Form 8-K - Current report

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): January 12, 2024

 

NEW HORIZON AIRCRAFT LTD.

(Exact name of registrant as specified in its charter)

 

British Columbia		001-41607		N/A
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

3187 Highway 35, Lindsay, Ontario, K9V 4R1

(Address of principal executive offices, including zip code)

 

Registrant’s telephone number, including area code: [phone]

 

 

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class		Trading Symbol(s)		Name of Each Exchange on Which Registered
Class A Ordinary Share, no par value		HOVR		The Nasdaq Stock Market LLC
Warrants, each whole warrant exercisable for one Class A Ordinary Share at an exercise price of $11.50 per share		HOVRW		The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

 

 

 

Introductory Note

 

On January 12, 2024, Pono Capital Three, Inc. (“Pono”) completed a series of transactions that resulted in the combination (the “Business Combination”) of Pono with Robinson Aircraft, Ltd. d/b/a Horizon Aircraft (“Horizon”) pursuant to the previously announced Business Combination Agreement (the “BCA”), dated August 15, 2023, by and among Pono, Pono Three Merger Acquisitions Corp., a British Columbia company and wholly-owned subsidiary of Pono (“Merger Sub”) and Horizon, following the approval at the extraordinary general meeting of the shareholders of Pono held on January 4, 2024 (the “Special Meeting”). On January 10, 2024, pursuant to the BCA, and as described in greater detail in the Company’s final prospectus and definitive proxy statement, which was filed with the U.S. Securities and Exchange Commission (the “SEC”) on December 22, 2023 (as supplemented by a prospectus supplement filed on December 29, 2023, the “Proxy Statement/Prospectus”), Pono was continued and de-registered from the Cayman Islands and redomesticated as a British Columbia company on January 11, 2024 (the “SPAC Continuation”). Pursuant to the BCA, on January 12, 2024, Merger Sub and Horizon were amalgamated under the laws of British Columbia, and Pono changed its name to New Horizon Aircraft Ltd. (“New Horizon”). As consideration for the Business Combination, New Horizon issued to Horizon shareholders an aggregate of 9,419,084 Class A ordinary shares (the “Exchange Consideration”), including 282,573 shares held in escrow for any purchase price adjustments under the BCA, and 754,013 shares issued to the PIPE investor or his designees, as set forth below.

 

Unless otherwise defined herein, capitalized terms used in this Current Report on Form 8-K have the same meaning as set forth in the Proxy Statement/Prospectus.

 

Simultaneous with the closing of the Business Combination, New Horizon also completed a series of private financings, issuing and selling 200,000 shares of its common stock in a private placement to a PIPE investor (the “PIPE Offering”), issued 103,500 shares to EF Hutton LLC, in partial satisfaction of the deferred underwriting commission due from Pono’s initial public offering, and assumed options issued by Horizon to purchase 585,230 New Horizon Class A ordinary shares. In connection with the Special Meeting, Pono shareholders holding 9,852,558 of Pono’s ordinary shares (after giving effect to redemption reversal requests) exercised their right to redeem their shares for a pro rata portion of the funds in Pono’s trust account (the “Trust Account”). Approximately $104.5 million (approximately $10.61 per Public Share) was removed from the Trust Account to pay such holders.

 

Item 1.01. Entry into Material Definitive Agreement.

  

Business Combination Agreement

 

As disclosed under the section titled “Proposal No. 2—The Business Combination Proposal” of the Proxy Statement/Prospectus, Pono entered into the BCA, dated August 15, 2023, by and among Pono, Merger Sub and Horizon.

 

Accordingly, (a) Pono was continued and de-registered from the Cayman Islands and redomesticated as a British Columbia Company on January 11, 2024, (b) Merger Sub, a wholly-owned subsidiary of Pono, was amalgamated with Horizon on January 12, 2024, and (c) Pono changed its name to New Horizon Aircraft Ltd. and adopted new Articles.

 

Item 2.01 of this Current Report discusses the consummation of the Business Combination and events contemplated by the BCA which were completed on January 12, 2024 (the “Closing”), and is incorporated herein by reference.

 

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Lock-up Agreements

 

On January 11, 2024, Pono entered into Lock-Up Agreements (the “Lock-up Agreements”) by and among Pono, the Sponsor, and certain shareholders of Horizon (such shareholders, the “Company Holders”), pursuant to which each Company Holder agreed not to, during the Lock-up Period (as defined below), lend, offer, pledge, hypothecate, encumber, donate, assign, sell, contract to sell, sell any option or contract to purchase, purchase an option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any of the shares issued to such Company Holder in connection with the Business Combination (the “Lock-up Shares”), enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such shares, or publicly disclose the intention to do any of the foregoing, whether any of these transactions are to be settled by delivery of any such shares or other securities, in cash, or otherwise, subject to limited exceptions. As used herein, “Lock-Up Period” means the period commencing on the date of the Closing and ending on the earlier of: (i) six months after the Closing, (ii) the date on which the closing sale price of New Horizon Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations and the like) for any twenty (20) trading days within any thirty (30) trading day period commencing at least one hundred and fifty (150) days after the Closing, and (iii) the date after the Closing on which New Horizon consummates a liquidation, merger, share exchange or other similar transaction with an unaffiliated third party that results in all of New Horizon’s shareholders having the right to exchange their New Horizon Class A ordinary shares for cash, securities or other property.

 

In connection with the Closing, Pono, Horizon, and the Sponsor waived lockup restrictions on approximately 1.69 million shares held by a non-affiliate Horizon shareholder.

 

The foregoing description of the Lock-Up Agreements is subject to and qualified in its entirety by reference to the full text of the form of the Lock-Up Agreement, a copy of which is included as Exhibit 10.5 hereto, and the terms of which are incorporated by reference.

 

Non-Competition Agreements

 

On January 12, 2024, New Horizon, Horizon, and each of E. Brandon Robinson, Jason O’Neill, Brian Robinson, and Stewart Lee entered into non-competition and non-solicitation agreements (the “Non-Competition and Non-Solicitation Agreements”), pursuant to which such persons and their affiliates agreed not to compete with New Horizon during the two-year period following the Closing and, during such two-year restricted period, not to solicit employees or customers or clients of such entities. The Non-Competition and Non-Solicitation Agreements also contain customary non-disparagement and confidentiality provisions.

 

The foregoing description of the Non-Competition and Non-Solicitation Agreements is subject to and qualified in its entirety by reference to the full text of the form of the Non-Competition and Non-Solicitation Agreement, a copy of which is included as Exhibit 10.10 hereto, and the terms of which are incorporated by reference.

 

Registration Rights Agreement

 

In connection with the Business Combination, on January 12, 2024, Pono, Horizon, the Sponsor, the executive officers and directors of Pono immediately prior to the consummation of the Business Combination (with such executive officers and directors, together with the Sponsor, the “Sponsor Parties”), and a certain existing shareholder of Horizon (such party, together with the Sponsor Parties, the “Investors”) enter into a registration rights agreement (the “Registration Rights Agreement”) to provide for the registration of New Horizon’s Class A ordinary shares issued to them in connection with the Business Combination. The Investors are entitled to (i) make three written demands for registration under the Securities Act of all or part of their shares and (ii) “piggy-back” registration rights with respect to registration statements filed following the consummation of the Business Combination. New Horizon will bear the expenses incurred in connection with the filing of any such registration statements.

 

The foregoing description of the Registration Rights Agreement is subject to and qualified in its entirety by reference to the full text of the Registration Rights Agreement, a copy of which is included as Exhibit 10.3 hereto, and the terms of which are incorporated by reference.

 

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PIPE

 

On December 27, 2023, Pono entered into that certain subscription agreement (the “Subscription Agreement”), pursuant to which Pono obtained a commitment from a certain investor (the “Subscriber”). On January 12, 2024, Pono issued 200,000 Class A ordinary shares to the Subscriber, and received $2,000,000 in net proceeds from such transaction. In addition, in connection with the closing of the PIPE Offering, Horizon caused 754,013 Incentive Shares to be transferred to the Subscriber or its designees. Pursuant to the Subscription Agreement, New Horizon has agreed to provide registration rights to the PIPE shares and the Incentive Shares.

 

The foregoing description of the Subscription Agreement is subject to and qualified in its entirety by reference to the full text of the form of Subscription Agreement, a copy of which is included as Exhibit 10.1 hereto, and the terms of which are incorporated by reference.

 

Item 2.01. Completion of Acquisition or Disposition of Assets.

 

The disclosure set forth in the “Introductory Note” and “Business Combination Agreement” above is incorporated into this Item 2.01 by reference.

 

Pursuant to the terms of the BCA, the total consideration for the Business Combination and related transactions (the “Exchange Consideration”) was approximately $99 million. In connection with the Special Meeting, holders of 9,852,558 Pono Class A ordinary shares sold in its initial public offering exercised their right to redeem those shares for cash prior to the redemption deadline of January 2, 2024 (and did not subsequently reverse the redemption election), at a price of $10.60989602 per share, for an aggregate payment from Pono’s trust account of approximately $104.535 million. Effective January 16, 2024, Pono’s units ceased trading, and New Horizon’s common stock and warrants began trading on the Nasdaq Capital Market under the symbols “HOVR” and “HOVRW,” respectively.

 

After taking into account the aggregate payment in respect of the redemption, Pono’s trust account had a balance immediately prior to the Closing of approximately $17.45 million. Such balance in the trust account, together with approximately $2.00 million in proceeds from the PIPE Offering, were used to pay transaction expenses and other liabilities of Pono, and pay approximately $16.8 million to Meteora under the Forward Purchase Agreement. No shares were issued to Meteora under the FPA Funding Amount Subscription Agreement.

 

As discussed in the Introductory Note above, in connection with the Business Combination, Horizon shareholders received 8,382,498 New Horizon Class A ordinary shares, 282,573 New Horizon Class A ordinary were put into an escrow account to satisfy purchase price adjustments under the BCA, if any, the remainder of which will be transferred to the Horizon shareholders pro rata, and 754,013 Incentive Shares were transferred to the PIPE investor or its designees.

 

In connection with the Closing, 4,935,622 Class B ordinary shares held by the Sponsor were automatically exchanged for 4,935,622 Class A ordinary shares.

 

In addition, as disclosed above, immediately prior to the Closing of the Business Combination, Pono issued and sold 200,000 Class A ordinary shares (the “PIPE Shares”) to the PIPE investor for proceeds of $2,000,000. Pono has agreed to file a registration statement registering the resale of the PIPE Shares within 30 days of the Closing and to have such registration statement effective as soon as practicable, but in any event within 60 days of the filing deadline or within 5 business days after New Horizon is notified that the SEC will not review the filing. Also, at the Closing, Horizon transferred 754,013 Incentive Shares to the PIPE investor or his designees.

 

As of the Closing: public stockholders (including shares that may be held by Meteora pursuant to the FPA) own approximately 9.71% of the outstanding New Horizon Class A ordinary shares; the Sponsor and its affiliates (including 100,000 Incentive Shares that were transferred to the Sponsor) own approximately 33.00% of the outstanding Class A ordinary shares; Horizon’s former shareholders collectively own approximately 51.05% of the outstanding Class A ordinary shares; EF Hutton owns approximately 1.22% of the outstanding Class A ordinary shares; and approximately 5.03% of the outstanding Class A ordinary shares are held by the PIPE investor or its designees (excluding 100,000 Incentive Shares that were transferred to the Sponsor).

 

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FORM 10 INFORMATION

 

Item 2.01(f) of Form 8-K states that if the predecessor registrant was a shell company, as Pono was immediately before the Business Combination, then the registrant must disclose the information that would be required if the registrant were filing a general form for registration of securities on Form 10. Accordingly, New Horizon is providing the information below that would be included in a Form 10 if New Horizon were to file a Form 10. Please note that the information provided below relates to New Horizon as the combined company after the consummation of the Business Combination, unless otherwise specifically indicated or the context otherwise requires.

 

Forward-Looking Statements

 

The information in this Current Report on Form 8-K contains certain “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “aim,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result” and similar expressions, but the absence of these words does not mean that a statement is not forward-looking. 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. Actual results may differ from their expectations, estimates and projections and consequently, you should not rely on these forward-looking statements as predictions of future events. Many factors could cause actual future events to differ materially from the forward-looking statements in this Current Report on Form 8-K, including but not limited to: (i) changes in the markets in which New Horizon competes, including with respect to its competitive landscape, technology evolution or regulatory changes; (ii) the risk that New Horizon will need to raise additional capital to execute its business plans, which may not be available on acceptable terms or at all; (iii) the ability of the parties to recognize the benefits of the business combination agreement and the business combination; (iv) the lack of useful financial information for an accurate estimate of future capital expenditures and future revenue; (v) statements regarding New Horizon’s industry and market size; (vi) financial condition and performance of New Horizon, including the anticipated benefits, the implied enterprise value, the expected financial impacts of the business combination, the financial condition, liquidity, results of operations, the products, the expected future performance and market opportunities of New Horizon; (vii) New Horizon’s ability to develop, certify, and manufacture an aircraft that meets its performance expectations; (viii) successful completion of testing and certification of New Horizon’s Cavorite X7 eVTOL; (ix) the targeted future production of New Horizon’s Cavorite X7 aircraft; (x) the number of aircraft purchased under the LOI with JetSetGo; and (xi) those factors discussed in our filings with the SEC. You should carefully consider the foregoing factors and the other risks and uncertainties that will be described in the “Risk Factors” section of the Proxy Statement/Prospectus and other documents to be filed by New Horizon 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. 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 while New Horizon may elect to update these forward-looking statements at some point in the future, they assume no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law. New Horizon does not give any assurance that New Horizon will achieve its expectations.

 

Actual results, performance or achievements may differ materially, and potentially adversely, from any projections and forward-looking statements and the assumptions on which those forward-looking statements are based. There can be no assurance that the data contained herein is reflective of future performance to any degree. You are cautioned not to place undue reliance on forward-looking statements as a predictor of future performance as projected financial information and other information are based on estimates and assumptions that are inherently subject to various significant risks, uncertainties and other factors, many of which are beyond our control. All information set forth herein speaks only as of the date hereof in the case of information about New Horizon or the date of such information in the case of information from persons other than New Horizon, and New Horizon disclaims any intention or obligation to update any forward looking statements as a result of developments occurring after the date of this Current Report on Form 8-K, except as required by law. Forecasts and estimates regarding New Horizon’s industry and end markets are based on sources New Horizon believes to be reliable, however there can be no assurance these forecasts and estimates will prove accurate in whole or in part. Annualized, pro forma, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results.

 

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Business

 

The business of New Horizon is described in the Proxy Statement/Prospectus in the section titled “Information About Horizon” and that information is incorporated herein by reference.

 

Risk Factors

 

The risks associated with New Horizon are described in the Proxy Statement/Prospectus in the section titled “Risk Factors,” which is incorporated herein by reference. 

 

Financial Information

 

Reference is made to the disclosure set forth in Item 9.01 of this Current Report on Form 8-K concerning the financial information of New Horizon. Reference is further made to the disclosure contained in the Proxy Statement/Prospectus in the sections titled “Selected Financial Information of Horizon,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Horizon,” and “Unaudited Pro Forma Condensed Consolidated Combined Financial Information” which are incorporated herein by reference. In addition, the Unaudited Pro Forma Condensed Combined Financial Information for the period ended September 30, 2023 is included as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

 

Properties

 

New Horizon leases office space and an aircraft hangar in Lindsay Ontario, which serves as the corporate headquarters, and office space and light composite manufacturing space in Haliburton Ontario. New Horizon believes that these properties are sufficient for its business and operations as currently conducted.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The disclosure contained under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Horizon” in the Proxy Statement/Prospectus is incorporated herein by reference.

 

Security Ownership of Certain Beneficial Owners and Management

 

The following table sets forth information regarding the beneficial ownership of shares of New Horizon common shareholders upon the completion of the Business Combination by:

 

	●	each person known by New Horizon to be the beneficial owner of more than 5% of any class of New Horizon’s common shares;
	●	each of New Horizon’s officers and directors;
	●	all executive officers and directors of New Horizon.

  

Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable within 60 days.

 

In the table below, percentage ownership is based on 16,974,523 common shares outstanding as of January 12, 2024, including 9,419,084 Class A ordinary shares issued as Exchange Consideration, 200,000 Class A ordinary shares issued in connection with the PIPE financing, and reflects the valid redemption of 9,852,558 Class A ordinary shares by public shareholders of Pono. The table below includes Exchange Consideration shares held in escrow pending any purchase price adjustment under the BCA, and excludes the common shares underlying the Private Warrants held or to be held by Sponsor because these securities are not exercisable until registered, which may or may not occur within sixty (60) days. This table also assumes that there are no issuances of equity securities in connection with the Closing, including equity awards that may be issued under the 2023 Equity Incentive Plan following the Business Combination.

 

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Unless otherwise indicated, New Horizon believes that all persons named in the table have sole voting and investment power with respect to all common shares beneficially owned by them. Unless otherwise noted, the business address of each of the following entities or individuals is 3187 Highway 35, Lindsay A6 K9V 4R1, Ontario Canada.

 

Name and Address of Beneficial Owner		Number of Shares Beneficially Owned				% of Class
Directors and Named Executive Officers
Brandon Robinson(1)(2)			2,538,846				14.8	%
Jason O’Neill(3)			389,713				2.3	%
Brian Merker			0				--
Stewart Lee(4)			293,926				1.7	%
Brian Robinson(1)(5)			2,536,603				14.8	%
Trisha Nomura			0				--
John Maris			0				--
John Pinsent			0				--
All executive officers and directors as a group (8 individuals)			3,363,455				19.3	%
Greater than Five Percent Holders:
Mehana Capital LLC(6)			5,600,997				33.0	%
Entities affiliated with Meteora Capital LLC (7)			1,580,127				9.3	%
Robinson Family Ventures(1)			2,395,634				14.1	%
Astro Aerospace Ltd.(8)			1,698,529				9.9	%
Canso group			1,485,228				8.8	%

 

 

(1)

Brandon Robinson and Brian Robinson are the directors of Robinson Family Ventures Inc. Brandon Robinson and Brian Robinson may each be deemed to share beneficial ownership of the securities held of record by Robinson Family Ventures Inc. Each of Brandon Robinson and Brian Robinson disclaims any such beneficial ownership except to the extent of his pecuniary interest.

(2)	Includes options to purchase 143,213 shares at a price of $0.91 per share. The table reflects the options on a fully vested basis.

(3)

Includes options to purchase 146,252 shares at a price of $0.91 per share. The table reflects the options on a fully vested basis.

(4)

Includes options to purchase 35,455 shares at a price of $0.91 per share. The table reflects the options on a fully vested basis.

(5)

Includes options to purchase 117,001 shares at a price of $0.91 per share. The table reflects the options on a fully vested basis. Also includes conversion of his convertible note into 28,563 pre-combination Horizon shares including interest accrued on the note as of December 1, 2023.

(6)

Based on a Form 4 filed January 17, 2024, Mehana Capital LLC, the Sponsor, is the record holder of the securities reported herein. Dustin Shindo is the managing member of the Sponsor. By virtue of this relationship, Mr. Shindo may be deemed to share beneficial ownership of the securities held of record by the Sponsor. Mr. Shindo disclaims any such beneficial ownership except to the extent of his pecuniary interest. The address of Mehana Capital LLC is 4348 Waialae Ave Unit 632, Honolulu, HI 96816.

(7)

Voting and investment power over the securities held by these entities resides with its investment manager, Meteora Capital, LLC. Mr. Vikas Mittal serves as the managing member of Meteora Capital, LLC and may be deemed to be the beneficial owner of the securities held by such entities. Mr. Mittal disclaims any beneficial ownership over such securities except to the extent of his pecuniary interest therein. The business address of Meteora Entities is 1200 N Federal Hwy, Ste 200, Boca Raton, FL 33432.

(8)

The business address of Astro Aerospace Ltd. is 320 West Main Street, Lewisville, Texas 75057.

(9)

The business address of Canso Strategic Credit Fund is 100 York Blvd., Suite 550, Richmond Hill, On, L4B 1J8.

 

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Directors and Executive Officers

 

New Horizon’s directors and executive officers after the Closing are described in the Proxy Statement/Prospectus in the section titled “Management after the Business Combination,” which is incorporated herein by reference.

 

Executive Compensation

 

The compensation of the named executive officers of Horizon before the Business Combination is set forth in the Proxy Statement/Prospectus in the section titled “Executive and Director Compensation of Horizon,” which is incorporated herein by reference.

 

The information set forth in this Current Report on Form 8-K under Item 5.02 is incorporated in this Item 2.01 by reference.

 

At the Special Meeting, Pono’s shareholders approved the 2023 Equity Incentive Plan. A description of the material terms of the 2023 Equity Incentive Plan is set forth in the section of the Proxy Statement/Prospectus titled “The Incentive Plan Proposal (Proposal 4),” which is incorporated herein by reference. This summary is qualified in its entirety by reference to the complete text of the 2023 Equity Incentive Plan, a copy of which is attached as an Exhibit 10.2 to this Current Report on Form 8-K. 

 

Certain Relationships and Related Transactions, and Director Independence

 

The certain relationships and related party transactions of Pono and Horizon are described in the Proxy Statement/Prospectus in the section titled “Certain Transactions and Related Person Transactions” and are incorporated herein by reference.

 

Reference is made to the disclosure regarding director independence in the section of the Proxy Statement/Prospectus titled “Management After the Business Combination,” which is incorporated herein by reference.

 

The information set forth under Item 5.02 “Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers—Employment Agreements” of this Current Report on Form 8-K is incorporated into this Item 2.01 by reference.

 

The information set forth in the section titled “Registration Rights Agreements” in Item 1.01 of this Current Report on Form 8-K are incorporated herein by reference.

 

Legal Proceedings

 

To the knowledge of New Horizon’s management, there are no legal proceedings pending against Pono or New Horizon.

 

Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters

 

New Horizon’s Class A ordinary shares began trading on the Nasdaq Capital Market under the symbol “HOVR” and its warrants began trading on the Nasdaq Capital Market under the symbol “HOVRW” on January 16, 2024. Pono has not paid any cash dividends on its ordinary shares to date. The payment of cash dividends by New Horizon in the future will be dependent upon New Horizon’s revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of the Business Combination. The payment of any dividends subsequent to the Business Combination will be within the discretion of the board of directors of New Horizon.

 

Information regarding Pono’s common shares, rights and units and related shareholder matters are described in the Proxy Statement/Prospectus in the section titled “Description of Securities of New Pono Capital” and such information is incorporated herein by reference. 

 

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Recent Sales of Unregistered Securities

 

Reference is made to the disclosure set forth under Item 3.02 of this Current Report on Form 8-K concerning the issuance of Pono’s and New Horizon’s common shares in connection with the Business Combination and the PIPE financing, which is incorporated herein by reference.

 

Description of Registrant’s Securities to be Registered

 

The description of New Horizon’s securities is contained in the Proxy Statement/Prospectus in the sections titled “Description of Securities of New Pono Capital.”

 

Financial Statements and Supplementary Data

 

Reference is made to the disclosure set forth in Item 9.01 of this Current Report on Form 8-K concerning the financial information of Horizon. Reference is further made to the disclosure contained in the Proxy Statement/Prospectus in the sections titled “Summary Historical Financial Information of Pono” and “Selected Historical Financial Information of Horizon,” “Unaudited Pro Forma Condensed Consolidated Combined Financial Information,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Horizon,” which are incorporated herein by reference.

 

Financial Statements and Exhibits

 

The information set forth under Item 9.01 of this Current Report on Form 8-K is incorporated herein by reference.

 

Item 3.02. Unregistered Sales of Equity Securities.

 

The PIPE Financing

 

On January 16, 2024, the Company closed its previously announced PIPE financing, issuing 200,000 common shares to an investor for proceeds of $2,000,000.

 

Underwriter and Vendor Shares

 

At the closing of the Business Combination, New Horizon issued an aggregate of 103,500 common shares to EF Hutton LLC in partial satisfaction of deferred underwriting commissions. New Horizon agreed to customary registration rights with respect to such shares.

 

The common shares listed above were issued in reliance upon exemption from the registration requirements under Section 4(a)(2) under the Securities Act of 1933.

 

Item 3.03. Material Modification to Rights of Security Holders.

 

The shareholders of Pono approved the Articles of post-combination New Horizon (as defined below) at the Special Meeting. In connection with the Closing, Pono adopted the Articles effective as of the Closing Date. Reference is made to the disclosure described in the Proxy Statement/Prospectus in the sections titled “The Business Combination Proposal (Proposal 2),” “The Advisory Charter Amendment Proposals (Advisory Proposals 3A through 3G),” which is incorporated herein by reference.

 

The full text of the Articles, which are included as Exhibit 3.1 to this Current Report on Form 8-K, are incorporated herein by reference.

  

Item 5.01. Changes in Control of Registrant.

 

Reference is made to the disclosure in the Proxy Statement/Prospectus in the section titled “Business Combination Proposal (Proposal 2),” which is incorporated herein by reference. Further reference is made to the information contained in Item 2.01 to this Current Report on Form 8-K, which is incorporated herein by reference.

 

As of the Closing: public stockholders (including shares that may be held by Meteora pursuant to the FPA) own approximately 9.71% of the outstanding New Horizon Class A ordinary shares; the Sponsor and its affiliates (including 100,000 Incentive Shares that were transferred to the Sponsor) own approximately 33.00% of the outstanding Class A ordinary shares; Horizon’s former shareholders collectively own approximately 51.05% of the outstanding Class A ordinary shares; EF Hutton owns approximately 1.22% of the outstanding Class A ordinary shares; and approximately 5.03% of the outstanding Class A ordinary shares are held by the PIPE investor or its designees (excluding 100,000 Incentive Shares that were transferred to the Sponsor).

 

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Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

Election of Directors and Appointment of Officers

 

The following persons are serving as executive officers and directors following the Closing. For information concerning the executive officers and directors, see the disclosure in the Proxy Statement/Prospectus in the sections titled “Pono’s Management,” and “Executive Officers and Directors of Horizon,” “Management After the Business Combination” and “Certain Relationships and Related Person Transactions,” which are incorporated herein by reference.

 

Name		Age		Position
Brandon Robinson(6)		44		Chief Executive Officer, Director
James O’Neill(5)		45		Chief Operating Officer, Director
Brian Merker		46		Chief Financial Officer
Stewart Lee		50		Head of People & Strategy
Brian Robinson		74		Chief Engineer
Trisha Nomura(1)(2)(3)(4)		44		Director
John Maris(1)(2)(3)(5)		65		Director
John Pinsent(1)(2)(3)(4)		63		Director

 

(1)	Member of the audit committee.
(2)	Member of the compensation committee.
(3)	Member of the nominating and corporate governance committee.
(4)	Class I Director.
(5)	Class II Director.
(6)	Class III Director.

 

Each director will hold office until his or her term expires at the next annual meeting of shareholders for such director’s class or until his or her death, resignation, removal or the earlier termination of his or her term of office.

 

Effective upon Closing, each of Davin Kazama and Gary Miyashiro resigned as officers of Pono. Effective upon Closing, each of Davin Kazama, Dustin Shindo, Kotaro Chiba, and Dr. Mike Sayama resigned as directors of Pono.

 

2023 Equity Incentive Plan

 

At the Special Meeting, Pono shareholders considered and approved the 2023 Equity Incentive Plan and reserved an amount of common shares equal to 10% of the number of common shares of New Horizon following the Business Combination for issuance thereunder. The 2023 Equity Incentive Plan was approved by the Pono board of directors on January 4, 2024. The 2023 Equity Incentive Plan became effective immediately upon the Closing of the Business Combination.

 

A more complete summary of the terms of the 2023 Equity Incentive Plan is set forth in the Proxy Statement/Prospectus in the section titled “The Incentive Plan Proposal (Proposal 4).” That summary and the foregoing description are qualified in their entirety by reference to the text of the 2023 Equity Incentive Plan, which is filed as Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein by reference.

 

Employment Agreements

 

As a result of the Business Combination, New Horizon entered into employment agreements with the following of New Horizon’s executive officers: E. Brandon Robinson (Chief Executive Officer), James O’Neill (Chief Operating Officer), Brian Merker (Chief Financial Officer), and Brian Robinson (Chief Engineer) (each an “Employment Agreement, and collectively, the “Employment Agreements”). 

 

9

 

 

The Employment Agreements all provide for at-will employment that may be terminated by the employee with thirty days’ notice to New Horizon of resignation from employment; by New Horizon without notice, payment in lieu of notice, benefit continuation (if applicable) or compensation of any kind, where permitted by the Ontario Employment Standards Act, 2000, as amended from time to time (the “ESA”), which includes willful misconduct, disobedience or willful neglect of duty that is not trivial and has not been condoned by New Horizon; or by New Horizon with notice or pay in lieu of notice by providing the employee (i) the minimum amount of notice, pay in lieu of notice (or a combination of both), severance pay, vacation pay and benefit continuation (if applicable) and any other entitlements strictly required by the ESA, calculated from the date of the employee’s original employment with Horizon; plus (ii) such additional amount of payment of Base Salary (as defined below) in lieu of notice (“Additional Pay in Lieu of Notice”), as is necessary to ensure that the aggregate of the statutory notice, pay in lieu of notice and severance pay entitlements under (a) above and the Additional Pay in Lieu of Notice under sub-section (ii), (b), at a minimum equals twelve (12) months, and such aggregate shall increase by additional one (1) month payment of the employee’s Base Salary in lieu of notice for each completed year of service from the Effective Date to an overall cumulative maximum of 24 months of Base Salary; plus, (iii) payment of a prorated portion of any bonuses that the employee is eligible to receive as of the date of termination, calculated to the end of the Severance Period based upon the average incentive compensation paid to the employee in the two years prior to the year in which notice of termination is communicated. For the purposes of the Employment Agreements, the period for which an employee receives notice and/or payment, calculated from the date the employee is advised of the termination of his employment, is the “Severance Period.”

 

If following a Change of Control (as defined in the Employment Agreements), New Horizon gives the employee Good Reason to terminate his employment and the related Employment Agreement, and provided the employee exercises that right within two years from the date of the Change of Control, the employee shall be entitled to receive the benefits set forth above, as if the employee’s employment had been terminated on a without cause basis. “Good Reason” means the occurrence of (i) a constructive termination of employment and of the Employment Agreement; (ii) any material and unilateral change in employee’s title, responsibilities, or authority in place at the time of the Change of Control; (iii) any material reduction in the Base Salary paid to employee at the time of the Change of Control; (iv) any termination or material reduction in the aggregate value of the employee benefit programs, including, but not limited to, pension, life, disability, health, medical or dental insurance, in which the employee participated or under which the employee was covered at the time of Change of Control; or (v) the employee’s assignment to any significant, ongoing duties inconsistent with his skills, position (including status, offices, titles and reporting requirements), authority, duties or responsibilities, or any other action by New Horizon, which results in material diminution of such position.

 

The Employment Agreements provide for a base salary of $CAD295,000 for E. Brandon Robinson; $CAD225,000 for each of Jason O’Neill and Brian Merker; and $CAD170,000 for Brian Robinson (each a “Base Salary”). Possible annual performance bonuses and equity grants under the 2023 Equity Incentive Plan are to be determined by New Horizon’s compensation committee.

 

This summary is qualified in its entirety by reference to the text of the Employment Agreements, which are included as Exhibits 10.12, 10.13, 10.14, and 10.15 to this Current Report on Form 8-K and are incorporated herein by reference.

 

Contractor Agreement

 

In connection with the Closing of the Business Combination, New Horizon entered into a Contractor Agreement (the “Contractor Agreement"), dated January 12, 2024 (the “Effective Date”), by and among New Horizon, 2195790 Alberta Inc. (the “Contractor”) and Stewart Lee (the “Keyman”). Pursuant to the Contractor Agreement, the Contractor will be providing certain services (the “Services”) as the Head of People & Strategy through the Keyman. The term of the Contractor Agreement began on the Effective Date and unless earlier terminated, will automatically expire on December 31, 2025 (the “Expiry Date”) and may be extended by mutual agreement in writing. New Horizon will pay the Contractor for the performance of the Services fees in the amount of $CAD120.00 per hour (the “Fees”).

 

The Contractor Agreement may be terminated by mutual agreement; for convenience by either party upon the delivery of, (i) if by the Contractor, 90 calendar days’ prior written notice to New Horizon, and if by New Horizon, 60 calendar days’ prior written notice to the Contractor; or by New Horizon for material breach. Upon the expiration or earlier termination of the Contractor Agreement for any reason, New Horizon will provide the Contractor with only the Fees accrued and owing to the Contractor up to and including the Expiry Date or earlier termination date.

 

The foregoing description of the Contractor Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the Contractor Agreement, a copy of which is attached as Exhibit 10.16 to this Current Report on Form 8-K and is incorporated herein by reference.

 

Director Indemnity Agreements

 

In connection with the Closing, each of the individuals designated to be members of the board of directors of New Horizon (the “Board”) entered into an Indemnity Agreement with New Horizon (collectively, the “Director Indemnity Agreements,” and each, a “Director Indemnity Agreement”).

 

Pursuant to New Horizon’s Articles, subject to the Business Corporations Act, New Horizon must indemnify a director, former director or alternate director of New Horizon and his or her heirs and legal personal representatives against all eligible penalties to which such person is or may be liable, and New Horizon must, after the final disposition of an eligible proceeding, pay the expenses actually and reasonably incurred by such person in respect of that proceeding.

 

10

 

 

The foregoing description of the Director Indemnity Agreements does not purport to be complete and is qualified in its entirety by the terms and conditions of the form of Director Indemnity Agreement, a copy of which is attached as Exhibit 10.11 to this Current Report on Form 8-K and is incorporated herein by reference.

 

Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

 

The information set forth in Item 3.03 of this Current Report on Form 8-K is incorporated by reference into this Item 5.03.

 

On January 18, 2024, the Board approved a change in fiscal year end of New Horizon from December 31st to May 31st.

 

The Board’s decision to change the fiscal year end was related to the Business Combination. As a result of the Business Combination and the other transactions contemplated thereunder, Horizon is now a wholly owned subsidiary of New Horizon. Horizon’s financial statements will survive and become the post-transaction company's financial statements and the fiscal year end of Horizon is May 31st; therefore, the Board approved the change in the Company’s fiscal year end.

 

Following such change, the date of New Horizon’s next fiscal year end is May 31, 2024. Consequently, on or before July 15, 2024, New Horizon will file a transition report on Form 10-Q covering the five-month period ended May 31, 2024.

 

Item 5.06. Change in Shell Company Status.

 

As a result of the Business Combination, Pono ceased being a shell company. Reference is made to the disclosure in the Proxy Statement/Prospectus in the sections titled “The SPAC Continuance Proposal (Proposal 1)” and “The Business Combination Proposal (Proposal 2),” which is incorporated herein by reference. The information contained in Item 2.01 of this Current Report on Form 8-K is incorporated by reference into this Item 5.06.

 

Item 9.01. Financial Statement and Exhibits.

 

(a) Financial statements of businesses acquired.

 

Information responsive to Item 9.01(a) of Form 8-K is set forth in the financial statements included in the Proxy Statement/Prospectus beginning on page F-1, which are incorporated herein by reference.

 

(b) Pro forma financial information.

 

The unaudited pro forma financial statements are filed as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.

 

11

 

 

(c) Exhibits

 

Exhibit No.		Description
2.1†		Business Combination Agreement, dated August 15, 2023, by and among Pono Capital Three, Inc., Pono Three Merger Acquisitions Corp., and Robinson Aircraft, Ltd. d/b/a Horizon Aircraft (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K, filed by Pono Capital Three, Inc. on August 15, 2023).
3.1		New Horizon Articles (incorporated by reference to Exhibit 3.1 of Form 8-K filed by Pono Capital Three, Inc. on January 11, 2024).
4.1		Warrant Agreement, dated February 9, 2023, by and between Pono Capital Three, Inc. 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 Pono Capital Three, Inc. on February 15, 2023).
4.2		Specimen Class A Ordinary Share Certificate (incorporated by reference to Exhibit 4.2 to the Registration Statement on Form S-1, filed by Pono Capital Three, Inc. on November 10, 2022).
4.3		Specimen Warrant Certificate (incorporated by reference to Exhibit 4.3 to the Registration Statement on Form S-1, filed by Pono Capital Three, Inc. on November 10, 2022).
10.1		Form of Subscription Agreement for the PIPE investment (incorporated by reference to Exhibit 10.1 of Form 8-K filed by Pono Capital Three, Inc. on January 3, 2024).
10.2*+		New Horizon Aircraft Ltd. 2023 Equity Incentive Plan.
10.3*		Registration Rights Agreement, dated January 12, 2024, by and between Pono Capital Three, Inc. and parties thereto.
10.4		Registration Rights Agreement, dated February 9, 2023, by and among Pono Capital Three, Inc. and certain security holders. (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed by Pono Capital Three, Inc. on February 15, 2023).
10.5*		Form of Lockup Agreement.
10.6		Placement Unit Purchase Agreement, dated February 9, 2023, between Pono Capital Three, Inc. and Mehana Capital LLC (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K, filed by Pono Capital Three, Inc. on February 15, 2023).
10.7		Letter Agreement, dated February 9, 2023, among the Company, Mehana Capital LLC and each of the executive officers and directors of the Company (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed by Pono Capital Three, Inc. on February 15, 2023).
10.8		Forward Share Purchase Agreement with Meteora (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K, file by Pono Capital Three, Inc. on August 15, 2023).
10.9		Form of Subscription Agreement with Meteora (incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K, file by Pono Capital Three, Inc. on August 15, 2023).
10.10*		Form of Non-Competition and Non-Solicitation Agreement.
10.11*		Form of Indemnity Agreement.
10.12*+		Employment Agreement, dated January 19, 2024, by and between New Horizon Aircraft Ltd. and E. Brandon Robinson.
10.13*+		Employment Agreement, dated January 11, 2024, by and between New Horizon Aircraft Ltd. and Jason O’Neill.
10.14*+		Employment Agreement, dated January 12, 2024, by and between New Horizon Aircraft Ltd. and Brian Merker.
10.15*+		Employment Agreement, dated January 19, 2024, by and between New Horizon Aircraft Ltd. and Brian  Robinson.
10.16*+		Contractor Agreement, dated January 19, 2024, by and between New Horizon Aircraft Ltd., 2195790 Alberta Inc., and Stewart Lee.
21.1*		List of Subsidiaries of New Horizon Aircraft Ltd.
99.1*		Unaudited Pro Forma Condensed Consolidated Combined Financial Statements.
104*		Cover Page Interactive Data File (embedded within the Inline XBRL document).

  

*	Filed herewith
+	Indicates a management or compensatory plan.
†	Schedules to this exhibit have been omitted pursuant to Item 601(b)(2) of Registration S-K. The Registrant hereby agrees to furnish a copy of any omitted schedules to the SEC upon request.

 

12

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	NEW HORIZON AIRCRAFT LTD.
Date: January 19, 2024	By:	/s/ E. Brandon Robinson
	Name:	E. Brandon Robinson
	Title:	Chief Executive Officer

 

 

13

 

 

Exhibit 10.2

 

 

 

 

 

 

NEW HORIZON AIRCRAFT LTD.

 

 

 

 

 

 

 

 

OMNIBUS SHARE INCENTIVE PLAN

 

 

 

 

 

TABLE OF CONTENTS

 

 

 

		Page No.
ARTICLE 1 INTERPRETATION		1
1.1	Definitions	1
1.2	Interpretation	5
ARTICLE 2 PURPOSE AND ADMINISTRATION OF THE PLAN; GRANTING OF AWARDS		6
2.1	Purpose of the Plan	6
2.2	Implementation and Administration of the Plan	6
2.3	Participation in this Plan	7
2.4	Shares Subject to the Plan	7
2.5	Limits with Respect to Insiders, Individual Limits, Annual Grant Limits and Non-Employee Director Limits	7
2.6	Granting of Awards	8
ARTICLE 3 OPTIONS		8
3.1	Nature of Options	8
3.2	Option Awards	8
3.3	Option Price	8
3.4	Option Term	9
3.5	Exercise of Options	9
3.6	Method of Exercise and Payment of Purchase Price	9
3.7	Option Agreements	10
ARTICLE 4 RESTRICTED AND PERFORMANCE SHARE UNITS		10
4.1	Nature of Share Units	10
4.2	Share Unit Awards	11
4.3	Share Unit Agreements	11
4.4	Vesting of Share Units	11
4.5	Redemption / Settlement of Share Units	12
4.6	Determination of Amounts	13
4.7	Award of Dividend Equivalents	13
ARTICLE 5 DEFERRED SHARE UNITS		13
5.1	Nature of Deferred Share Units	13
5.2	Market Fluctuation	14
5.3	DSU Awards	14
5.4	DSU Agreements	14
5.5	Redemption / Settlement of DSUs	14

 

i

 

 

5.6	Determination of Amounts	16
ARTICLE 6 SHARE BONUS AWARDS		16
6.1	Participants	16
6.2	Number of Shares	16
6.3	Necessary Approvals	16
ARTICLE 7 GENERAL CONDITIONS		16
7.1	General Conditions Applicable to Awards	16
7.2	General Conditions Applicable to Options	17
7.3	General Conditions Applicable to Share Units	18
ARTICLE 8 ADJUSTMENTS AND AMENDMENTS		19
8.1	Adjustment to Shares Subject to Outstanding Awards	19
8.2	Change of Control	19
8.3	Amendment or Discontinuance of the Plan	20
ARTICLE 9 MISCELLANEOUS		21
9.1	Use of an Administrative Agent	21
9.2	Tax Withholding	21
9.3	Clawback	21
9.4	Securities Law Compliance	22
9.5	Reorganization of the Corporation	23
9.6	Quotation of Shares	23
9.7	Fractional Shares	23
9.8	Governing Laws	23
9.9	Severability	23
9.10	Code Section 409A	23
ARTICLE 10 BUSINESS COMBINATION		24
10.1	Business Combination Agreement	24
10.2	Amalgamation Options

 

ii

 

 

NEW HORIZON AIRCRAFT LTD. OMNIBUS SHARE INCENTIVE PLAN

 

The Corporation hereby establishes an omnibus share incentive plan for certain qualified directors, executive officers, employees or Consultants of the Corporation or any of its Subsidiaries (all as defined herein).

