conditions of the full text of the
Subscription Agreement, the Oaktree Side Letter and the Tor Side Letter, copies
of which were filed as Exhibits 10.1, 10.2 and 10.3, respectively, to ACE's
Current Report on Form 8-K filed with the U.S. Securities and Exchange
Commission (the "SEC") on January 20, 2022, each of which is incorporated by
reference herein.
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Additional Information and Where to Find It
Additional information about the proposed transaction (the "Proposed Business
Combination") between Tempo Automation (collectively with its subsidiaries and
pro forma for its acquisition of Whizz Systems, Inc., "Tempo") and ACE,
including a copy of the Agreement and Plan of Merger, dated as of October 13,
2021, by and among ACE, Tempo Automation and ACE Convergence Subsidiary Corp.
(the "Merger Agreement"), and investor presentation, was provided in a Current
Report on Form 8-K filed by ACE with the SEC on October 14, 2021, and is
available at www.sec.gov. In connection with the Proposed Business Combination,
ACE has filed a Registration Statement on Form S-4 (as it has been and may be
amended or supplemented from time to time, the "Registration Statement"). The
Registration Statement has been declared effective, and ACE has filed a
post-effective amendment thereto. In advance of the vote by ACE's shareholders
with respect to the Proposed Business Combination and other matters as described
in the Registration Statement, ACE will mail a definitive proxy statement to its
shareholders in connection with ACE's solicitation of proxies for such vote. The
Registration Statement also includes the prospectus relating to the offer of
securities to be issued to Tempo stockholders in connection with the Proposed
Business Combination. The Registration Statement includes information regarding
the persons who may, under SEC rules, be deemed participants in the solicitation
of proxies to ACE's shareholders in connection with the Proposed Business
Combination. ACE will also file other documents regarding the Proposed Business
Combination with the SEC. Before making any voting decision, investors and
security holders of ACE and Tempo Automation are urged to read the Registration
Statement, the proxy statement/prospectus contained therein, and all other
relevant documents filed or that will be filed with the SEC in connection with
the Proposed Business Combination as they become available because they will
contain important information about the Proposed Business Combination.
Investors and security holders can obtain free copies of the proxy
statement/prospectus and all other relevant documents filed or that will be
filed with the SEC by ACE through the website maintained by the SEC at
www.sec.gov. In addition, the documents filed by ACE may be obtained free of
charge from ACE's website at acev.io or by written request to ACE at ACE
Convergence Acquisition Corp., 1013 Centre Road, Suite 403S, Wilmington, DE
19805.
Forward-Looking Statements
This Current Report on Form 8-K contains certain forward-looking statements
within the meaning of the federal securities laws with respect to the Proposed
Business Combination between Tempo and ACE, including statements regarding the
benefits of the Proposed Business Combination, the anticipated timing of the
Proposed Business Combination, the services offered by Tempo and the markets in
which it operates, and Tempo's projected future results. These forward-looking
statements generally are identified by the words "believe," "project," "expect,"
"anticipate," "estimate," "intend," "strategy," "future," "opportunity," "plan,"
"may," "should," "will," "would," "will be," "will continue," "will likely
result," and similar expressions. Forward-looking statements are predictions,
projections and other statements about future events that are based on current
expectations and assumptions and, as a result, are subject to risks and
uncertainties that could cause the actual results to differ materially from the
expected results. Many factors could cause actual future events to differ
materially from the forward-looking statements in this document, including but
not limited to: (i) the risk that the Proposed Business Combination may not be
completed in a timely manner or at all, which may adversely affect the price of
ACE's securities, (ii) the risk that the acquisition by Tempo Automation of
Whizz Systems, Inc. may not be completed in a timely manner or at all, (iii) the
risk that the Proposed Business Combination may not be completed by ACE's
business combination deadline and the potential failure to obtain an extension
of the business combination deadline if sought by ACE, (iv) the failure to
satisfy the conditions to the consummation of the Proposed Business Combination,
including the receipt of the requisite approvals of ACE's shareholders and
Tempo's stockholders, respectively, the satisfaction of the minimum trust
account amount following redemptions by ACE's public shareholders and the
receipt of certain governmental and regulatory approvals, (v) the lack of a
third party valuation in determining whether or not to pursue the Proposed