 

ARTICLE 1
INTERPRETATION

 

1.1 Definitions

 

Where used herein or in any amendments hereto or in any communication required or permitted to be given hereunder, the following terms shall have the following meanings, respectively, unless the context otherwise requires:

 

“Account” means a notional account maintained for each Participant on the books of the Corporation which will be credited with Share Units or DSUs, as applicable, in accordance with the terms of this Plan;

 

“Amalgamation” means the means the amalgamation of MergerSub and Robinson pursuant to the Business Combination Agreement and in accordance with the BCA;

 

“Amalgamation Options” means Options issued upon the effectiveness of the Amalgamation pursuant to the Business Combination Agreement in exchange for Outstanding Options;

 

“Associate”, where used to indicate a relationship with a Participant, means (i) any domestic partner of that Participant and (ii) the spouse of that Participant and that Participant’s children, as well as that Participant’s relatives and that Participant’s spouse’s relatives, if they share that Participant’s residence;

 

“Award” means any of an Option (including, for the avoidance of doubt, an Amalgamation Option), Share Unit, DSU or Share Award granted pursuant to, or otherwise governed by, the Plan;

 

“BCA” means the Business Corporations Act (British Columbia);

 

“Blackout Period” means the period during which Participants cannot trade securities of the Corporation pursuant to the Corporation’s policy respecting restrictions on trading which is in effect at that time (which, for greater certainty, does not include the period during which a cease trade order is in effect to which the Corporation or in respect of an insider, that insider, is subject);

 

“Blackout Period Expiry Date” means the date on which a Blackout Period expires;

 

“Board” has the meaning ascribed thereto in Section 2.2(1) hereof;

 

“Business Combination Agreement” means the Business Combination Agreement, dated as of August 15, 2023 (as it may be amended or supplemented from time to time), by and among the Corporation, MergerSub and Robinson.

 

“Business Day” means a day other than a Saturday, Sunday or statutory holiday, when banks are generally open for business in Vancouver, British Columbia for the transaction of banking business;

 

“Canadian Participant” means a Participant who is a resident of Canada and/or who is granted an Award in respect of, or by virtue of, employment services rendered in Canada, provided that, for greater certainty, a Participant may be both a Canadian Participant and a U.S. Taxpayer;

 

“Cashless Exercise Right” has the meaning ascribed thereto in Section 3.6(3) hereof;

 

“Cause” has the meaning ascribed thereto in Section 6.2(1) hereof;

 

1

 

 

“Change of Control” means, unless the Board determines otherwise, the happening, in a single transaction or in a series of related transactions, of any of the following events:

 

(a)

any transaction (other than a transaction described in clause (c) below) pursuant to which any Person or group of Persons acting jointly or in concert acquires the direct or indirect beneficial ownership of securities of the Corporation representing 50% or more of the aggregate voting power of all of the Corporation’s then issued and outstanding securities entitled to vote in the election of directors of the Corporation, other than any such acquisition that occurs upon the exercise or settlement of options or other securities granted by the Corporation under any of the Corporation’s equity incentive plans;

 

(b)

there is consummated an arrangement, amalgamation, merger, consolidation or similar transaction involving (directly or indirectly) the Corporation and, immediately after the consummation of such arrangement, amalgamation, merger, consolidation or similar transaction, the shareholders of the Corporation immediately prior thereto do not beneficially own, directly or indirectly, either (A) outstanding voting securities representing more than 50% of the combined outstanding voting power of the surviving or resulting entity in such amalgamation, merger, consolidation or similar transaction or (B) more than 50% of the combined outstanding voting power of the parent of the surviving or resulting entity in such arrangement, amalgamation, merger, consolidation or similar transaction, in each case in substantially the same proportions as their beneficial ownership of the outstanding voting securities of the Corporation immediately prior to such transaction;

 

(c)

the sale, lease, exchange, license or other disposition, in a single transaction or a series of related transactions, of assets, rights or properties of the Corporation or any of its Subsidiaries which have an aggregate book value greater than 50% of the book value of the assets, rights and properties of the Corporation and its Subsidiaries on a consolidated basis to any other person or entity, other than a disposition to a wholly-owned Subsidiary of the Corporation in the course of a reorganization of the assets of the Corporation and its wholly-owned Subsidiaries;

 

(d)

the passing of a resolution by the Board or shareholders of the Corporation to substantially liquidate the assets of the Corporation or wind up the Corporation’s business or significantly rearrange its affairs in one or more transactions or series of transactions or the commencement of proceedings for such a liquidation, winding-up or re-arrangement (except where such re-arrangement is part of a bona fide reorganization of the Corporation in circumstances where the business of the Corporation is continued and the shareholdings remain substantially the same following the re-arrangement); or

 

(e)

individuals who, immediately prior to a particular time, are members of the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the members of the Board immediately following such time; provided, however, that if the appointment or election (or nomination for election) of any new Board member was approved or recommended by a majority vote of the members of the Incumbent Board then still in office, such new member will, for purposes of this Plan, be considered as a member of the Incumbent Board;

 

“Code” means the United States Internal Revenue Code of 1986, as amended;

 

“Code Section 409A” means Section 409A of the Code and applicable regulations and guidance issued thereunder;

 

“Consultant” means a natural person, other than an employee, executive officer or director of the Corporation or a Subsidiary, who provides ongoing bona fide services to the Corporation (not in connection with the offer or sale of securities in a capital-raising transaction), and who does not directly or indirectly promote or maintain a market for the Corporation’s securities;

 

“Consulting Agreement” means any written consulting agreement between the Corporation or a Subsidiary and a Participant who is a Consultant;

 

“Corporation” means Pono Capital Three, Inc., a company which will be continued and exist as a company under the BCA and change its name to “New Horizon Aircraft Ltd.” upon consummation of the transactions contemplated by the Business Combination Agreement;

 

“Designated Broker” means a broker who is independent (pursuant to the rules and policies of Nasdaq) of, and deals at arm’s length with, the Corporation and its Subsidiaries and is designated by the Corporation or its Subsidiaries;

 

2

 

 

“Dividend Equivalent” means additional Share Units credited to a Participant’s Account as a dividend equivalent pursuant to Section 4.7;

 

“DSU” has the meaning ascribed thereto in Section 5.1 hereof;

 

“DSU Agreement” means a written agreement between the Corporation and a Participant evidencing the grant of DSUs and the terms and conditions thereof, a form of which is attached hereto as Exhibit “D”;

 

“DSU Redemption Date” means, with respect to a particular DSU, the date on which such DSU is redeemed in accordance with the provisions of this Plan;

 

“Eligibility Date” the effective date on which a Participant becomes eligible to receive long-term disability benefits (provided that, for greater certainty, such effective date shall be confirmed in writing to the Corporation by the insurance company providing such long-term disability benefits);

 

“Eligible Participant” means: (i) in respect of a grant of Options, Share Units or Share Awards, any director, executive officer, employee or Consultant of the Corporation or any of its Subsidiaries, (ii) in respect of a grant of DSUs, any Non-Employee Director, and (iii) in respect of a grant of Amalgamation Options, any former holder of Outstanding Options who is entitled to receive Amalgamation Options in accordance with the Business Combination Agreement and the Option Exchange Agreements;

 

“Employment Agreement” means, with respect to any Participant, any written employment agreement between the Corporation or a Subsidiary and such Participant;

 

“Exercise Notice” means a notice in writing signed by a Participant and stating the Participant’s intention to exercise a particular Option, if applicable;

 

“Grant Agreement” means an agreement evidencing the grant to a Participant of an Award, including an Option Agreement, a Share Unit Agreement, a DSU Agreement, an Employment Agreement or a Consulting Agreement;

 

“Insider” means the Corporation’s officers, directors and shareholders with 10% or greater beneficial ownership of the Shares;

 

“ITA” means the Income Tax Act (Canada), as amended from time to time;

 

“ITA Regulations” means the regulations promulgated under the ITA, as amended from time to time;

 

“Market Value of a Share” means, with respect to any particular date as of which the Market Value of a Share is required to be determined, (i) if the Shares are then listed on Nasdaq, the closing price of the Shares on Nasdaq on the last trading day prior to such particular date (as converted to Canadian dollars based on the exchange rate reported by the Bank of Canada on such date); (ii) if the Shares are not then listed on Nasdaq, the closing price of the Shares on any other stock exchange on which the Shares are then listed (and, if more than one, then using the exchange on which a majority of trading in the Shares occurs) on the last trading day prior to the such particular date (if not reported in Canadian dollars, as converted to Canadian dollars based on the exchange rate reported by the Bank of Canada on such date); or (iii) if the Shares are not then listed on any stock exchange, the value as is determined solely by the Board, acting reasonably and in good faith, and such determination shall be conclusive and binding on all Persons;

 

“MergerSub” means Merger Acquisitions Corp., a British Columbia company and wholly-owned subsidiary of the Corporation, as it existed prior to the Amalgamation;

 

“Nasdaq” means the Nasdaq Stock Exchange;

 

“Non-Employee Director” means a member of the Board who is not otherwise an employee or executive officer of the Corporation or a Subsidiary;

 

“Option” means an option granted by the Corporation to a Participant entitling such Participant to acquire a designated number of Shares from treasury at the Option Price, and includes, for the avoidance of doubt, an Amalgamation Option;

 

3

 

 

“Option Agreement” means a written agreement between the Corporation and a Participant evidencing the grant of Options and the terms and conditions thereof, a form of which is attached hereto as Exhibit “A”;

 

“Option Exchange Agreements” mean, collectively, all of the agreements between Robinson, the Corporation, and each holder of Outstanding Options pursuant to which each such holder will exchange all of their Outstanding Options for Amalgamation Options;

 

“Option Price” has the meaning ascribed thereto in Section 3.2 hereof;

 

“Option Term” has the meaning ascribed thereto in Section 3.4 hereof;

 

“Outstanding Issue” means the number of Shares that are outstanding as at a specified time, on a non- diluted basis;

 

“Outstanding Options” means options of Robinson immediately prior to the effective time of the Amalgamation which, pursuant to the terms of the Business Combination Agreement, were exchanged for Options;

 

“Participant” means any Eligible Participant that is granted one or more Awards under the Plan;

 

“Performance Criteria” means specified criteria, other than the mere continuation of employment or the mere passage of time, the satisfaction of which is a condition for the grant, exercisability, vesting or full enjoyment of an Option or Share Unit.

 

“Performance Period” means the period determined by the Board at the time any Option or Share Unit is granted or at any time thereafter during which any Performance Criteria and any other vesting conditions specified by the Board with respect to such Options or Share Unit are to be measured;

 

“Person” means an individual, corporation, company, cooperative, partnership, trust, unincorporated association, entity with juridical personality or governmental authority or body, and pronouns which refer to a Person shall have a similarly extended meaning;

 

“Plan” means this New Horizon Aircraft Ltd. Omnibus Share Incentive Plan, including the exhibits hereto and any amendments or supplements hereto made after the effective date hereof;

 

“Redemption Date” has the meaning ascribed thereto in Section 4.5(1) hereof;

 

“Restriction Period” means, with respect to a particular grant of Share Units, the period between the date of grant of such Share Units and the latest Vesting Date in respect of any portion of such Share Units;

 

“Robinson” means Robinson Aircraft Ltd. d/b/a Horizon Aircraft, a British Columbia company, as it existed prior to the Amalgamation;

 

“SEC” has the meaning ascribed thereto in Section 9.4(5) hereof;

 

“Separation from Service” has the meaning ascribed to it under Code Section 409A;

 

“Share Award” means a right awarded to a Participant to receive Shares as provided in Article 6 hereof and subject to the terms and conditions of this Plan;

 

“Share Compensation Arrangement” means any stock option, stock option plan, employee stock purchase plan, long-term incentive plan or other compensation or incentive mechanism involving the issuance or potential issuance of Shares from treasury, including a share purchase from treasury by a full-time employee, director, officer, Insider, or Consultant which is financially assisted by the Corporation or a Subsidiary by way of a loan, guarantee or otherwise;

 

“Share Unit” means a right awarded to a Participant to receive a payment as provided in Article 4 hereof and subject to the terms and conditions of this Plan;

 

“Share Unit Agreement” means a written agreement between the Corporation and a Participant evidencing the grant of Share Units and the terms and conditions thereof, a form of which is attached hereto as Exhibit “C”;

 

“Share Unit Outside Expiry Date” has the meaning ascribed thereto in Section 4.5(5) hereof.

 

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“Shares” means the Class A Common shares in the share capital of the Corporation;

 

“Stock Exchange” means Nasdaq or, if the Shares are not listed or posted for trading on Nasdaq at a particular date, any other stock exchange on which the majority of the trading volume and value of the Shares are listed or posted for trading;

 

“Subsidiary” means a corporation, company or partnership that is controlled, directly or indirectly, by the Corporation including, without limitation, MergerSub and the company which will continue upon the Amalgamation of MergerSub and Robinson;

 

“Termination Date” means (i) in the event of a Participant’s resignation, the date on which such Participant ceases to be a director, executive officer, employee or Consultant of the Corporation or one of its Subsidiaries, (ii) in the event of the termination of the Participant’s employment, or position as director, executive or officer of the Corporation or a Subsidiary, or Consultant, the effective date of the termination as specified in the notice of termination provided to the Participant by the Corporation or the Subsidiary, as the case may be, and (iii) in the event of a Participant’s death, on the date of death, provided that, in applying the provisions of this Plan to DSUs granted to a Canadian Participant, the “Termination Date” shall be the date on which the Participant is neither a director, employee, executive or officer of the Corporation or of any affiliate of the Corporation (where “affiliate” has the meaning ascribed thereto by the Canada Revenue Agency for the purposes of paragraph 6801(d) of the ITA Regulations);

 

“Termination of Service” means that a Participant has ceased to be an Eligible Participant;

 

“U.S.” means the United States of America;

 

“U.S. Securities Act” means the United States Securities Act of 1933, as amended;

 

“U.S. Share Unit Outside Expiry Date” has the meaning ascribed thereto in Section 4.1 hereof;

 

“U.S. Taxpayer” means a Participant who is a U.S. citizen, a U.S. permanent resident or other person who is subject to taxation on their income or in respect of Awards under the Code, provided that, for greater certainty, a Participant may be both a Canadian Participant and a U.S. Taxpayer; and

 

“Vesting Date” has the meaning ascribed thereto in Section 4.4 hereof.

 

1.2 Interpretation

 

(1)

Whenever the Board is to exercise discretion or authority in the administration of the terms and conditions of this Plan, the term “discretion” or “authority” means the sole and absolute discretion of the Board.

 

(2)

The provision of a table of contents, the division of this Plan into Articles, Sections and other subdivisions and the insertion of headings are for convenient reference only and do not affect the interpretation of this Plan.

 

(3)

In this Plan, words importing the singular shall include the plural, and vice versa and words importing any gender include any other gender.

 

(4)

The words “including”, “includes” and “include” and any derivatives of such words mean “including (or includes or include) without limitation”. As used herein, the expressions “Article”, “Section” and other subdivision followed by a number, mean and refer to the specified Article, Section or other subdivision of this Plan, respectively.

 

(5)

Unless otherwise specified in the Participant’s Grant Agreement, all references to money amounts are to Canadian currency, and where any amount is required to be converted to or from a currency other than Canadian currency, such conversion shall be based on the exchange rate quoted by the Bank of Canada on the particular date.

 

(6)

For purposes of this Plan, the legal representatives of a Participant shall only include the legal representative of the Participant’s estate or will.

 

(7)

If any action may be taken within, or any right or obligation is to expire at the end of, a period of days under this Plan, then the first day of the period is not counted, but the day of its expiry is counted.

 

5

 

 

ARTICLE 2
PURPOSE AND ADMINISTRATION OF THE PLAN; GRANTING OF AWARDS

 

2.1 Purpose of the Plan

 

The purpose of the Plan is to permit the Corporation to grant Awards to Eligible Participants, subject to certain conditions as hereinafter set forth, for the following purposes:

 

(a)

to increase the interest in the Corporation’s welfare of those Eligible Participants, who share responsibility for the management, growth and protection of the business of the Corporation or a Subsidiary;

 

(b)

to provide an incentive to such Eligible Participants to continue their services for the Corporation or a Subsidiary and to encourage such Eligible Participants whose skills, performance and loyalty to the objectives and interests of the Corporation or a Subsidiary are necessary or essential to its success, image, reputation or activities;

 

(c)

to reward Participants for their performance of services while working for the Corporation or a Subsidiary;

 

(d)

to provide a means through which the Corporation or a Subsidiary may attract and retain able Persons to enter its employment or service; and

 

(e)

in connection with the grant of Amalgamation Options, to reward such Participants for the services performed by them in relation to the Subsidiaries prior to the effective time of the Amalgamation.

 

2.2 Implementation and Administration of the Plan

 

(1)

The Plan shall be administered and interpreted by the board of directors of the Corporation (the “Board”) or, if the Board by resolution so decides, by a committee or plan administrator appointed by the Board. If such committee or plan administrator is appointed for this purpose, all references to the “Board” herein will be deemed references to such committee or plan administrator. Nothing contained herein shall prevent the Board from adopting other or additional Share Compensation Arrangements or other compensation arrangements, subject to any required approval.

 

(2)

Subject to Article 7 and any applicable rules of a Stock Exchange, the Board may, from time to time, as it may deem expedient, adopt, amend and rescind rules and regulations or vary the terms of this Plan and/or any Award hereunder for carrying out the provisions and purposes of the Plan and/or to address tax or other requirements of any applicable jurisdiction.

 

(3)

Subject to the provisions of this Plan, the Board is authorized, in its sole discretion, to make such determinations under, and such interpretations of, and take such steps and actions in connection with, the proper administration and operations of the Plan as it may deem necessary or advisable. The Board may delegate to officers or managers of the Corporation, or committees thereof, the authority, subject to such terms as the Board shall determine, to perform such functions, in whole or in part. Any such delegation by the Board may be revoked at any time at the Board’s sole discretion. The interpretation, administration, construction and application of the Plan and any provisions hereof made by the Board, or by any officer, manager, committee or any other Person to which the Board delegated authority to perform such functions, shall be final and binding on the Corporation, its Subsidiaries and all Eligible Participants.

 

(4)

No member of the Board or any Person acting pursuant to authority delegated by the Board hereunder shall be liable for any action or determination taken or made in good faith in the administration, interpretation, construction or application of the Plan or any Award granted hereunder. Members of the Board or and any person acting at the direction or on behalf of the Board, shall, to the extent permitted by law, be fully indemnified and protected by the Corporation with respect to any such action or determination.

 

(5)

The Plan shall not in any way fetter, limit, obligate, restrict or constrain the Board with regard to the allotment or issuance of any Shares or any other securities in the capital of the Corporation. For greater clarity, the Corporation shall not by virtue of this Plan be in any way restricted from declaring and paying stock dividends, repurchasing Shares or varying or amending its share capital or corporate structure.

 

6

 

 

2.3 Participation in this Plan

 

(1)

The Corporation makes no representation or warranty as to the future market value of the Shares or with respect to any income tax matters affecting any Participant resulting from the grant of an Award, the exercise of an Option or transactions in the Shares or otherwise in respect of participation under the Plan. Neither the Corporation, nor any of its directors, officers, employees, shareholders or agents shall be liable for anything done or omitted to be done by such Person or any other Person with respect to the price, time, quantity or other conditions and circumstances of the issuance of Shares hereunder, or in any other manner related to the Plan. For greater certainty, no amount will be paid to, or in respect of, a Participant under the Plan or pursuant to any other arrangement, and no additional Awards will be granted to such Participant to compensate for a downward fluctuation in the price of the Shares, nor will any other form of benefit be conferred upon, or in respect of, a Participant for such purpose. The Corporation and its Subsidiaries do not assume and shall not have responsibility for the income or other tax consequences resulting to any Participant and each Participant is advised to consult with his or her own tax advisors.

 

(2)

Participants (and their legal representatives) shall have no legal or equitable right, claim, or interest in any specific property or asset of the Corporation or any of its Subsidiaries. No asset of the Corporation or any of its Subsidiaries shall be held in any way as collateral security for the fulfillment of the obligations of the Corporation or any of its Subsidiaries under this Plan. Unless otherwise determined by the Board, this Plan shall be unfunded. To the extent any Participant or his or her estate holds any rights by virtue of a grant of Awards under this Plan, such rights (unless otherwise determined by the Board) shall be no greater than the rights of an unsecured creditor of the Corporation.

 

(3)

Unless otherwise determined by the Board, the Corporation shall not offer financial assistance to any Participant in regards to the exercise of any Award granted under this Plan.

 

2.4 Shares Subject to the Plan

 

(1)

Subject to adjustment pursuant to Article 8 hereof, the securities that may be acquired by Participants pursuant to Awards under this Plan shall consist of authorized but unissued Shares, provided that in the case of Share Units the Corporation (or applicable Subsidiary) may, at its sole discretion, elect to settle such Share Units in Shares acquired in the open market by a Designated Broker for the benefit of a Participant.

 

(2)

The maximum number of Shares reserved for issuance, in the aggregate, under this Plan shall be equal to 1,697,452 Shares. For the purposes of calculating the number of Shares reserved for issuance under this Plan, (i) each Option, including an Amalgamation Option, and each Share Award shall be counted as reserving the relevant number of Shares contemplated by that Option or Share Award under the Plan, and (ii) notwithstanding that the settlement of any Share Unit or DSU in Shares shall be at the sole discretion of the Corporation as provided herein, for purposes of the foregoing each Share Unit and each DSU shall, in each case, be counted as reserving the relevant number of Shares which may be used to settle them under the Plan.

 

(3)

No Award may be granted if such grant would have the effect of causing the total number of Shares reserved for issuance under this Plan to exceed the maximum number of Shares reserved for issuance under this Plan as set out above.

 

(4)

If (i) an outstanding Award (or portion thereof) expires or is forfeited, surrendered, cancelled or otherwise terminated for any reason without having been exercised, (ii) an outstanding Award (or portion thereof) is settled in cash, or (iii) Shares acquired pursuant to an Award subject to forfeiture are forfeited, then in each such case the Shares reserved for issuance in respect of such Award (or portion thereof) will again be available for issuance under the Plan.

 

2.5 Limits with Respect to Insiders, Individual Limits, Annual Grant Limits and Non-Employee Director Limits

 

(1)

The maximum number of the Corporation’s securities issuable to Insiders, at any time under the Plan, or when combined with all of the Corporation’s other Share Compensation Arrangements, cannot exceed ten percent (10%) of the Corporation’s total issued and outstanding securities.

 

7

 

 

(2)

The maximum number of the Corporation’s securities issued to Insiders, within any one-year period, under the Plan, or when combined with all of the Corporation’s other Share Compensation Arrangement, cannot exceed ten percent (10%) of the Corporation’s total issued and outstanding securities.

 

(3)

Any Award granted pursuant to the Plan, or securities issued under any other Share Compensation Arrangement, prior to a Participant becoming an Insider, shall be excluded from the purposes of the limits set out in Section 2.5(1) and Section 2.5(2).

 

(4)

The maximum number of Shares that may be made issuable pursuant to Awards made to employees and Non-Employee Directors within any one-year period shall not exceed 5% of the Outstanding Issue (as of the commencement of such one-year period).

 

(5)

The Board may make Awards to Non-Employee Directors under the Plan provided that the annual grant of Awards under this Plan to any one Non-Employee Director shall not exceed $200,000 in value (based on a Black-Scholes calculation or such other similar and acceptable methodology, applied consistently and appropriately as determined by the Board), of which no more than $150,000 may comprise Options.

 

2.6 Granting of Awards

 

Any Award granted under or otherwise governed by the Plan shall be subject to the requirement that, if at any time counsel to the Corporation shall determine that the listing, registration or qualification of the Shares upon any stock exchange or under any law or regulation of any jurisdiction, or the consent or approval of any stock exchange or any governmental or regulatory body, is necessary as a condition of, or in connection with, the grant or settlement of such Award or the exercise of any Option or the issuance or purchase of Shares thereunder, as applicable, such Award may not be granted, settled or exercised, as applicable, in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained on conditions acceptable to the Board. Nothing herein shall be deemed to require the Corporation to apply for or to obtain such listing, registration, qualification, consent or approval.

 

ARTICLE 3
OPTIONS

 

3.1 Nature of Options

 

An Option is an option granted by the Corporation to a Participant entitling such Participant to acquire a designated number of Shares from treasury at the Option Price, but subject to the provisions hereof. For greater certainty, the Corporation is obligated to issue and deliver the designated number of Shares on the exercise of an Option and shall have no independent discretion to settle an Option in cash or other property other than Shares issued from treasury. For the avoidance of doubt, no Dividend Equivalents shall be granted in connection with an Option.

 

3.2 Option Awards

 

Subject to the provisions set forth in this Plan and any shareholder or regulatory approval which may be required, the Board shall, from time to time by resolution, in its sole discretion, (i) designate the Eligible Participants who may receive Options under the Plan, (ii) fix the number of Options, if any, to be granted to each Eligible Participant and the date or dates on which such Options shall be granted, (iii) in accordance with Section 3.3, determine the price per Share to be payable upon the exercise of each such Option (the “Option Price”) and the relevant vesting provisions (including Performance Criteria, if applicable) and the Option Term, the whole subject to the terms and conditions prescribed in this Plan or in any Option Agreement, and any applicable rules of a Stock Exchange. Notwithstanding the foregoing, the Corporation shall grant the Amalgamation Options to former holders of Outstanding Options pursuant to, and on the terms and conditions set out in, the Business Combination Agreement.

 

3.3 Option Price

 

The Option Price in respect of any Option shall be determined and approved by the Board when such Option is granted, but shall not be less than the Market Value of a Share as of the date of the grant. Notwithstanding the foregoing, the exercise price per Share under any Amalgamation Option shall be the exercise price determined in accordance with the Business Combination Agreement and the relevant Option Exchange Agreement for such Amalgamation Option.

 

8

 

 

3.4 Option Term

 

Except in the case of Amalgamation Options, the Board shall determine, at the time of granting the particular Option, the period during which the Option is exercisable, which shall not be more than ten (10) years from the date the Option is granted (“Option Term”). In the case of Amalgamation Options, each Amalgamation Option shall expire on the applicable expiry date for such Amalgamation Option determined in accordance with the Business Combination Agreement and the relevant Option Exchange Agreement. Unless otherwise determined by the Board, all unexercised Options shall be cancelled, without any compensation, at the expiry of such Options. Notwithstanding the expiration provisions hereof, with respect to Options held by Participants who are not U.S. Taxpayers, if the date on which an Option Term expires falls within a Blackout Period or within nine Business Days after a Blackout Period Expiry Date, the expiration date of the Option will be the date that is ten Business Days after the Blackout Period Expiry Date. Notwithstanding anything else herein contained, the ten Business Day period referred to in this section may not be further extended by the Board.

 

3.5 Exercise of Options

 

Prior to its expiration or earlier termination in accordance with the Plan, each Option shall be exercisable at such time or times and/or pursuant to the achievement of such Performance Criteria and/or other vesting conditions as the Board, at the time of granting the particular Option, may determine in its sole discretion. For greater certainty, any exercise of Options by a Participant shall be made in compliance with the Corporation’s insider trading policy.

 

3.6 Method of Exercise and Payment of Purchase Price

 

(1)

Subject to the provisions of the Plan, an Option granted under the Plan shall be exercisable (from time to time as provided in Section 3.5 hereof) by the Participant (or by the legal representative of the Participant) by delivering a fully completed Exercise Notice, a form of which is attached hereto as Exhibit “B”, to the Corporation at its registered office to the attention of the Chief Financial Officer of the Corporation (or the individual that the Chief Financial Officer of the Corporation may from time to time designate) or by giving notice in such other manner as the Corporation may from time to time designate, which notice shall specify the number of Shares in respect of which the Option is being exercised and shall be accompanied by payment, in full, of (i) the Option Price multiplied by the number of Shares specified in such notice, and (ii) such amount in respect of withholding taxes as the Corporation may require under Section 9.2. Such payment shall be in the form of cash, certified cheque, bank draft or any other form of payment deemed acceptable by the Board.

 

(2)

Upon exercise of an Option, the Corporation shall, as soon as practicable after such exercise and receipt of all payments required to be made by the Participant to the Corporation in connection with such exercise, but no later than ten (10) Business Days following such exercise and payment, forthwith cause the transfer agent and registrar of the Shares either to:

 

(a)

deliver to the Participant (or to the legal representative of the Participant) a certificate in the name of the Participant representing in the aggregate such number of Shares as the Participant (or to the legal representative of the Participant) shall have then paid for and as are specified in such Exercise Notice; or

 

(b)

in the case of Shares issued in uncertificated form, cause the issuance of the aggregate number of Shares as the Participant (or the legal representative of the Participant) shall have then paid for and as are specified in such Exercise Notice, which Shares shall be evidenced by a book position on the register of the shareholders of the Corporation to be maintained by the transfer agent and registrar of the Shares.

 

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(3)

The Board may, at any time and on such terms as it may in its discretion determine, grant to a Participant who is entitled to exercise an Option the alternative right (the “Cashless Exercise Right”) to deal with such Option on a “cashless exercise” basis. Without limitation, the Board may determine in its discretion that such Cashless Exercise Right, if any, granted to a Participant in respect of any Options entitles the Participant the right to surrender such Options, in whole or in part, to the Corporation upon giving notice in writing to the Corporation of the Participant’s intention to exercise such Cashless Exercise Right and the number of Options in respect of which such Cashless Exercise Right is being exercised, and, upon such surrender, to receive, as consideration for the surrender of such Options as are specified in the notice, that number of Shares, disregarding fractions, equal to the quotient obtained by:

 

(a)

subtracting the applicable Option Price from the Market Value of a Share (determined as of the date such notice of cashless exercise is received by the Corporation), and multiplying the remainder by the number of Options specified in such notice;

 

(b)

subtracting from the amount obtained under Section 3.6(3)(a) the amount of any applicable withholding taxes as determined by the Corporation in its sole discretion; and

 

(c)

dividing the net amount obtained under subsection 3.6(3)(b) by the Market Value of a Share determined as of the date such notice of cashless exercise is received by the Corporation.

 

3.7 Option Agreements

 

Options shall be evidenced by an Option Agreement, in such form not inconsistent with the Plan as the Board may from time to time determine with reference to the form attached as Exhibit “A”. The Option Agreement shall contain such terms that may be considered necessary in order that the Option will comply with any provisions respecting options in the income tax (including, in respect of Canadian Participants, such terms and conditions so as to ensure that the Option shall be continuously governed by section 7 of the ITA) or other laws in force in any country or jurisdiction of which the Participant may from time to time be a resident or citizen or provide services in or the rules of any regulatory body having jurisdiction over the Corporation.

 

ARTICLE 4
RESTRICTED AND PERFORMANCE SHARE UNITS

 

4.1 Nature of Share Units

 

A Share Unit is an Award in the nature of a bonus for services rendered in the year of grant, that, upon settlement, entitles the recipient Participant to receive a cash payment equal to the Market Value of a Share (or, at the sole discretion of the Corporation, a Share), and subject to such restrictions and conditions on vesting as the Board may determine at the time of grant, unless such Share Unit expires prior to being settled. Restrictions and conditions on vesting conditions may, without limitation, be based on the passage of time during continued employment or other service relationship (sometimes referred to as a “Restricted Share Unit”) the achievement of specified Performance Criteria (sometimes referred to as a “Performance Share Unit”), or both. Unless otherwise provided in the applicable Share Unit Agreement, it is intended Share Units awarded to U.S. Taxpayers will be exempt from Code Section 409A under U.S. Treasury Regulation section 1.409A-1(b)(4), and accordingly such Share Units will be settled/redeemed by March 15^th of the year following the year in which such Share Units are not, or are no longer, subject to a substantial risk of forfeiture (as such term is interpreted under Code Section 409A). For greater certainty, upon the satisfaction or waiver or deemed satisfaction of all Performance Criteria and other vesting conditions, the Share Units of U.S. Taxpayers will no longer be subject to a substantial risk of forfeiture, and will be settled/redeemed by March 15^th of the following year (the “U.S. Share Unit Outside Expiry Date”). It is intended that, in respect of Share Units granted to Canadian Participants as a bonus for services rendered in the year of grant, neither the Plan nor any Share Units granted hereunder will constitute a “salary deferral arrangement” as defined in subsection 248(1) of the ITA, by reason of the exemption in paragraph (k) thereof. For greater certainty, notwithstanding anything to the contrary in this Plan, all vesting and issuances or payments, as applicable, in respect of a Share Unit granted to a Canadian Participant shall be completed no later than by the Share Unit Outside Expiry Date. All Share Units granted hereunder shall be in addition to, and not in substitution for or in lieu of, ordinary salary and wages received or receivable by any Canadian Participant in respect of his or her services to the Corporation or a Subsidiary, as applicable.

 

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4.2 Share Unit Awards

 

(1)

The Board shall, from time to time by resolution, in its sole discretion, (i) designate the Eligible Participants who may receive Share Units under the Plan, (ii) fix the number of Share Units, if any, to be granted to each Eligible Participant and the date or dates on which such Share Units shall be granted, (iii) determine the relevant conditions, vesting provisions (including the applicable Performance Period and Performance Criteria, if any) and Restriction Period of such Share Units, and (iv) any other terms and conditions applicable to the granted Share Units, which need not be identical and which, without limitation, may include non-competition provisions, subject to the terms and conditions prescribed in this Plan and in any Share Unit Agreement.

 

(2)

Subject to the vesting and other conditions and provisions in this Plan and in the applicable Share Unit Agreement, each Share Unit awarded to a Participant shall entitle the Participant to receive, on settlement, a cash payment equal to the Market Value of a Share, or at the discretion of the Corporation (or applicable Subsidiary), one Share or any combination of cash and Shares as the Corporation (or applicable Subsidiary) in its sole discretion may determine, in each case less any applicable withholding taxes. For greater certainty, no Participant shall have any right to demand to be paid in, or receive, Shares in respect of any Share Unit, and, notwithstanding any discretion exercised by the Corporation (or applicable Subsidiary) to settle any Share Unit, or portion thereof, in the form of Shares, the Corporation (and each Subsidiary) reserves the right to change such form of payment at any time until payment is actually made.

 

4.3 Share Unit Agreements

 

(1)

The grant of a Share Unit by the Board shall be evidenced by a Share Unit Agreement in such form not inconsistent with the Plan as the Board may from time to time determine with reference to the form attached as Exhibit “C”. Such Share Unit Agreement shall be subject to all applicable terms and conditions of this Plan and may be subject to any other terms and conditions (including without limitation any recoupment, reimbursement or claw-back compensation policy as may be adopted by the Board from time to time) which are not inconsistent with this Plan and which the Board deems appropriate for inclusion in a Share Unit Agreement. The provisions of the various Share Unit Agreements issued under this Plan need not be identical.

 

(2)

The Share Unit Agreement shall contain such terms that the Corporation considers necessary in order that the Share Unit will comply with Code Section 409A and any provisions respecting restricted share units in the income tax laws (including, in respect of Canadian Participants, such terms and conditions so as to ensure that the Share Units shall not constitute a “salary deferral arrangement” as defined in subsection 248(1) of the ITA, by reason of the exemption in paragraph (k) thereof) or other laws in force in any country or jurisdiction of which the Participant may from time to time be a resident or citizen or provide services in or the rules of any regulatory body having jurisdiction over the Corporation.

 

4.4 Vesting of Share Units

 

The Board shall have sole discretion to (i) determine if any vesting conditions with respect to a Share Unit, including any Performance Criteria or other vesting conditions contained in the applicable Share Unit Agreement, have been met, (ii) waive the vesting conditions applicable to Share Units (or deem them to be satisfied), and (iii) extend the Restriction Period with respect to any grant of Share Units, provided that (A) any such extension shall not result in the Restriction Period for such Shares Units extending beyond the Share Unit Outside Expiry Date, and (B) with respect to any grant of Share Units to a U.S. Taxpayer, such extension constitutes a substantial risk of forfeiture and such Share Units will continue to be exempt from (or otherwise comply with) Code Section 409A. The Corporation shall communicate to a Participant, as soon as reasonably practicable, the date on which all such applicable vesting conditions in respect of a grant of Share Units to the Participant have been satisfied, waived, or deemed satisfied and such Share Units have vested (the “Vesting Date”). Notwithstanding the foregoing, if the date on which any Share Units would otherwise vest falls within a Blackout Period or within nine Business Days after a Blackout Period Expiry Date, the Vesting Date of such Share Units will be deemed to be the date that is the earlier of (i) ten Business Days after the Blackout Period Expiry Date (which ten Business Day period may not be further extended by the Board) and (ii) the Share Unit Outside Expiry Date in respect of such Share Units, provided that in no event will the redemption and settlement of any Share Units of a Participant who is a U.S. Taxpayer be delayed beyond March 15^th of the calendar year immediately following the year in which such Share Units are not, or are no longer, subject to a substantial risk of forfeiture (as such term is interpreted under Code Section 409A).

 

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4.5 Redemption/Settlement of Share Units

 

(1)

Subject to the provisions of this Section 4.5 and Section 4.6, a Participant’s vested Share Units shall be redeemed in consideration for a cash payment on the date (the “Redemption Date”) that is the earliest of (i) the 15th day following the applicable Vesting Date for such vested Share Units (or, if such day is not a Business Day, on the immediately following Business Day), (ii) the Share Unit Outside Expiry Date, and (iii) in the case of a Participant who is a U.S. Taxpayer, the U.S. Share Unit Outside Expiry Date.

 

(2)

Subject to the provisions of this Section 4.5 and Section 4.6, during the period between the Vesting Date and the Redemption Date in respect of a Participant’s vested Share Units, the Corporation (or any Subsidiary that is party to an Employment Agreement or Consulting Agreement with the Participant whose vested Share Units are to be redeemed) shall, at its sole discretion, be entitled to elect to settle all or any portion of the cash payment obligation otherwise arising in respect of the Participant’s vested Share Units either (i) by the issuance of Shares to the Participant (or the legal representative of the Participant, if applicable) on the Redemption Date, or (ii) by paying all or a portion of such cash payment obligation to the Designated Broker, who shall use the funds received to purchase Shares in the open market, which Shares shall be registered in the name of the Designated Broker in a separate account the Participant’s benefit.

 

(3) Settlement of a Participant’s vested Share Units shall take place on the Redemption Date as follows:

 

(a)

where the Corporation (or applicable Subsidiary) has elected to settle all or a portion of the Participant’s vested Share Units in Shares issued from treasury:

 

(i)

in the case of Shares issued in certificated form, by delivery to the Participant (or to the legal representative of the Participant, if applicable) of a certificate in the name of the Participant (or the legal representative of the Participant, if applicable) representing the aggregate number of Shares that the Participant is entitled to receive, subject to satisfaction of any applicable withholding in accordance with Section 9.2; or

 

(ii)

in the case of Shares issued in uncertificated form, by the issuance to the Participant (or to the legal representative of the Participant, if applicable) of the aggregate number of Shares that the Participant is entitled to receive, subject to satisfaction of any applicable withholding tax under Section 9.2, which Shares shall be evidenced by a book position on the register of the shareholders of the Corporation to be maintained by the transfer agent and registrar of the Shares;

 

(b)

where the Corporation or a Subsidiary has elected to settle all or a portion of the Participant’s vested Share Units in Shares purchased in the open market, by delivery to the Designated Broker of readily available funds in an amount equal to the Market Value of a Share as of the Redemption Date multiplied by the number of vested Share Units to be settled in Shares purchased in the open market, less the amount of any applicable withholding tax under Section 9.2, along with directions instructing the Designated Broker to use such funds to purchase Shares in the open market for the benefit of the Participant and to be evidenced by a confirmation from the Designated Broker of such purchase;

 

(c)

any cash payment to which the Participant is entitled (excluding, for the avoidance of doubt, any amount payable in respect of the Participant’s Share Units that the Corporation or a Subsidiary has elected to settle in Shares) shall, subject to satisfaction of any applicable withholding tax under Section 9.2, be paid to the Participant (or to the legal representative of the Participant, if applicable) by the Corporation or Subsidiary of which the Participant is a director, employee, executive officer or Consultant, in cash, by cheque or by such other payment method as the Corporation and Participant may agree; and

 

(d)

where the Corporation or a Subsidiary has elected to settle a portion, but not all, of the Participant’s vested Share Units in Shares, the Participant shall be deemed to have instructed the Corporation or Subsidiary, as applicable, to withhold from the cash portion of the payment to which the Participant is otherwise entitled such amount as may be required in accordance with Section 9.2 and to remit such withheld amount to the applicable taxation authorities on account of any withholding tax obligations, and the Corporation or Subsidiary, as applicable, shall deliver any remaining cash payable, after making any such remittance, to the Participant (or to the legal representative of the Participant, if applicable) as soon as reasonable practicable. In the event that the cash portion payable to settle a Participant’s Share Units in the foregoing circumstances is not sufficient to satisfy the withholding obligations of the Corporation or a Subsidiary pursuant to Section 9.2, the Corporation or Subsidiary, as applicable, shall be entitled to satisfy any remaining withholding obligation by any other mechanism as may be required or determined by the Corporation or Subsidiary as appropriate.

 

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(4)

Notwithstanding any other provision in this Article 4, all payments, whether in cash or in Shares, shall be completed in respect of the settlement of any Share Unit by no later than December 15 of the third (3rd) calendar year commencing after the year in which such Share Unit was granted (the “Share Unit Outside Expiry Date”).

 

4.6 Determination of Amounts

 

(1)

The cash payment obligation arising in respect of the redemption and settlement of a vested Share Unit pursuant to Section 4.5 shall be equal to the Market Value of a Share as of the applicable Redemption Date. For the avoidance of doubt, the aggregate cash amount to be paid to a Participant (or the legal representative of the Participant, if applicable) in respect of a particular redemption of the Participant’s vested Share Units shall, subject to any adjustments in accordance with Section 8.1 and any withholding required pursuant to Section 9.2, be equal to the Market Value of a Share as of the Redemption Date for such vested Share Units multiplied by the number of vested Share Units in the Participant’s Account at the commencement of the Redemption Date (after deducting any such vested Share Units in the Participant’s Account in respect of which the Corporation (or applicable Subsidiary) makes an election under Section 4.5(2) to settle such vested Share Units in Shares).

 

(2)

If the Corporation (or applicable Subsidiary) elects in accordance with Section 4.5(2) to settle all or a portion of the cash payment obligation arising in respect of the redemption of a Participant’s vested Share Units by the issuance of Shares, the Corporation shall, subject to any adjustments in accordance with Section 8.1 and any withholding required pursuant to Section 9.2, issue to the Participant (or the legal representative of the Participant, if applicable), for each vested Share Unit which the Corporation (or applicable Subsidiary) elects to settle in Shares, one Share. Where, as a result of any adjustment in accordance with Section 8.1 and/or any withholding required pursuant to Section 9.2, the aggregate number of Shares to be received by a Participant upon an election by the Corporation (or applicable Subsidiary) to settle all or a portion of the Participant’s vested Share Units in Shares includes a fractional Share, the aggregate number of Shares to be received by the Participant shall be rounded down to the nearest whole number of Shares.

 

4.7 Award of Dividend Equivalents

 

Dividend Equivalents may, as determined by the Board in its sole discretion, be awarded in respect of unvested Share Units in a Participant’s Account on the same basis as cash dividends declared and paid on Shares as if the Participant was a shareholder of record of Shares on the relevant record date. Dividend Equivalents, if any, will be credited to the Participant’s Account in additional Share Units, the number of which shall be equal to a fraction where the numerator is the product of (i) the number of Share Units in such Participant’s Account on the date that dividends are paid multiplied by (ii) the dividend paid per Share and the denominator of which is the Market Value of one Share calculated as of the date that dividends are paid. Any additional Share Units credited to a Participant’s Account as a Dividend Equivalent shall be subject to the same terms and conditions (including vesting and Restriction Periods and Share Unit Outside Expiry Date) as the Share Units in respect of which such additional Share Units are credited and shall be deemed to have been awarded on the same date and subject to the same expiry date as the Share Units in respect of which such additional Share Units are credited.

 

In the event that the Participant’s applicable Share Units do not vest, all Dividend Equivalents, if any, associated with such Share Units will be forfeited by the Participant.

 

ARTICLE 5
DEFERRED SHARE UNITS

 

5.1 Nature of Deferred Share Units

 

A deferred share unit (“DSU”) is an Award in the nature of a deferral of payment for services rendered, or for future services to be rendered, and that, upon settlement, entitles the recipient Participant to receive cash or acquire Shares, as determined by the Corporation in its sole discretion, unless such DSU expires prior to being settled.

 

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5.2 Market Fluctuation

 

For greater certainty, no amount will be paid or benefit provided to, or in respect of, a Participant, or to any person who does not deal at arm’s length with a Participant for the purposes of the ITA, under the Plan or pursuant to any other arrangement, and no additional Awards will be granted to such Participant for the purpose of reducing the impact, in whole or in part, of any reduction in the fair market value of the shares of the Corporation or any corporation related thereto.

 

5.3 DSU Awards

 

(1)

Subject to the provisions of this Plan and the requirements of paragraph 6801(d) of the ITA Regulations and Code Section 409A, the Board shall, from time to time by resolution, in its sole discretion, (i) designate the Non-Employee Directors who may receive DSUs under the Plan, (ii) fix the number of DSUs, if any, to be granted to any Non-Employee Director and the date or dates on which such DSUs shall be granted, and (iii) determine any other terms and conditions applicable to the granted DSUs.

 

(2)

Subject to the vesting and other conditions and provisions in this Plan and in any DSU Agreement, each DSU awarded to a Participant shall entitle the Participant to receive on settlement a cash payment equal to the Market Value of a Share, or at the discretion of the Corporation, one Share or any combination of cash and Shares as the Corporation in its sole discretion may determine. For greater certainty, no Participant shall have any right to demand to be paid in, or receive, Shares in respect of any DSU, and, notwithstanding any discretion exercised by the Corporation to settle any DSU, or portion thereof, in the form of Shares, the Corporation reserves the right to change such form of payment at any time until payment is actually made.

 

5.4 DSU Agreements

 

(1)

The grant of a DSU by the Board shall be evidenced by a DSU Agreement in such form not inconsistent with the Plan as the Board may from time to time determine with reference to the form attached as Exhibit “D”. Such DSU Agreement shall be subject to all applicable terms and conditions of this Plan and may be subject to any other terms and conditions (including without limitation any recoupment, reimbursement or claw-back compensation policy as may be adopted by the Board from time to time) which are not inconsistent with this Plan and which the Board deems appropriate for inclusion in a DSU Agreement. The provisions of the various DSU Agreements issued under this Plan need not be identical.

 

(2)

Each DSU Agreement shall contain such terms that the Corporation considers necessary in order that the DSUs granted thereunder will comply with Code Section 409A and any provisions respecting restricted share units in the income tax (including, in respect of Canadian Participants, such terms and conditions so as to ensure that the DSUs shall not constitute a “salary deferral arrangement” as defined in subsection 248(1) of the ITA by reason of the exemption in paragraph 6801(d) of the ITA Regulations) or other laws in force in any country or jurisdiction of which the Participant may from time to time be a resident or citizen or provide services in or the rules of any regulatory body having jurisdiction over the Corporation.

 

5.5 Redemption/Settlement of DSUs

 

(1)

Except as otherwise provided in this Section 5.5 or Section 9.10 of this Plan, (i) DSUs of a Participant who is a U.S. Taxpayer shall be redeemed and settled by the Corporation as soon as reasonably practicable following the Participant’s Separation from Service, and (ii) DSUs of a Participant who is a Canadian Participant (or who is neither a U.S Taxpayer nor a Canadian Participant) shall be redeemed and settled by the Corporation as soon as reasonably practicable following the Participant’s Termination Date, but in any event not later than, and any payment (whether in cash or in Shares) in respect of the settlement of such DSUs shall be made no later than, December 15 of the first (1st) calendar year commencing immediately after the Participant’s Termination Date. Notwithstanding the foregoing, if a payment in settlement of DSUs of a Participant who is both a U.S. Taxpayer and a Canadian Participant:

 

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(a)

is required as a result of his or her Separation from Service in accordance with clause (i) above, but such payment would result in such DSUs failing to satisfy the requirements of paragraph 6801(d) of the ITA Regulations, then such Participant will automatically forfeit all right to such payment without compensation therefor, and no such payment will be made to such Participant; or

 

(b)

is required pursuant to clause (ii) above, but such payment would result in such DSUs failing to satisfy the requirements of Code Section 409A because the Participant has not experienced a Separation from Service, and if the Board determines that it is not practical to make such payment in some other manner or at some other time that satisfies the requirements of both Code Section 409A and paragraph 6801(d) of the ITA Regulations, then the Participant shall forfeit such DSUs without compensation therefor.

 

(2)

The Corporation will have, at its sole discretion, the ability to elect to settle all or any portion of the cash payment obligation arising in respect of the redemption and settlement of a Participant’s DSUs by the issuance of Shares.

 

(3)

For greater certainty, the Corporation shall not pay any cash or issue any Shares to a Participant in satisfaction of the redemption of a Participant’s DSUs prior to the Corporation being satisfied, in its sole discretion, that all applicable withholding taxes under Section 9.2 will be timely withheld, deducted, or received and remitted to the appropriate taxation authorities in respect of any particular Participant and any particular DSUs.

 

(4)

The redemption and settlement of a Participant’s DSUs shall occur on the applicable DSU Redemption Date as follows:

 

(a)

where the Corporation has elected to settle all or a portion of the Participant’s DSUs in Shares,

 

(i)

in the case of Shares issued in certificated form, delivery to the Participant (or to the legal representative of the Participant, if applicable) of a certificate in the name of the Participant (or the legal representative of the Participant, if applicable) representing the aggregate number of Shares that the Participant is entitled to receive, subject to satisfaction of any applicable withholding in accordance with Section 9.2; or

 

(ii)

in the case of Shares issued in uncertificated form, issuance to the Participant (or to the legal representative of the Participant, if applicable) of the aggregate number of Shares that the Participant is entitled to receive, subject to satisfaction of any applicable withholding tax under Section 9.2, which Shares shall be evidenced by a book position on the register of the shareholders of the Corporation to be maintained by the transfer agent and registrar of the Shares;

 

(b)

any cash payment to which the Participant is entitled (excluding, for the avoidance of doubt, any amount payable in respect of the Participant’s DSUs that the Corporation has elected to pay in Shares) shall, subject to satisfaction of any applicable withholding tax under Section 9.2, be paid to the Participant (or to the legal representative of the Participant, if applicable) by the Corporation in cash, by cheque or by such other payment method as the Corporation and Participant may agree; and

 

(c)

where the Corporation has elected to settle a portion, but not all, of the Participant’s DSUs in Shares, the Participant shall be deemed to have instructed the Corporation to withhold from the cash portion of the payment to which the Participant is otherwise entitled such amount as may be required in accordance with Section 9.2 and to remit such withheld amount to the applicable taxation authorities on account of any withholding obligations of the Corporation, and the Corporation shall deliver any remaining cash payable, after making any such remittance, to the Participant (or to the legal representative of the Participant, if applicable) as soon as reasonable practicable. In the event that the cash portion elected by the Corporation to settle the Participant’s Share Units is not sufficient to satisfy the withholding obligations of the Corporation pursuant to Section 9.2, any remaining amounts shall be satisfied by the Corporation by any other mechanism as may be required or determined by the Corporation as appropriate.

 

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5.6 Determination of Amounts

 

(1)

The cash payment obligation by the Corporation in respect of the redemption and settlement of a DSU pursuant to Section 5.5 shall be equal to the Market Value of a Share as of the applicable DSU Redemption Date. For the avoidance of doubt, the aggregate cash amount to be paid to a Participant (or the legal representative of the Participant, if applicable) in respect of a particular redemption of the Participant’s DSUs shall, subject to any adjustment in accordance with Section 8.1 and any withholding required pursuant to Section 9.2, be equal to the Market Value of a Share as of the DSU Redemption Date for such DSUs multiplied by the number of DSUs being redeemed (after deducting any such DSUs in respect of which the Corporation makes an election under Section 5.5(2) to settle such DSUs in Shares).

 

(2)

If the Corporation elects in accordance with Section 5.5(2) to settle all or a portion of the cash payment obligation arising in respect of the redemption of a Participant’s DSUs by the issuance of Shares, the Corporation shall, subject to any adjustments in accordance with Section 7.1 and any withholding required pursuant to Section 8.2, issue to the Participant, for each DSU which the Corporation elects to settle in Shares, one Share. Where, as a result of any adjustment in accordance with Section 7.1 and/or any withholding required pursuant to Section 8.2, the aggregate number of Shares to be received by a Participant upon an election by the Corporation to settle all or a portion of the Participant’s DSUs includes a fractional Share, the aggregate number of Shares to be received by the Participant shall be rounded down to the nearest whole number of Shares.

 

ARTICLE 6
SHARE BONUS AWARDS

 

6.1 Participants

 

The Board, on the recommendation of the Committee, shall have the right, subject to Section 6.2, to issue or reserve for issuance, in consideration for services performed for the Corporation or any Subsidiary, to any Eligible Participant any number of Shares as a discretionary bonus of Shares subject to such provisos and restrictions as the Board may determine.

 

6.2 Number of Shares

 

Shares reserved for issuance and issued as Share Awards shall be subject to the limitations set out in Section 2.4. In addition to the limitations set out in Section 2.4, the aggregate maximum number of shares that may be issued pursuant to Section 6.1 will be limited to 1,000,000 Shares. The Board, on the recommendation of the Committee, in its absolute discretion, shall have the right to reallocate any of the Shares reserved for issuance as Share Awards for future issuance pursuant to a grant of other types of Awards permitted under this Plan and, in the event that any Shares specifically reserved under this Article 6 are reallocated to other types of Awards, the aggregate maximum number of Shares reserved for grants as Share Awards will be reduced to that extent. In no event will the number of Shares allocated for issuance under this Article 6 exceed 1,000,000 Shares.

 

6.3 Necessary Approvals

 

The obligation of the Company to issue and deliver any Shares pursuant to a Share Award will be subject to all necessary approvals of any exchange or securities regulatory authority having jurisdiction over the Shares and Share Awards will be subject to satisfactory arrangements for the deduction and remittance of any required withholding tax.

 

ARTICLE 7
GENERAL CONDITIONS

 

7.1 General Conditions Applicable to Awards

 

Each Award shall be subject to the following conditions:

 

(1)

Vesting Period. Each Award granted hereunder shall vest in accordance with the terms of this Plan and the Grant Agreement entered into in respect of such Award. Except in the case of DSUs, the Board has the right, in its sole discretion, to waive any vesting conditions or accelerate the vesting of any Award, or to deem any Performance Criteria or other vesting conditions to be satisfied, notwithstanding the vesting schedule set forth for such Award.

 

(2)

Employment. Notwithstanding any express or implied term of this Plan to the contrary, the granting of an Award pursuant to the Plan shall in no way be construed as a guarantee by the Corporation or a Subsidiary to the Participant of employment or another service relationship with the Corporation or a Subsidiary. The granting of an Award to a Participant shall not impose upon the Corporation or a Subsidiary any obligation to retain the Participant in its employ or service in any capacity. Nothing contained in this Plan or in any Award granted under this Plan shall interfere in any way with the rights of the Corporation or any of its Subsidiaries in connection with the employment, retention or termination of any such Participant. The loss of existing or potential profit in Shares underlying Awards granted under this Plan shall not constitute an element of damages in the event of termination of a Participant’s employment or service in any office or otherwise.

 

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(3)

Grant of Awards. Eligibility to participate in this Plan does not confer upon any Eligible Participant any right to be granted Awards pursuant to this Plan. Granting Awards to any Eligible Participant does not confer upon any Eligible Participant the right to receive nor preclude such Eligible Participant from receiving any additional Awards at any time. The extent to which any Eligible Participant is entitled to be granted Awards pursuant to this Plan will be determined in the sole discretion of the Board. Participation in the Plan shall be entirely voluntary and any decision not to participate shall not affect an Eligible Participant’s relationship or employment with the Corporation or any Subsidiary.

 

(4)

Rights as a Shareholder. Neither the Participant nor such Participant’s personal representatives or legatees shall have any rights whatsoever as shareholder in respect of any Shares covered by such Participant’s Awards by reason of the grant of such Award until such Award has been duly exercised, as applicable, and settled and Shares have been issued in respect thereof. Without in any way limiting the generality of the foregoing and except as provided under this Plan, no adjustment shall be made for dividends or other rights for which the record date is prior to the date such Shares have been issued.

 

(5)

Conformity to Plan. In the event that an Award is granted or a Grant Agreement is executed which does not conform in all particulars with the provisions of the Plan, or purports to grant Awards on terms different from those set out in the Plan, the Award or the grant of such Award shall not be in any way void or invalidated, but the Award so granted will be adjusted to become, in all respects, in conformity with the Plan.

 

(6)

Non-Transferrable Awards. Except as specifically provided in a Grant Agreement approved by the Board, each Award granted under the Plan is personal to the Participant and shall not be assignable or transferable by the Participant, whether voluntarily or by operation of law, except by will or by the laws of succession of the domicile of the deceased Participant. No Award granted hereunder shall be pledged, hypothecated, charged, transferred, assigned or otherwise encumbered or disposed of on pain of nullity.

 

(7)

Participant’s Entitlement. Except as otherwise provided in this Plan (including, without limiting the generality of the foregoing, pursuant to Section 6.2), or unless the Board permits otherwise, upon any Subsidiary of the Corporation ceasing to be a Subsidiary of the Corporation, Awards previously granted under this Plan that, at the time of such change, are held by a Person who is a director, executive officer, employee or Consultant of such Subsidiary of the Corporation and not of the Corporation itself, whether or not then exercisable, shall automatically terminate on the date of such change.

 

7.2 General Conditions Applicable to Options

 

Subject to Subsection (7), each Option shall be subject to the following conditions:

 

(1)

Termination for Cause. Upon a Participant ceasing to be an Eligible Participant for Cause, any vested or unvested Option granted to such Participant shall terminate automatically and become void immediately. For the purposes of the Plan, the determination by the Corporation that the Participant was discharged for Cause shall be binding on the Participant. “Cause” shall include, among other things, gross misconduct, theft, fraud, breach of confidentiality or breach of the Corporation’s codes of conduct and any other reason determined by the Corporation to be cause for termination.

 

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(2)

Termination not for Cause. Upon a Participant ceasing to be an Eligible Participant as a result of his or her employment or service relationship with the Corporation or a Subsidiary being terminated without Cause (including, for the avoidance of doubt, as a result of any Subsidiary of the Corporation ceasing to be a Subsidiary of the Corporation, as contemplated by Section 7.1(7)), (i) each unvested Option granted to such Participant shall expire and become void immediately upon such termination, and (ii) each vested Option held by such Participant shall cease to be exercisable on the earlier of (A) ninety (90) days after the Participant’s Termination Date (or such later date as the Board may, in its sole discretion, determine) and (B) the expiry date of such Option as set forth in the applicable Grant Agreement, after which such vested Option will expire.

 

(3)

Resignation. Upon a Participant ceasing to be an Eligible Participant as a result of his or her resignation from the Corporation or a Subsidiary, (i) each unvested Option granted to such Participant shall terminate and become void immediately upon such resignation and (ii) each vested Option held by such Participant shall cease to be exercisable on the earlier of (A) ninety (90) days after the Participant’s Termination Date and (B) the expiry date of such Option as set forth in the applicable Grant Agreement, after which such vested Option will expire.

 

(4)

Permanent Disability/Retirement. Upon a Participant ceasing to be an Eligible Participant by reason of retirement or permanent disability, (i) each unvested Option granted to such Participant shall terminate and become void immediately, and (ii) each vested Option held by such Participant shall cease to be exercisable on the earlier of (A) ninety (90) days from the date of retirement or the date on which the Participant ceases his or her employment or service relationship with the Corporation or any Subsidiary by reason of permanent disability, and (B) the expiry date of such Option as set forth in the applicable Grant Agreement, after which such vested Option will expire.

 

(5)

Death. Upon a Participant ceasing to be an Eligible Participant by reason of death, (i) each unvested Option granted to such Participant shall terminate and become void immediately, and (ii) each vested Option held by such Participant at the time of death may be exercised by the legal representative of the Participant, provided that any such vested Option shall cease to be exercisable on the earlier of (A) the date that is six (6) months after the Participant’s death or prior to the expiration of the original term of the Options whichever occurs earlier.

 

(6)

Leave of Absence. Upon a Participant electing a voluntary leave of absence of more than twelve (12) months, including maternity and paternity leaves, the Board may determine, at its sole discretion but subject to applicable laws, that such Participant’s participation in the Plan shall be terminated, provided that all vested Options shall remain outstanding and in effect until the applicable exercise date, or an earlier date determined by the Board at its sole discretion.

 

(7)

Amalgamation Options. The above provisions of this Section 7.2, other than subsection (5) and this subsection (7), shall not apply to any Amalgamation Option, and each Amalgamation Option shall, subject to subsection (5), only expire on the expiry date of such Amalgamation Option determined in accordance with the Business Combination Agreement and the relevant Option Exchange Agreement.

 

7.3 General Conditions Applicable to Share Units

 

Each Share Unit shall be subject to the following conditions:

 

(1)

Termination for Cause and Resignation. Upon a Participant ceasing to be an Eligible Participant for Cause or as a result of his or her resignation from the Corporation or a Subsidiary, the Participant’s participation in the Plan shall be terminated immediately, all Share Units credited to such Participant’s Account that have not vested shall be forfeited and cancelled, and the Participant’s rights that relate to such Participant’s unvested Share Units shall be forfeited and cancelled on the Termination Date.

 

(2)

Death, Leave of Absence or Termination of Service. Except as otherwise determined by the Board from time to time, at its sole discretion, upon a Participant electing a voluntary leave of absence of more than twelve (12) months, including maternity and paternity leaves, or upon a Participant ceasing to be Eligible Participant as a result of (i) death, (ii) retirement, (iii) Termination of Service for reasons other than for Cause, (iv) his or her employment or service relationship with the Corporation or a Subsidiary being terminated by reason of injury or disability or (v) becoming eligible to receive long-term disability benefits, all unvested Share Units in the Participant’s Account as of such date relating to a Restriction Period in progress shall be forfeited and cancelled. Notwithstanding the foregoing, if the Board, in its sole discretion, instead accelerates the vesting or waives vesting conditions with respect to all or some portion of outstanding unvested Share Units, the date of such action is the Vesting Date.

 

(3)

General. For greater certainty, where (i) a Participant’s employment or service relationship with the Corporation or a Subsidiary is terminated pursuant to Section 7.3(1) or Section 7.3(2) hereof or (ii) a Participant elects for a voluntary leave of absence pursuant to Section 7.3(2) hereof following the satisfaction of all vesting conditions in respect of particular Share Units but before receipt of the corresponding distribution or payment in respect of such Share Units, the Participant shall remain entitled to such distribution or payment.

 

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ARTICLE 8
ADJUSTMENTS AND AMENDMENTS

 

8.1 Adjustment to Shares Subject to Outstanding Awards

 

At any time after the grant of an Award to a Participant and prior to the expiration of the term of such Award or the forfeiture or cancellation of such Award, in the event of (i) any subdivision of the Shares into a greater number of Shares, (ii) any consolidation of Shares into a lesser number of Shares, (iii) any reclassification, reorganization or other change affecting the Shares, (iv) any merger, amalgamation or consolidation of the Corporation with or into another corporation, or (v) any distribution to all holders of Shares or other securities in the capital of the Corporation, of cash, evidences of indebtedness or other assets of the Corporation (excluding an ordinary course dividend in cash or shares, but including for greater certainty shares or equity interests in a subsidiary or business unit of the Corporation or one of its subsidiaries or cash proceeds of the disposition of such a subsidiary or business unit) or any transaction or change having a similar effect, then the Board shall in its sole discretion, subject to the required approval of any Stock Exchange, determine the appropriate adjustments or substitutions to be made in such circumstances in order to maintain the economic rights of the Participant in respect of such Award in connection with such occurrence or change, including, without limitation:

 

(a)

adjustments to the exercise price of such Award without any change in the total price applicable to the unexercised portion of the Award;

 

(b)

adjustments to the number of Shares to which the Participant is entitled upon exercise of such Award; or

 

(c)

adjustments to the number of kind of Shares reserved for issuance pursuant to the Plan.

 

8.2 Change of Control

 

(1)

In the event of a potential Change of Control, the Board shall have the power, in its sole discretion, to accelerate the vesting of Options to assist the Participants to tender into a takeover bid or participating in any other transaction leading to a Change of Control. For greater certainty, in the event of a take-over bid or any other transaction leading to a Change of Control, the Board shall have the power, in its sole discretion, to (i) provide that any or all Options shall thereupon terminate, provided that any such outstanding Options that have vested shall remain exercisable until the consummation of such Change of Control, and (ii) permit Participants to conditionally exercise their vested Options immediately prior to the consummation of the take-over bid and the Shares issuable under such Options to be tendered to such bid, such conditional exercise to be conditional upon the take-up by such offeror of the Shares or other securities tendered to such take-over bid in accordance with the terms of such take-over bid (or the effectiveness of such other transaction leading to a Change of Control). If, however, the potential Change of Control referred to in this Section 8.2 is not completed within the time specified therein (as the same may be extended), then notwithstanding this Section 8.2 or the definition of “Change of Control”: (i) any conditional exercise of vested Options shall be deemed to be null, void and of no effect, and such conditionally exercised Options shall for all purposes be deemed not to have been exercised, (ii) Shares which were issued pursuant to the exercise of Options which vested pursuant to this Section 8.2 shall be returned by the Participant to the Corporation and reinstated as authorized but unissued Shares, and (iii) the original terms applicable to Options which vested pursuant to this Section 8.28.2 shall be reinstated. In the event of a Change in Control, the Board may exercise its discretion to accelerate the vesting of, or waive the Performance Criteria or other Vesting Conditions applicable to, outstanding Share Units, and the date of the such action shall be the Vesting Date of such Share Units.

 

(2)

If the Corporation completes a transaction constituting a Change of Control and within twelve (12) months following the Change of Control a Participant who was also an officer or employee of, or Consultant to, the Corporation prior to the Change of Control has their Employment Agreement or Consulting Agreement terminated, then: (i) all unvested Options granted to such Participant shall immediately vest and become exercisable, and remain open for exercise until the earlier of (A) their expiry date as set out in the applicable Grant Agreement, and (B) the date that is 90 days after such termination or dismissal; and (ii) all unvested Share Units shall become vested, and the date of such Participant’s Termination Date shall be deemed to be the Vesting Date.

 

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8.3 Amendment or Discontinuance of the Plan

 

(1)

The Board may suspend or terminate the Plan at any time, or from time to time amend or revise the terms of the Plan or any granted Award without the consent of the Participants, provided that such suspension, termination, amendment or revision shall:

 

(a)

not adversely alter or impair the rights of any Participant, without the consent of such Participant except as permitted by the provisions of the Plan;

 

(b)

be in compliance with applicable law (including Code Section 409A, to the extent it is applicable) and with the prior approval, if required, of the shareholders of the Corporation, Nasdaq, or any other regulatory body having authority over the Corporation; and

 

(c)

be subject to shareholder approval, where required by law or the requirements of Nasdaq provided that the Board may, from time to time, in its absolute discretion and without approval of the shareholders of the Corporation make the following amendments to this Plan:

 

(i)

any amendment to the vesting provision, if applicable, or assignability provisions of the Awards;

 

(ii)

any amendment to the expiration date of an Award that does not extend the terms of the Award past the original date of expiration of such Award;

 

(iii)

any amendment regarding the effect of termination of a Participant’s employment or engagement;

 

(iv)

any amendment which accelerates the date on which any Option may be exercised under the Plan;

 

(v)

any amendment necessary to comply with applicable law or the requirements of Nasdaq or any other regulatory body;

 

(vi)

any amendment of a “housekeeping” nature, including to clarify the meaning of an existing provision of the Plan, correct or supplement any provision of the Plan that is inconsistent with any other provision of the Plan, correct any grammatical or typographical errors or amend the definitions in the Plan;

 

(vii)

any amendment regarding the administration of the Plan;

 

(viii)

any amendment to add provisions permitting the grant of Awards settled otherwise than with Shares issued from treasury, or adopt a clawback provision applicable to equity compensation;

 

(ix)

any other amendment that does not require the approval of the shareholders of the Corporation under Section 8.3(2); and

 

(x)

to reduce the allocation of Shares to Share Awards under Article 6.

 

20

 

 

(2)

Notwithstanding Section 8.3(1), the Board shall be required to obtain shareholder approval to make the following amendments:

 

(a)

any increase to the maximum number of Shares issuable under the Plan, except in the event of an adjustment pursuant to Article 8;

 

(b)

except in the case of an adjustment pursuant to Article 8, any amendment which reduces the exercise price of an Option or any cancellation of an Option and replacement of such Option with an Option with a lower exercise price;

 

(c)

any amendment which extends the expiry date of any Award, or the Restriction Period of any Share Unit beyond the original expiry date or Restriction Period;

 

(d)

any amendment which increases the maximum number of Shares that may be (i) issuable to Insiders at any time; or (ii) issued to Insiders under the Plan and any other proposed or established Share Compensation Arrangement in a one-year period, except in case of an adjustment pursuant to Article 8;

 

(e)

any amendment to the number of Shares that may be made issuable pursuant to Awards made to employees and Non-Employee Directors within any one year period;

 

(f)

any amendment to the limits on Awards to Non-Employee Directors set out in Section 2.5(5); and

 

(g)

any amendment to the definition of an Eligible Participant under the Plan;

 

provided that Shares held directly or indirectly by Insiders benefiting from the amendments shall be excluded when obtaining such shareholder approval.

 

ARTICLE 9
MISCELLANEOUS

 

9.1 Use of an Administrative Agent

 

The Board may in its sole discretion appoint from time to time one or more entities to act as administrative agent to administer the Awards granted under the Plan and to hold and administer the assets that may be held in respect of Awards granted under the Plan, the whole in accordance with the terms and conditions determined by the Board in its sole discretion. The Corporation and the administrative agent will maintain records showing the number of Awards granted to each Participant under the Plan.

 

9.2 Tax Withholding

 

Notwithstanding any other provision of this Plan, all distributions, delivery of Shares or payments to a Participant (or to the legal representative of the Participant) under this Plan shall be made net of any applicable withholdings, including in respect of applicable withholding taxes required to be withheld at source and other source deductions, as the Corporation determines. If the event giving rise to the withholding obligation involves an issuance or delivery of Shares, then, the withholding may be satisfied in such manner as the Corporation determines, including (a) by the sale of a portion of such Shares by the Corporation, the Corporation’s transfer agent and registrar or any trustee appointed by the Corporation pursuant to Section 8.1, on behalf of and as agent for the Participant, as soon as permissible and practicable, with the proceeds of such sale being used to satisfy any withholding and remittance obligations of the Corporation (and any remaining proceeds, following such withholding and remittance, to be paid to the Participant), (b) by requiring the Participant, as a condition of receiving such Shares, to pay to the Corporation an amount in cash sufficient to satisfy such withholding, or (c) any other mechanism as may be required or determined by the Corporation as appropriate.

 

9.3 Clawback

 

Notwithstanding any other provisions in this Plan, any Award which is subject to recovery under any law, government regulation or stock exchange listing requirement, will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement (or any policy adopted by the Corporation pursuant to any such law, government regulation or stock exchange listing requirement) or any policy adopted by the Corporation. Without limiting the generality of the foregoing, the Board may provide in any case that outstanding Awards (whether or not vested or exercisable) and the proceeds from the exercise or disposition of Awards or Shares acquired under Awards will be subject to forfeiture and disgorgement to the Corporation, with interest and other related earnings, if the Participant to whom the Award was granted violates (i) a non-competition, non- solicitation, confidentiality or other restrictive covenant by which he or she is bound, or (ii) any policy adopted by the Corporation applicable to the Participant that provides for forfeiture or disgorgement with respect to incentive compensation that includes Awards under the Plan. In addition, the Board may require forfeiture and disgorgement to the Corporation of outstanding Awards and the proceeds from the exercise or disposition of Awards or Shares acquired under Awards, with interest and other related earnings, to the extent required by law or applicable stock exchange listing standards, including any related policy adopted by the Corporation. Each Participant, by accepting or being deemed to have accepted an Award under the Plan, agrees to cooperate fully with the Board, and to cause any and all permitted transferees of the Participant to cooperate fully with the Board, to effectuate any forfeiture or disgorgement required hereunder. Neither the Board nor the Corporation nor any other person, other than the Participant and his or her permitted transferees, if any, will be responsible for any adverse tax or other consequences to a Participant or his or her permitted transferees, if any, that may arise in connection with this Section 9.3.

 

21

 

 

9.4 Securities Law Compliance

 

(1)

The Plan (including any amendments to it), the terms of the grant of any Award under the Plan, the grant of any Award, the exercise of any Option, the delivery of any Shares upon exercise of any Option or pursuant to a Share Award, or the Corporation’s election to deliver Shares in settlement of any Share Units or DSUs, shall be subject to all applicable federal, provincial, state and foreign laws, rules and regulations, the rules and regulations of applicable Stock Exchanges and to such approvals by any regulatory or governmental agency as may, as determined by the Corporation, be required. The Corporation shall not be obliged by any provision of the Plan or the grant of any Award or exercise of any Option hereunder to issue, sell or deliver Shares in violation of such laws, rules and regulations or any condition of such approvals.

 

(2)

No Awards shall be granted, and no Shares shall be issued, sold or delivered hereunder, where such grant, issue, sale or delivery would require registration of the Plan or of the Shares under the securities laws of any jurisdiction or the filing of any prospectus for the qualification of same thereunder, and any purported grant of any Award or purported issue or sale of Shares hereunder in violation of this provision shall be void.

 

(3)

The Corporation shall have no obligation to issue any Shares pursuant to this Plan unless upon official notice of issuance such Shares shall have been duly listed with a Stock Exchange. Shares issued, sold or delivered to Participants under the Plan may be subject to limitations on sale or resale under applicable securities laws.

 

(4)

If Shares cannot be issued to a Participant upon the exercise of an Option due to legal or regulatory restrictions, the obligation of the Corporation to issue such Shares shall terminate and any funds paid to the Corporation in connection with the exercise of such Option will be returned to the applicable Participant as soon as practicable.

 

(5)

With respect to Awards granted in the United States or to U.S. Persons (as defined under Regulation S under the U.S. Securities Act) or at such time as the Corporation ceases to be a “foreign private issuer” (as defined under the U.S. Securities Act), unless the Shares which may be issued upon the exercise or settlement of such Awards are registered under the U.S. Securities Act, the Awards granted hereunder and any Shares that may be issuable upon the exercise or settlement of such Awards will be considered “restricted securities” (as such term is defined in Rule 144(a)(3) under the U.S. Securities Act). Accordingly, any such Awards or Shares issued prior to an effective registration statement filed with the United States Securities and Exchange Commission (the “SEC”) may not be transferred, sold, assigned, pledged, hypothecated or otherwise disposed by the Participant, directly or indirectly, without registration under the U.S. Securities Act and applicable state securities laws or unless in compliance with an available exemption therefrom. Certificate(s) representing the Awards and any Shares issued upon the exercise of settlement of such Awards prior to an effective registration statement filed with the SEC, and all certificate(s) issued in exchange therefor or in substitution thereof, will be endorsed with the following or a similar legend until such time as it is no longer required under the applicable requirements of the U.S. Securities Act:

 

“THE SECURITIES REPRESENTED HEREBY [for Awards add: AND ANY SECURITIES ISSUABLE UPON EXERCISE HEREOF] HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”), OR UNDER ANY OTHER APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED EXCEPT (A) PURSUANT TO A REGISTRATION STATEMENT EFFECTIVE UNDER THE U.S. SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, OR (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION THEREUNDER. HEDGING TRANSACTIONS INVOLVING SUCH SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT.”

 

22

 

 

9.5 Reorganization of the Corporation

 

The existence of any Awards shall not affect in any way the right or power of the Corporation or its shareholders to make or authorize any adjustment, reclassification, recapitalization, reorganization or other change in the Corporation’s capital structure or its business, or any amalgamation, combination, merger or consolidation involving the Corporation or to create or issue any bonds, debentures, shares or other securities of the Corporation or the rights and conditions attaching thereto or to affect the dissolution or legal representative of the Corporation 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 nature or otherwise.

 

9.6 Quotation of Shares

 

So long as the Shares are listed on one or more Stock Exchanges, the Corporation must apply to such Stock Exchange or Stock Exchanges for the listing or quotation, as applicable, of the Shares underlying the Awards granted under the Plan, however, the Corporation cannot guarantee that such Shares will be listed or quoted on any Stock Exchange.

 

9.7 Fractional Shares

 

If, upon the concurrent exercise of one or more Options by a Participant, the aggregate number of Shares that the Participant would otherwise be entitled to receive includes a fractional Share, then the aggregate number of Shares to be issued to the Participant upon such exercise shall be rounded down to the nearest lowest whole number of Shares, and no payment or other adjustment will be made with respect to the fractional interest so disregarded.

 

9.8 Governing Laws

 

The Plan and all matters to which reference is made herein shall be governed by and interpreted in accordance with the laws of the Province of British Columbia and the laws of Canada applicable therein.

 

9.9 Severability

 

The invalidity or unenforceability of any provision of the Plan shall not affect the validity or enforceability of any other provision and any invalid or unenforceable provision shall be severed from the Plan.

 

9.10 Code Section 409A

 

It is intended that any payments under the Plan to U.S. Taxpayers shall be exempt from or comply with Code Section 409A, and all provisions of the Plan shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes and penalties under Code Section 409A. Solely to the extent that Awards of a U.S. Taxpayer are determined to be subject to Code Section 409A, the following will apply with respect to the rights and benefits of U.S. Taxpayers under the Plan:

 

(1)

Except as permitted under Code Section 409A, any deferred compensation (within the meaning of Code Section 409A) payable to or for the benefit of a U.S. Taxpayer may not be reduced by, or offset against, any amount owing by the U.S. Taxpayer to the Corporation or any of its Affiliates.

 

(2)

If a U.S. Taxpayer becomes entitled to receive payment in respect of any DSUs, or any Share Units that are subject to Code Section 409A, as a result of his or her Separation from Service and the U.S. Taxpayer is a “specified employee” (within the meaning of Code Section 409A) at the time of his or her Separation from Service, and the Board makes a good faith determination that (i) all or a portion of the Share Units or DSUs constitute “deferred compensation” (within the meaning of Code Section 409A) and (ii) any such deferred compensation that would otherwise be payable during the six-month period following such Separation from Service is required to be delayed pursuant to the six-month delay rule set forth in Code Section 409A in order to avoid taxes or penalties under Code Section 409A, then payment of such “deferred compensation” shall not be made to the U.S. Taxpayer before the date which is six months after the date of his or her Separation from Service (and shall be paid in a single lump sum on the first day of the seventh month following the date of such Separation from Service) or, if earlier, the U.S. Taxpayer’s date of death.

 

23

 

 

(3)

A U.S. Taxpayer’s status as a “specified employee” (within the meaning of Code Section 409A) shall be determined by the Corporation as required by Code Section 409A on a basis consistent with Code Section 409A and such basis for determination will be consistently applied to all plans, programs, contracts, agreements, etc. maintained by the Corporation that are subject to Code Section 409A.

 

(4)

Although the Corporation intends that Share Units will be exempt from Code Section 409A or will comply with Code Section 409A, and that DSUs will comply with Code Section 409A, the Corporation makes no assurances that the Share Units will be exempt from Code Section 409A or will comply with it. Each U.S. Taxpayer, any beneficiary or the U.S. Taxpayer’s estate, as the case may be, is solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on or for the account of such U.S. Taxpayer in connection with this Plan (including any taxes and penalties under Code Section 409A), and neither the Corporation nor any Subsidiary shall have any obligation to indemnify or otherwise hold such U.S. Taxpayer or beneficiary or the U.S. Taxpayer’s estate harmless from any or all of such taxes or penalties.

 

(5)

In the event that the Board determines that any amounts payable hereunder will be taxable to a Participant under Code Section 409A prior to payment to such Participant of such amount, the Corporation may (i) adopt such amendments to the Plan and Share Units and appropriate policies and procedures, including amendments and policies with retroactive effect, that the Board determines necessary or appropriate to preserve the intended tax treatment of the benefits provided by the Plan and Share Units hereunder and/or (ii) take such other actions as the Board determines necessary or appropriate to avoid or limit the imposition of an additional tax under Code Section 409A.

 

(6)

In the event the Corporation amends, suspends or terminates the Plan or Share Units as permitted under the Plan, such amendment, suspension or termination will be undertaken in a manner that does not result in adverse tax consequences under Code Section 409A.

 

ARTICLE 10
BUSINESS COMBINATION

 

10.1 Business Combination Agreement

 

This Plan contemplates the provisions of the Business Combination Agreement. To the extent applicable, it is intended that the Outstanding Options will be exchanged for Amalgamation Options pursuant to the Business Combination Agreement and each relevant Option Exchange Agreement on a tax-deferred basis under subsection 7(1.4) of the ITA.