Business Combination, (vi) the occurrence of any event, change or other
circumstance that could give rise to the termination of the Merger Agreement,
(vii) the effect of the announcement or pendency of the Proposed Business
Combination on Tempo's business relationships, performance, and business
generally, (viii) risks that the Proposed Business Combination disrupts current
plans of Tempo and potential difficulties in Tempo employee retention as a
result of the Proposed Business Combination, (ix) the outcome of any legal
proceedings that may be instituted against Tempo or against ACE related to the
Merger Agreement or the Proposed Business Combination, (x) the ability to
maintain the listing of ACE's securities on The Nasdaq Stock Market LLC,
(xi) volatility in the price of ACE's securities due to a variety of factors,
including changes in the competitive and highly regulated industries in which
Tempo plans to operate, variations in performance across competitors, changes in
laws and regulations affecting Tempo's business and changes in the combined
capital structure, (xii) the ability to implement business plans, forecasts, and
other expectations after the completion of the Proposed Business Combination,
and identify and realize additional opportunities, (xiii) the risk of downturns
in the highly competitive industry in which Tempo operates, (xiv) the impact of
the global COVID-19 pandemic, (xv) the enforceability of Tempo's intellectual
property, including its patents, and the potential infringement on the
intellectual property rights of others, cyber security risks or potential
breaches of data security, (xvi) the ability of Tempo to protect the
intellectual property and confidential information of its customers, (xvii) the
risk of downturns in the highly competitive additive manufacturing industry, and
(xviii) other risks and uncertainties described in ACE's registration statement
on Form S-1 (File No. 333-239716), which was originally filed with the SEC on
July 6, 2020 (as amended, the "Form S-1"), Annual Report on Form 10-K for the
fiscal year ended December 31, 2021, filed with the SEC on March 10, 2022 (the
"Form 10-K"), and its subsequent Quarterly Reports on Form 10-Q. The foregoing
list of factors is not exhaustive. These forward-looking statements are provided
for illustrative purposes only and are not intended to serve as, and must not be
relied on by investors as, a guarantee, an assurance, a prediction or a
definitive statement of fact or probability. You should carefully consider the
foregoing factors and the other risks and uncertainties described in the "Risk
Factors" section of the Form S-1, the Form 10-K, ACE's Quarterly Reports on Form
10-Q, the Registration Statement, the proxy statement/prospectus contained
therein, and the other documents filed by ACE from time to time with the SEC.
These filings identify and address other important risks and uncertainties that
could cause actual events and results to differ materially from those contained
in the forward-looking statements. These risks and uncertainties may be
amplified by the COVID-19 pandemic, which has caused significant economic
uncertainty. Forward-looking statements speak only as of the date they are made.
Readers are cautioned not to put undue reliance on forward-looking statements,
and Tempo and ACE assume no obligation and do not intend to update or revise
these forward-looking statements, whether as a result of new information, future
events, or otherwise, except as required by securities and other applicable
laws. Neither Tempo nor ACE gives any assurance that either Tempo or ACE,
respectively, will achieve its expectations.
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No Offer or Solicitation
This communication is for informational purposes only and does not constitute an
offer or invitation for the sale or purchase of securities, assets or the
business described herein or a commitment to ACE with respect to any of the
foregoing, and this communication shall not form the basis of any contract, nor
is it a solicitation of any vote, consent, or approval in any jurisdiction
pursuant to or in connection with the Proposed Business Combination or
otherwise, nor shall there be any sale, issuance or transfer of securities in
any jurisdiction in contravention of applicable law.
Participants in Solicitation
ACE and Tempo, and their respective directors and executive officers, may be
deemed participants in the solicitation of proxies of ACE's shareholders in
respect of the Proposed Business Combination. Information about the directors
and executive officers of ACE is set forth in the Form 10-K. Additional
information regarding the identity of all potential participants in the
solicitation of proxies to ACE's shareholders in connection with the Proposed
Business Combination and other matters to be voted upon at the extraordinary
general meeting, and their direct and indirect interests, by security holdings
or otherwise, is set forth in ACE's proxy statement. Investors may obtain such
information by reading such proxy statement.
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