 

[Signature Page Follows]

 

24

 

 

IN WITNESS WHEREOF, this New Horizon Aircraft Ltd. 2024 Omnibus Share Incentive Plan has been duly approved and adopted by the Corporation and the shareholders as of the dates set forth below.

 

Adopted by unanimous written consent of the Board: January 4, 2024

Shareholder Approved: January 4, 2024

 

NEW HORIZON AIRCRAFT LTD.
By	/s/ E. Brandon Robinson
Title:	Chief Executive Officer
Date:	January 12, 2024

 

 

 

EXHIBIT “A”
TO OMNIBUS SHARE INCENTIVE PLAN OF NEW HORIZON AIRCRAFT LTD.

 

FORM OF OPTION AGREEMENT

 

This Option Agreement is entered into between New Horizon Aircraft Ltd. (the “Company”) and the Participant named below, pursuant to the Company’s Omnibus Share Incentive Plan (the “Plan”), a copy of which is attached hereto, and confirms that on:

 

1.

(the “Grant Date”),

 

2.

(the “Participant”)

 

3.

was granted     options (“Options”) to purchase common shares of the Company (each, a “Share”), in accordance with the terms of the Plan, which Options will bear the following terms:

 

(a)

Exercise Price and Expiry. Subject to the vesting conditions specified below, the Options will be exercisable by the Participant at a price of CAD$[•] per Share (the “Option Price”) at any time prior to expiry on [•] (the “Expiration Date”).

 

(b)

Vesting; Time of Exercise. Subject to the terms of the Plan, the Options shall vest and become exercisable as follows:

 

	Number of Options		Vested On

 

If the aggregate number of Shares vesting in a tranche set forth above includes a fractional Share, aggregate number of Shares will be rounded down to the nearest whole number of Shares. Notwithstanding anything to the contrary herein, the Options shall expire on the Expiration Date set forth above and must be exercised, if at all, on or before the Expiration Date. Options are denominated in Canadian dollars (CAD$).

 

4.

The Options shall be exercisable only by delivery to the Company of a duly completed and executed notice in the form attached to this Option Agreement (the “Exercise Notice”), together with (i) payment of the Option Price for each Share covered by the Exercise Notice, and (ii) payment of any withholding taxes as required in accordance with the terms of the Exercise Notice. Any such payment to the Company shall be made by certified cheque or wire transfer in readily available funds.

 

5.

Subject to the terms of the Plan, the Options specified in an Exercise Notice shall be deemed to be exercised upon receipt by the Company of such written Exercise Notice, together with the payment of all amounts required to be paid by the Participant to the Company pursuant to paragraph 4 of this Option Agreement.

 

6.

To the extent the Participant is entitled to a Cashless Exercise Right in respect of all or any portion of the Options granted pursuant to this Option Agreement, such Cashless Exercise Right shall be exercisable only by delivery to the Company of a duly completed and executed Exercise Notice specifying the Participant’s intention to surrender such Options to the Company pursuant to such Cashless Exercise Right, together with payment of any withholding taxes as required by the Company. Any such payment to the Company shall be made by certified cheque or wire transfer in readily available funds.

 

 

 

7.

The Participant hereby represents and warrants (on the date of this Option Agreement and upon each exercise or surrender of Options) that:

 

(a)

the Participant has not received any offering memorandum, or any other documents (other than annual financial statements, interim financial statements or any other document the content of which is prescribed by statute or regulation, other than an offering memorandum) describing the business and affairs of the Company that has been prepared for delivery to, and review by, a prospective purchaser in order to assist it in making an investment decision in respect of the Shares;

 

(b)

the Participant is acquiring the Shares without the requirement for the delivery of a prospectus or offering memorandum, pursuant to an exemption under applicable securities legislation and, as a consequence, is restricted from relying upon the civil remedies otherwise available under applicable securities legislation and may not receive information that would otherwise be required to be provided to it;

 

(c)

the Participant has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of an investment in the Company and does not desire to utilize a registrant in connection with evaluating such merits and risks;

 

(d)

the Participant acknowledges that an investment in the Shares involves a high degree of risk, and represents that it understands the economic risks of such investment and is able to bear the economic risks of this investment;

 

(e)

the Participant acknowledges that he or she is responsible for paying any applicable taxes and withholding taxes arising from the exercise (or termination upon exercise of the Cashless Exercise Right) of any Options, as provided in Section 8.2 of the Plan;

 

(f)

this Option Agreement constitutes a legal, valid and binding obligation of the Participant, enforceable against him in accordance with its terms; and

 

(g)

the execution and delivery of this Option Agreement and the performance of the obligations of the Participant hereunder will not result in the creation or imposition of any lien, charge or encumbrance upon the Shares.

 

The Participant acknowledges that the Company is relying upon such representations and warranties in granting the Options and issuing any Shares upon exercise thereof.

 

8.

The Participant acknowledges and represents that: (a) the Participant fully understands and agrees to be bound by the terms and provisions of this Option Agreement and the Plan; (b) agrees and acknowledges that the Participant has received a copy of the Plan and that the terms of the Plan form part of this Option Agreement, and (c) hereby accepts these Options subject to all of the terms and provisions hereof and of the Plan. To the extent of any inconsistency between the terms of this Option Agreement and those of the Plan, the terms of the Plan shall govern. The Participant has reviewed this Option Agreement and the Plan, and has had an opportunity to obtain the advice of counsel prior to executing this Option Agreement.

 

9.

This Option Agreement and the terms of the Plan incorporated herein (with the Exercise Notice, if the Option is exercised or surrendered to the Company pursuant to a Cashless Exercise Right) constitutes the entire agreement of the Company and the Participant (collectively the “Parties”) with respect to the Options and supersedes in its entirety all prior undertakings and agreements of the Parties with respect to the subject matter hereof, and may not be modified adversely to the Participant’s interest except by means of a writing signed by the Parties. This Option Agreement and the terms of the Plan incorporated herein are to be construed in accordance with and governed by the laws of the Province of British Columbia. Should any provision of this Option Agreement or the Plan be determined by a court of law to be illegal or unenforceable, such provision shall be enforced to the fullest extent allowed by law and the other provisions shall nevertheless remain effective and shall remain enforceable.

 

10.

In accordance with Section 8.4(5) of the Plan, if the Options and the underlying Shares are not registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any state securities laws, the Options may not be exercised in the “United States” or by “U.S. Persons” (each as defined in Rule 902 of Regulation S under the U.S. Securities Act) unless an exemption from the registration requirements of the U.S. Securities Act is available. Any Shares issued to Option holders in the United States that have not been registered under the U.S. Securities Act will be deemed “restricted securities” (as defined in Rule 144(a)(3) of the U.S. Securities Act) and bear a restrictive legend to such effect.

 

All capitalized terms used but not otherwise defined herein shall have the meaning ascribed to them in the Plan.

 

[Remainder of page left intentionally blank]

 

 

 

IN WITNESS WHEREOF the Company and the Participant have executed this Option Agreement as of ________ , 20__.

 

	NEW HORIZON AIRCRAFT LTD.
	Per:
		Authorized Signatory

 

EXECUTED by [•] in the presence of:		)
		)
		)
Signature		)
		)
		)
Print Name		)		[NAME OF PARTICIPANT]
		)
		)
Address		)
		)
		)
		)
Occupation		)

 

Note to Plan Participants

 

This Agreement must be signed where indicated and returned to the Company within 30 days of receipt. Failure to acknowledge acceptance of this grant will result in the cancellation of your Options.

 

 

 

EXHIBIT “B”
TO OMNIBUS SHARE INCENTIVE PLAN OF NEW HORIZON AIRCRAFT LTD.

 

FORM OF OPTION EXERCISE NOTICE

 

TO:  New Horizon Aircraft Ltd.

 

This Exercise Notice is made in reference to stock options (“Options”) granted under the Omnibus Share Incentive Plan (the “Plan”) of New Horizon Aircraft Ltd. (the “Company”).

 

The undersigned (the “Participant”) holds options (“Options”) under the Plan to purchase [•] common shares of the Company (each, a “Share”) at a price per Share of CAD$[•] (the “Option Price”) pursuant to the terms and conditions set out in that certain option agreement between the Participant and the Company dated [•] (the “Option Agreement”). The Participant confirms the representations and warranties contained in the Option Agreement.

 

The Participant hereby:

 

☐

irrevocably gives notice of the exercise of ___ Options held by the Participant pursuant to the Option Agreement at the Option Price, for an aggregate exercise price of CAD$________ (the “Aggregate Option Price”), on the terms specified in the Option Agreement and encloses herewith a certified cheque payable to the Company or evidence of wire transfer to the Company in full satisfaction of the Aggregate Option Price.   The Participant acknowledges and agrees that: (i) in addition to the Aggregate Option Price, the Company may require the Participant to also provide the Company with a certified cheque or evidence of wire transfer equal to the amount of any applicable withholding taxes associated with the exercise of such Options, before the Company will issue any Shares to the Participant in settlement of the Options; and (ii) the Company shall have the sole discretion to determine the amount of any applicable withholding taxes associated with the exercise of such Options, and shall inform the Participant of such amount as soon as reasonably practicable upon receipt of this completed Exercise Notice.

 

- or -

☐

irrevocably gives notice of the Participant’s intention to surrender to the Company ___ Options held by the Participant pursuant to the Option Agreement in accordance with the Cashless Exercise Right (as defined in the Plan) granted in respect of such Options, and agrees to receive, in consideration for the surrender of such Options to the Company, that number of Shares equal to the following:   ((A - B) x C) - D A   where: A is the Market Value (as defined in the Plan) of a Share on determined as of the date this Exercise Notice is received by the Company; B is the Option Price; C is the number of Options in respect of which such Cashless Exercise Right is being exercised; and D is the amount of any applicable withholding taxes associated with the exercise of such Options, as determined by the Company in its sole discretion.   For greater certainty, where a Participant elects to surrender Options to the Company pursuant to his/her Cashless Exercise Right, the amount of any applicable withholding taxes determined pursuant to the above formula will be deemed to have been paid in cash by the Company to the Participant as partial consideration for the surrender and termination of the Options, which cash will be withheld by the Company and remitted to the applicable taxation authorities as may be required.

 

Registration:

 

The Shares issued pursuant to this Exercise Notice are to be registered in the name of the undersigned and are to be delivered, as directed below:

 

	Name:
	Address:

 

Date		Name of Participant
Date		Signature of Participant

 

 

 

EXHIBIT “C”
TO OMNIBUS SHARE INCENTIVE PLAN OF NEW HORIZON AIRCRAFT LTD.

 

FORM OF SHARE UNIT AGREEMENT

 

This Share Unit Agreement is entered into between New Horizon Aircraft Ltd. (the “Company”) and the Participant named below, pursuant to the Company’s Omnibus Share Incentive Plan (the “Plan”), a copy of which is attached hereto, and confirms that on:

 

1.  _________________ (the “Grant Date”),

 

2.  _________________ (the “Participant”)

 

3. was granted ________________________ Share Units (“Share Units”), in accordance with the terms of the Plan, which Share Units will vest as follows:

 

	Number of Share Units		Time Vesting Conditions		Performance Vesting Conditions

 

all on the terms and subject to the conditions set out in the Plan.

 

4.

Subject to the terms and conditions of the Plan, including provisions governing the vesting of Awards while the Company is in a Blackout Period, the performance period for any performance-based Share Units granted hereunder commences on the Grant Date and ends at the close of business on [•] (the “Performance Period”), while the restriction period for any time-based Share Units granted hereunder commences on the Grant Date and ends at the close of business on [•] (the “Restriction Period”). Subject to the terms and conditions of the Plan, Shares Units will be redeemed and settled fifteen days after the applicable Vesting Date, all in accordance with the terms of the Plan.

 

5.

By signing this Share Unit Agreement, the Participant:

 

(a)

acknowledges that he or she has read and understands the Plan and agrees with the terms and conditions thereof, which terms and conditions shall be deemed to be incorporated into and form part of this Share Unit Agreement (subject to any specific variations contained in this Share Unit Agreement);

 

(b)

acknowledges that, subject to the vesting and other conditions and provisions in this Share Unit Agreement, each Share Unit awarded to the Participant shall entitle the Participant to receive on settlement an aggregate cash payment equal to Market Value of a Share or, at the election of the Company and in its sole discretion, one Share of the Company. For greater certainty, no Participant shall have any right to demand to be paid in, or receive, Shares in respect of any Share Unit, and, notwithstanding any discretion exercised by the Company to settle any Share Unit, or portion thereof, in the form of Shares, the Company reserves the right to change such form of payment at any time until payment is actually made;

 

(c)

acknowledges that he or she is responsible for paying any applicable taxes and withholding taxes arising from the vesting and redemption of any Share Unit, as determined by the Company in its sole discretion;

 

(d)

agrees that a Share Unit does not carry any voting rights;

 

(e)

acknowledges that the value of the Share Units granted herein is denominated in Canadian dollars (CAD$), and such value is not guaranteed; and

 

 

 

(f)

recognizes that, at the sole discretion of the Company, the Plan can be administered by a designee of the Company by virtue of Section 2.2 of the Plan and any communication from or to the designee shall be deemed to be from or to the Company.

 

6.

The Participant acknowledges and represents that: (a) the Participant fully understands and agrees to be bound by the terms and provisions of this Share Unit Agreement and the Plan; (b) agrees and acknowledges that the Participant has received a copy of the Plan and that the terms of the Plan form part of this Share Unit Agreement, and (c) hereby accepts these Share Units subject to all of the terms and provisions hereof and of the Plan. To the extent of any inconsistency between the terms of this Share Unit Agreement and those of the Plan, the terms of the Plan shall govern. The Participant has reviewed this Share Unit Agreement and the Plan, and has had an opportunity to obtain the advice of counsel prior to executing this Share Unit Agreement.

 

7.

This Share Unit Agreement and the terms of the Plan incorporated herein constitutes the entire agreement of the Company and the Participant (collectively the “Parties”) with respect to the Share Units and supersedes in its entirety all prior undertakings and agreements of the Parties with respect to the subject matter hereof, and may not be modified adversely to the Participant’s interest except by means of a writing signed by the Parties. This Share Unit Agreement and the terms of the Plan incorporated herein are to be construed in accordance with and governed by the laws of the Province of Ontario. Should any provision of this Share Unit Agreement or the Plan be determined by a court of law to be illegal or unenforceable, such provision shall be enforced to the fullest extent allowed by law and the other provisions shall nevertheless remain effective and shall remain enforceable.

 

8.

In accordance with Section 8.4(5) of the Plan, unless the Shares that may be issued upon the settlement of vested Share Units granted pursuant to this Share Unit Agreement are registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), and any applicable state securities laws, such Shares may not be issued in the “United States” or to “U.S. Persons” (each as defined in Rule 902 of Regulation S under the U.S. Securities Act) unless an exemption from the registration requirements of the U.S. Securities Act is available. Any Shares issued to a Participant in the United States that have not been registered under the U.S. Securities Act will be deemed “restricted securities” (as defined in Rule 144(a)(3) of the U.S. Securities Act) and bear a restrictive legend to such effect.

 

All capitalized terms used but not otherwise defined herein shall have the meaning ascribed to them in the Plan.

 

[Remainder of page left intentionally blank]

 

 

 

IN WITNESS WHEREOF the Company and the Participant have executed this Share Unit Agreement as of________, 20__.

 

	NEW HORIZON AIRCRAFT LTD.
	Per:
		Authorized Signatory

 

EXECUTED by [•] in the presence of:		)
		)
		)
Signature		)
		)
		)
Print Name		)	[NAME OF PARTICIPANT]
		)
		)
Address		)
		)
		)
		)
Occupation		)

 

Note to Plan Participants

 

This Agreement must be signed where indicated and returned to the Company within 30 days of receipt. Failure to acknowledge acceptance of this grant will result in the cancellation of your Share Units.

 

 

 

EXHIBIT “D”
TO OMNIBUS SHARE INCENTIVE PLAN OF NEW HORIZON AIRCRAFT LTD.

 

FORM OF DSU AGREEMENT

 

This DSU Agreement is entered into between New Horizon Aircraft Ltd. (the “Company”) and the Participant named below, pursuant to the Company’s Omnibus Share Incentive Plan (the “Plan”), a copy of which is attached hereto, and confirms that on:

 

1.  _________________ (the “Grant Date”),

 

2.  _________________ (the “Participant”)

 

3.  was granted ___________________ deferred share units (“DSUs”), in accordance with the terms of the Plan.

 

4.  The DSUs subject to this DSU Agreement [are fully vested] [will become vested as follows: _________________].

 

5.

Subject to the terms of the Plan, the settlement of the DSUs, in cash (or, at the election of the Company, in Shares or a combination of cash and Shares), shall be payable to you, net of any applicable withholding taxes in accordance with the Plan, not later than December 15 of the first (1st) calendar year commencing immediately after the Termination Date, provided that if you are a U.S. Taxpayer, the settlement will be as soon as administratively feasible following your Separation from Service. If the Participant is both a U.S. Taxpayer and a Canadian Participant, the settlement of the DSUs will be subject to the provisions of Section 5.5(1) of the Plan.

 

6.

By signing this agreement, the Participant:

 

(a)

acknowledges that he or she has read and understands the Plan and agrees with the terms and conditions thereof, which terms and conditions shall be deemed to be incorporated into and form part of this DSU Agreement (subject to any specific variations contained in this DSU Agreement);

 

(b)

acknowledges that he or she is responsible for paying any applicable taxes and withholding taxes arising from the vesting and redemption of any DSU, as determined by the Company in its sole discretion;

 

(c)

agrees that a DSU does not carry any voting rights;

 

(d)

acknowledges that the value of the DSUs granted herein is denominated in Canadian dollars (CAD$), and such value is not guaranteed; and

 

(e)

recognizes that, at the sole discretion of the Company, the Plan can be administered by a designee of the Company by virtue of Section 2.2 of the Plan and any communication from or to the designee shall be deemed to be from or to the Company.

 

7.

The Participant acknowledges and represents that: (a) the Participant fully understands and agrees to be bound by the terms and provisions of this DSU Agreement and the Plan; (b) agrees and acknowledges that the Participant has received a copy of the Plan and that the terms of the Plan form part of this DSU Agreement, and (c) hereby accepts these DSUs subject to all of the terms and provisions hereof and of the Plan. To the extent of any inconsistency between the terms of this DSU Agreement and those of the Plan, the terms of the Plan shall govern. The Participant has reviewed this DSU Agreement and the Plan, and has had an opportunity to obtain the advice of counsel prior to executing this DSU Agreement.

 

8.

This DSU Agreement and the terms of the Plan incorporated herein constitutes the entire agreement of the Company and the Participant (collectively the “Parties”) with respect to the DSUs and supersedes in its entirety all prior undertakings and agreements of the Parties with respect to the subject matter hereof, and may not be modified adversely to the Participant’s interest except by means of a writing signed by the Parties. This DSU Agreement and the terms of the Plan incorporated herein are to be construed in accordance with and governed by the laws of the Province of Ontario. Should any provision of this DSU Agreement or the Plan be determined by a court of law to be illegal or unenforceable, such provision shall be enforced to the fullest extent allowed by law and the other provisions shall nevertheless remain effective and shall remain enforceable.

 

9.

In accordance with Section 8.4(5) of the Plan, unless the Shares that may be issued upon the settlement of the DSU are registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), and any applicable state securities laws, such Shares may not be issued in the “United States” or to “U.S. Persons” (each as defined in Rule 902 of Regulation S under the U.S. Securities Act) unless an exemption from the registration requirements of the U.S. Securities Act is available. Any Shares issued to a Participant in the United States that have not been registered under the U.S. Securities Act will be deemed “restricted securities” (as defined in Rule 144(a)(3) of the U.S. Securities Act) and bear a restrictive legend to such effect.

 

All capitalized terms used but not otherwise defined herein shall have the meaning ascribed to them in the Plan.

 

[Remainder of page left intentionally blank]

 

 

 

 

IN WITNESS WHEREOF the Company and the Participant have executed this DSU Agreement as of _______, 20__.

 

	NEW HORIZON AIRCRAFT LTD.
	Per:
		Authorized Signatory

 

EXECUTED by [•] in the presence of:		)
		)
		)
Signature		)
		)
		)
Print Name		)		[NAME OF PARTICIPANT]
		)
		)
Address		)
		)
		)
		)
Occupation		)

 

Note to Plan Participants

 

This Agreement must be signed where indicated and returned to the Company within 30 days of receipt. Failure to acknowledge acceptance of this grant will result in the cancellation of your DSUs.

 

 

 

 

  

Exhibit 10.3

 

EXECUTION VERSION

 

REGISTRATION RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of January 12, 2024 by and among (i) Robinson Aircraft Ltd. d/b/a Horizon Aircraft., a British Columbia company (“Horizon”), (ii) Pono Capital Three, Inc., a British Columbia company (the “Company”), (iii) Mehana Capital LLC, a Delaware limited liability company (the “Sponsor”), (iv) the executive officers and directors of the Company as of immediately prior to the consummation of the transactions contemplated by the BCA (as defined below) (with such executive officers and directors, together with Sponsor, the “Sponsor Parties”) and (v) the undersigned parties listed under Investor on the signature page hereto (each such party, together with the Sponsor Parties and any person or entity who hereafter becomes a party to this Agreement pursuant to Section 6.2 of this Agreement, an “Investor” and collectively the “Investors”).

 

WHEREAS, contemporaneously with the execution of this Agreement, the Company, Horizon, Pono Three Merger Acquisitions Corp., a British Columbia company and a wholly-owned subsidiary of the Company (“Merger Sub”), and certain other persons are entering into that certain Business Combination Agreement (the “BCA”), a copy of which has been made available to Investor and pursuant to which, subject to the terms and conditions thereof, the Company will redomesticate and continue as a British Columbia company, and Merger Sub will amalgamate with Horizon, with the amalgamated company a wholly-owned subsidiary of the Company (the “Amalgamation”), and with Horizon’s shareholders receiving shares of the post-redomesticated Company’s common stock (the “Shares”);

 

WHEREAS, in connection with the Closing, the Investors will enter into a lock-up agreement with the Company and Sponsor (as amended from time to time in accordance with the terms thereof, a “Lock-Up Agreement”), pursuant to which the Investors will agree not to transfer the Shares received as Exchange Consideration for a certain period of time after the Closing as stated in the Lock-Up Agreement; and

 

WHEREAS, in connection with the Placement Unit Purchase Agreement between the Company and Sponsor, dated as of February 9, 2023, Sponsor acquired 565,375 private placement units of the Company, consisting of 565,375 Company Common Shares (as such term is defined herein) and 565,375 redeemable private placement warrants, each exercisable for one Company Common Share for $11.50 per share (the “SPAC Warrants”);

 

WHEREAS, the Sponsor Parties are acquiring Company Common Shares (including the Company Common Shares issued or issuable upon the exercise of any other equity security issued to the Sponsor Parties pursuant to the terms of the BCA and upon conversion of the Company’s Class B ordinary shares) on or about the date hereof pursuant to the terms of the BCA;

 

WHEREAS, in connection with the transactions contemplated by the BCA, the Company and the Investors desire to enter into this Agreement, pursuant to which the Company shall grant the Investors certain registration rights with respect to certain securities of the Company, as set forth in this Agreement.

 

 

 

 

NOW, THEREFORE, in consideration of the representations, covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

 

1. DEFINITIONS. Any capitalized term used but not defined in this Agreement will have the meaning ascribed to such term in the BCA. The following capitalized terms used herein have the following meanings:

 

“Agreement” means this Agreement, as amended, restated, supplemented, or otherwise modified from time to time.

 

“Closing” is defined in the recitals to this Agreement.

 

“Company” is defined in the recitals to this Agreement and shall include the Company’s successors by merger, acquisition, continuance, reorganization or otherwise.

 

“Company Common Shares” means Class A ordinary shares, par value US$0.0001 per share, of the Company, along with any equity securities paid as dividends or distributions after the Closing with respect to such shares or into which such shares are exchanged or converted after the Closing.

 

“Demand Registration” is defined in Section 2.1.1.

 

“Demanding Holder” is defined in Section 2.1.1.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder, all as the same shall be in effect at the time.

 

“Founder Registration Rights Agreement” means that certain Registration Rights Agreement, dated as of February 9, 2023, by and among the Company, Sponsor and certain holders listed thereto.

 

“Indemnified Party” is defined in Section 4.3.

 

“Indemnifying Party” is defined in Section 4.3.

 

“Investors” is defined in the preamble to this Agreement, and includes any transferee of the Registrable Securities (so long as they remain Registrable Securities) of an Investor permitted under this Agreement and the Lock-Up Agreement.

 

“Investor Indemnified Party” is defined in Section 4.1.

 

“Lock-Up Agreement” is defined in the recitals to this Agreement.

 

“Maximum Number of Securities” is defined in Section 2.1.4.

 

“Merger Agreement” is defined in the recitals to this Agreement.

 

“Piggy-Back Registration” is defined in Section 2.2.1.

 

“Pro Rata” is defined in Section 2.1.4.

 

“Proceeding” is defined in Section 6.9.

 

“Register,” “Registered” and “Registration” mean a registration or offering effected by preparing and filing a registration statement 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.

 

2

 

 

“Registrable Securities” means (a) any outstanding Company Common Shares or other equity securities of the Company held by an Investor immediately following the Closing Date, (b) any Company Common Shares issued to an Investor pursuant to the terms of the BCA (including the Company Common Shares issued or issuable upon the exercise of any other equity security issued to an Investor pursuant to the terms of the BCA), (c) the SPAC Warrants (including any Company Common Shares issued or issuable upon the exercise of any SPAC Warrants) and (d) any other equity security of the Company issued or issuable with respect to the securities referred to in the foregoing clauses (a) through (c) by way of a share dividend or share split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when: (a) a Registration Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been sold, transferred, disposed of or exchanged in accordance with such Registration Statement; (b) such securities shall have been otherwise transferred, new certificates for them not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of them shall not require registration under the Securities Act; (c) such securities shall have ceased to be outstanding; (d) such securities are freely saleable under Rule 144 without volume limitations; or (e) such securities have been sold to, or through, a broker, dealer or underwriter in a public distribution or other public securities transaction. Notwithstanding anything to the contrary contained herein, securities shall only be “Registrable Securities” under this Agreement if they are held by an Investor or a transferee of an Investor permitted under this Agreement and the Lock-Up Agreement.

 

“Registration Statement” shall mean any registration statement that covers the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus included in such registration statement, amendments (including post-effective amendments) and supplements to such registration statement, and all exhibits to and all material incorporated by reference in such registration statement.

 

“Rule 144” means Rule 144 promulgated under the Securities Act or any successor rule thereto.

 

“SEC” means the United States Securities and Exchange Commission or any successor thereto.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder, all as the same shall be in effect at the time.

 

“Short Form Registration” is defined in Section 2.3.

 

“Specified Courts” is defined in Section 6.9.

 

“Underwriter” means a securities dealer who purchases any Registrable Securities as principal in an underwritten offering and not as part of such dealer’s market-making activities.

 

2. REGISTRATION RIGHTS.

 

2.1 Demand Registration.

 

2.1.1 Request for Registration. Subject to this Section 2.1.1 and Section 2.4, at any time and from time to time after the Closing, Sponsor or Investors holding a majority-in-interest of the Registrable Securities then issued and outstanding may make a written demand for registration under the Securities Act of all or part of their Registrable Securities (a “Demand Registration”). Any demand for a Demand Registration shall specify the number of Registrable Securities proposed to be sold and the intended method(s) of distribution thereof. Within thirty (30) days following receipt of any request for a Demand Registration, the Company will notify all other Investors holding Registrable Securities of the demand, and each Investor holding Registrable Securities who wishes to include all or a portion of such Investor’s Registrable Securities in the Demand Registration (each such Investor including shares of Registrable Securities in such registration, a “Demanding Holder”) shall so notify the Company within fifteen (15) days after the receipt by the Investor of the notice from the Company. Upon any such request, the Demanding Holders shall be entitled to have their Registrable Securities included in the Demand Registration, subject to Section 2.1.4 and the provisos set forth in Section 3.1.1. The Company shall not be obligated to effect more than an aggregate of three (3) Demand Registrations under this Section 2.1.1 in respect of all Registrable Securities.

 

3

 

 

2.1.2 Effective Registration. A Registration will not count as a Demand Registration until the Registration Statement filed with the SEC with respect to such Demand Registration has been declared effective and the Company has complied in all material respects with its obligations under this Agreement with respect thereto; provided, however, that if, after such Registration Statement has been declared effective, the offering of Registrable Securities pursuant to a Demand Registration is interfered with by any stop order or injunction of the SEC or any other governmental agency or court, the Registration Statement with respect to such Demand Registration will be deemed not to have been declared effective, unless and until, (i) such stop order or injunction is removed, rescinded or otherwise terminated, and (ii) a majority-in-interest of the Demanding Holders thereafter elect to continue with such Registration and accordingly notify the Company in writing, but in no event later than five (5) days, of such election; provided, further, that the Company shall not be obligated to file a second Registration Statement until a Registration Statement that has been filed is counted as a Demand Registration or is terminated.

 

2.1.3 Underwritten Offering. If a majority-in-interest of the Demanding Holders so elect and advise the Company as part of their written demand for a Demand Registration, the offering of such Registrable Securities pursuant to such Demand Registration shall be in the form of an underwritten offering. In such event, the right of any Demanding Holder to include its Registrable Securities in such registration shall be conditioned upon such Demanding Holder’s participation in such underwritten offering and the inclusion of such Demanding Holder’s Registrable Securities in the underwritten offering to the extent provided herein. All Demanding Holders proposing to distribute their Registrable Securities through such underwritten offering shall enter into an underwriting agreement in customary form with the Underwriter or Underwriters selected for such underwritten offering by a majority-in-interest of the Investors initiating the Demand Registration and reasonably acceptable to the Company.

 

2.1.4 Reduction of Offering. If the managing Underwriter or Underwriters for a Demand Registration that is to be an underwritten offering, in good faith, advises the Company and the Demanding Holders in writing that the dollar amount or number of Registrable Securities which the Demanding Holders desire to sell, taken together with all other Company Common Shares or other securities which the Company desires to sell and the Company Common Shares or other securities, if any, as to which Registration by the Company has been requested pursuant to written contractual piggy-back registration rights held by other security holders of the Company who desire to sell, exceeds the maximum dollar amount or maximum number of shares that can be sold in such offering without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering (such maximum dollar amount or maximum number of securities, as applicable, the “Maximum Number of Securities”), then the Company shall include in such Registration: (i) first, the Registrable Securities as to which Demand Registration has been requested by the Demanding Holders and the Founder Securities for the account of any Persons who have exercised demand registration rights pursuant to the Founder Registration Rights Agreement during the period under which the Demand Registration hereunder is ongoing (all pro rata in accordance with the number of securities that each applicable Person has requested be included in such registration, regardless of the number of securities held by each such Person, as long as they do not request to include more securities than they own (such proportion is referred to herein as “Pro Rata”)) that can be sold without exceeding the Maximum Number of Securities; (ii) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (i) the Registrable Securities of Investors as to which registration has been requested pursuant to Section 2.2 and the Founder Securities as to which registration has been requested pursuant to the applicable written contractual piggy-back registration rights of the Founder Registration Rights Agreement, Pro Rata among the holders thereof based on the number of securities requested by such holders to be included in such registration, that can be sold without exceeding the Maximum Number of Securities; (iii) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i) and (ii), the Company Common Shares or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Securities; and (iv) fourth, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i), (ii) and (iii), the Company Common Shares or other securities for the account of other Persons that the Company is obligated to register pursuant to written contractual arrangements with such Persons that can be sold without exceeding the Maximum Number of Securities. In the event that Company securities that are convertible into Company Common Shares are included in the offering, the calculations under this Section 2.1.4 shall include such Company securities on an as-converted to Company Common Shares basis.

 

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2.1.5 Withdrawal. A Demanding Holder may withdraw all or any portion of their Registrable Securities included in a Demand Registration from such Demand Registration at any time prior to the effectiveness of the Demand Registration Statement. If a majority-in-interest of the Demanding Holders disapprove of the terms of any underwritten offering or are not entitled to include all of their Registrable Securities in any offering, such majority-in-interest of the Demanding Holders may elect to withdraw from such offering by giving written notice to the Company and the Underwriter or Underwriters of their request to withdraw prior to the effectiveness of the Registration Statement filed with the SEC with respect to such Demand Registration. If the majority-in-interest of the Demanding Holders withdraws from a proposed offering relating to a Demand Registration in such event, then such registration shall not count as a Demand Registration provided for in Section 2.1.

 

2.2 Piggy-Back Registration.

 

2.2.1 Piggy-Back Rights. Subject to Section 2.4, if at any time after the Closing the Company proposes to file a Registration Statement under the Securities Act with respect to the Registration of or an offering of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into, equity securities, by the Company for its own account or for security holders of the Company for their account (or by the Company and by security holders of the Company including pursuant to Section 2.1), other than a Registration Statement (i) filed in connection with any employee share option or other benefit plan, (ii) for an exchange offer or offering of securities solely to the Company’s existing security holders, (iii) for an offering of debt that is convertible into equity securities of the Company, or (iv) for a dividend reinvestment plan, then the Company shall (x) give written notice of such proposed filing to Investors holding Registrable Securities as soon as practicable but in no event less than ten (10) days before the anticipated filing date or confidential submission date, which notice shall describe the amount and type of securities to be included in such Registration or offering, the intended method(s) of distribution, and the name of the proposed managing Underwriter or Underwriters, if any, of the offering, and (y) offer to Investors holding Registrable Securities in such notice the opportunity to register the sale of such number of Registrable Securities as such Investors may request in writing within five (5) days following receipt of such notice (a “Piggy-Back Registration”). To the extent permitted by applicable securities laws with respect to such registration by the Company or another demanding security holder, the Company shall use its commercially reasonable efforts to cause (i) such Registrable Securities to be included in such registration and (ii) the managing Underwriter or Underwriters of a proposed underwritten offering to permit the Registrable Securities requested to be included in a Piggy-Back Registration on the same terms and conditions as any similar securities of the Company and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. All Investors holding Registrable Securities proposing to distribute their securities through a Piggy-Back Registration that involves an Underwriter or Underwriters shall enter into an underwriting agreement in customary form with the Underwriter or Underwriters selected for such Piggy-Back Registration.

 

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2.2.2 Reduction of Offering. If the managing Underwriter or Underwriters for a Piggy-Back Registration that is to be an underwritten offering, in good faith, advises the Company and Investors holding Registrable Securities proposing to distribute their Registrable Securities through such Piggy-Back Registration in writing that the dollar amount or number of Company Common Shares or other Company securities which the Company desires to sell, taken together with the Company Common Shares or other Company securities, if any, as to which registration has been demanded pursuant to written contractual arrangements with Persons other than the Investors holding Registrable Securities hereunder, the Registrable Securities as to which registration has been requested under this Section 2.2, and the Company Common Shares or other Company securities, if any, as to which registration has been requested pursuant to the written contractual piggy-back registration rights of other security holders of the Company, exceeds the Maximum Number of Securities, then the Company shall include in any such registration:

 

(a) If the registration is undertaken for the Company’s account: (i) first, the Company Common Shares or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Securities; (ii) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (i), the Registrable Securities of Investors as to which registration has been requested pursuant to this Section 2.2 and the Founder Securities as to which registration has been requested pursuant to the applicable written contractual piggy-back registration rights under the Founder Registration Rights Agreement, Pro Rata among the holders thereof based on the number of securities requested by such holders to be included in such registration, that can be sold without exceeding the Maximum Number of Securities; and (iii) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i) and (ii), the Company Common Shares or other equity securities for the account of other Persons that the Company is obligated to register pursuant to separate written contractual arrangements with such Persons that can be sold without exceeding the Maximum Number of Securities;

 

(b) If the registration is a “demand” registration undertaken at the demand of Demanding Holders pursuant to Section 2.1: (i) first, the Company Common Shares or other securities for the account of the Demanding Holders and the Founder Securities for the account of any Persons who have exercised demand registration rights pursuant to the Founder Registration Rights Agreement during the period under which the Demand Registration hereunder is ongoing, Pro Rata among the holders thereof based on the number of securities requested by such holders to be included in such registration, that can be sold without exceeding the Maximum Number of Securities; (ii) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (i), the Registrable Securities of Investors as to which registration has been requested pursuant to this Section 2.2 and the Founder Securities as to which registration has been requested pursuant to the applicable written contractual piggy-back registration rights under the Founder Registration Rights Agreement, Pro Rata among the holders thereof based on the number of securities requested by such holders to be included in such registration, that can be sold without exceeding the Maximum Number of Securities; (iii) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i) and (ii), the Company Common Shares or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Securities; and (iv) fourth, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i), (ii) and (iii), the Company Common Shares or other equity securities for the account of other Persons that the Company is obligated to register pursuant to separate written contractual arrangements with such Persons that can be sold without exceeding the Maximum Number of Securities;

 

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(c) If the registration is a “demand” registration undertaken at the demand of holders of Founder Securities under the Founder Registration Rights Agreement: (i) first, the Founder Securities for the account of the demanding holders and the Registrable Securities for the account of Demanding Holders who have exercised demand registration rights pursuant to Section 2.1 during the period under which the demand registration under the Founder Registration Rights Agreement is ongoing, Pro Rata among the holders thereof based on the number of securities requested by such holders to be included in such registration, that can be sold without exceeding the Maximum Number of Securities; (ii) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (i), the Registrable Securities of Investors as to which registration has been requested pursuant to this Section 2.2 and the Founder Securities as to which registration has been requested pursuant to the applicable written contractual piggy-back registration rights under the Founder Registration Rights Agreement, Pro Rata among the holders thereof based on the number of securities requested by such holders to be included in such registration, that can be sold without exceeding the Maximum Number of Securities; (iii) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i) and (ii), the Company Common Shares or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Securities; and (iv) fourth, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i), (ii) and (iii), the Company Common Shares or other equity securities for the account of other Persons that the Company is obligated to register pursuant to separate written contractual arrangements with such Persons that can be sold without exceeding the Maximum Number of Securities; and

 

(d) If the registration is a “demand” registration undertaken at the demand of Persons other than either Demanding Holders under Section 2.1 or the holders of Founder Securities exercising demand registration rights under the Founder Registration Rights Agreement: (i) first, the Company Common Shares or other securities for the account of the demanding Persons that can be sold without exceeding the Maximum Number of Securities; (ii) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (i) the Registrable Securities of Investors as to which registration has been requested pursuant to this Section 2.2 and the Founder Securities as to which registration has been requested pursuant to the applicable written contractual piggy-back registration rights under the Founder Registration Rights Agreement, Pro Rata among the holders thereof based on the number of securities requested by such holders to be included in such registration, that can be sold without exceeding the Maximum Number of Securities; (iii) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i) and (ii), the Company Common Shares or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Securities; and (iv) fourth, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i), (ii) and (iii), the Company Common Shares or other equity securities for the account of other Persons that the Company is obligated to register pursuant to separate written contractual arrangements with such Persons that can be sold without exceeding the Maximum Number of Securities.

 

In the event that Company securities that are convertible into Company Common Shares are included in the offering, the calculations under this Section 2.2.2 shall include such Company securities on an as-converted to Company Common Shares basis.

 

2.2.3 Withdrawal. Any Investor holding Registrable Securities may elect to withdraw such Investor’s request for inclusion of Registrable Securities in any Piggy-Back Registration by giving written notice to the Company of such request to withdraw prior to the effectiveness of the Registration Statement. The Company (whether on its own determination or as the result of a withdrawal by Persons making a demand pursuant to written contractual obligations) may withdraw a Registration Statement at any time prior to the effectiveness of such Registration Statement without any liability to the applicable Investor, subject to the next sentence and the provisions of Section 4. Notwithstanding any such withdrawal, the Company shall pay all expenses incurred in connection with such Piggy-Back Registration as provided in Section 3.3 (subject to the limitations set forth therein) by Investors holding Registrable Securities that requested to have their Registrable Securities included in such Piggy-Back Registration.

 

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2.3 Short Form Registrations. After the Closing, subject to Section 2.4, Investors holding Registrable Securities may at any time and from time to time, request in writing that the Company register the resale of any or all of such Registrable Securities on Form F-3 or any similar short-form registration which may be available at such time and applicable to such Investor’s Registrable Securities (“Short Form Registration”); provided, however, that the Company shall not be obligated to effect such request through an underwritten offering. Upon receipt of such written request, the Company will promptly give written notice of the proposed registration to all other Investors holding Registrable Securities, and, as soon as practicable thereafter, effect the registration of all or such portion of such Investors’ Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities, if any, of any other Investors joining in such request as are specified in a written request given within fifteen (15) days after receipt of such written notice from the Company; provided, however, that the Company shall not be obligated to effect any such registration pursuant to this Section 2.3: (i) if Short Form Registration is not available to the Company for such offering; or (ii) if Investors holding Registrable Securities, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) at any aggregate price to the public of less than $250,000. Registrations effected pursuant to this Section 2.3 shall not be counted as Demand Registrations effected pursuant to Section 2.1.

 

2.4 Restriction of Offerings. Notwithstanding anything to the contrary contained in this Agreement, the Investors shall not be entitled to request, and the Company shall not be obligated to effect, or to take any action to effect, any registration (including any Demand Registration but not including Piggy-Back Registration) pursuant to this Section 2 with respect to any Registrable Securities that are subject to the transfer restrictions under the Lock-Up Agreement.

 

3. REGISTRATION PROCEDURES.

 

3.1 Filings; Information. Whenever the Company is required to effect the registration of any Registrable Securities pursuant to Section 2, the Company shall use its commercially reasonable efforts to effect the registration and sale of such Registrable Securities in accordance with the intended method(s) of distribution thereof as expeditiously as practicable, and in connection with any such request:

 

3.1.1 Filing Registration Statement. The Company shall use its commercially reasonable efforts to, as expeditiously as possible after receipt of a request for a Demand Registration pursuant to Section 2.1, prepare and file with the SEC a Registration Statement on any form for which the Company then qualifies or which counsel for the Company shall deem appropriate and which form shall be available for the sale of all Registrable Securities to be registered thereunder in accordance with the intended method(s) of distribution thereof, and shall use its reasonable efforts to cause such Registration Statement to become effective and use its reasonable efforts to keep it effective for the period required by Section 3.1.3; provided, however, that the Company shall have the right to defer any Demand Registration for up to sixty (60) days, and any Piggy-Back Registration for such period as may be applicable to deferment of any demand registration to which such Piggy-Back Registration relates, in each case if the Company shall furnish to Investors requesting to include their Registrable Securities in such registration a certificate signed by the Chief Executive Officer, Chief Financial Officer or Chairman of the Company stating that, in the good faith judgment of the Board of Directors of the Company, it would be materially detrimental to the Company and its shareholders for such Registration Statement to be effected at such time or the filing would require premature disclosure of material information which is not in the interests of the Company to disclose at such time; provided further, however, that the Company shall not have the right to exercise the right set forth in the immediately preceding proviso more than twice in any 365-day period in respect of a Demand Registration hereunder.

 

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3.1.2 Copies. The Company shall, prior to filing a Registration Statement or prospectus, or any amendment or supplement thereto, furnish without charge to Investors holding Registrable Securities included in such registration, and such Investors’ legal counsel, copies of such Registration Statement as proposed to be filed, each amendment and supplement to such Registration Statement (in each case including all exhibits thereto and documents incorporated by reference therein), the prospectus included in such Registration Statement (including each preliminary prospectus), and such other documents as Investors holding Registrable Securities included in such registration or legal counsel for any such Investors may request in order to facilitate the disposition of the Registrable Securities owned by such Investors.

 

3.1.3 Amendments and Supplements. The Company shall prepare and file with the SEC such amendments, including post-effective amendments, and supplements to such Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective and in compliance with the provisions of the Securities Act until all Registrable Securities and other securities covered by such Registration Statement have been disposed of in accordance with the intended method(s) of distribution set forth in such Registration Statement or such securities have been withdrawn or until such time as the Registrable Securities cease to be Registrable Securities as defined by this Agreement.

 

3.1.4 Reporting Obligations. As long as any Investors shall own Registrable Securities, the Company, at all times while it shall be a reporting company under the Exchange Act, covenants to file timely (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to Sections 13(a) or 15(d) of the Exchange Act and to promptly furnish the Investors with true and complete copies of all such filings; provided that any documents publicly filed or furnished with the SEC pursuant to the Electronic Data Gathering, Analysis and Retrieval System shall be deemed to have been furnished or delivered to the Investors pursuant to this Section 3.1.4.

 

3.1.5 Other Obligations. In connection with a sale or transfer of Registrable Securities exempt from Section 5 of the Securities Act or through any broker-dealer transactions described in the plan of distribution set forth within the prospectus included in the Registration Statement, the Company shall, subject to the receipt of the any customary documentation reasonably required from the applicable Investors in connection therewith, (a) promptly instruct its transfer agent to remove any restrictive legends applicable to the Registrable Securities being sold or transferred and (b) cause its legal counsel to deliver the necessary legal opinions, if any, to the transfer agent in connection with the instruction under subclause (a). In addition, the Company shall cooperate reasonably with, and take such customary actions as may reasonably be requested by the Investors, in connection with the aforementioned sales or transfers.

 

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3.1.4 Notification. After the filing of a Registration Statement, the Company shall promptly, and in no event more than five (5) Business Days after such filing, notify Investors holding Registrable Securities included in such Registration Statement of such filing, and shall further notify such Investors promptly and confirm such advice in writing in all events within five (5) Business Days after the occurrence of any of the following: (i) when such Registration Statement becomes effective; (ii) when any post-effective amendment to such Registration Statement becomes effective; (iii) the issuance or threatened issuance by the SEC of any stop order (and the Company shall take all actions required to prevent the entry of such stop order or to remove it if entered); and (iv) any request by the SEC for any amendment or supplement to such Registration Statement or any prospectus relating thereto or for additional information or of the occurrence of an event requiring the preparation of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of the securities covered by such Registration Statement, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and promptly make available to Investors holding Registrable Securities included in such Registration Statement any such supplement or amendment; except that before filing with the SEC a Registration Statement or prospectus or any amendment or supplement thereto, including documents incorporated by reference, the Company shall furnish to Investors holding Registrable Securities included in such Registration Statement and to the legal counsel for any such Investors, copies of all such documents proposed to be filed sufficiently in advance of filing to provide such Investors and legal counsel with a reasonable opportunity to review such documents and comment thereon; provided that such Investors and their legal counsel must provide any comments promptly (and in any event within five (5) Business Days) after receipt of such documents.

 

3.1.5 State Securities Laws Compliance. The Company shall use its reasonable efforts to (i) register or qualify the Registrable Securities covered by the Registration Statement under such securities or “blue sky” laws of such jurisdictions in the United States as Investors holding Registrable Securities included in such Registration Statement (in light of their intended plan of distribution) may reasonably request and (ii) take such action necessary to cause such Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental authorities as may be necessary by virtue of the business and operations of the Company and do any and all other acts and things that may be necessary or advisable to enable Investors holding Registrable Securities included in such Registration Statement to consummate the disposition of such Registrable Securities in such jurisdictions; provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph or take any action to which it would be subject to general service of process or to taxation in any such jurisdiction where it is not then otherwise subject.

 

3.1.6 Agreements for Disposition. To the extent required by the underwriting agreement or similar agreements, the Company shall enter into reasonable customary agreements (including, if applicable, an underwriting agreement in customary form) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable Securities. The representations, warranties and covenants of the Company in any underwriting agreement which are made to or for the benefit of any Underwriters, to the extent applicable, shall also be made to and for the benefit of Investors holding Registrable Securities included in such Registration Statement. No Investor holding Registrable Securities included in such Registration Statement shall be required to make any representations or warranties in the underwriting agreement except, if applicable, with respect to such Investor’s organization, good standing, authority, title to Registrable Securities, lack of conflict of such sale with such Investor’s material agreements and organizational documents, and with respect to written information relating to such Investor that such Investor has furnished in writing expressly for inclusion in such Registration Statement.

 

3.1.7 Cooperation. The principal executive officer of the Company, the principal financial officer of the Company, the principal accounting officer of the Company and all other officers and members of the management of the Company shall reasonably cooperate in any offering of Registrable Securities hereunder, which cooperation shall include the preparation of the Registration Statement with respect to such offering and all other offering materials and related documents, and participation in meetings with Underwriters, attorneys, accountants and potential investors.

 

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3.1.8 Records. The Company shall make available for inspection by Investors holding Registrable Securities included in such Registration Statement, any Underwriter participating in any disposition pursuant to such Registration Statement and any attorney, accountant or other professional retained by any Investor holding Registrable Securities included in such Registration Statement or any Underwriter, all financial and other records, pertinent corporate documents and properties of the Company, as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company’s officers, directors and employees to supply all information reasonably requested by any of them in connection with such Registration Statement; provided that the Company may require execution of a reasonable confidentiality agreement prior to sharing any such information.

 

3.1.9 Opinions and Comfort Letters. The Company shall obtain from its counsel and accountants to provide customary legal opinions and customary comfort letters, to the extent so reasonably required by any underwriting agreement.

 

3.1.10 Earnings Statement. The Company shall comply with all applicable rules and regulations of the SEC and the Securities Act, and make available to its shareholders if reasonably required, as soon as reasonably practicable, an earnings statement covering a period of twelve (12) months, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder.

 

3.1.11 Listing. The Company shall use its commercially reasonable efforts to cause all Registrable Securities that are Company Common Shares included in any registration to be listed on such national security exchange as similar securities issued by the Company are then listed or, if no such similar securities are then listed, in a manner satisfactory to Investors holding a majority-in-interest of the Registrable Securities included in such registration.

 

3.1.12 Road Show. If the registration involves the registration of Registrable Securities involving gross proceeds in excess of $5,000,000, the Company shall use its reasonable efforts to make available senior executives of the Company to participate in customary “road show” presentations that may be reasonably requested by the Underwriter in any underwritten offering.

 

3.2 Obligation to Suspend Distribution. Upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3.1.4(iv), or in the event that the financial statements contained in the Registration Statement become stale, or in the event that the Registration Statement or prospectus included therein contains a misstatement of material fact or omits to state a material fact due to a bona fide business purpose, or, in the case of a resale registration on Short Form Registration pursuant to Section 2.3 hereof, upon any suspension by the Company, pursuant to a written insider trading compliance program adopted by the Company’s Board of Directors, of the ability of all “insiders” covered by such program to transact in the Company’s securities because of the existence of material non-public information, each Investor holding Registrable Securities included in any registration shall immediately discontinue disposition of such Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such Investor receives the supplemented or amended prospectus contemplated by Section 3.1.4(iv) or the Registration Statement is updated so that the financial statements are no longer stale, or the restriction on the ability of “insiders” to transact in the Company’s securities is removed, as applicable, and, if so directed by the Company, each such Investor will deliver to the Company all copies, other than permanent file copies then in such Investor’s possession, of the most recent prospectus covering such Registrable Securities at the time of receipt of such notice.

 

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3.3 Registration Expenses. Subject to Section 4, the Company shall bear all reasonable costs and expenses incurred in connection with any Demand Registration pursuant to Section 2.1, any Piggy-Back Registration pursuant to Section 2.2, and any registration on Short Form Registration effected pursuant to Section 2.3, and all reasonable expenses incurred in performing or complying with its other obligations under this Agreement, whether or not the Registration Statement becomes effective, including: (i) all registration and filing fees; (ii) fees and expenses of compliance with securities or “blue sky” laws (including fees and disbursements of counsel in connection with blue sky qualifications of the Registrable Securities); (iii) printing expenses; (iv) the Company’s internal expenses (including all salaries and expenses of its officers and employees); (v) the fees and expenses incurred in connection with the listing of the Registrable Securities as required by Section 3.1.11; (vi) Financial Industry Regulatory Authority fees; (vii) fees and disbursements of counsel for the Company and fees and expenses for independent certified public accountants retained by the Company (including the expenses or costs associated with the delivery of any opinions or comfort letters requested pursuant to Section 3.1.9); (viii) the reasonable fees and expenses of any special experts retained by the Company in connection with such registration; and (ix) the reasonable fees and expenses of one legal counsel selected by Investors holding a majority-in-interest of the Registrable Securities included in such registration for such legal counsel’s review, comment and finalization of the proposed Registration Statement and other relevant documents. The Company shall have no obligation to pay any underwriting discounts or selling commissions attributable to the Registrable Securities being sold by the holders thereof, which underwriting discounts or selling commissions shall be borne by such holders. Additionally, in an underwritten offering, only if the Underwriters require the selling security holders and/or the Company to bear the expenses of the Underwriter following good faith negotiations, all selling security holders and the Company shall bear the expenses of the Underwriter pro rata in proportion to the respective amount of securities each is selling in such offering.

 

3.4 Information. Investors holding Registrable Securities included in any Registration Statement shall provide such information as may reasonably be requested by the Company, or the managing Underwriter, if any, in connection with the preparation of such Registration Statement, including amendments and supplements thereto, in order to effect the registration of any Registrable Securities under the Securities Act pursuant to Section 2 and in connection with the obligation to comply with federal and applicable state securities laws. Investors selling Registrable Securities in any offering must provide all questionnaires, powers of attorney, custody agreements, stock powers, and other documentation reasonably requested by the Company or the managing Underwriter.

 

4. INDEMNIFICATION AND CONTRIBUTION.

 

4.1 Indemnification by the Company. Subject to the provisions of this Section 4.1, the Company agrees to indemnify and hold harmless each Investor, and each Investor’s officers, employees, affiliates, directors, partners, members, attorneys and agents, and each Person, if any, who controls an Investor (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) (each, an “Investor Indemnified Party”), from and against any expenses, losses, judgments, claims, damages or liabilities, whether joint or several, arising out of or based upon any untrue or alleged untrue statement of a material fact contained in any Registration Statement under which the sale of such Registrable Securities was registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained in the Registration Statement, or any amendment or supplement to such Registration Statement, or arising out of or based upon any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of the Securities Act or any rule or regulation promulgated thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration (provided, however, that the indemnity agreement contained in this Section 4.1 shall not apply to amounts paid in settlement of any such claim, loss, damage, liability or action if such settlement is effected without the consent of the Company, such consent not to be unreasonably withheld, delayed or conditioned); and the Company shall promptly reimburse the Investor Indemnified Party for any legal and any other expenses reasonably incurred by such Investor Indemnified Party in connection with investigating and defending any such expense, loss, judgment, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case to the extent that any such expense, loss, claim, damage or liability arises out of or is based upon any untrue or alleged untrue statement or omission or alleged omission made in such Registration Statement, preliminary prospectus, final prospectus, or summary prospectus, or any such amendment or supplement, in reliance upon and in conformity with information furnished to the Company, in writing, by such selling holder or Investor Indemnified Party expressly for use therein. The Company also shall indemnify any Underwriter of the Registrable Securities, their officers, affiliates, directors, partners, members and agents and each Person who controls such Underwriter on substantially the same basis as that of the indemnification provided above in this Section 4.1.

 

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4.2 Indemnification by Holders of Registrable Securities. Subject to the provisions of this Section 4.2, each Investor selling Registrable Securities will, in the event that any registration is being effected under the Securities Act pursuant to this Agreement of any Registrable Securities held by such selling Investor, indemnify and hold harmless the Company, each of its directors and officers and each Underwriter (if any), and each other selling holder and each other Person, if any, who controls another selling holder or such Underwriter within the meaning of the Securities Act, against any losses, claims, judgments, damages or liabilities, whether joint or several, insofar as such losses, claims, judgments, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement of a material fact contained in any Registration Statement under which the sale of such Registrable Securities was registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained in the Registration Statement, or any amendment or supplement to the Registration Statement, or arise out of or are based upon any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statement therein not misleading, if the statement or omission was made in reliance upon and in conformity with information furnished in writing to the Company by such selling Investor expressly for use therein (provided, however, that the indemnity agreement contained in this Section 4.2 shall not apply to amounts paid in settlement of any such claim, loss, damage, liability or action if such settlement is effected without the consent of the indemnifying Investor, such consent not to be unreasonably withheld, delayed or conditioned), and shall reimburse the Company, its directors and officers, each Underwriter and each other selling holder or controlling Person for any legal or other expenses reasonably incurred by any of them in connection with investigation or defending any such loss, claim, damage, liability or action. Each selling Investor’s indemnification obligations hereunder shall be several and not joint and shall be limited to the amount of any net proceeds actually received by such selling Investor in the applicable offering.

 

4.3 Conduct of Indemnification Proceedings. Promptly after receipt by any Person of any notice of any loss, claim, damage or liability or any action in respect of which indemnity may be sought pursuant to Section 4.1 or Section 4.2, such Person (the “Indemnified Party”) shall, if a claim in respect thereof is to be made against any other Person for indemnification hereunder, notify such other Person (the “Indemnifying Party”) in writing of the loss, claim, judgment, damage, liability or action; provided, however, that the failure by the Indemnified Party to notify the Indemnifying Party shall not relieve the Indemnifying Party from any liability which the Indemnifying Party may have to such Indemnified Party hereunder, except and solely to the extent the Indemnifying Party is actually prejudiced by such failure. If the Indemnified Party is seeking indemnification with respect to any claim or action brought against the Indemnified Party, then the Indemnifying Party shall be entitled to participate in such claim or action, and, to the extent that it wishes, jointly with all other Indemnifying Parties, to assume control of the defense thereof with counsel satisfactory to the Indemnified Party if the Indemnifying Party provides notice of such to the Indemnified Party within thirty (30) days of the Indemnifying Party’s receipt of notice of such claim. After notice from the Indemnifying Party to the Indemnified Party of its election to assume control of the defense of such claim or action, the Indemnifying Party shall not be liable to the Indemnified Party for any legal or other expenses subsequently incurred by the Indemnified Party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that in any action in which both the Indemnified Party and the Indemnifying Party are named as defendants, the Indemnified Party shall have the right to employ separate counsel (but no more than one such separate counsel) to represent the Indemnified Party and its controlling Persons who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the Indemnified Party against the Indemnifying Party, with the fees and expenses of such counsel to be paid by such Indemnifying Party if, based upon the written opinion of counsel of such Indemnified Party, representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. No Indemnifying Party shall, without the prior written consent of the Indemnified Party (acting reasonably), consent to entry of judgment or effect any settlement of any claim or pending or threatened proceeding in respect of which the Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such judgment or settlement includes an unconditional release of such Indemnified Party from all liability arising out of such claim or proceeding.

 

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4.4 Contribution.

 

4.4.1 If the indemnification provided for in the foregoing Sections 4.1, and 4.2 is unavailable to any Indemnified Party in respect of any loss, claim, damage, liability or action referred to herein, then each such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the Indemnified Parties and the Indemnifying Parties in connection with the actions or omissions which resulted in such loss, claim, damage, liability or action, as well as any other relevant equitable considerations. The relative fault of any Indemnified Party and any Indemnifying Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such Indemnified Party or such Indemnifying Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

 

4.4.2 The Parties agree that it would not be just and equitable if contribution pursuant to this Section 4.4 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding Section 4.4.1.

 

4.4.3 The amount paid or payable by an Indemnified Party as a result of any loss, claim, damage, liability or action referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 4, no Investor holding Registrable Securities shall be required to contribute any amount in excess of the dollar amount of the net proceeds (after payment of any underwriting fees, discounts, commissions or taxes) actually received by such Investor from the sale of Registrable Securities which gave rise to such contribution obligation. Any contributions obligation of the Investors shall be several and not joint. 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.

 

5. RULE 144 AND 145.

 

5.1 Rule 144 and 145. The Company covenants that it shall file any reports required to be filed by it under the Securities Act and the Exchange Act and shall take such further action as Investors holding Registrable Securities may reasonably request, all to the extent required from time to time to enable such Investors to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 and 145 under the Securities Act, as such Rule 144 and 145 may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC.

 

6. MISCELLANEOUS.

 

6.1 Other Registration Rights. The Company represents and warrants that as of the date of this Agreement, no Person, other than the holders of (i) Registrable Securities and (ii) Founder Securities, has any right to require the Company to register any of the Company’s share capital for sale or to include the Company’s share capital in any registration filed by the Company for the sale of share capital for its own account or for the account of any other Person.

 

6.2 Assignment; No Third Party Beneficiaries. This Agreement and the rights, duties and obligations of the Company hereunder may not be assigned or delegated by the Company in whole or in part, unless the Company first provides Investors holding Registrable Securities at least ten (10) Business Days prior written notice; provided that no assignment or delegation by the Company will relieve the Company of its obligations under this Agreement unless Investors holding a majority-in-interest of the Registrable Securities provide their prior written consent, which consent must not be unreasonably withheld, delayed or conditioned. This Agreement and the rights, duties and obligations of Investors holding Registrable Securities hereunder may be freely assigned or delegated by such Investor in conjunction with and to the extent of any transfer of Registrable Securities by such Investor which is permitted by the Lock-Up Agreement; provided that no assignment by any Investor of its rights, duties and obligations hereunder shall be binding upon or obligate the Company unless and until the Company shall have received (i) written notice of such assignment and (ii) the written agreement of the assignee, in a form reasonably satisfactory to the Company, to be bound by the terms and provisions of this Agreement (which may be accomplished by an addendum or certificate of joinder to this Agreement). This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the Parties, to the permitted assigns of the Investors or of any assignee of the Investors. This Agreement is not intended to confer any rights or benefits on any Persons that are not party hereto other than as expressly set forth in Section 4 and this Section 6.2.

 

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6.3 Notices. All notices, consents, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered (i) in person, (ii) by facsimile or other electronic means, with affirmative confirmation of receipt, (iii) one Business Day after being sent, if sent by reputable, nationally recognized overnight courier service or (iv) 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 Company prior to the Closing to: Pono Capital Three, Inc.		With a copy (which will not constitute notice) to: Nelson Mullins Riley & Scarborough LLP
4348 Waialae Ave., #632		101 Constitution Avenue, NW, Suite 900
Honolulu, Hawaii 96816		Washington, DC 20001
Attn: Davin Kazama		Attn: Andrew Tucker, Esq., Peter Strand Esq.
Telephone No.: [phone]		Facsimile No.: [phone]
E-mail: [e-mail]		Telephone No.: [phone]
		E-mail: [e-mail];
		[e-mail]
If to the Sponsor, to: Mehana Capital LLC		with a copy (which will not constitute notice) to: Nelson Mullins Riley & Scarborough LLP
4348 Waialae Ave, #632		101 Constitution Avenue, NW, Suite 900
Honolulu, Hawaii 96816		Washington, DC 20001
Attn: Dustin Shindo		Attn: Andrew Tucker, Esq., Peter Strand
Telephone No.: [phone]		Facsimile No.: [phone]
		Telephone No.: [phone]
E-mail: [e-mail]		E-mail: [e-mail];
		[e-mail]
If to Horizon, or to the Company after the Closing to:		With a copy (which will not constitute notice) to:
Horizon Aircraft		Gowling WLG (Canada) LLP
3187 Highway 35		345 King Street West, Suite 600
Lindsay, Ontario		Kitchener, ON N2G 0C5
K9V 4R1		Attn: Todd Bissett
Attn: E. Brandon Robinson		Telephone: [phone]
E-mail: [e-mail]		Facsimile No.: [phone]
		E-mail: [e-mail]
If to the Investors, to such Investor’s address or facsimile number as set forth in the Company’s books and records.

  

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6.4 Severability. This 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 Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the Parties intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible that is valid and enforceable. Notwithstanding anything to the contrary contained in this Agreement, in the event that any prospective Investor fails to deliver to the Company a duly executed copy of this Agreement, such failure shall not affect the rights and obligations of the other Parties to this Agreement as amongst such other Parties.

 

6.5 Entire Agreement. This Agreement (together with the BCA, Ancillary Documents, and the Lock-Up Agreement to the extent incorporated herein, and including all agreements entered into pursuant hereto or thereto or referenced herein or therein and all certificates and instruments delivered pursuant hereto and thereto) constitutes the entire agreement of the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, representations, understandings, negotiations and discussions between the Parties, whether oral or written, relating to the subject matter hereof; provided, that, for the avoidance of doubt, the foregoing shall not affect the rights and obligations of the Parties under the BCA or any other Ancillary Document or the rights or obligations of the Parties under the Founder Registration Rights Agreement.

 

6.6 Interpretation. Titles and headings of sections of this Agreement are for convenience only and shall not affect the construction of any provision of this Agreement. In this Agreement, unless the context otherwise requires: (i) any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa; (ii) “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”; (iii) the words “herein,” “hereto,” and “hereby” and other words of similar import in this Agreement 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; and (iv) the term “or” means “and/or”. The Parties have participated jointly in the negotiation and drafting of this Agreement. Consequently, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement.

 

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6.7 Amendments; Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written agreement or consent of the Company (after the Closing, following approval of such amendment by a majority of the directors of the Company who are deemed to be “independent” directors pursuant to the applicable rules of Nasdaq and the SEC) and Investors holding a majority-in-interest of the Registrable Securities; provided, that any amendment or waiver of this Agreement which affects an Investor in a manner materially and adversely disproportionate to other Investors will also require the consent of such Investor. No failure or delay by a Party in exercising any right hereunder shall operate as a waiver thereof. No waivers of or exceptions to any term, condition, or provision of this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such term, condition, or provision.

 

6.8 Remedies Cumulative. In the event a Party fails to observe or perform any covenant or agreement to be observed or performed under this Agreement, the other Parties may proceed to protect and enforce its rights by suit in equity or action at law, whether for specific performance of any term contained in this Agreement or for an injunction against the breach of any such term or in aid of the exercise of any power granted in this Agreement or to enforce any other legal or equitable right, or to take any one or more of such actions, without being required to post a bond. None of the rights, powers or remedies conferred under this Agreement shall be mutually exclusive, and each such right, power or remedy shall be cumulative and in addition to any other right, power or remedy, whether conferred by this Agreement or now or hereafter available at law, in equity, by statute or otherwise.

 

6.9 Governing Law; Jurisdiction. Sections 11.4 and 11.5 of the BCA shall apply to this Agreement mutatis mutandis, with any reference therein to the “Agreement” being a reference to this Agreement and any reference to a “Party” therein being a reference to any “Party” to this Agreement.

 

6.10 Termination of Merger Agreement. This Agreement shall be binding upon each Party upon such Party’s execution and delivery of this Agreement at the Closing, and this Agreement shall only become effective upon the Closing.

 

6.11 Counterparts. This Agreement may be executed in multiple counterparts (including by facsimile or pdf or other electronic document transmission), each of which shall be deemed an original, and all of which taken together shall constitute one and the same instrument. Copies of executed counterparts of this Agreement transmitted by electronic transmission (including by email or in .pdf format) or facsimile as well as electronically or digitally executed counterparts (such as DocuSign) shall have the same legal effect as original signatures and shall be considered original executed counterparts of this Agreement.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGES FOLLOW]

 

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IN WITNESS WHEREOF, the Parties have caused this Registration Rights Agreement to be executed and delivered as of the date first written above.

 

	Horizon:
	ROBINSON AIRCRAFT LTD.
	By:	/s/ E. Brandon Robinson
	Name:	E. Brandon Robinson
	Title:	CEO

 

[Signature Page to Registration Rights Agreement]

 

 

 

 

IN WITNESS WHEREOF, the Parties have caused this Registration Rights Agreement to be executed and delivered as of the date first written above.

 

	Company:
	PONO CAPITAL THREE, INC.
	By:	/s/ Davin Kazama
	Name:	Davin Kazama
	Title:	CEO

 

[Signature Page to Registration Rights Agreement]

 

 

 

 

IN WITNESS WHEREOF, the Parties have caused this Registration Rights Agreement to be executed and delivered as of the date first written above.

 

	Sponsor:
	MEHANA CAPITAL LLC
	By:	/s/ Dustin Shindo
	Name:	Dustin Shindo
	Title:	Managing Member

 

[Signature Page to Registration Rights Agreement]

 

 

 

 

IN WITNESS WHEREOF, the Parties have caused this Registration Rights Agreement to be executed and delivered as of the date first written above.

 

	Investors:
	ROBINSON FAMILY VENTURES INC.
	By:	/s/ E. Brandon Robinson
	Name:	E. Brandon Robinson
	Title:	Authorized Signatory

 

[Signature Page to Registration Rights Agreement]

 

 

 

 

 

Exhibit 10.5

 

LOCK-UP AGREEMENT

 

THIS LOCK-UP AGREEMENT (this “Agreement”) is made and entered into as of               , 2024, by and between (i) Pono Capital Three, Inc., a British Columbia company (the “Company”), (ii) Mehana Capital LLC (the “Sponsor”), and (iii) the undersigned (“Holder”). Any capitalized term used but not defined in this Agreement will have the meaning ascribed to such term in the BCA (as defined herein). Company, Sponsor and Holder may be referred to herein individually as a “Party” and collectively as the “Parties.”

 

WHEREAS, contemporaneously with the execution of this Agreement, the Company, Robinson Aircraft Ltd. d/b/a Horizon Aircraft (“Horizon”), Pono Three Merger Acquisitions Corp., a British Columbia company and a wholly-owned subsidiary of the Company (“Merger Sub”), and certain other persons are entering into that certain Business Combination Agreement (the “BCA”), pursuant to which, subject to the terms and conditions thereof, the Company will redomesticate and continue as a British Columbia company, and Merger Sub will amalgamate with Horizon, with the amalgamated company a wholly-owned subsidiary of the Company (the “Amalgamation”), and with Horizon’s shareholders receiving shares of the post-redomestication Company’s common stock (the “Company Class A Ordinary Shares”);

 

WHEREAS, immediately prior to the Closing, Holder is a holder of Horizon Shares and upon the Closing, Holder will be a holder of Company Class A Ordinary Shares; and

 

WHEREAS, pursuant to the BCA, and in view of the valuable consideration to be received by Holder thereunder, the Parties desire to enter into this Agreement, pursuant to which the Company Class A Ordinary Shares (all such securities, together with any securities paid as dividends or distributions with respect to such securities or into which such securities are exchanged or converted, the “Restricted Securities”) shall become subject to limitations on disposition as set forth herein.

 

1

 

 

NOW, THEREFORE, in consideration of the premises set forth above, which are incorporated in this Agreement as if fully set forth below, and intending to be legally bound hereby, the Parties hereby agree as follows:

 

1. Lock-Up Provisions.

 

(a) Holder hereby agrees not to, during the period commencing from the Closing and ending on the earlier of (x) the six month anniversary of the date of the Closing, (y) if the reported last sale price of the Company Class A Ordinary Shares equals or exceeds US $12.00 per share (as adjusted for share splits, share dividends, right issuances, reorganizations, recapitalizations and the like) for any twenty (20) trading days within any thirty (30) trading day period commencing at least one-hundred and fifty (150) days after the Closing, and (z) the date after the Closing on which the Company consummates a liquidation, merger, capital stock exchange, reorganization or other similar transaction with an unaffiliated third party that results in all of the Company’s shareholders having the right to exchange their common stock of the Company for cash, securities or other property (the “Lock-Up Period”): (i) lend, offer, pledge, hypothecate, encumber, donate, assign, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any Restricted Securities, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Restricted Securities, or (iii) publicly disclose the intention to do any of the foregoing, whether any such transaction described in clauses (i), (ii) or (iii) above is to be settled by delivery of Restricted Securities or other securities, in cash or otherwise (any of the foregoing described in clauses (i), (ii) or (iii), a “Prohibited Transfer”). The foregoing restrictions shall not apply to the transfer of any or all of the Restricted Securities owned by Holder (I) by gift, will or intestate succession upon the death of Holder, (II) to any Permitted Transferee (as defined below) or (III) pursuant to a court order or settlement agreement related to the distribution of assets in connection with the dissolution of marriage or civil union; provided, however, that in any of cases (I), (II) or (III) it shall be a condition to such transfer that the transferee executes and delivers to the Company an agreement stating that the transferee is receiving and holding the Restricted Securities subject to the provisions of this Agreement applicable to Holder, and there shall be no further transfer of such Restricted Securities except in accordance with this Agreement. As used in this Agreement, the term “Permitted Transferee” shall mean: (1) the members of Holder’s immediate family (for purposes of this Agreement, “immediate family” shall mean with respect to any natural person, any of the following: such person’s spouse or domestic partner, the siblings of such person and his or her spouse or domestic partner, and the direct descendants and ascendants (including adopted and step children and parents) of such person and his or her spouses or domestic partners and siblings), (2) any trust for the direct or indirect benefit of Holder or the immediate family of Holder, (3) if Holder is a trust, to the trustor or beneficiary of such trust or to the estate of a beneficiary of such trust, (4) in the case of an entity, partners, members, managers, investment managers or stockholders of such entity that receive such transfer as a distribution, (5) to any affiliate of Holder, (6) any charitable foundation controlled by the undersigned, its members or stockholders or any of their respective immediate family, (7) any transferee to satisfy any U.S. federal, state, or local income tax obligations of a Holder (or its direct or indirect owners) arising from such Holder’s ownership (including prior to and after the Business Combination) of the Restricted Securities or any interests in the Company, in each case solely and to the extent necessary to cover any tax liability as a direct result of such ownership of the Restricted Securities or any interests in the Company, and (8) any transferee whereby there is no change in beneficial ownership. Holder further agrees to execute such agreements as may be reasonably requested by the Company that are consistent with the foregoing or that are necessary to give further effect thereto.

 

(b) If any Prohibited Transfer is made or attempted contrary to the provisions of this Agreement, such purported Prohibited Transfer shall be null and void ab initio, and the Company shall refuse to recognize any such purported transferee of the Restricted Securities as one of its equity holders for any purpose. In order to enforce this Section 1, the Company may impose stop-transfer instructions with respect to the Restricted Securities of Holder (and Permitted Transferees and assigns thereof) until the end of the Lock-Up Period except in compliance with the foregoing restrictions.

 

2

 

 

(c) During the Lock-Up Period, each certificate evidencing any Restricted Securities shall be stamped or otherwise imprinted with a legend in substantially the following form, in addition to any other applicable legends:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER SET FORTH IN A LOCK-UP AGREEMENT, DATED AS OF AUGUST 15, 2023, BY AND AMONG THE ISSUER OF SUCH SECURITIES (THE “ISSUER”) AND THE ISSUER’S SECURITY HOLDER NAMED THEREIN, AS AMENDED. A COPY OF SUCH LOCK-UP AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE ISSUER TO THE HOLDER HEREOF UPON WRITTEN REQUEST.”

 

(d) For the avoidance of any doubt, Holder shall retain all of its rights as a stockholder of the Company during the Lock-Up Period, including the right to vote any Restricted Securities.

 

2. Miscellaneous.

 

(a) 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 permitted successors and assigns. This Agreement and all obligations of Holder are personal to Holder and may not be transferred or delegated by Holder at any time. The Company may freely assign any or all of its rights under this Agreement, in whole or in part, to any successor entity (whether by merger, consolidation, equity sale, asset sale or otherwise) without obtaining the consent or approval of Holder.

 

(b) Third Parties. 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 or entity that is not a Party or thereto or a successor or permitted assign of such a Party.

 

(c) Governing Law; Jurisdiction. This Agreement shall be governed by, and construed and interpreted in accordance with the laws of the Province of British Columbia applicable in that Province. Without prejudice to the ability of any Party to enforce this Agreement in any other proper jurisdiction, each of the Parties irrevocably and unconditionally submits and attorns to the non-exclusive jurisdiction of the courts of the Province of British Columbia to determine all issues, whether at law or in equity, arising from this Agreement. To the extent permitted by applicable Law, each Party:

 

(i)

irrevocably waives any objection, including any claim of inconvenient forum, that it may now or in the future have to the venue of any legal proceeding arising out of or relating to this agreement in the courts of that Province, or that the subject matter of this agreement may not be enforced in those courts;

 

(ii)

irrevocably agrees not to seek, and waives any right to, judicial review by any court that may be called upon to enforce the judgment of the courts referred to in this section 2(c), of the substantive merits of any suit, action or proceeding; and

 

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(iii)

to the extent that party has or may acquire any immunity from the jurisdiction of any court or from any legal process, whether through service or notice, attachment before judgment, attachment in aid of execution, execution or otherwise, with respect to itself or its property, irrevocably waives that immunity in connection with its obligations under this Agreement.

 

(d) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY 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 2(d).

 

(e) Interpretation. The titles and subtitles used in this Agreement are for convenience only and are not to be considered in construing or interpreting this Agreement. In this Agreement, unless the context otherwise requires: (i) any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa; (ii) “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”; (iii) the words “herein,” “hereto,” and “hereby” and other words of similar import in this Agreement 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; and (iv) the term “or” means “and/or”. The Parties have participated jointly in the negotiation and drafting of this Agreement. Consequently, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement.

 

4

 

 

(f) Notices. All notices, consents, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered (i) in person, (ii) by facsimile, email or other electronic means, with affirmative confirmation of receipt, (iii) one Business Day after being sent, if sent by reputable, nationally recognized overnight courier service or (iv) 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 Company, to:

 

Horizon Aircraft

3187 Highway 35

Lindsay, Ontario

K9V 4R1

Attn: E. Brandon Robinson

E-mail: [e-mail]

 

with a copy, which shall not constitute notice, to:

 

Gowling WLG (Canada) LLP

345 King Street West, Suite 600

Kitchener, ON N2G 0C5

Attn: Todd Bissett

Telephone: [phone]

Facsimile No.: [phone]

E-mail: [e-mail]

 

and:

 

Mehana Capital LLC

4348 Waialae Ave., #632

Honolulu, Hawaii 96816

Attn: Dustin Shindo

Telephone No.: [phone]

E-mail: [e-mail]

 

and:

 

Nelson Mullins Riley & Scarborough LLP

101 Constitution Avenue, NW, Suite 900

Washington, DC 20001

Attn: Andrew Tucker, Esq., Peter Strand, Esq.

Facsimile No.: [phone]

Telephone No.: [phone]

E-mail: [e-mail]

 

 

 

If to Holder, to: the address set forth below Holder’s name on the signature page to this Agreement.

 

 

 

(g) Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent of the Company, Sponsor and Holder. No failure or delay by a Party in exercising any right hereunder shall operate as a waiver thereof. No waivers of or exceptions to any term, condition, or provision of this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such term, condition, or provision.

 

5

 

 

(h) Authorization on Behalf of the Company. The Parties acknowledge and agree that notwithstanding anything to the contrary contained in this Agreement, any and all determinations, actions or other authorizations under this Agreement on behalf of the Company, including enforcing the Company’s rights and remedies under this Agreement, or providing any waivers with respect to the provisions hereof, shall solely be made, taken and authorized by the majority of the Company’s disinterested directors (the “Disinterested Directors”). In the event that the Company at any time does not have any Disinterested Directors, so long as Holder has any remaining obligations under this Agreement, the Company will promptly appoint one in connection with this Agreement. Without limiting the foregoing, in the event that Holder or Holder’s Affiliate serves as a director, officer, employee or other authorized agent of the Company or any of its current or future Affiliates, Holder and/or Holder’s Affiliate shall have no authority, express or implied, to act or make any determination on behalf of the Company or any of its current or future Affiliates in connection with this Agreement or any dispute or Action with respect hereto.

 

(i) Severability. In case any provision in this Agreement shall be held invalid, illegal or unenforceable in a 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.

 

(j) Specific Performance. Holder acknowledges that its obligations under this Agreement are unique, recognizes and affirms that in the event of a breach of this Agreement by Holder, money damages will be inadequate and Company will have no adequate remedy at law, and agrees that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed by Holder in accordance with their specific terms or were otherwise breached. Accordingly, the Company shall be entitled to an injunction or restraining order to prevent breaches of this Agreement by Holder 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 the Company may be entitled under this Agreement, at law or in equity.

 

(k) Entire Agreement. This Agreement constitutes the full and entire understanding and agreement among the Parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the Parties is expressly canceled; provided, that, for the avoidance of doubt, the foregoing shall not affect the rights and obligations of the Parties under the BCA or any Ancillary Document or under the Insider Letter. Notwithstanding the foregoing, nothing in this Agreement shall limit any of the rights or remedies of the Company or any of the obligations of Holder under any other agreement between Holder and the Company or any certificate or instrument executed by Holder in favor of the Company, and nothing in any other agreement, certificate or instrument shall limit any of the rights or remedies of the Company or any of the obligations of Holder under this Agreement.

 

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(l) Further Assurances. From time to time, at another Party’s request and without further consideration (but at the requesting Party’s reasonable cost and expense), each Party shall execute and deliver such additional documents and take all such further action as may be reasonably necessary to consummate the transactions contemplated by this Agreement.

 

(m) Counterparts; Facsimile. This Agreement may also be executed and delivered by facsimile signature or by email in portable document format in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

(n) Effectiveness. This Agreement shall be binding upon the Holder upon the Holder’s execution and delivery of this Agreement, but this Agreement shall only become effective upon the consummation of the Amalgamation. In the event that the BCA is validly terminated in accordance with its terms prior to the consummation of the Amalgamation, this Agreement shall automatically terminate and become null and void, and the Parties shall have no obligations hereunder.

 

[Remainder of Page Intentionally Left Blank; Signature Pages Follow]

 

7

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

	Company:
	PONO CAPITAL THREE, INC.
	By:
	Name:	Davin Kazama
	Title:	CEO

 

	Sponsor:
	MEHANA CAPITAL LLC
	By:
	Name:	Dustin Shindo
	Title:	Managing Member

 

{Additional Signature on the Following Page}

 

{Signature Page to Lock-Up Agreement}

 

8

 

 

IN WITNESS WHEREOF, the parties have executed this Lock-Up Agreement as of the date first written above.

 

Holder:

 

Name of Holder:
By:
Name:
Title:

  

Number of Horizon Shares:
Horizon Shares:
Address for Notice:

 

{Signature Page to Lock-Up Agreement}

 

 

9

 

 

Exhibit 10.10

 

NON-COMPETITION AND NON-SOLICITATION AGREEMENT

 

THIS NON-COMPETITION AND NON-SOLICITATION AGREEMENT (this “Agreement”) is being executed and delivered as of             , 2024, by the individual set forth on the signature page hereto (the “Subject Party”) in favor of and for the benefit of Pono Capital Three, Inc., a British Columbia company, which will be known after the consummation of the transactions contemplated by the Business Combination Agreement (as defined below) as “New Horizon Aircraft Ltd.” (including any successor entity thereto, the “Purchaser”), Robinson Aircraft Ltd. d/b/a Horizon Aircraft (the “Company”), and each of the Purchaser’s and/or the Company’s respective Affiliates, successors and direct and indirect Subsidiaries (collectively with the Purchaser and the Company, the “Covered Parties”). Any capitalized term used but not defined in this Agreement will have the meaning ascribed to such term in the Business Combination Agreement. Purchaser, the Company and Subject Party may be referred to herein individually as a “Party” and collectively as the “Parties”.

 

WHEREAS, on August 15, 2023, (i) the Purchaser, (ii) Pono Three Merger Acquisitions Corp., a British Columbia company and a wholly-owned subsidiary of the Purchaser (“Merger Sub”), and (iii) the Company entered into that certain Business Combination Agreement (the “Business Combination Agreement”), pursuant to which, subject to the terms and conditions thereof, the Purchaser will redomesticate and continue as a British Columbia company, and Merger Sub will amalgamate with the Company, with the amalgamated entity continuing as the surviving entity and as a wholly owned subsidiary of the Purchaser (the “Business Combination”), and with the Company’s shareholders receiving shares of the Purchaser’s ordinary shares;

 

WHEREAS, the Company, is engaged in the business of designing and/or manufacturing vertical take-off and landing aerial vehicles (the “Business”);

 

WHEREAS, in connection with, and as a condition to the execution and delivery of the Business Combination Agreement and the consummation of the Business Combination and the other transactions contemplated thereby (the “Transactions”), and to enable the Purchaser to secure more fully the benefits of the Transactions, including the protection and maintenance of the goodwill and confidential information of the Company, the Purchaser has required that the Subject Party enter into this Agreement;

 

WHEREAS, the Subject Party is entering into this Agreement in order to induce the Purchaser and Merger Sub to consummate the Transactions, pursuant to which the Subject Party will directly or indirectly receive a material benefit; and

 

WHEREAS, the Subject Party, as a former executive of the Company, has contributed to the value of the Company and has obtained extensive and valuable knowledge and confidential information concerning the business of the Company.

 

NOW, THEREFORE, in order to induce the Purchaser to consummate the Transactions, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Subject Party hereby agrees as follows:

 

1. Restriction on Competition.

 

(a) Restriction. The Subject Party hereby agrees that during the period from the Closing until the two (2) year anniversary of the Closing Date (the “Termination Date,” and such period from the Closing until the Termination Date, the “Restricted Period”), the Subject Party will not, and will cause its Affiliates not to, without the prior written consent of Purchaser (which may be withheld in its sole discretion), anywhere in the United States, or Canada, or in any other markets in which the Covered Parties are engaged, or are actively contemplating to become engaged, in the Business as of the Closing Date or during the Restricted Period (the “Territory”), directly or indirectly engage in the Business (other than through a Covered Party) or own, manage, finance or control, or participate in the ownership, management, financing or control of, or become engaged or serve as an officer, director, member, partner, employee, agent, consultant, advisor or representative of, a business or entity (other than a Covered Party) that engages in the Business (a “Competitor”).

 

 

 

 

(b) Acknowledgment. The Subject Party acknowledges and agrees, that (i) the Subject Party possesses knowledge of confidential information of the Company and the Business, (ii) the Subject Party’s execution of this Agreement is a material inducement to Purchaser to consummate the Transactions and to realize the goodwill of the Company, for which the Subject Party and/or its Affiliates will receive a substantial direct or indirect financial benefit, and that the Purchaser would not have entered into the Business Combination Agreement or consummated the Transactions but for the Subject Party’s agreements set forth in this Agreement, (iii) it would impair the goodwill of the Company and reduce the value of the assets of the Company and cause serious and irreparable injury if the Subject Party were to use its ability and knowledge by engaging in the Business in competition with a Covered Party, and/or to otherwise breach the obligations contained herein and that the Covered Parties would not have an adequate remedy at law because of the unique nature of the Business, (iv) the Subject Party and its Affiliates have no intention of engaging in the Business (other than through the Covered Parties) during the Restricted Period, (v) the relevant public policy aspects of restrictive covenants, covenants not to compete and non-solicitation provisions have been discussed, and every effort has been made to limit the restrictions placed upon the Subject Party to those that are reasonable and necessary to protect the Covered Parties’ legitimate interests, (vi) the Covered Parties conduct and intend to conduct the Business everywhere in the Territory and compete with other businesses that are or could be located in any part of the Territory, (vii) the foregoing restrictions on competition are fair and reasonable in type of prohibited activity, geographic area covered, scope and duration, (viii) the consideration provided to the Subject Party under this Agreement and the Business Combination Agreement is not illusory, and (ix) such provisions do not impose a greater restraint than is necessary to protect the goodwill or other business interests of the Covered Parties.

 

2. No Solicitation; No Disparagement.

 

(a) No Solicitation of Employees and Consultants. The Subject Party agrees that, during the Restricted Period, the Subject Party will not, and will not permit its Affiliates to, without the prior written consent of the Purchaser (which may be withheld in its sole discretion), either on its own behalf or on behalf of any other Person (other than, if applicable, a Covered Party in the performance of the Subject Party’s duties on behalf of the Covered Parties), directly or indirectly: (i) hire or engage as an employee, independent contractor, consultant or otherwise any Covered Personnel (as defined below); (ii) solicit, induce, encourage or otherwise knowingly cause (or attempt to do any of the foregoing) any Covered Personnel to leave the service (whether as an employee, consultant or independent contractor) of any Covered Party; or (iii) in any way interfere with or attempt to interfere with the relationship between any Covered Personnel and any Covered Party; provided, however, the Subject Party and its Affiliates will not be deemed to have violated this Section 2(a) if any Covered Personnel voluntarily and independently solicits an offer of employment from the Subject Party or its Affiliate (or other Person whom any of them is acting on behalf of) by responding to a general advertisement or solicitation program conducted by or on behalf of the Subject Party or its Affiliate (or such other Person whom any of them is acting on behalf of) that is not targeted at such Covered Personnel or Covered Personnel generally, so long as such Covered Personnel is not hired. For purposes of this Agreement, “Covered Personnel” shall mean any Person who is or was an employee, consultant or independent contractor of the Covered Parties, as of the Closing Date, at any time during the Restricted Period and as of the relevant time of determination.

 

2

 

 

(b) Non-Solicitation of Customers and Suppliers. The Subject Party agrees that, during the Restricted Period, the Subject Party and its Affiliates will not, without the prior written consent of the Purchaser (which may be withheld in its sole discretion), individually or on behalf of any other Person (other than, if applicable, a Covered Party in the performance of the Subject Party’s duties on behalf of the Covered Parties), directly or indirectly: (i) solicit, induce, encourage or otherwise knowingly cause (or attempt to do any of the foregoing) any Covered Customer (as defined below) to (A) cease being, or not become, a client or customer of any Covered Party with respect to the Business or (B) reduce the amount of business of such Covered Customer with any Covered Party, or otherwise alter such business relationship in a manner adverse to any Covered Party, in either case, with respect to or relating to the Business; (ii) knowingly interfere with or disrupt (or attempt to interfere with or disrupt) the contractual relationship between any Covered Party and any Covered Customer; (iii) divert any business with any Covered Customer relating to the Business from a Covered Party; (iv) solicit for business, provide services to, engage in or do business with, any Covered Customer for products or services that are part of the Business; or (v) interfere with or disrupt (or attempt to interfere with or disrupt), any Person that was a vendor, supplier, distributor, agent or other service provider of a Covered Party at the time of such interference or disruption, for a purpose competitive with a Covered Party as it relates to the Business. For purposes of this Agreement, a “Covered Customer” shall mean any Person who is or was an actual customer or client (or prospective customer or client with whom a Covered Party actively marketed or made or taken specific action to make a proposal) of a Covered Party, as of the Closing Date, at any time during the Restricted Period and as of the relevant time of determination.

 

(c) Non-Disparagement. The Subject Party agrees that from and after the Closing until the Second (2^nd) anniversary of the end of the Restricted Period, the Subject Party and its Affiliates will not, directly or indirectly engage in any conduct that involves the making or publishing (including through electronic mail distribution or online social media) of any written or oral statements or remarks (including the repetition or distribution of derogatory rumors, allegations, negative reports or comments) that are disparaging, deleterious or damaging to the integrity, reputation or good will of one or more Covered Parties or their respective management, officers, employees, independent contractors or consultants. Notwithstanding the foregoing, subject to Section 3 below, the provisions of this Section 2(c) shall not restrict the Subject Party from providing truthful testimony or information in response to a subpoena or investigation by a Governmental Authority or in connection with any legal action by the Subject Party against any Covered Party under this Agreement, the Business Combination Agreement or any other Ancillary Document that is asserted by the Subject Party in good faith.

 

3. Confidentiality. From and after the Closing Date, the Subject Party will, and will cause its Representatives to, keep confidential and not (except, if applicable, in the performance of the Subject Party’s duties on behalf of the Covered Parties) directly or indirectly use, disclose, reveal, publish, transfer or provide access to, any and all Covered Party Information without the prior written consent of the Purchaser (which may be withheld in its sole discretion). As used in this Agreement, “Covered Party Information” means all material and information relating to the business, affairs and assets of any Covered Party, including material and information that concerns or relates to such Covered Party’s bidding and proposal, technical, computer hardware or software, administrative, management, operational, data processing, financial, marketing, sales, human resources, business development, planning and/or other business activities, regardless of whether such material and information is maintained in physical, electronic, or other form, that is: (A) gathered, compiled, generated, produced or maintained by such Covered Party through its Representatives, or provided to such Covered Party by its suppliers, service providers or customers; and (B) intended and maintained by such Covered Party or its Representatives, suppliers, service providers or customers to be kept in confidence. The obligations set forth in this Section 3 will not apply to any Covered Party Information where the Subject Party can prove that such material or information: (i) is known or available through other lawful sources not bound by a confidentiality agreement with, or other confidentiality obligation to, any Covered Party; (ii) is or becomes publicly known through no violation of this Agreement or other non-disclosure obligation of the Subject Party or any of its Representatives; (iii) is already in the possession of the Subject Party at the time of disclosure through lawful sources not bound by a confidentiality agreement or other confidentiality obligation as evidenced by the Subject Party’s documents and records; or (iv) is required to be disclosed pursuant to an order of any administrative body or court of competent jurisdiction (provided that (A) the applicable Covered Party is given reasonable prior written notice, (B) the Subject Party cooperates (and causes its Representatives to cooperate) with any reasonable request of any Covered Party to seek to prevent or narrow such disclosure and (C) if after compliance with clauses (A) and (B) such disclosure is still required, the Subject Party and its Representatives only disclose such portion of the Covered Party Information that is expressly required by such order, as it may be subsequently narrowed).

 

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4. Representations and Warranties. The Subject Party hereby represents and warrants, to and for the benefit of the Covered Parties as of the date of this Agreement and as of the Closing Date, that: (a) the Subject Party has full power and capacity to execute and deliver, and to perform all of the Subject Party’s obligations under, this Agreement; and (b) neither the execution and delivery of this Agreement nor the performance of the Subject Party’s obligations hereunder will result directly or indirectly in a violation or breach of any agreement or obligation by which the Subject Party is a party or otherwise bound. By entering into this Agreement, the Subject Party certifies and acknowledges that the Subject Party has carefully read all of the provisions of this Agreement, and that the Subject Party voluntarily and knowingly enters into this Agreement.

 

5. Remedies. The covenants and undertakings of the Subject Party contained in this Agreement relate to matters which are of a special, unique and extraordinary character and a violation of any of the terms of this Agreement may cause irreparable injury to the Covered Parties, the amount of which may be impossible to estimate or determine and which cannot be adequately compensated. The Subject Party agrees that, in the event of any breach or threatened breach by the Subject Party of any covenant or obligation contained in this Agreement, each applicable Covered Party will be entitled to seek the following remedies (in addition to, and not in lieu of, any other remedy at law or in equity or pursuant to the Business Combination Agreement or the other Ancillary Documents that may be available to the Covered Parties, including monetary damages), and a court of competent jurisdiction may award: (i) an injunction, restraining order or other equitable relief restraining or preventing such breach or threatened breach, without the necessity of proving actual damages or posting bond or security, which the Subject Party expressly waives; and (ii) recovery of the Covered Party’s attorneys’ fees and costs incurred in enforcing the Covered Party’s rights under this Agreement. The Subject Party hereby consents to the award of any of the above remedies to the applicable Covered Party in connection with any such breach or threatened breach. The Subject Party hereby acknowledges and agrees that in the event of any breach of this Agreement, any value attributed or allocated to this Agreement (or any other non-competition agreement with the Subject Party) under or in connection with the Business Combination Agreement shall not be considered a measure of, or a limit on, the damages of the Covered Parties.

 

6. Survival of Obligations. The expiration of the Restricted Period will not relieve the Subject Party of any obligation or liability arising from any breach by the Subject Party of this Agreement during the Restricted Period. The Subject Party further agrees that the time period during which the covenants contained in Section 1 and Section 2 of this Agreement will be effective will be computed by excluding from such computation any time during which the Subject Party is in violation of any provision of such Sections.

 

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7. Miscellaneous.

 

(a) Notices. All notices, consents, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered (i) in person, (ii) by facsimile or other electronic means, with affirmative confirmation of receipt, (iii) one Business Day after being sent, if sent by reputable, nationally recognized overnight courier service or (iv) 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 Purchaser (or any other Covered Party), to.   Pono Capital Three, Inc. 643 Ilalo Street, #102 Honolulu, Hawaii 96813 Attn: Davin Kazama Telephone No.: [phone] E-mail: [e-mail]

with a copy (that will not constitute notice) to.   Nelson Mullins Riley & Scarborough 101 Constitution Avenue, NW, Suite 900 Washington, DC 20001 Attn: Peter Strand, Esq. Facsimile No.: 202.689.2952 Telephone No.: 202.689.2983 Email: [e-mail]

 

 

 

If to the Subject Party, to.

the address below the Subject Party’s name on the signature page to this Agreement.

 

 

 

(b) Integration and Non-Exclusivity. This Agreement, the Business Combination Agreement and the other Ancillary Documents contain the entire agreement between the Subject Party and the Covered Parties concerning the subject matter hereof. Notwithstanding the foregoing, the rights and remedies of the Covered Parties under this Agreement are not exclusive of or limited by any other rights or remedies which they may have, whether at law, in equity, by contract or otherwise, all of which will be cumulative (and not alternative). Without limiting the generality of the foregoing, the rights and remedies of the Covered Parties, and the obligations and liabilities of the Subject Party and its Affiliates, under this Agreement, are in addition to their respective rights, remedies, obligations and liabilities (i) under the laws of unfair competition, misappropriation of trade secrets, or other requirements of statutory or common law, or any applicable rules and regulations and (ii) otherwise conferred by contract, including the Business Combination Agreement and any other written agreement between the Subject Party or its Affiliate and any of the Covered Parties. Nothing in the Business Combination Agreement will limit any of the obligations, liabilities, rights or remedies of the Subject Party or the Covered Parties under this Agreement, nor will any breach of the Business Combination Agreement or any other agreement between the Subject Party or its Affiliate and any of the Covered Parties limit or otherwise affect any right or remedy of the Covered Parties under this Agreement. If any term or condition of any other agreement between the Subject Party or its Affiliate and any of the Covered Parties conflicts or is inconsistent with the terms and conditions of this Agreement, the more restrictive terms will control as to the Subject Party or its Affiliate, as applicable.

 

(c) Severability; Reformation. Each provision of this Agreement is separable from every other provision of this Agreement. If any provision of this Agreement is found or held to be invalid, illegal or unenforceable, in whole or in part, by a court of competent jurisdiction, then (i) such provision will be deemed amended to conform to applicable laws so as to be valid, legal and enforceable to the fullest possible extent, (ii) the invalidity, illegality or unenforceability of such provision will not affect the validity, legality or enforceability of such provision under any other circumstances or in any other jurisdiction, and (iii) the invalidity, illegality or unenforceability of such provision will not affect the validity, legality or enforceability of the remainder of such provision or the validity, legality or enforceability of any other provision of this Agreement. The Subject Party and the Covered 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. Without limiting the foregoing, if any court of competent jurisdiction determines that any part hereof is unenforceable because of the duration, geographic area covered, scope of such provision, or otherwise, such court will have the power to reduce the duration, geographic area covered or scope of such provision, as the case may be, and, in its reduced form, such provision will then be enforceable. The Subject Party will, at a Covered Party’s request, join such Covered Party in requesting that such court take such action.

 

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(d) Amendment; Waiver. This Agreement may not be amended or modified in any respect, except by a written agreement executed by the Subject Party, the Purchaser and Disinterested Director Majority (or their respective permitted successors or assigns). No waiver will be effective unless it is expressly set forth in a written instrument executed by the waiving Party (and if such waiving Party is a Covered Party, the Disinterested Director Majority) and any such waiver will have no effect except in the specific instance in which it is given. Any delay or omission by a Party in exercising its rights under this Agreement, or failure to insist upon strict compliance with any term, covenant, or condition of this Agreement will not be deemed a waiver of such term, covenant, condition or right, nor will any waiver or relinquishment of any right or power under this Agreement at any time or times be deemed a waiver or relinquishment of such right or power at any other time or times.

 

(e) Dispute Resolution. Any dispute, difference, controversy or claim arising in connection with or related or incidental to, or question occurring under, this Agreement or the subject matter hereof (other than applications for a temporary restraining order, preliminary injunction, permanent injunction or other equitable relief or application for enforcement of a resolution under this Section 7(e)) (a “Dispute”) shall be governed by this Section 7(e). A Party must, in the first instance, provide written notice of any Disputes to the other Parties subject to such Dispute, which notice must provide a reasonably detailed description of the matters subject to the Dispute. Any Dispute that is not resolved may at any time after the delivery of such notice immediately be referred to and finally resolved by arbitration pursuant to the then-existing Expedited Procedures of the Commercial Arbitration Rules (the “AAA Procedures”) of the American Arbitration Association (the “AAA”). Any Party involved in such Dispute may submit the Dispute to the AAA to commence the proceedings after the Resolution Period. To the extent that the AAA Procedures and this Agreement are in conflict, the terms of this Agreement shall control. The arbitration shall be conducted by one arbitrator nominated by the AAA promptly (but in any event within five (5) Business Days) after the submission of the Dispute to the AAA and reasonably acceptable to each Party subject to the Dispute, which arbitrator shall be a commercial lawyer with substantial experience arbitrating disputes under acquisition agreements. The arbitrator shall accept his or her appointment and begin the arbitration process promptly (but in any event within five (5) Business Days) after his or her nomination and acceptance by the Parties subject to the Dispute. The proceedings shall be streamlined and efficient. The arbitrator shall decide the Dispute in accordance with the substantive law of the State of Delaware. Time is of the essence. Each Party shall submit a proposal for resolution of the Dispute to the arbitrator within twenty (20) days after confirmation of the appointment of the arbitrator. The arbitrator shall have the power to order any Party to do, or to refrain from doing, anything consistent with this Agreement, the Ancillary Documents and applicable Law, including to perform its contractual obligation(s); provided, that the arbitrator shall be limited to ordering pursuant to the foregoing power (and, for the avoidance of doubt, shall order) the relevant Party (or Parties, as applicable) to comply with only one or the other of the proposals. The arbitrator’s award shall be in writing and shall include a reasonable explanation of the arbitrator’s reason(s) for selecting one or the other proposal. The seat of arbitration shall be in Delaware. The language of the arbitration shall be English.

 

6

 

 

(f) Governing Law; Jurisdiction. This Agreement shall be governed by, construed and enforced in accordance with the Laws of the State of Delaware without regard to the conflict of laws principles thereof. Subject to Section 7(e), all Actions arising out of or relating to this Agreement shall be heard and determined exclusively in any state or federal court located in Delaware (or in any appellate courts thereof) (the “Specified Courts”). Subject to Section 7(e), each Party hereby (a) submits to the exclusive jurisdiction of any Specified Court for the purpose of any Action arising out of or relating to this Agreement brought by any Party, (b) irrevocably waives, and agrees not to assert by way of motion, defense or otherwise, in any such Action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the Action is brought in an inconvenient forum, that the venue of the Action is improper, or that this Agreement or the transactions contemplated hereby may not be enforced in or by any Specified Court and (c) waives any bond, surety or other security that might be required of any other Party with respect thereto. Each Party agrees that a final judgment in any Action shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law or in equity. Each Party irrevocably consents to the service of the summons and complaint and any other process in any other action or proceeding relating to the transactions contemplated by this Agreement, on behalf of itself, or its property, by personal delivery of copies of such process to such Party at the applicable address set forth in Section 7(a). Nothing in this Section 7(f) shall affect the right of any Party to serve legal process in any other manner permitted by Law.

 

(g) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO (A) 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 (B) 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 7(g). ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 7(g) WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

 

(h) Successors and Assigns; Third Party Beneficiaries. This Agreement will be binding upon the Subject Party and the Subject Party’s estate, successors and assigns, and will inure to the benefit of the Covered Parties, and their respective successors and assigns. No Covered Party may assign any or all of its rights under this Agreement, at any time, in whole or in part, to any Person without first obtaining the consent or approval of the Subject Party (which consent shall not be unreasonably withheld, conditioned or delayed). The Subject Party agrees that the obligations of the Subject Party under this Agreement are personal and will not be assigned by the Subject Party. Each of the Covered Parties are express third party beneficiaries of this Agreement and will be considered parties under and for purposes of this Agreement.

 

(i) Disinterested Director Majority Authorized to Act on Behalf of Covered Parties. The Parties acknowledge and agree that the Disinterested Director Majority is authorized and shall have the sole right to act on behalf of Purchaser and the other Covered Parties under this Agreement, including the right to enforce the Purchaser’s rights and remedies under this Agreement. Without limiting the foregoing, in the event that the Subject Party serves as a director, officer, employee or other authorized agent of a Covered Party, the Subject Party shall have no authority, express or implied, to act or make any determination on behalf of a Covered Party in connection with this Agreement or any dispute or Action with respect hereto.

 

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(j) Construction. The Subject Party acknowledges that the Subject Party has been represented by counsel, or had the opportunity to be represented by counsel of the Subject Party’s choice. Any rule of construction to the effect that ambiguities are to be resolved against the drafting Party will not be applied in the construction or interpretation of this Agreement. Neither the drafting history nor the negotiating history of this Agreement will be used or referred to in connection with the construction or interpretation of this Agreement. The headings and subheadings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. In this Agreement: (i) the words “include,” “includes” and “including” when used herein shall be deemed in each case to be followed by the words “without limitation”; (ii) the definitions contained herein are applicable to the singular as well as the plural forms of such terms; (iii) whenever required by the context, any pronoun shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa; (iv) 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; (v) 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”; (vi) the term “or” means “and/or”; and (vii) any agreement or instrument defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement or instrument as from time to time amended, modified or supplemented, including by waiver or consent and references to all attachments thereto and instruments incorporated therein.

 

(k) Counterparts. This Agreement may be executed 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. A photocopy, faxed, scanned and/or emailed copy of this Agreement or any signature page to this Agreement, shall have the same validity and enforceability as an originally signed copy.

 

(l) Effectiveness. This Agreement shall be binding upon the Subject Party upon the Subject Party’s execution and delivery of this Agreement, but this Agreement shall only become effective upon the consummation of the Transactions. In the event that the Business Combination Agreement is validly terminated in accordance with its terms prior to the consummation of the Transactions, this Agreement shall automatically terminate and become null and void, and the Parties shall have no obligations hereunder.

 

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

 

8

 

 

IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Agreement as of the date first written above.

 

	Subject Party:
	[NAME]
	Address for Notice:

 

{Signature Page to Non-Competition Agreement}

 

 

 

 

Acknowledged and accepted as of the date first written above:

 

The Purchaser:
PONO CAPITAL THREE, INC.
By:
Name:	Davin Kazama
Title:	Chief Executive Officer
The Company:
ROBINSON AIRCRAFT LTD.
By:
Name:	Brandon Robinson
Title:	Chief Executive Officer

 

{Signature Page to Non-Competition Agreement}

 

 

 

 

 

Exhibit 10.11

 

INDEMNITY AGREEMENT

 

THIS INDEMNITY AGREEMENT is dated ______________ ___, 202_.

 

BETWEEN:

 

New Horizon Aircraft Ltd.
a company existing under the laws of British Columbia

 

(the “Company”)

 

- and -

 

[Name of director/officer]
of [City or full address]

 

(the “Indemnified Party”)

 

Context

 

A.	The Company is a company governed by the Act.

 

B.	The Indemnified Party has, at the request of the Company, accepted the position of director of the Company and may, at the request of the Company, accept the position of officer of the Company or act as a director or officer, or act in an equivalent capacity, of one or more Associated Corporations.

 

C.	The Articles of the Company provide that the Company will indemnify a director or officer in certain circumstances, subject to the Act.

 

THEREFORE, the Parties agree as follows:

 

1.	Definitions

 

In this Agreement, the following terms have the following meanings:

 

1.1	“Act” means the Business Corporations Act (British Columbia).

 

1.2	“Agreement” means this agreement, as it may be confirmed, amended, modified, supplemented or restated by written agreement between the Parties.

 

1.3	“Associated Corporation” means:

 

1.3.1

a corporation of which the Indemnified Party is or was a director or officer at a time when that corporation is or was an affiliate of the Company;

 

1.3.2

any other corporation of which the Indemnified Party is or was a director or officer at the request of the Company; and

 

1.3.3

any other partnership, trust, joint venture or other unincorporated entity for which the Indemnified Party is or was a director or officer, or holds or held a position equivalent to director or officer, at the request of the Company.

 

 

 

 

1.4	“Business Day” means any day other than a Saturday, Sunday or statutory holiday in the Province of British Columbia.

 

1.5	“Company” is defined in the recital of the Parties above.

 

1.6	“Derivative Action” means an Eligible Proceeding by or on behalf of the Company or any Associated Corporation brought against the Indemnified Party.

 

1.7	“Eligible Penalty” means a judgment, penalty or fine awarded or imposed in, or an amount paid in settlement of, an Eligible Proceeding.

 

1.8	“Eligible Proceeding” means any legal proceeding or investigative action, whether current, threatened, pending or completed, in which the Indemnified Party or any of the heirs and personal or other legal representatives of the Indemnified Party:

 

1.8.1

is or may be joined as a party; or

 

1.8.2

is or may be liable for or in respect of a judgment, penalty or fine in, or expenses related to, that legal proceeding or investigative action,

 

by reason of the Indemnified Party being or having been a director or officer of, or holding or having held a position equivalent to that of a director or officer of, the Company or any Associated Corporation, and includes any action to establish a right to indemnification under this Agreement.

 

1.9	“Expenses” includes costs, charges and expenses, including legal and other fees, but does not include judgments, penalties, fines or amounts paid in settlement of a proceeding.

 

1.10	“Indemnified Party” is defined in the recital of the Parties above.

 

1.11	“Parties” means the Company and the Indemnified Party collectively, and “Party” means any one of them.

 

2.	General Indemnity

 

Subject to Sections 3, 6, and 7 the Company, to the extent permitted by law, indemnifies the Indemnified Party from and against all Eligible Penalties and all Expenses actually and reasonably incurred by the Indemnified Party in respect of any Eligible Proceeding.

 

3.	Indemnification in Derivative Actions

 

In respect of any Derivative Action, the Company will, at the Indemnified Party’s request, apply at the Company’s own expense to a court of competent jurisdiction for approval to indemnify the Indemnified Party against all Eligible Penalties and all Expenses actually and reasonably incurred by the Indemnified Party in connection with that Derivative Action, as well as for approval to advance money to the Indemnified Party under Section 4.

 

4.	Advance of Expenses

 

Subject to Sections 6 and 7, the Company will, prior to the final disposition of an Eligible Proceeding, advance moneys to the Indemnified Party:

 

4.1	for the Expenses referred to in Section 2, provided that at the time of the advance of those Expenses, the Company does not have reasonable grounds to believe that the Indemnified Party has not met the conditions of Section 6.1; and

 

4.2	for the Expenses referred to in Section 3, provided the Company receives the approval of a court of competent jurisdiction as contemplated by Section 3.

 

It will not be necessary for the Indemnified Party to pay those Expenses and then seek reimbursement; the Indemnified Party may provide invoices, bills and statements of account for those Expenses to the Company for direct payment by the Company, and the Company will pay those amounts.

 

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5.	Scope and Survival

 

This Agreement will:

 

5.1	have effect as of the first date that the Indemnified Party acted for the Company or any Associated Corporation in an Indemnified Capacity; and

 

5.2	survive any resignation by the Indemnified Party from any Indemnified Capacity, and any other circumstance by reason of which the Indemnified Party will cease to act in an Indemnified Capacity.

 

6.	Limitation

 

6.1	The Company will not indemnify the Indemnified Party under this Agreement unless the Indemnified Party:

 

6.1.1

in relation to the subject matter of the Eligible Proceeding, acted honestly and in good faith with a view to the best interests of the Company or of the Associated Corporation, as the case may be; and

 

6.1.2

in the case of an Eligible Proceeding other than a civil proceeding, had reasonable grounds for believing that the Indemnified Party’s conduct in respect of which the Eligible Proceeding was brought was lawful.

 

6.2	The Company will not indemnify the Indemnified Party under this Agreement for:

 

6.2.1

any Eligible Penalties or Expenses incurred in the course of any action or other proceeding initiated by the Indemnified Party with respect to any claim that the Indemnified Party has against the Company or any Associated Corporation;

 

6.2.2

any Eligible Penalties or Expenses related to any action or proceeding initiated by the Indemnified Party against any other person or entity unless the Company or Associated Corporation has joined with the Indemnified Party in, or consented to, the initiation of that action or proceeding;

 

6.2.3

any Eligible Penalties or Expenses related to claims by the Company or Associated Corporation for the forfeiture and recovery by the Company or Associated Corporation, as applicable, of bonuses or other compensation received by the Indemnified Party from the Company or Associated Corporation due to the Indemnified Party’s violation of applicable securities laws or other laws.

 

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7.	Repayment of Indemnification Payments

 

7.1	If, at the conclusion of any Eligible Proceeding with respect to which indemnification is provided under this Agreement:

 

7.1.1

there is a final judicial or quasi-judicial determination establishing that the Indemnified Party has not fulfilled the conditions of Section 6.1 in respect of any amounts advanced or paid by the Company; or

 

7.1.2

the payment of any amounts advanced or paid by the Company is otherwise prohibited by section 163 of the Act;

 

the Indemnified Party undertakes to pay, and will pay, those amounts to the Company.

 

7.2

If the Indemnified Party receives indemnification or reimbursement from a source other than the Company for all or part of any Eligible Penalties or Expenses already advanced or paid by the Company to the Indemnified Party, then the amount received by the Indemnified Party from that other source will be paid by the Indemnified Party to the Company.

 

7.3	The Indemnified Party will repay to the Company all advances of Eligible Penalties or Expenses under this Agreement not actually required or used by the Indemnified Party.

 

7.4

All amounts payable by the Indemnified Party to the Company under this Agreement will be paid within 30 Business Days of the Company’s written request for payment and will bear interest after their due date until paid in full at the variable annual interest rate announced and adjusted from time to time by Toronto-Dominion Bank as its reference rate for determining interest rates on Canadian dollar commercial loans made by it in Canada, and which it may refer to as its “prime rate” or “prime lending rate”, plus 2%.

 

8.

General

 

8.1

Entire Agreement. This Agreement constitutes the entire agreement between the Parties pertaining to the subject matter of this Agreement and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the Parties, and there are no representations, warranties or other agreements between the Parties in connection with the subject matter of this Agreement except as specifically set out in this Agreement. No Party has been induced to enter into this Agreement in reliance on, and there will be no liability assessed, either in tort or contract, with respect to, any warranty, representation, opinion, advice or assertion of fact, except to the extent it has been reduced to writing and included as a term in this Agreement.

 

8.2

Notice of a Claim. Promptly, and in any event no later than ten Business Days after receipt by the Indemnified Party of a written notice of a claim or threatened claim against it that may result in a demand for indemnification under this Agreement, the Indemnified Party will give written notice to the Company of the claim or threatened claim. A notice delivered under this Section will include a description of the claim or threatened claim, a summary of the facts giving rise to the claim or threatened claim and, if possible, an estimate of any potential liability arising under the claim or threatened claim. Failure by the Indemnified Party to notify the Company of any claim or threatened claim will not relieve the Company from its obligations under this Agreement or otherwise limit its liability, except to the extent that the claim includes legal proceedings and the failure of the Indemnified Party to notify the Company within the required time limits prejudices the defence of the claim.

 

8.3	Notices. Any notice or other communication required or permitted by this Agreement to be given or made to a Party must be in writing and either:

 

8.3.1

delivered personally or by courier;

 

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8.3.2

sent by prepaid registered mail; or

 

8.3.3

transmitted by e-mail or functionally equivalent electronic means of transmission, charges (if any) prepaid;

 

and must be sent to the intended recipient at its address as follows:

 

to the Company at:

 

New Horizon Aircraft Ltd.

3187 Highway 35

Lindsay, Ontario

K9V 4R1, Canada

	Attention:	E. Brandon Robinson
	E-mail:	[e-mail]

 

with a copy to

 

Gowling WLG (Canada) LLP
345 King Street West, Suite #600
Kitchener, Ontario
N2G 0C5, Canada

 

	Attention:	Todd Bissett
	E-mail:	[e-mail]

 

to the Indemnified Party at:

 

[Name]
[Address]

 

E-mail: [●]

 

or at any other address as any Party may at any time advise the other by notice in writing given in accordance with this Section 8.3. Any notice or other communication delivered to the Party to whom it is addressed will be deemed to have been given or made and received on the day it is delivered at that Party’s address, provided that if that day is not a Business Day or if it is received after 5:00 p.m. (local time of the recipient) then the notice or other communication will be deemed to have been given or made and received on the next Business Day. Any notice or other communication sent by prepaid registered mail will be deemed to have been given or made and received on the fifth Business Day after which it is mailed. If a strike or lockout of postal employees is then in effect, or generally known to be impending, every notice or other communication must be delivered personally or by courier or transmitted by e-mail or functionally equivalent electronic means of transmission. Any notice or communication transmitted by e-mail or other functionally equivalent electronic means of transmission will be deemed to have been given or made and received on the day on which it is transmitted; but if the notice or communication is transmitted on a day that is not a Business Day or after 5:00 p.m. (local time of the recipient), it will be deemed to have been given or made and received on the next Business Day.

 

8.4	Headings. The division of this Agreement into sections and subsections and the insertion of headings are for convenience of reference only and will not affect the construction or interpretation of this Agreement.

 

8.5	References. References in this Agreement to a section, subsection or paragraph are to be construed as references to a section, subsection or paragraph of this Agreement unless the context requires otherwise.

 

5

 

 

8.6	Assignment. Neither Party may assign this Agreement or any rights or obligations under this Agreement without the prior written consent of the other Party.

 

8.7	Enurement. This Agreement will enure to the benefit of and be binding upon the Parties and their respective heirs, legal representatives, successors and permitted assigns.

 

8.8

Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction will not invalidate the remaining provisions of this Agreement, and any such invalid or unenforceable provision will be deemed to be severed. The prohibition against or unenforceability of a provision in one jurisdiction will not invalidate that provision or render it unenforceable in any other jurisdiction.

 

8.9

Further Assurances. The Parties will, with reasonable diligence, do all things and provide all reasonable assurances as may be required to, and each Party will provide any further documents or instruments required by the other Party as may be reasonably necessary or desirable to, give effect to this Agreement and carry out its provisions.

 

8.10	Governing Law. This Agreement is governed by, and is to be construed in accordance with, the laws of the Province of British Columbia and the laws of Canada applicable in that Province.

 

8.11	Electronic Signatures and Delivery. This Agreement and any counterpart of it may be:

 

8.11.1

signed by manual, digital or other electronic signatures; and

 

8.11.2

delivered or transmitted by any digital, electronic or other intangible means, including by e-mail or other functionally equivalent electronic means of transmission,

 

and that execution, delivery and transmission will be valid and legally effective to create a valid and binding agreement between the Parties.

 

8.12	Counterparts. This Agreement may be signed and delivered by the Parties in counterparts, with the same effect as if each of the Parties had signed and delivered the same document, and that execution and delivery will be valid and legally effective.

 

8.13	Acknowledgement—Independent Legal Advice. Each Party acknowledges that it has:

 

8.13.1

had the opportunity to receive independent legal advice from its own lawyer(s) with respect to the terms of this Agreement before its execution;

 

8.13.2

read this Agreement, understands it, and agrees to be bound by its terms and conditions; and

 

8.13.3

received a copy of this Agreement.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

6

 

 

Each of the Parties has executed and delivered this Agreement as of the date noted at the beginning of the Agreement.

 

	New Horizon Aircraft Ltd.
	Per:
		Name:
		Title:
	[NAME OF INDEMNIFIED PARTY]

 

 

7

 

 

Exhibit 10.12

 

 

January 5, 2024

 

Private & Confidential

 

Sent Via Email

 

Brandon Robinson

***

***

 

Dear Brandon:

 

Re: Offer of Employment with Horizon Aircraft

 

As announced recently, New Horizon Aircraft Ltd. d/b/a Horizon Aircraft (the “Company”) has completed a business combination with Robinson Aircraft Ltd. (“Robinson”) whereby the Company has acquired all of the issued and outstanding shares of Robinson (the “Sale”). Conditioned on the successful closing of the Sale, we are pleased to offer you employment with the Company on the terms and conditions set out below. Once you return this signed offer, the terms of this letter agreement will become a binding employment agreement between you and the Company (the “Agreement”).

 

1.

Duties and Responsibilities

 

(a)

You will serve as Chief Executive Officer. In this capacity, you will report to and perform such executive duties consistent with your position as may be assigned to you by the Board of Directors and such other executive duties customary to your office and as are reasonably necessary to the operations of the Company. You will: (i) devote all of your business time and attention, your best efforts, and all of your skill and ability to promote the interests of the Company; (ii) carry out your duties and responsibilities with the highest level of integrity and judgment, and exercise at all times the care, skill and diligence consistent with the Company’s policies regarding quality and service; (iii) work with other employees of the Company in a competent and professional manner; (iv) Use best efforts to promote the interests and goodwill of the Company and not act or fail to act, or make or fail to make any statement, oral or written, which would injure the Company’s business, interests or reputation; and (v) comply with all relevant client, and Company policies as in effect from time to time, including the Ethics and Insider Trading Policy.

 

(b)

During the term of your employment, you agree to obtain the prior written approval of the person to whom you report prior to accepting any appointments of any kind (including, but not limited to, appointments to boards of directors) with any third parties other than the Company. It is understood that if approved, any such appointment, and your activities thereunder, must not constitute a violation of any provision of this Agreement.

 

(c)

If requested by the Company, you will act as a director and/or officer of the Company or any of its affiliates and associates as such terms are defined in the Business Corporations Act (Ontario) (collectively, “Affiliates”) as may be determined from time to time by the Company, in its sole discretion. For the period of any such appointment, the Company shall ensure you are entitled to coverage pursuant to any policy of insurance maintained by or for the Company from time to time and related to the liability of the directors and officers of the Company and its Affiliates, which policy shall indemnify you against any amounts payable by you, including damages, fines, penalties, interest and legal expenses incurred by you or for which you are liable by reason of such appointment and your conduct, provided you have acted honestly and in good faith with a view to the best interests of the Company and its Affiliates, and had reasonable grounds for believing that such conduct was lawful. You acknowledge and agree that in the event that an appointment to the Board of Directors of the Company or as a director or officer of any one or more of its Affiliates shall be terminated for any reason whatsoever, you shall not be entitled to any notice or compensation whatsoever with respect to the termination of such appointment.

 

	Private and Confidential

Horizon Aircraft – Employment Agreement – Brian Robinson

 

(d)

As the business needs of the Company may change from time to time, the Company may, from time to time, amend your duties, responsibilities, title, reporting arrangements and place of work without causing termination or a breach of this Agreement.

 

2.

Start Date, Term, Background Verification

 

Your employment with the Company will begin immediately following the successful close of the Sale, which is currently scheduled for January 10, 2024 (“Effective Date”). Thereafter, you employment will continue indefinitely until terminated in accordance with Section 9 of this Agreement.

 

This offer of employment is conditional on your approval for a security clearance with governmental authorities as the Company considers necessary or advisable. The process to secure approval of this clearance may include, but is not limited to, a criminal record check, reference check, and financial check. By signing this Agreement, you are providing the Company with your written consent to undertake the background check required to obtain this clearance, and you agree to complete any documents required. Furthermore, you understand and agree this offer of employment will be void or your employment terminated immediately in the event you do not participate as indicated or as required, or if the results of this background check are not satisfactory to the Company, at its sole discretion.

 

3.

Prior Service

 

Although you will be a new employee with the Company, your prior employment service with Robinson Aircraft Ltd. will be recognized for the purposes of the Ontario Employment Standards Act, 2000, as amended from time to time (the “ESA”). For clarity, the Company will recognize your original employment start date of February 18, 2021 (“Original Hire Date”).

 

4.

Place of Work

 

This position is located at 3187 Hwy 35 in Lindsay, Ontario (“Location”). It is understood that you will regularly work remotely part of the time, and may exclusively work remotely due to restrictions related to public health that may in the future require remote work (“Public Health Restrictions”). Absent such Public Health Restrictions, it is understood that you will regularly work remotely five (5) days per week. Despite any pre-arranged schedule, and subject to Public Health Restrictions, you may be required to attend at the Location or at other business-related locations as directed on short notice so as to ensure the goals of your employment are met.

 

5.

Hours of Work

 

Although you are generally expected to be available during regular business hours, given the nature of your role within the organization, you will be entitled to a flexible work schedule, subject to the needs of the business and the satisfactory completion of your duties hereunder.

 

In light of your managerial and executive position, and the duties and responsibilities associated with this role, you acknowledge and agree that your employment with the Company is not subject to the overtime and hours of work provisions of the ESA.

 

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Horizon Aircraft – Employment Agreement – Brian Robinson

 

6.

Compensation

 

Your base salary will be at the annual rate of $295,000.00 CAD. You will be paid in accordance with the Company’s payroll practices and your base salary will be subject to review in accordance with the Company’s salary review policy for senior executives then in effect.

 

In addition to your base salary, you will be eligible to receive additional compensation as set forth in Schedule 1 of this Agreement.

 

7.

Benefits

 

You will be eligible to participate in additional benefits in accordance with Schedule 1 of this Agreement and subject to the provisions of the various benefit plans and programs in effect from time to time.

 

8.

Vacation/Time Off, Leaves and Holidays

 

The Company offers flexible vacation/paid time off, meaning that paid vacation/time off is not subject to a particular fixed limit, although you will still require Company approval when requesting vacation days and certain other paid time off. You are expected to use this privilege responsibly, and the following conditions apply:

 

(a)

Under the ESA, based on your Original Hire Date, your current statutory vacation accrues at a rate totalling 15 days for each 12-month period of employment. While you are permitted to take additional vacation, you understand you are required to consume all of the statutory vacation accrued in that vacation entitlement year. The Company’s vacation entitlement year commences on June 1 and ends on May 31. Any paid vacation days taken will be credited first toward satisfying these statutory minimums.

 

(b)

Vacation is to be scheduled in advance by agreement with your manager, but subject always to compliance with ESA requirements, the Company reserves the right to impose a specific vacation schedule, including the right to require employees to use up statutory vacation before the deadline.

 

(c)

To the maximum extent permitted under the ESA, the Company reserves the right to deny any request to take paid vacation/time off in excess of two (2) consecutive calendar weeks.

 

(d)

The Company will provide you with all statutory leaves to which you are entitled under the ESA and other applicable legislation (each, a “Statutory Leave”). If you are taking vacation/time off for reasons that also qualify for any paid or unpaid Statutory Leave, the time taken will be credited toward, and will not be additional to, your Statutory Leave entitlements.

 

Paid vacation/time off is not intended as a substitute or “add-on” to any Statutory Leaves of longer than ten (10) consecutive business days. For example, if you qualify for an 8-week unpaid compassionate care Statutory Leave, you are not entitled to use paid vacation/time off instead of (or as part of) that Statutory Leave, unless you have the Company’s prior consent.

 

(e)

If you take paid vacation/time off due to illness/injury for longer than ten (10) consecutive business days, then (to the extent permitted by the ESA) you may be required to provide appropriate medical documentation to the Company. If you are covered for disability benefits under our benefits plans, you may be required to apply for those benefits.

 

(f)

You are also entitled to all applicable public holidays/public holiday pay for which you are eligible in Ontario.

 

	Private and Confidential	3

Horizon Aircraft – Employment Agreement – Brian Robinson

 

9.

Termination

 

(a)

Resignation: You shall provide the Company with thirty (30) days’ notice of resignation from employment.

 

(b)

Termination Without Notice or Pay in Lieu of Notice: The Company may terminate your employment without notice, payment in lieu of notice, benefit continuation (if applicable) or compensation of any kind where permitted by the ESA, which includes willful misconduct, disobedience or willful neglect of duty that is not trivial and has not been condoned by the Company. Failure by the Company to rely on this provision in any given instance or instances shall not constitute a precedent or be deemed a waiver.

 

(c)

Termination With Notice or Pay in Lieu of Notice: The Company may terminate your employment with notice or pay in lieu of notice by providing you with the following:

 

(i)

the minimum amount of notice, pay in lieu of notice (or a combination of both), severance pay, vacation pay and benefit continuation (if applicable) and any other entitlements strictly required by the ESA, calculated from the Original Hire Date; plus,

 

(ii)

such additional amount of payment of Base Salary in lieu of notice (“Additional Pay in Lieu of Notice”), as is necessary to ensure that the aggregate of the statutory notice, pay in lieu of notice and severance pay entitlements under (i) above and the Additional Pay in Lieu of Notice under this sub-section (ii), at a minimum equals twelve (12) months, and such aggregate shall increase by additional one (1) month payment of Base Salary in lieu of notice for each completed year of service from the Effective Date to an overall cumulative maximum of 24 months of Base Salary; plus,

 

For the purposes of this Agreement, the period for which you receive notice and/or payment under this sub-section 9(c), calculated from the date you are advised of the termination of your employment, is the ‘Severance Period’.

 

(iii)

payment of a prorated portion of any bonuses that you are eligible to receive as of the date of termination, calculated to the end of the Severance Period based upon the average incentive compensation paid to you in the two years prior to the year in which notice of termination is communicated.

 

(d)

The Company agrees that the payment of any amounts payable pursuant to section 9(c) above shall be made as a lump-sump payment to you in the payroll following the effective date of termination of employment.

 

(e)

Upon delivery of notice of termination of your employment with notice or pay in lieu of notice, you will be entitled to continued participation in benefit plans, including group insurance benefit coverage, for the greater of the period during which you are actively employed following receipt of notice of termination and end of the Severance Period.

 

(f)

It is intended that the amounts payable pursuant to section 9(c) of this Agreement include your full entitlement to termination, vacation and/or severance pay and continuation of benefits pursuant to the ESA, and any entitlement to payment of damages at common law and in equity as a result of a termination of your employment with notice or pay in lieu of notice. You agree that you are not entitled to, and waive any right to claim damages for the loss of, an entitlement to earn or receive amounts as a result of the Company’s failure to provide you with notice of termination without just cause at common law.

 

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Horizon Aircraft – Employment Agreement – Brian Robinson

 

(g)

Notwithstanding anything to the contrary in this Agreement, in no case will the total payments and provision of benefits provided to you in respect of the termination of your employment be less than your entitlements pursuant to the ESA. In the event that your full entitlement under the ESA exceeds these contractual provisions, then those entitlements shall replace these provisions and no further entitlements or payments are due to you pursuant to the ESA or at common law.

 

(h)

The provisions of this Agreement in respect of the termination of your employment shall remain in full force and effect throughout the period of your employment, notwithstanding the length of that employment and any changes in your employment, including changes in your title, position, duties, level of responsibility, reporting structure, remuneration, and location.

 

10.

Change of Control

 

(a)

For the purposes of this Agreement, “Change of Control” means the occurrence of any one or more of the following events:

 

i.

any transaction that results in a person, group of persons or persons acting jointly or in concert, having beneficial ownership of, or control or direction over 50% or more of the voting securities of the Company; or

 

ii.

a merger, arrangement, amalgamation, or other business combination involving the Company that results in any person or group of person that had the beneficial ownership of, or control or direction over the outstanding voting securities of the Company immediately before the transaction having beneficial ownership of, or control or direction over, less than 50% of the outstanding voting securities of the resulting entity;

 

iii.

the sale, lease or exchange of all or substantially all of the Company’s property, other than to a wholly owned subsidiary of the Company or in the ordinary course of business, or

 

iv.

Incumbent Directors, defined as “any member of the Board who was a member of the Board immediately prior to the occurrence of a transaction giving rise to a Change in Control”, ceasing to constitute a majority of the Company’s Board of Directors.

 

“Good Reason” means the occurrence of any of the following:

 

i.

a constructive termination of your employment and of this Agreement;

 

ii.

any material and unilateral change in your title, responsibilities, or authority in place at the time of the Change of Control;

 

iii.

any material reduction in the Base Salary paid to you at the time of the Change of Control;

 

iv.

any termination or material reduction in the aggregate value of the employee benefit programs, including, but not limited to, pension, life, disability, health, medical or dental insurance, in which you participated or under which you were covered at the time of Change of Control; or

 

v.

your assignment to any significant, ongoing duties inconsistent with your skills, position (including status, offices, titles and reporting requirements), authority, duties or responsibilities, or any other action by the Company, which results in material diminution of such position.

 

	Private and Confidential	5

Horizon Aircraft – Employment Agreement – Brian Robinson

 

(b)

If following a Change of Control, the Company gives you Good Reason to terminate your employment and this Agreement, and provided you exercises that right within two (2) years from the date of the Change of Control, you shall be entitled to receive the payments and benefits set forth in section 9(c) as if your employment had been terminated on a without cause basis.

 

11.

Protective Covenant Obligations

 

You agree to abide by the Employee Non-Solicitation Agreement set forth in Scheule 2 of this Agreement.

 

12.

Confidentiality and Intellectual Property

 

During the course of your employment with the Company, you will have access to sensitive and/or non-public confidential or proprietary information, including, without limitation, information that belongs to or relates to the business of the Company or its affiliates’ (such as, for example, information about business practices, pricing and marketing plans), or that belongs to or relates to our (or our affiliates’) current, prospective or former customers. If that information was disclosed without our permission, it could harm the Company’s interests. All such confidential information, in any form, even if not marked as confidential, is “Confidential Information”, and you have no ownership rights in or to any Confidential Information.

 

During the term of this Agreement, you will disclose to the Company all ideas, inventions and business plans developed by you during such period which relate directly or indirectly to the business of the Company, including, without limitation, any process, operation, campaign, product or improvement which may be patentable or copyrightable (the “Work Product”). You agree that all Work Product and all intellectual property rights therein, including all patents, licenses, copyrights, tradenames, trademarks, service marks, campaigns and business plans developed or created by you in the course of your employment hereunder, either individually or in collaboration with others, will be deemed works made for hire and works made in the course of your employment with the Company, and are the sole and absolute property of the Company. For no additional consideration, you hereby assign and transfer to the Company, and agree to assign and transfer to the Company, any and all Work Product and all intellectual property rights therein, including all patents, licenses, copyrights, tradenames, trademarks, and service marks in the Work Product. For no additional consideration, you hereby waive all “moral rights” in the Work Product in favour of the Company and any person designated by the Company. You agree, that at the Company’s request and cost, you will take all steps necessary to secure the rights thereto to the Company in the Work Product, by patent, copyright or otherwise.

 

13.

Representations and Warranties

 

You represent, warrant and acknowledge to the Company the following:

 

(a)

You will not use or disclose any confidential or proprietary information from any previous employer or other person, firm, corporation or other entity (“Person”) which is in your power, possession or control and which use or disclosure could give rise to a legal claim against either you or the Company. Further, you shall comply with all restrictions on the solicitation of employees, contractors, customers or prospective customers of any previous employer or other Person by which you are legally bound. The Company specifically advises you that it does not wish, nor will it knowingly permit you to use or disclose such information or breach such restrictions in the context of performing your duties for the Company.

 

(b)

You will not, during your employment or thereafter, engage in any pattern of conduct that involves the making or publishing of written or oral statements or remarks, including the repetition or distribution of derogatory rumours, allegations, negative reports or comments, which are disparaging, deleterious or damaging to the integrity, reputation or goodwill of the Company or any of its Affiliates or their respective shareholders, directors, officers or employees.

 

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Horizon Aircraft – Employment Agreement – Brian Robinson

 

14.

Assignment

 

This Agreement may not be transferred, assigned, pledged or hypothecated by any party hereto, other than by operation of law; provided, however, that the Company shall be permitted to assign this Agreement to an affiliate in connection with a reorganization of the Company’s business or assets. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and assigns.

 

15.

Modification

 

This Agreement may not be orally canceled, changed, modified or amended, and no cancellation, change, modification or amendment shall be effective or binding, unless in writing and signed by the parties to this Agreement.

 

16.

Severability; Survival

 

In the event any provision or portion of this Agreement is determined to be invalid or unenforceable for any reason, in whole or in part, the remaining provisions of this Agreement shall nevertheless be binding upon the parties with the same effect as though the invalid or unenforceable part had been severed and deleted. The respective rights and obligations of the parties hereunder shall survive the termination of your employment to the extent necessary to the intended preservation of such rights and obligations.

 

17.

No Conflict

 

You represent and warrant that you are not subject to any agreement, instrument, obligations, order, judgment or decree of any kind, or any other restrictive agreement or obligation of any character, which would prevent you from entering into this Agreement or which would be breached by you upon the performance of your duties pursuant to this Agreement.

 

18.

Governing Law

 

This Agreement will be governed by and construed in accordance with the laws of the province of Ontario without giving effect to any choice or conflict of law provision or rule (whether in the province of Ontario or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the province of Ontario.

 

19.

Entire Agreement

 

Except as provided herein, this Agreement (including the Schedules, Exhibits and Annexes, as applicable) constitutes the complete agreement between you and the Company and supersedes all prior agreements relating to the subject matter hereof.

 

20.

Withholding

 

The Company may withhold from any amounts payable under this Agreement such federal, provincial or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.

 

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Horizon Aircraft – Employment Agreement – Brian Robinson

 

21.

Compliance with the ESA

 

Should any term of this Agreement fail to comply with a mandatory minimum standard or requirement imposed by applicable legislation, including the ESA, then the employment standard or requirement shall apply in place of the offending term of this Agreement, and shall constitute the rights and obligations of the parties in that respect. Under no circumstances will you receive less than your entitlements under the ESA.

 

22.

Eligibility to Work in Canada

 

You represent and warrant that you are legally permitted to work in Canada. Upon request, you will provide the Company with appropriate documentation confirming your eligibility to work in Canada. For clarity, this offer of employment (and your continued employment with the Company) is conditional upon your being legally entitled to work in Canada at all times.

 

23.

Legal Advice

 

You acknowledge and agree that you have had an adequate opportunity to obtain such independent legal advice as you deem prudent prior to entering into this Agreement.

 

24.

Accommodation

 

The Company provides accommodations for employees with disabilities. If you have specific ergonomic needs or require other accommodation because of a disability or a medical need, please contact Human Resources at [e-mail] to discuss arrangements.

 

25.

Counterparts

 

This Agreement may be executed in counterparts, all of which taken together shall constitute one instrument.

 

To indicate your acceptance of the terms and conditions set out in this Agreement, please in the space provided below and return one copy to Human Resources at [e-mail]. We encourage you to take some time to consider this offer and to seek whatever advice you deem necessary prior to making your decision. We do, however, require a response by no later than January 10, 2024.

 

Best regards,

 

/s/ Stewart Lee                                        

Stewart Lee

Horizon Aircraft

Head of People and Strategy

 

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Horizon Aircraft – Employment Agreement – Brian Robinson

 

Agreement and Acceptance

 

By signing below, I confirm that I have read, understand and agree to the terms and conditions of employment as set out above. I acknowledge that I have been given the opportunity to obtain independent legal advice with respect to the nature and consequences of entering into this Agreement.

 

IMPORTANT: Before you accept our offer, we draw your attention again to Paragraph 9 (Termination), which contains significant limitations on your rights if your employment with the Company ends for any reason whatsoever.

 

/s/ Brandon Robinson                                    

Brandon Robinson

 

DATED January 19, 2024

 

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Horizon Aircraft – Employment Agreement – Brian Robinson

 

Schedule 1

 

1.

Additional Compensation

 

1.1

Incentive Compensation: You shall be eligible for annual bonuses of up to 20% of your Base Salary, based upon overall performance and factors to be determined by the Company exercising its sole and unfettered discretion pursuant to and in accordance with the Executive Bonus Plan. The Executive Bonus Plan, as amended from time to time in the sole and absolute discretion of the Company, will govern the terms of your entitlement to such bonus compensation. The entitlement to such bonuses, the amount of any bonuses and the time of payment of such bonuses are in the sole and absolute discretion of the Company. Payment of bonus compensation is not expected compensation, and the payment of a bonus in any one or successive bonus periods shall not create an entitlement to a bonus in any subsequent bonus period. All bonus payments include a base amount plus vacation pay (calculated at the minimum percentage stipulated by the ESA) in respect of that base amount. Accordingly, no additional amount is payable on bonus amounts in respect of vacation pay. Bonuses are not earned on a prorated basis. Except as required by the ESA, you must be actively employed by the Company at the time any bonus is payable in order to be eligible to receive the bonus. For the purpose of the payment of any bonus, except as required by the ESA, “active employment” does not include any period of pay in lieu of notice of termination, or period of notice of resignation which is waived. Except as required by the ESA, any bonus entitlement will be forfeited effective on the date that the Company specifies as the date that the termination of your employment is effective (regardless of any period of pay in lieu of notice to which you may claim to be or are entitled under contract or common law), or on the effective date that the Company waives notice of your resignation (even if you claim constructive dismissal, and regardless of any period of pay in lieu of notice to which you may claim to be or is entitled under contract or common law). You agree that you are not entitled to, and waive any right to claim damages for the loss of an entitlement to receive a bonus as a result of the Company’s failure to provide you with notice of termination without just cause at common law (if applicable).

 

1.2

Stock Option Plan: Subject to the terms of the Omnibus Share Incentive Plan of the Company (the “SOP”), and contingent upon the approval of the Compensation Committee of the Company’s Board of Directors and the Company’s Board of Directors (to be granted in its sole and unfettered discretion), the Company shall provide you with such number of awards of the Company at a price and under such conditions to be determined in accordance with the terms of the SOP. If granted, such awards will vest on the schedule detailed in the terms of the SOP or the terms of the agreement representing such award which you will be required to execute upon the issuance of the stock options. Your participation in the SOP will be strictly governed by its terms, as they may be amended from time to time, and the Stock Option Agreement. You agree to bear responsibility for, and adhere to, any and all tax regulations in connection with the stock options issued to you.

 

1.3

Group Insurance Benefits: On the Effective Date, you will be eligible to make application to participate in such group insurance benefit plans enjoyed by other employees of the Company at a similar level of responsibility. Your eligibility, participation and coverage in respect of any plans will continue to be governed and shall be interpreted in accordance with the written terms of the contract between the Company and the insurer (or other provider) and the policies of the Company.

 

1.4

Resources: You will be provided with all property, equipment, facilities and resources reasonably necessary to perform their duties and responsibilities. These include a laptop with the required applications, credit and/or debit cards, and necessary keys, passwords, access codes and rights. All property, equipment, facilities and resources remain the property of the Company, and are to be used in accordance with its policies. The Company shall have the right to delete and remove, directly or remotely, with or without prior notice, any Company data from any device, including personal devices you may use in the course of carrying out your duties. Such action may result in the deletion or removal of your personal data as stored on such personal device, and you hereby waive any claims against the Company arising or resulting from such deletion or removal of such personal data.

 

1.5

Expenses: You shall be reimbursed for all reasonable business expenses actually and properly incurred from time to time in connection with carrying out your duties and responsibilities to the Company and in accordance with its policies. Those policies require provision of original copies of all invoices and/or statements in respect of which you seek reimbursement and obtaining the approval of the CFO of the Company for such expenses and otherwise complying with the terms of any policy of the Company respecting expense claims in effect from time to time.

 

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Horizon Aircraft – Employment Agreement – Brian Robinson

 

Schedule 2

 

EMPLOYEE NON-SOLICITATION AGREEMENT

 

TO:

New Horizon Aircraft Ltd. d/b/a Horizon Aircraft (the “Corporation”)

 

In consideration of my employment with the Corporation and in accordance with my written employment agreement with the Corporation dated January 5, 2024 (the “Employment Agreement”), I hereby execute this Employee Non-Solicitation Agreement (this “Agreement”) and covenant, acknowledge and agree as follows:

 

Relationship

 

1.

By reason of my employment with the Corporation pursuant to the Employment Agreement, I will receive the value and advantage of special training, skills, expert knowledge and experience, as well as contact with existing and prospective customers of the Corporation, its affiliates and associates as such terms are defined in the Business Corporations Act (Ontario) (collectively “Affiliates”) and other employees of the Corporation and its Affiliates. In the course of my employment, I will be assigned duties that will give me Confidential Information (as defined in the Employment Agreement) as it relates to the conduct and details of the Corporation’s and its Affiliates’ businesses, and which will result in irreparable injury to the Corporation and its Affiliates which could not be adequately compensated by monetary damages if I were to act in a manner detrimental to the Corporation’s and/or its Affiliates’ interests, and/or use or disclose such Confidential Information and/or Work Product (as defined in the Employment Agreement).

 

2.

The business of the Corporation and its Affiliates is currently aerospace research and development, and aircraft prototype development. However, I understand that during my employment, the Corporation and its Affiliates will seek to expand and modify their businesses so as to achieve their legitimate business goals. Therefore, I agree that for the purposes of this Agreement, following the end of my active employment, “Business” shall mean the businesses of the Corporation and its Affiliates as they exist at the time that I cease to be actively employed by the Corporation.

 

Non-Solicitation

 

3.

I shall not, either directly or indirectly, individually or in partnership, jointly or in conjunction with any other person, firm, corporation or other entity (“Person”), in any capacity whatsoever including, without limitation, as agent, shareholder, employee, or consultant, except upon the request and on behalf of the Corporation and/or its Affiliates, during my employment and for the period of twelve (12) months following the date that I cease to be actively employed by the Corporation, regardless of who initiated the end of the employment relationship, do any of the following:

 

a.

In any way which could have a detrimental effect upon the Business:

 

i.

solicit; or

 

ii.

have business contact with;

 

iii.

any Person with whom I had direct dealings as a representative of the Corporation or any of its Affiliates and who or which is then either (A) a customer of the Corporation or any of its Affiliates; or (B) a prospective customer of the Corporation or any of its Affiliates with whom the Corporation or any of its Affiliates is then having direct business communication related to a specific business opportunity or has had direct business communication related to a specific business opportunity during the twelve (12) month period immediately preceding the date upon which I cease to be actively employed by the Corporation. For these purposes, “direct dealings” means direct communications with/by me (whether in person or otherwise) for the purposes of servicing, selling or marketing on behalf of the Corporation and/or its Affiliates, but only if such communications are more than trivial in nature, and in any case excluding bulk or mass-marketing communications directed to multiple customers or prospective customers.

 

	Private and Confidential	11

Horizon Aircraft – Employment Agreement – Brian Robinson

 

b.

In respect of any Person known to me to be employed or engaged by the Corporation or any of its Affiliates on the last day of my active employment, save and except any person employed or engaged by the Corporation or any of its Affiliates in an exclusively clerical position, i. offer employment to them; ii. in any manner employ or engage them; iii. interfere with their employment or engagement with the Corporation or any of its Affiliates; or iv.encourage or entice them to terminate their employment or reduce the level or scope of their employment or engagement with the Corporation or any of its Affiliates, irrespective of whether such Person would commit any breach of their contract with the Corporation or any of its Affiliates by altering or ending their relationship with the Corporation or any of its Affiliates.

 

c.

In respect of any Person which is known to me to be a business partner or supplier of goods and/or services to the Corporation or any of its Affiliates on the last day of my active employment, encourage or entice them to terminate their relationship or reduce the level or scope of their relationship with the Corporation or any of its Affiliates, irrespective of whether such Person would commit any breach of their contract with the Corporation or any of its Affiliates by altering or ending their relationship with the Corporation or any of its Affiliates.

 

4.

I hereby acknowledge that the Corporation and I (collectively, the “Parties”) have agreed that all provisions in this Agreement are reasonable as between the Parties in the context of my employment with the Corporation. I acknowledge and agree that all provisions in this Agreement are reasonable with reference to the public interest in free and open competition based upon the Parties’ knowledge of the market and the industry in which the Corporation or any of its Affiliates are engaged. Specifically, I agree that any court of competent jurisdiction shall be ignoring the intention of the Parties and the Parties’ reasoned assessment of the reasonableness of the provisions with reference to the public interest in free and open competition should it find otherwise. I agree that my compliance with my obligations pursuant to this Agreement will not unduly restrict or curtail my legitimate efforts to earn a livelihood in my chosen area of endeavour following my employment with the Corporation.

 

Miscellaneous

 

5.

If any provision or part thereof, including individual words or phrases, contained in this Agreement, to any extent and for any reason is declared to be void, voidable, invalid, illegal, ineffective, frustrated or unenforceable by any court of competent jurisdiction, the remainder of the provision and this Agreement shall not be affected thereby, and each provision of this Agreement or part thereof shall be separately valid and enforceable to the fullest extent permitted by law. If such a provision may be made enforceable or effective by imposing limitations, particularly in respect of its scope in terms of time or territory, such limitations shall be imposed and made so as to render such provision enforceable and effective to the fullest extent permissible by law.

 

6.

I acknowledge and agree that in the event of a breach or threatened breach of a provision contained in this Agreement, the Corporation and/or any of its Affiliates shall be entitled to obtain from any court of competent jurisdiction interim, interlocutory and permanent injunctive relief to prevent or restrain such breach or threatened breach, and an accounting of all profits and benefits arising out of such breach, which rights and remedies shall be cumulative and in addition to any other rights or remedies to which the Corporation and/or any of its Affiliates may be entitled at law or in equity. I hereby waive all defences to the strict enforcement by the Corporation and/or any of its Affiliates of all covenants, provisions and restrictions in this Agreement.

 

	Private and Confidential	12

Horizon Aircraft – Employment Agreement – Brian Robinson

 

7.

No failure by the Corporation to pursue any remedy resulting from a breach of this Agreement by me shall be construed as a waiver of that breach, or as a waiver of any subsequent or other breach.

 

8.

I acknowledge and agree that my agreement to the covenants and restrictions contained in this Agreement are the essence of this Agreement and constitute a material inducement to the Corporation to enter into this Agreement and to employ me.

 

9.

This Agreement and the provisions of the Employment Agreement which relate to this Agreement constitute the entire understanding and agreement between me and the Corporation in respect of the subject matter herein contained, and supersede and replace all prior oral or written statements, representations (even if made negligently), negotiations and agreements related thereto. There are no other oral or written collateral agreements in respect of the subject matter herein contained.

 

10.

Except for that body of law related to conflict of laws, this Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein.

 

11.

I acknowledge and agree that the covenants made by me herein shall survive the termination of my employment and shall continue in full force and effect. The existence of any claim or cause of action by me against the Corporation, whether based upon a right pursuant to or a breach of the Employment Agreement or otherwise, shall not constitute a defence to the enforcement of the provisions contained in this Agreement in favour of the Corporation or any of its Affiliates.

 

12.

I acknowledge that the Corporation has urged me to obtain independent legal advice in respect to this Agreement and has offered me adequate opportunity to obtain such independent legal advice prior to my signing it.

 

13.

The provisions of this Agreement shall be binding upon and enure to the benefit of the Parties and their respective heirs, executors, administrators, legal representatives, successors, permitted assigns and any of the Corporation’s Affiliates. Without my consent the Corporation may assign the benefit of this Agreement provided the assignee agrees to comply with all of the obligations of the Corporation under this Agreement. I may not transfer my responsibilities.

 

SIGNED, SEALED AND DELIVERED	)
in the presence of	)
	)
/s/ S. Robinson	)	/s/ Brandon Robinson
Witness	)	Brandon Robinson
Stephanie Robinson		January 19, 2024
Witness Name (Print)		Date

 

	Private and Confidential	13

 

Exhibit 10.13

 

 

January 9, 2024

 

Private & Confidential

 

Sent Via Email

 

Jason O’Neill

***

***

 

Dear Jason:

 

Re: Offer of Employment with Horizon Aircraft

 

As announced recently, New Horizon Aircraft Ltd. d/b/a Horizon Aircraft (the “Company”) has completed a business combination with Robinson Aircraft Ltd. (“Robinson”) whereby the Company has acquired all of the issued and outstanding shares of Robinson (the “Sale”). Conditioned on the successful closing of the Sale, we are pleased to offer you employment with the Company on the terms and conditions set out below. Once you return this signed offer, the terms of this letter agreement will become a binding employment agreement between you and the Company (the “Agreement”).

 

1.

Duties and Responsibilities

 

(a)

You will serve as Chief Operating Officer. In this capacity, you will report to and perform such executive duties consistent with your position as may be assigned to you by the Chief Executive Officer and such other executive duties customary to your office and as are reasonably necessary to the operations of the Company. You will: (i) devote all of your business time and attention, your best efforts, and all of your skill and ability to promote the interests of the Company; (ii) carry out your duties and responsibilities with the highest level of integrity and judgment, and exercise at all times the care, skill and diligence consistent with the Company’s policies regarding quality and service; (iii) work with other employees of the Company in a competent and professional manner; (iv) Use best efforts to promote the interests and goodwill of the Company and not act or fail to act, or make or fail to make any statement, oral or written, which would injure the Company’s business, interests or reputation; and (v) comply with all relevant client, and Company policies as in effect from time to time, including the Ethics and Insider Trading Policy.

 

(b)

During the term of your employment, you agree to obtain the prior written approval of the person to whom you report prior to accepting any appointments of any kind (including, but not limited to, appointments to boards of directors) with any third parties other than the Company. It is understood that if approved, any such appointment, and your activities thereunder, must not constitute a violation of any provision of this Agreement.

 

(c)

If requested by the Company, you will act as a director and/or officer of the Company or any of its affiliates and associates as such terms are defined in the Business Corporations Act (Ontario) (collectively, “Affiliates”) as may be determined from time to time by the Company, in its sole discretion. For the period of any such appointment, the Company shall ensure you are entitled to coverage pursuant to any policy of insurance maintained by or for the Company from time to time and related to the liability of the directors and officers of the Company and its Affiliates, which policy shall indemnify you against any amounts payable by you, including damages, fines, penalties, interest and legal expenses incurred by you or for which you are liable by reason of such appointment and your conduct, provided you have acted honestly and in good faith with a view to the best interests of the Company and its Affiliates, and had reasonable grounds for believing that such conduct was lawful. You acknowledge and agree that in the event that an appointment to the Board of Directors of the Company or as a director or officer of any one or more of its Affiliates shall be terminated for any reason whatsoever, you shall not be entitled to any notice or compensation whatsoever with respect to the termination of such appointment.

 

Private and Confidential

 

 

 

 

Horizon Aircraft – Employment Agreement – Jason O’Neill

 

(d)

As the business needs of the Company may change from time to time, the Company may, from time to time, amend your duties, responsibilities, title, reporting arrangements and place of work without causing termination or a breach of this Agreement.

 

2.

Start Date, Term, Background Verification

 

Your employment with the Company will begin immediately following the successful close of the Sale, which is currently scheduled for January 12, 2024 (“Effective Date”). Thereafter, you employment will continue indefinitely until terminated in accordance with Section 9 of this Agreement.

 

This offer of employment is conditional on your approval for a security clearance with governmental authorities as the Company considers necessary or advisable. The process to secure approval of this clearance may include, but is not limited to, a criminal record check, reference check, and financial check. By signing this Agreement, you are providing the Company with your written consent to undertake the background check required to obtain this clearance, and you agree to complete any documents required. Furthermore, you understand and agree this offer of employment will be void or your employment terminated immediately in the event you do not participate as indicated or as required, or if the results of this background check are not satisfactory to the Company, at its sole discretion.

 

3.

Prior Service

 

Although you will be a new employee with the Company, your prior employment service with Robinson Aircraft Ltd. will be recognized for the purposes of the Ontario Employment Standards Act, 2000, as amended from time to time (the “ESA”). For clarity, the Company will recognize your original employment start date on March 18, 2021 (“Original Hire Date”).

 

4.

Place of Work

 

This position is located at 3187 Hwy 35 in Lindsay, Ontario (“Location”). It is understood that you will regularly work remotely part of the time, and may exclusively work remotely due to restrictions related to public health that may in the future require remote work (“Public Health Restrictions”). Absent such Public Health Restrictions, it is understood that you will regularly work remotely five (5) days per week. Despite any pre-arranged schedule, and subject to Public Health Restrictions, you may be required to attend at the Location or at other business-related locations as directed on short notice so as to ensure the goals of your employment are met.

 

5.

Hours of Work

 

Although you are generally expected to be available during regular business hours, given the nature of your role within the organization, you will be entitled to a flexible work schedule, subject to the needs of the business and the satisfactory completion of your duties hereunder.

 

In light of your managerial and executive position, and the duties and responsibilities associated with this role, you acknowledge and agree that your employment with the Company is not subject to the overtime and hours of work provisions of the ESA.

 

Private and Confidential

 

2

 

 

Horizon Aircraft – Employment Agreement – Jason O’Neill

 

6.

Compensation

 

Your base salary will be at the annual rate of $225,000.00 CAD. You will be paid in accordance with the Company’s payroll practices and your base salary will be subject to review in accordance with the Company’s salary review policy for senior executives then in effect.

 

In addition to your base salary, you will be eligible to receive additional compensation as set forth in Schedule 1 of this Agreement.

 

7.

Benefits

 

You will be eligible to participate in additional benefits in accordance with Schedule 1 of this Agreement and subject to the provisions of the various benefit plans and programs in effect from time to time.

 

8.

Vacation/Time Off, Leaves and Holidays

 

The Company offers flexible vacation/paid time off, meaning that paid vacation/time off is not subject to a particular fixed limit, although you will still require Company approval when requesting vacation days and certain other paid time off. You are expected to use this privilege responsibly, and the following conditions apply:

 

(a)

Under the ESA, based on your Original Hire Date, your current statutory vacation accrues at a rate totalling 15 days for each 12-month period of employment. While you are permitted to take additional vacation, you understand you are required to consume all of the statutory vacation accrued in that vacation entitlement year. The Company’s vacation entitlement year commences on June 1 and ends on May 31. Any paid vacation days taken will be credited first toward satisfying these statutory minimums.

 

(b)

Vacation is to be scheduled in advance by agreement with your manager, but subject always to compliance with ESA requirements, the Company reserves the right to impose a specific vacation schedule, including the right to require employees to use up statutory vacation before the deadline.

 

(c)

To the maximum extent permitted under the ESA, the Company reserves the right to deny any request to take paid vacation/time off in excess of two (2) consecutive calendar weeks.

 

(d)

The Company will provide you with all statutory leaves to which you are entitled under the ESA and other applicable legislation (each, a “Statutory Leave”). If you are taking vacation/time off for reasons that also qualify for any paid or unpaid Statutory Leave, the time taken will be credited toward, and will not be additional to, your Statutory Leave entitlements.

 

Paid vacation/time off is not intended as a substitute or “add-on” to any Statutory Leaves of longer than ten (10) consecutive business days. For example, if you qualify for an 8-week unpaid compassionate care Statutory Leave, you are not entitled to use paid vacation/time off instead of (or as part of) that Statutory Leave, unless you have the Company’s prior consent.

 

(e)

If you take paid vacation/time off due to illness/injury for longer than ten (10) consecutive business days, then (to the extent permitted by the ESA) you may be required to provide appropriate medical documentation to the Company. If you are covered for disability benefits under our benefits plans, you may be required to apply for those benefits.

 

(f)

You are also entitled to all applicable public holidays/public holiday pay for which you are eligible in Ontario.

 

Private and Confidential

 

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Horizon Aircraft – Employment Agreement – Jason O’Neill

 

9.

Termination

 

(a)

Resignation: You shall provide the Company with thirty (30) days’ notice of resignation from employment.

 

(b)

Termination Without Notice or Pay in Lieu of Notice: The Company may terminate your employment without notice, payment in lieu of notice, benefit continuation (if applicable) or compensation of any kind where permitted by the ESA, which includes willful misconduct, disobedience or willful neglect of duty that is not trivial and has not been condoned by the Company. Failure by the Company to rely on this provision in any given instance or instances shall not constitute a precedent or be deemed a waiver.

 

(c)

Termination With Notice or Pay in Lieu of Notice: The Company may terminate your employment with notice or pay in lieu of notice by providing you with the following:

 

(i)

the minimum amount of notice, pay in lieu of notice (or a combination of both), severance pay, vacation pay and benefit continuation (if applicable) and any other entitlements strictly required by the ESA, calculated from the Original Hire Date; plus,

 

(ii)

such additional amount of payment of Base Salary in lieu of notice (“Additional Pay in Lieu of Notice”), as is necessary to ensure that the aggregate of the statutory notice, pay in lieu of notice and severance pay entitlements under (i) above and the Additional Pay in Lieu of Notice under this sub-section (ii), at a minimum equals twelve (12) months, and such aggregate shall increase by additional one (1) month payment of Base Salary in lieu of notice for each completed year of service from the Effective Date to an overall cumulative maximum of 24 months of Base Salary; plus,

 

For the purposes of this Agreement, the period for which you receive notice and/or payment under this sub-section 9(c), calculated from the date you are advised of the termination of your employment, is the ‘Severance Period’.

 

(iii)

payment of a prorated portion of any bonuses that you are eligible to receive as of the date of termination, calculated to the end of the Severance Period based upon the average incentive compensation paid to you in the two years prior to the year in which notice of termination is communicated.

 

(d)

The Company agrees that the payment of any amounts payable pursuant to section 9(c) above shall be made as a lump-sump payment to you in the payroll following the effective date of termination of employment.

 

(e)

Upon delivery of notice of termination of your employment with notice or pay in lieu of notice, you will be entitled to continued participation in benefit plans, including group insurance benefit coverage, for the greater of the period during which you are actively employed following receipt of notice of termination and end of the Severance Period.

 

(f)

It is intended that the amounts payable pursuant to section 9(c) of this Agreement include your full entitlement to termination, vacation and/or severance pay and continuation of benefits pursuant to the ESA, and any entitlement to payment of damages at common law and in equity as a result of a termination of your employment with notice or pay in lieu of notice. You agree that you are not entitled to, and waive any right to claim damages for the loss of, an entitlement to earn or receive amounts as a result of the Company’s failure to provide you with notice of termination without just cause at common law.

 

Private and Confidential

 

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Horizon Aircraft – Employment Agreement – Jason O’Neill

 

(g)

Notwithstanding anything to the contrary in this Agreement, in no case will the total payments and provision of benefits provided to you in respect of the termination of your employment be less than your entitlements pursuant to the ESA. In the event that your full entitlement under the ESA exceeds these contractual provisions, then those entitlements shall replace these provisions and no further entitlements or payments are due to you pursuant to the ESA or at common law.

 

(h)

The provisions of this Agreement in respect of the termination of your employment shall remain in full force and effect throughout the period of your employment, notwithstanding the length of that employment and any changes in your employment, including changes in your title, position, duties, level of responsibility, reporting structure, remuneration, and location.

 

10.

Change of Control

 

(a)

For the purposes of this Agreement, “Change of Control” means the occurrence of any one or more of the following events:

 

i.

any transaction that results in a person, group of persons or persons acting jointly or in concert, having beneficial ownership of, or control or direction over 50% or more of the voting securities of the Company; or

 

ii.

a merger, arrangement, amalgamation, or other business combination involving the Company that results in any person or group of person that had the beneficial ownership of, or control or direction over the outstanding voting securities of the Company immediately before the transaction having beneficial ownership of, or control or direction over, less than 50% of the outstanding voting securities of the resulting entity;

 

iii.

the sale, lease or exchange of all or substantially all of the Company’s property, other than to a wholly owned subsidiary of the Company or in the ordinary course of business, or

 

iv.

Incumbent Directors, defined as “any member of the Board who was a member of the Board immediately prior to the occurrence of a transaction giving rise to a Change in Control”, ceasing to constitute a majority of the Company’s Board of Directors.

 

“Good Reason” means the occurrence of any of the following:

 

i.

a constructive termination of your employment and of this Agreement;

 

ii.

any material and unilateral change in your title, responsibilities, or authority in place at the time of the Change of Control;

 

iii.

any material reduction in the Base Salary paid to you at the time of the Change of Control;

 

iv.

any termination or material reduction in the aggregate value of the employee benefit programs, including, but not limited to, pension, life, disability, health, medical or dental insurance, in which you participated or under which you were covered at the time of Change of Control; or

 

v.

your assignment to any significant, ongoing duties inconsistent with your skills, position (including status, offices, titles and reporting requirements), authority, duties or responsibilities, or any other action by the Company, which results in material diminution of such position.

 

Private and Confidential

 

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Horizon Aircraft – Employment Agreement – Jason O’Neill

 

(b)

If following a Change of Control, the Company gives you Good Reason to terminate your employment and this Agreement, and provided you exercises that right within two (2) years from the date of the Change of Control, you shall be entitled to receive the payments and benefits set forth in section 9(c) as if your employment had been terminated on a without cause basis.

 

11.

Protective Covenant Obligations

 

You agree to abide by the Employee Non-Solicitation Agreement set forth in Scheule 2 of this Agreement.

 

12.

Confidentiality and Intellectual Property

 

During the course of your employment with the Company, you will have access to sensitive and/or nonpublic confidential or proprietary information, including, without limitation, information that belongs to or relates to the business of the Company or its affiliates’ (such as, for example, information about business practices, pricing and marketing plans), or that belongs to or relates to our (or our affiliates’) current, prospective or former customers. If that information was disclosed without our permission, it could harm the Company’s interests. All such confidential information, in any form, even if not marked as confidential, is “Confidential Information”, and you have no ownership rights in or to any Confidential Information.

 

During the term of this Agreement, you will disclose to the Company all ideas, inventions and business plans developed by you during such period which relate directly or indirectly to the business of the Company, including, without limitation, any process, operation, campaign, product or improvement which may be patentable or copyrightable (the “Work Product”). You agree that all Work Product and all intellectual property rights therein, including all patents, licenses, copyrights, tradenames, trademarks, service marks, campaigns and business plans developed or created by you in the course of your employment hereunder, either individually or in collaboration with others, will be deemed works made for hire and works made in the course of your employment with the Company, and are the sole and absolute property of the Company. For no additional consideration, you hereby assign and transfer to the Company, and agree to assign and transfer to the Company, any and all Work Product and all intellectual property rights therein, including all patents, licenses, copyrights, tradenames, trademarks, and service marks in the Work Product. For no additional consideration, you hereby waive all “moral rights” in the Work Product in favour of the Company and any person designated by the Company. You agree, that at the Company’s request and cost, you will take all steps necessary to secure the rights thereto to the Company in the Work Product, by patent, copyright or otherwise.

 

13.

Representations and Warranties

 

You represent, warrant and acknowledge to the Company the following:

 

(a)

You will not use or disclose any confidential or proprietary information from any previous employer or other person, firm, corporation or other entity (“Person”) which is in your power, possession or control and which use or disclosure could give rise to a legal claim against either you or the Company. Further, you shall comply with all restrictions on the solicitation of employees, contractors, customers or prospective customers of any previous employer or other Person by which you are legally bound. The Company specifically advises you that it does not wish, nor will it knowingly permit you to use or disclose such information or breach such restrictions in the context of performing your duties for the Company.

 

(b)

You will not, during your employment or thereafter, engage in any pattern of conduct that involves the making or publishing of written or oral statements or remarks, including the repetition or distribution of derogatory rumours, allegations, negative reports or comments, which are disparaging, deleterious or damaging to the integrity, reputation or goodwill of the Company or any of its Affiliates or their respective shareholders, directors, officers or employees.

 

Private and Confidential

 

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Horizon Aircraft – Employment Agreement – Jason O’Neill

 

14.

Assignment

 

This Agreement may not be transferred, assigned, pledged or hypothecated by any party hereto, other than by operation of law; provided, however, that the Company shall be permitted to assign this Agreement to an affiliate in connection with a reorganization of the Company’s business or assets. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and assigns.

 

15.

Modification

 

This Agreement may not be orally canceled, changed, modified or amended, and no cancellation, change, modification or amendment shall be effective or binding, unless in writing and signed by the parties to this Agreement.

 

16.

Severability; Survival

 

In the event any provision or portion of this Agreement is determined to be invalid or unenforceable for any reason, in whole or in part, the remaining provisions of this Agreement shall nevertheless be binding upon the parties with the same effect as though the invalid or unenforceable part had been severed and deleted. The respective rights and obligations of the parties hereunder shall survive the termination of your employment to the extent necessary to the intended preservation of such rights and obligations.

 

17.

No Conflict

 

You represent and warrant that you are not subject to any agreement, instrument, obligations, order, judgment or decree of any kind, or any other restrictive agreement or obligation of any character, which would prevent you from entering into this Agreement or which would be breached by you upon the performance of your duties pursuant to this Agreement.

 

18.

Governing Law

 

This Agreement will be governed by and construed in accordance with the laws of the province of Ontario without giving effect to any choice or conflict of law provision or rule (whether in the province of Ontario or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the province of Ontario.

 

19.

Entire Agreement

 

Except as provided herein, this Agreement (including the Schedules, Exhibits and Annexes, as applicable) constitutes the complete agreement between you and the Company and supersedes all prior agreements relating to the subject matter hereof.

 

20.

Withholding

 

The Company may withhold from any amounts payable under this Agreement such federal, provincial or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.

 

Private and Confidential

 

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Horizon Aircraft – Employment Agreement – Jason O’Neill

 

21.

Compliance with the ESA

 

Should any term of this Agreement fail to comply with a mandatory minimum standard or requirement imposed by applicable legislation, including the ESA, then the employment standard or requirement shall apply in place of the offending term of this Agreement, and shall constitute the rights and obligations of the parties in that respect. Under no circumstances will you receive less than your entitlements under the ESA.

 

22.

Eligibility to Work in Canada

 

You represent and warrant that you are legally permitted to work in Canada. Upon request, you will provide the Company with appropriate documentation confirming your eligibility to work in Canada. For clarity, this offer of employment (and your continued employment with the Company) is conditional upon your being legally entitled to work in Canada at all times.

 

23.

Legal Advice

 

You acknowledge and agree that you have had an adequate opportunity to obtain such independent legal advice as you deem prudent prior to entering into this Agreement.

 

24.

Accommodation

 

The Company provides accommodations for employees with disabilities. If you have specific ergonomic needs or require other accommodation because of a disability or a medical need, please contact Human Resources at [e-mail] to discuss arrangements.

 

25.

Counterparts

 

This Agreement may be executed in counterparts, all of which taken together shall constitute one instrument.

 

To indicate your acceptance of the terms and conditions set out in this Agreement, please in the space provided below and return one copy to Human Resources at [e-mail]. We encourage you to take some time to consider this offer and to seek whatever advice you deem necessary prior to making your decision. We do, however, require a response by no later than January 10, 2024.

 

Best regards,

 

/s/ Stewart Lee
Stewart Lee
Horizon Aircraft
Head of People and Strategy

 

Private and Confidential

 

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Horizon Aircraft – Employment Agreement – Jason O’Neill

 

Agreement and Acceptance

 

By signing below, I confirm that I have read, understand and agree to the terms and conditions of employment as set out above. I acknowledge that I have been given the opportunity to obtain independent legal advice with respect to the nature and consequences of entering into this Agreement.

 

IMPORTANT: Before you accept our offer, we draw your attention again to Paragraph 9 (Termination), which contains significant limitations on your rights if your employment with the Company ends for any reason whatsoever.

 

/s/ Jason O’Neill
Jason O’Neill

 

Dated: Janury 11, 2024

 

Private and Confidential

 

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Horizon Aircraft – Employment Agreement – Jason O’Neill

 

Schedule 1

 

1.

Additional Compensation

 

1.1

Incentive Compensation: You shall be eligible for annual bonuses of up to 20% of your Base Salary, based upon overall performance and factors to be determined by the Company exercising its sole and unfettered discretion pursuant to and in accordance with the Executive Bonus Plan. The Executive Bonus Plan, as amended from time to time in the sole and absolute discretion of the Company, will govern the terms of your entitlement to such bonus compensation. The entitlement to such bonuses, the amount of any bonuses and the time of payment of such bonuses are in the sole and absolute discretion of the Company. Payment of bonus compensation is not expected compensation, and the payment of a bonus in any one or successive bonus periods shall not create an entitlement to a bonus in any subsequent bonus period. All bonus payments include a base amount plus vacation pay (calculated at the minimum percentage stipulated by the ESA) in respect of that base amount. Accordingly, no additional amount is payable on bonus amounts in respect of vacation pay. Bonuses are not earned on a prorated basis. Except as required by the ESA, you must be actively employed by the Company at the time any bonus is payable in order to be eligible to receive the bonus. For the purpose of the payment of any bonus, except as required by the ESA, “active employment” does not include any period of pay in lieu of notice of termination, or period of notice of resignation which is waived. Except as required by the ESA, any bonus entitlement will be forfeited effective on the date that the Company specifies as the date that the termination of your employment is effective (regardless of any period of pay in lieu of notice to which you may claim to be or are entitled under contract or common law), or on the effective date that the Company waives notice of your resignation (even if you claim constructive dismissal, and regardless of any period of pay in lieu of notice to which you may claim to be or is entitled under contract or common law). You agree that you are not entitled to, and waive any right to claim damages for the loss of an entitlement to receive a bonus as a result of the Company’s failure to provide you with notice of termination without just cause at common law (if applicable).

 

1.2

Stock Option Plan: Subject to the terms of the Omnibus Share Incentive Plan of the Company (the “SOP”), and contingent upon the approval of the Compensation Committee of the Company’s Board of Directors and the Company’s Board of Directors (to be granted in its sole and unfettered discretion), the Company shall provide you with such number of awards of the Company at a price and under such conditions to be determined in accordance with the terms of the SOP. If granted, such awards will vest on the schedule detailed in the terms of the SOP or the terms of the agreement representing such award which you will be required to execute upon the issuance of the stock options. Your participation in the SOP will be strictly governed by its terms, as they may be amended from time to time, and the Stock Option Agreement. You agree to bear responsibility for, and adhere to, any and all tax regulations in connection with the stock options issued to you.

 

1.3

Group Insurance Benefits: On the Effective Date, you will be eligible to make application to participate in such group insurance benefit plans enjoyed by other employees of the Company at a similar level of responsibility. Your eligibility, participation and coverage in respect of any plans will continue to be governed and shall be interpreted in accordance with the written terms of the contract between the Company and the insurer (or other provider) and the policies of the Company.

 

1.4

Resources: You will be provided with all property, equipment, facilities and resources reasonably necessary to perform their duties and responsibilities. These include a laptop with the required applications, credit and/or debit cards, and necessary keys, passwords, access codes and rights. All property, equipment, facilities and resources remain the property of the Company, and are to be used in accordance with its policies. The Company shall have the right to delete and remove, directly or remotely, with or without prior notice, any Company data from any device, including personal devices you may use in the course of carrying out your duties. Such action may result in the deletion or removal of your personal data as stored on such personal device, and you hereby waive any claims against the Company arising or resulting from such deletion or removal of such personal data.

 

1.5

Expenses: You shall be reimbursed for all reasonable business expenses actually and properly incurred from time to time in connection with carrying out your duties and responsibilities to the Company and in accordance with its policies. Those policies require provision of original copies of all invoices and/or statements in respect of which you seek reimbursement and obtaining the approval of the CFO of the Company for such expenses and otherwise complying with the terms of any policy of the Company respecting expense claims in effect from time to time.

 

Private and Confidential

 

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Horizon Aircraft – Employment Agreement – Jason O’Neill

 

Schedule 2

 

EMPLOYEE NON-SOLICITATION AGREEMENT

 

TO:

New Horizon Aircraft Ltd. d/b/a Horizon Aircraft (the “Corporation”)

 

In consideration of my employment with the Corporation and in accordance with my written employment agreement with the Corporation dated January 9, 2024 (the “Employment Agreement”), I hereby execute this Employee Non-Solicitation Agreement (this “Agreement”) and covenant, acknowledge and agree as follows:

 

Relationship

 

1.

By reason of my employment with the Corporation pursuant to the Employment Agreement, I will receive the value and advantage of special training, skills, expert knowledge and experience, as well as contact with existing and prospective customers of the Corporation, its affiliates and associates as such terms are defined in the Business Corporations Act (Ontario) (collectively “Affiliates”) and other employees of the Corporation and its Affiliates. In the course of my employment, I will be assigned duties that will give me Confidential Information (as defined in the Employment Agreement) as it relates to the conduct and details of the Corporation’s and its Affiliates’ businesses, and which will result in irreparable injury to the Corporation and its Affiliates which could not be adequately compensated by monetary damages if I were to act in a manner detrimental to the Corporation’s and/or its Affiliates’ interests, and/or use or disclose such Confidential Information and/or Work Product (as defined in the Employment Agreement).

 

2.

The business of the Corporation and its Affiliates is currently aerospace research and development, and aircraft prototype development. However, I understand that during my employment, the Corporation and its Affiliates will seek to expand and modify their businesses so as to achieve their legitimate business goals. Therefore, I agree that for the purposes of this Agreement, following the end of my active employment, “Business” shall mean the businesses of the Corporation and its Affiliates as they exist at the time that I cease to be actively employed by the Corporation.

 

Non-Solicitation

 

3.

I shall not, either directly or indirectly, individually or in partnership, jointly or in conjunction with any other person, firm, corporation or other entity (“Person”), in any capacity whatsoever including, without limitation, as agent, shareholder, employee, or consultant, except upon the request and on behalf of the Corporation and/or its Affiliates, during my employment and for the period of twelve (12) months following the date that I cease to be actively employed by the Corporation, regardless of who initiated the end of the employment relationship, do any of the following:

 

a.

In any way which could have a detrimental effect upon the Business:

 

i.

solicit; or

 

ii.

have business contact with;

 

iii.

any Person with whom I had direct dealings as a representative of the Corporation or any of its Affiliates and who or which is then either (A) a customer of the Corporation or any of its Affiliates; or (B) a prospective customer of the Corporation or any of its Affiliates with whom the Corporation or any of its Affiliates is then having direct business communication related to a specific business opportunity or has had direct business communication related to a specific business opportunity during the twelve (12) month period immediately preceding the date upon which I cease to be actively employed by the Corporation. For these purposes, “direct dealings” means direct communications with/by me (whether in person or otherwise) for the purposes of servicing, selling or marketing on behalf of the Corporation and/or its Affiliates, but only if such communications are more than trivial in nature, and in any case excluding bulk or mass-marketing communications directed to multiple customers or prospective customers.

 

Private and Confidential

 

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Horizon Aircraft – Employment Agreement – Jason O’Neill

  

b.

In respect of any Person known to me to be employed or engaged by the Corporation or any of its Affiliates on the last day of my active employment, save and except any person employed or engaged by the Corporation or any of its Affiliates in an exclusively clerical position, i. offer employment to them; ii. in any manner employ or engage them; iii. interfere with their employment or engagement with the Corporation or any of its Affiliates; or iv.encourage or entice them to terminate their employment or reduce the level or scope of their employment or engagement with the Corporation or any of its Affiliates, irrespective of whether such Person would commit any breach of their contract with the Corporation or any of its Affiliates by altering or ending their relationship with the Corporation or any of its Affiliates.

 

c.

In respect of any Person which is known to me to be a business partner or supplier of goods and/or services to the Corporation or any of its Affiliates on the last day of my active employment, encourage or entice them to terminate their relationship or reduce the level or scope of their relationship with the Corporation or any of its Affiliates, irrespective of whether such Person would commit any breach of their contract with the Corporation or any of its Affiliates by altering or ending their relationship with the Corporation or any of its Affiliates.

 

4.

I hereby acknowledge that the Corporation and I (collectively, the “Parties”) have agreed that all provisions in this Agreement are reasonable as between the Parties in the context of my employment with the Corporation. I acknowledge and agree that all provisions in this Agreement are reasonable with reference to the public interest in free and open competition based upon the Parties’ knowledge of the market and the industry in which the Corporation or any of its Affiliates are engaged. Specifically, I agree that any court of competent jurisdiction shall be ignoring the intention of the Parties and the Parties’ reasoned assessment of the reasonableness of the provisions with reference to the public interest in free and open competition should it find otherwise. I agree that my compliance with my obligations pursuant to this Agreement will not unduly restrict or curtail my legitimate efforts to earn a livelihood in my chosen area of endeavour following my employment with the Corporation.

 

Miscellaneous

 

5.

If any provision or part thereof, including individual words or phrases, contained in this Agreement, to any extent and for any reason is declared to be void, voidable, invalid, illegal, ineffective, frustrated or unenforceable by any court of competent jurisdiction, the remainder of the provision and this Agreement shall not be affected thereby, and each provision of this Agreement or part thereof shall be separately valid and enforceable to the fullest extent permitted by law. If such a provision may be made enforceable or effective by imposing limitations, particularly in respect of its scope in terms of time or territory, such limitations shall be imposed and made so as to render such provision enforceable and effective to the fullest extent permissible by law.

 

6.

I acknowledge and agree that in the event of a breach or threatened breach of a provision contained in this Agreement, the Corporation and/or any of its Affiliates shall be entitled to obtain from any court of competent jurisdiction interim, interlocutory and permanent injunctive relief to prevent or restrain such breach or threatened breach, and an accounting of all profits and benefits arising out of such breach, which rights and remedies shall be cumulative and in addition to any other rights or remedies to which the Corporation and/or any of its Affiliates may be entitled at law or in equity. I hereby waive all defences to the strict enforcement by the Corporation and/or any of its Affiliates of all covenants, provisions and restrictions in this Agreement.

 

Private and Confidential

 

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Horizon Aircraft – Employment Agreement – Jason O’Neill

  

7.

No failure by the Corporation to pursue any remedy resulting from a breach of this Agreement by me shall be construed as a waiver of that breach, or as a waiver of any subsequent or other breach.

 

8.

I acknowledge and agree that my agreement to the covenants and restrictions contained in this Agreement are the essence of this Agreement and constitute a material inducement to the Corporation to enter into this Agreement and to employ me.

 

9.

This Agreement and the provisions of the Employment Agreement which relate to this Agreement constitute the entire understanding and agreement between me and the Corporation in respect of the subject matter herein contained, and supersede and replace all prior oral or written statements, representations (even if made negligently), negotiations and agreements related thereto. There are no other oral or written collateral agreements in respect of the subject matter herein contained.

 

10.

Except for that body of law related to conflict of laws, this Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein.

 

11.

I acknowledge and agree that the covenants made by me herein shall survive the termination of my employment and shall continue in full force and effect. The existence of any claim or cause of action by me against the Corporation, whether based upon a right pursuant to or a breach of the Employment Agreement or otherwise, shall not constitute a defence to the enforcement of the provisions contained in this Agreement in favour of the Corporation or any of its Affiliates.

 

12.

I acknowledge that the Corporation has urged me to obtain independent legal advice in respect to this Agreement and has offered me adequate opportunity to obtain such independent legal advice prior to my signing it.

 

13.

The provisions of this Agreement shall be binding upon and enure to the benefit of the Parties and their respective heirs, executors, administrators, legal representatives, successors, permitted assigns and any of the Corporation’s Affiliates. Without my consent the Corporation may assign the benefit of this Agreement provided the assignee agrees to comply with all of the obligations of the Corporation under this Agreement. I may not transfer my responsibilities.

  

SIGNED, SEALED AND DELIVERED		)
in the presence of		)
		)

 

/s/ Sabrina O’Neill		/s/ Jason O’Neill
Witness		Jason O’Neill
Sabrina O'Neill		January 11, 2024
Witness Name (Print)		Date

 

Private and Confidential

 

 

13

 

Exhibit 10.14

 

 

January 9, 2024

 

Private & Confidential

 

Sent Via Email

 

Brian Merker

***

***

 

Dear Brian:

 

Re: Offer of Employment with Horizon Aircraft

 

As announced recently, New Horizon Aircraft Ltd. d/b/a Horizon Aircraft (the “Company”) has completed a business combination with Robinson Aircraft Ltd. (“Robinson”) whereby the Company has acquired all of the issued and outstanding shares of Robinson (the “Sale”). Conditioned on the successful closing of the Sale, we are pleased to offer you employment with the Company on the terms and conditions set out below. Once you return this signed offer, the terms of this letter agreement will become a binding employment agreement between you and the Company (the “Agreement”).

 

1.

Duties and Responsibilities

 

(a)

You will serve as Chief Financial Officer. In this capacity, you will report to and perform such executive duties consistent with your position as may be assigned to you by the Chief Executive Officer and such other executive duties customary to your office and as are reasonably necessary to the operations of the Company. You will: (i) devote all of your business time and attention, your best efforts, and all of your skill and ability to promote the interests of the Company; (ii) carry out your duties and responsibilities with the highest level of integrity and judgment, and exercise at all times the care, skill and diligence consistent with the Company’s policies regarding quality and service; (iii) work with other employees of the Company in a competent and professional manner; (iv) Use best efforts to promote the interests and goodwill of the Company and not act or fail to act, or make or fail to make any statement, oral or written, which would injure the Company’s business, interests or reputation; and (v) comply with all relevant client, and Company policies as in effect from time to time, including the Ethics and Insider Trading Policy.

 

(b)

During the term of your employment, you agree to obtain the prior written approval of the person to whom you report prior to accepting any appointments of any kind (including, but not limited to, appointments to boards of directors) with any third parties other than the Company. It is understood that if approved, any such appointment, and your activities thereunder, must not constitute a violation of any provision of this Agreement.

 

(c)

If requested by the Company, you will act as a director and/or officer of the Company or any of its affiliates and associates as such terms are defined in the Business Corporations Act (Ontario) (collectively, “Affiliates”) as may be determined from time to time by the Company, in its sole discretion. For the period of any such appointment, the Company shall ensure you are entitled to coverage pursuant to any policy of insurance maintained by or for the Company from time to time and related to the liability of the directors and officers of the Company and its Affiliates, which policy shall indemnify you against any amounts payable by you, including damages, fines, penalties, interest and legal expenses incurred by you or for which you are liable by reason of such appointment and your conduct, provided you have acted honestly and in good faith with a view to the best interests of the Company and its Affiliates, and had reasonable grounds for believing that such conduct was lawful. You acknowledge and agree that in the event that an appointment to the Board of Directors of the Company or as a director or officer of any one or more of its Affiliates shall be terminated for any reason whatsoever, you shall not be entitled to any notice or compensation whatsoever with respect to the termination of such appointment.

 

Private and Confidential

 

 

 

 

Horizon Aircraft – Employment Agreement – Brian Merker

  

(d)

As the business needs of the Company may change from time to time, the Company may, from time to time, amend your duties, responsibilities, title, reporting arrangements and place of work without causing termination or a breach of this Agreement.

 

2.

Start Date, Term, Background Verification

 

Your employment with the Company will begin immediately following the successful close of the Sale, which is currently scheduled for January 12, 2024 (“Effective Date”). Thereafter, you employment will continue indefinitely until terminated in accordance with Section 9 of this Agreement.

 

This offer of employment is conditional on your approval for a security clearance with governmental authorities as the Company considers necessary or advisable. The process to secure approval of this clearance may include, but is not limited to, a criminal record check, reference check, and financial check. By signing this Agreement, you are providing the Company with your written consent to undertake the background check required to obtain this clearance, and you agree to complete any documents required. Furthermore, you understand and agree this offer of employment will be void or your employment terminated immediately in the event you do not participate as indicated or as required, or if the results of this background check are not satisfactory to the Company, at its sole discretion.

 

3.

Prior Service

 

Although you will be a new employee with the Company, your prior employment service with Robinson Aircraft Ltd. will be recognized for the purposes of the Ontario Employment Standards Act, 2000, as amended from time to time (the “ESA”). For clarity, the Company will recognize your original employment start date on November 6, 2023 (“Original Hire Date”).

 

4.

Place of Work

 

This position is located at 3187 Hwy 35 in Lindsay, Ontario (“Location”). It is understood that you will regularly work remotely part of the time, and may exclusively work remotely due to restrictions related to public health that may in the future require remote work (“Public Health Restrictions”). Absent such Public Health Restrictions, it is understood that you will regularly work remotely five (5) days per week. Despite any pre-arranged schedule, and subject to Public Health Restrictions, you may be required to attend at the Location or at other business-related locations as directed on short notice so as to ensure the goals of your employment are met.

 

5.

Hours of Work

 

Although you are generally expected to be available during regular business hours, given the nature of your role within the organization, you will be entitled to a flexible work schedule, subject to the needs of the business and the satisfactory completion of your duties hereunder.

 

In light of your managerial and executive position, and the duties and responsibilities associated with this role, you acknowledge and agree that your employment with the Company is not subject to the overtime and hours of work provisions of the ESA.

 

Private and Confidential

 

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Horizon Aircraft – Employment Agreement – Brian Merker

 

6.

Compensation

 

Your base salary will be at the annual rate of $225,000.00 CAD. You will be paid in accordance with the Company’s payroll practices and your base salary will be subject to review in accordance with the Company’s salary review policy for senior executives then in effect.

 

In addition to your base salary, you will be eligible to receive additional compensation as set forth in Schedule 1 of this Agreement.

 

7.

Benefits

 

You will be eligible to participate in additional benefits in accordance with Schedule 1 of this Agreement and subject to the provisions of the various benefit plans and programs in effect from time to time.

 

8.

Vacation/Time Off, Leaves and Holidays

 

The Company offers flexible vacation/paid time off, meaning that paid vacation/time off is not subject to a particular fixed limit, although you will still require Company approval when requesting vacation days and certain other paid time off. You are expected to use this privilege responsibly, and the following conditions apply:

 

(a)

Under the ESA, based on your Original Hire Date, your current statutory vacation accrues at a rate totalling 15 days for each 12-month period of employment. While you are permitted to take additional vacation, you understand you are required to consume all of the statutory vacation accrued in that vacation entitlement year. The Company’s vacation entitlement year commences on June 1 and ends on May 31. Any paid vacation days taken will be credited first toward satisfying these statutory minimums.

 

(b)

Vacation is to be scheduled in advance by agreement with your manager, but subject always to compliance with ESA requirements, the Company reserves the right to impose a specific vacation schedule, including the right to require employees to use up statutory vacation before the deadline.

 

(c)

To the maximum extent permitted under the ESA, the Company reserves the right to deny any request to take paid vacation/time off in excess of two (2) consecutive calendar weeks.

 

(d)

The Company will provide you with all statutory leaves to which you are entitled under the ESA and other applicable legislation (each, a “Statutory Leave”). If you are taking vacation/time off for reasons that also qualify for any paid or unpaid Statutory Leave, the time taken will be credited toward, and will not be additional to, your Statutory Leave entitlements.

 

Paid vacation/time off is not intended as a substitute or “add-on” to any Statutory Leaves of longer than ten (10) consecutive business days. For example, if you qualify for an 8-week unpaid compassionate care Statutory Leave, you are not entitled to use paid vacation/time off instead of (or as part of) that Statutory Leave, unless you have the Company’s prior consent.

 

(e)

If you take paid vacation/time off due to illness/injury for longer than ten (10) consecutive business days, then (to the extent permitted by the ESA) you may be required to provide appropriate medical documentation to the Company. If you are covered for disability benefits under our benefits plans, you may be required to apply for those benefits.

 

(f)

You are also entitled to all applicable public holidays/public holiday pay for which you are eligible in Ontario

 

Private and Confidential

 

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Horizon Aircraft – Employment Agreement – Brian Merker

 

9.

Termination

 

(a)

Resignation: You shall provide the Company with thirty (30) days’ notice of resignation from employment.

 

(b)

Termination Without Notice or Pay in Lieu of Notice: The Company may terminate your employment without notice, payment in lieu of notice, benefit continuation (if applicable) or compensation of any kind where permitted by the ESA, which includes willful misconduct, disobedience or willful neglect of duty that is not trivial and has not been condoned by the Company. Failure by the Company to rely on this provision in any given instance or instances shall not constitute a precedent or be deemed a waiver.

 

(c)

Termination With Notice or Pay in Lieu of Notice: The Company may terminate your employment with notice or pay in lieu of notice by providing you with the following:

 

(i)

the minimum amount of notice, pay in lieu of notice (or a combination of both), severance pay, vacation pay and benefit continuation (if applicable) and any other entitlements strictly required by the ESA, calculated from the Original Hire Date; plus,

 

(ii)

such additional amount of payment of Base Salary in lieu of notice (“Additional Pay in Lieu of Notice”), as is necessary to ensure that the aggregate of the statutory notice, pay in lieu of notice and severance pay entitlements under (i) above and the Additional Pay in Lieu of Notice under this sub-section (ii), at a minimum equals twelve (12) months, and such aggregate shall increase by additional one (1) month payment of Base Salary in lieu of notice for each completed year of service from the Effective Date to an overall cumulative maximum of 24 months of Base Salary; plus,

 

For the purposes of this Agreement, the period for which you receive notice and/or payment under this sub-section 9(c), calculated from the date you are advised of the termination of your employment, is the ‘Severance Period’.

 

(iii)

payment of a prorated portion of any bonuses that you are eligible to receive as of the date of termination, calculated to the end of the Severance Period based upon the average incentive compensation paid to you in the two years prior to the year in which notice of termination is communicated.

 

(d)

The Company agrees that the payment of any amounts payable pursuant to section 9(c) above shall be made as a lump-sump payment to you in the payroll following the effective date of termination of employment.

 

(e)

Upon delivery of notice of termination of your employment with notice or pay in lieu of notice, you will be entitled to continued participation in benefit plans, including group insurance benefit coverage, for the greater of the period during which you are actively employed following receipt of notice of termination and end of the Severance Period.

 

(f)

It is intended that the amounts payable pursuant to section 9(c) of this Agreement include your full entitlement to termination, vacation and/or severance pay and continuation of benefits pursuant to the ESA, and any entitlement to payment of damages at common law and in equity as a result of a termination of your employment with notice or pay in lieu of notice. You agree that you are not entitled to, and waive any right to claim damages for the loss of, an entitlement to earn or receive amounts as a result of the Company’s failure to provide you with notice of termination without just cause at common law.

 

Private and Confidential

 

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Horizon Aircraft – Employment Agreement – Brian Merker

 

(g)

Notwithstanding anything to the contrary in this Agreement, in no case will the total payments and provision of benefits provided to you in respect of the termination of your employment be less than your entitlements pursuant to the ESA. In the event that your full entitlement under the ESA exceeds these contractual provisions, then those entitlements shall replace these provisions and no further entitlements or payments are due to you pursuant to the ESA or at common law.

 

(h)

The provisions of this Agreement in respect of the termination of your employment shall remain in full force and effect throughout the period of your employment, notwithstanding the length of that employment and any changes in your employment, including changes in your title, position, duties, level of responsibility, reporting structure, remuneration, and location.

 

10.

Change of Control

 

(a)

For the purposes of this Agreement, “Change of Control” means the occurrence of any one or more of the following events:

 

i.

any transaction that results in a person, group of persons or persons acting jointly or in concert, having beneficial ownership of, or control or direction over 50% or more of the voting securities of the Company; or

 

ii.

a merger, arrangement, amalgamation, or other business combination involving the Company that results in any person or group of person that had the beneficial ownership of, or control or direction over the outstanding voting securities of the Company immediately before the transaction having beneficial ownership of, or control or direction over, less than 50% of the outstanding voting securities of the resulting entity;

 

iii.

the sale, lease or exchange of all or substantially all of the Company’s property, other than to a wholly owned subsidiary of the Company or in the ordinary course of business, or

 

iv.

Incumbent Directors, defined as “any member of the Board who was a member of the Board immediately prior to the occurrence of a transaction giving rise to a Change in Control”, ceasing to constitute a majority of the Company’s Board of Directors.

 

“Good Reason” means the occurrence of any of the following:

 

i.

a constructive termination of your employment and of this Agreement;

 

ii.

any material and unilateral change in your title, responsibilities, or authority in place at the time of the Change of Control;

 

iii.

any material reduction in the Base Salary paid to you at the time of the Change of Control;

 

iv.

any termination or material reduction in the aggregate value of the employee benefit programs, including, but not limited to, pension, life, disability, health, medical or dental insurance, in which you participated or under which you were covered at the time of Change of Control; or

 

v.

your assignment to any significant, ongoing duties inconsistent with your skills, position (including status, offices, titles and reporting requirements), authority, duties or responsibilities, or any other action by the Company, which results in material diminution of such position.

 

Private and Confidential

 

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Horizon Aircraft – Employment Agreement – Brian Merker

 

(b)

If following a Change of Control, the Company gives you Good Reason to terminate your employment and this Agreement, and provided you exercises that right within two (2) years from the date of the Change of Control, you shall be entitled to receive the payments and benefits set forth in section 9(c) as if your employment had been terminated on a without cause basis.

 

11.

Protective Covenant Obligations

 

You agree to abide by the Employee Non-Solicitation Agreement set forth in Scheule 2 of this Agreement.

 

12.

Confidentiality and Intellectual Property

 

During the course of your employment with the Company, you will have access to sensitive and/or nonpublic confidential or proprietary information, including, without limitation, information that belongs to or relates to the business of the Company or its affiliates’ (such as, for example, information about business practices, pricing and marketing plans), or that belongs to or relates to our (or our affiliates’) current, prospective or former customers. If that information was disclosed without our permission, it could harm the Company’s interests. All such confidential information, in any form, even if not marked as confidential, is “Confidential Information”, and you have no ownership rights in or to any Confidential Information.

 

During the term of this Agreement, you will disclose to the Company all ideas, inventions and business plans developed by you during such period which relate directly or indirectly to the business of the Company, including, without limitation, any process, operation, campaign, product or improvement which may be patentable or copyrightable (the “Work Product”). You agree that all Work Product and all intellectual property rights therein, including all patents, licenses, copyrights, tradenames, trademarks, service marks, campaigns and business plans developed or created by you in the course of your employment hereunder, either individually or in collaboration with others, will be deemed works made for hire and works made in the course of your employment with the Company, and are the sole and absolute property of the Company. For no additional consideration, you hereby assign and transfer to the Company, and agree to assign and transfer to the Company, any and all Work Product and all intellectual property rights therein, including all patents, licenses, copyrights, tradenames, trademarks, and service marks in the Work Product. For no additional consideration, you hereby waive all “moral rights” in the Work Product in favour of the Company and any person designated by the Company. You agree, that at the Company’s request and cost, you will take all steps necessary to secure the rights thereto to the Company in the Work Product, by patent, copyright or otherwise.

 

13.

Representations and Warranties

 

You represent, warrant and acknowledge to the Company the following:

 

(a)

You will not use or disclose any confidential or proprietary information from any previous employer or other person, firm, corporation or other entity (“Person”) which is in your power, possession or control and which use or disclosure could give rise to a legal claim against either you or the Company. Further, you shall comply with all restrictions on the solicitation of employees, contractors, customers or prospective customers of any previous employer or other Person by which you are legally bound. The Company specifically advises you that it does not wish, nor will it knowingly permit you to use or disclose such information or breach such restrictions in the context of performing your duties for the Company.

 

(b)

You will not, during your employment or thereafter, engage in any pattern of conduct that involves the making or publishing of written or oral statements or remarks, including the repetition or distribution of derogatory rumours, allegations, negative reports or comments, which are disparaging, deleterious or damaging to the integrity, reputation or goodwill of the Company or any of its Affiliates or their respective shareholders, directors, officers or employees.

 

Private and Confidential

 

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Horizon Aircraft – Employment Agreement – Brian Merker

 

14.

Assignment

 

This Agreement may not be transferred, assigned, pledged or hypothecated by any party hereto, other than by operation of law; provided, however, that the Company shall be permitted to assign this Agreement to an affiliate in connection with a reorganization of the Company’s business or assets. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and assigns.

 

15.

Modification

 

This Agreement may not be orally canceled, changed, modified or amended, and no cancellation, change, modification or amendment shall be effective or binding, unless in writing and signed by the parties to this Agreement.

 

16.

Severability; Survival

 

In the event any provision or portion of this Agreement is determined to be invalid or unenforceable for any reason, in whole or in part, the remaining provisions of this Agreement shall nevertheless be binding upon the parties with the same effect as though the invalid or unenforceable part had been severed and deleted. The respective rights and obligations of the parties hereunder shall survive the termination of your employment to the extent necessary to the intended preservation of such rights and obligations.

 

17.

No Conflict

 

You represent and warrant that you are not subject to any agreement, instrument, obligations, order, judgment or decree of any kind, or any other restrictive agreement or obligation of any character, which would prevent you from entering into this Agreement or which would be breached by you upon the performance of your duties pursuant to this Agreement.

 

18.

Governing Law

 

This Agreement will be governed by and construed in accordance with the laws of the province of Ontario without giving effect to any choice or conflict of law provision or rule (whether in the province of Ontario or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the province of Ontario.

 

19.

Entire Agreement

 

Except as provided herein, this Agreement (including the Schedules, Exhibits and Annexes, as applicable) constitutes the complete agreement between you and the Company and supersedes all prior agreements relating to the subject matter hereof.

 

20.

Withholding

 

The Company may withhold from any amounts payable under this Agreement such federal, provincial or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.

 

Private and Confidential

 

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Horizon Aircraft – Employment Agreement – Brian Merker

 

21.

Compliance with the ESA

 

Should any term of this Agreement fail to comply with a mandatory minimum standard or requirement imposed by applicable legislation, including the ESA, then the employment standard or requirement shall apply in place of the offending term of this Agreement, and shall constitute the rights and obligations of the parties in that respect. Under no circumstances will you receive less than your entitlements under the ESA.

 

22.

Eligibility to Work in Canada

 

You represent and warrant that you are legally permitted to work in Canada. Upon request, you will provide the Company with appropriate documentation confirming your eligibility to work in Canada. For clarity, this offer of employment (and your continued employment with the Company) is conditional upon your being legally entitled to work in Canada at all times.

 

23.

Legal Advice

 

You acknowledge and agree that you have had an adequate opportunity to obtain such independent legal advice as you deem prudent prior to entering into this Agreement.

 

24.

Accommodation

 

The Company provides accommodations for employees with disabilities. If you have specific ergonomic needs or require other accommodation because of a disability or a medical need, please contact Human Resources at [e-mail] to discuss arrangements.

 

25.

Counterparts

 

This Agreement may be executed in counterparts, all of which taken together shall constitute one instrument.

 

To indicate your acceptance of the terms and conditions set out in this Agreement, please in the space provided below and return one copy to Human Resources at [e-mail]. We encourage you to take some time to consider this offer and to seek whatever advice you deem necessary prior to making your decision. We do, however, require a response by no later than January 10, 2024.

 

Best regards,
/s/ Stewart Lee
Stewart Lee
Horizon Aircraft
Head of People and Strategy

  

Private and Confidential

 

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Horizon Aircraft – Employment Agreement – Brian Merker

 

Agreement and Acceptance

 

By signing below, I confirm that I have read, understand and agree to the terms and conditions of employment as set out above. I acknowledge that I have been given the opportunity to obtain independent legal advice with respect to the nature and consequences of entering into this Agreement.

 

IMPORTANT: Before you accept our offer, we draw your attention again to Paragraph 9 (Termination), which contains significant limitations on your rights if your employment with the Company ends for any reason whatsoever.

 

/s/ Brian Merker
Brian Merker

 

Dated January 12, 2024

 

Private and Confidential

 

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Horizon Aircraft – Employment Agreement – Brian Merker

 

Schedule 1

 

1.

Additional Compensation

 

1.1

Incentive Compensation: You shall be eligible for annual bonuses of up to 20% of your Base Salary, based upon overall performance and factors to be determined by the Company exercising its sole and unfettered discretion pursuant to and in accordance with the Executive Bonus Plan. The Executive Bonus Plan, as amended from time to time in the sole and absolute discretion of the Company, will govern the terms of your entitlement to such bonus compensation. The entitlement to such bonuses, the amount of any bonuses and the time of payment of such bonuses are in the sole and absolute discretion of the Company. Payment of bonus compensation is not expected compensation, and the payment of a bonus in any one or successive bonus periods shall not create an entitlement to a bonus in any subsequent bonus period. All bonus payments include a base amount plus vacation pay (calculated at the minimum percentage stipulated by the ESA) in respect of that base amount. Accordingly, no additional amount is payable on bonus amounts in respect of vacation pay. Bonuses are not earned on a prorated basis. Except as required by the ESA, you must be actively employed by the Company at the time any bonus is payable in order to be eligible to receive the bonus. For the purpose of the payment of any bonus, except as required by the ESA, “active employment” does not include any period of pay in lieu of notice of termination, or period of notice of resignation which is waived. Except as required by the ESA, any bonus entitlement will be forfeited effective on the date that the Company specifies as the date that the termination of your employment is effective (regardless of any period of pay in lieu of notice to which you may claim to be or are entitled under contract or common law), or on the effective date that the Company waives notice of your resignation (even if you claim constructive dismissal, and regardless of any period of pay in lieu of notice to which you may claim to be or is entitled under contract or common law). You agree that you are not entitled to, and waive any right to claim damages for the loss of an entitlement to receive a bonus as a result of the Company’s failure to provide you with notice of termination without just cause at common law (if applicable).

 

1.2

Stock Option Plan: Subject to the terms of the Omnibus Share Incentive Plan of the Company (the “SOP”), and contingent upon the approval of the Compensation Committee of the Company’s Board of Directors and the Company’s Board of Directors (to be granted in its sole and unfettered discretion), the Company shall provide you with such number of awards of the Company at a price and under such conditions to be determined in accordance with the terms of the SOP. If granted, such awards will vest on the schedule detailed in the terms of the SOP or the terms of the agreement representing such award which you will be required to execute upon the issuance of the stock options. Your participation in the SOP will be strictly governed by its terms, as they may be amended from time to time, and the Stock Option Agreement. You agree to bear responsibility for, and adhere to, any and all tax regulations in connection with the stock options issued to you.

 

1.3

Group Insurance Benefits: On the Effective Date, you will be eligible to make application to participate in such group insurance benefit plans enjoyed by other employees of the Company at a similar level of responsibility. Your eligibility, participation and coverage in respect of any plans will continue to be governed and shall be interpreted in accordance with the written terms of the contract between the Company and the insurer (or other provider) and the policies of the Company.

 

1.4

Resources: You will be provided with all property, equipment, facilities and resources reasonably necessary to perform their duties and responsibilities. These include a laptop with the required applications, credit and/or debit cards, and necessary keys, passwords, access codes and rights. All property, equipment, facilities and resources remain the property of the Company, and are to be used in accordance with its policies. The Company shall have the right to delete and remove, directly or remotely, with or without prior notice, any Company data from any device, including personal devices you may use in the course of carrying out your duties. Such action may result in the deletion or removal of your personal data as stored on such personal device, and you hereby waive any claims against the Company arising or resulting from such deletion or removal of such personal data.

 

1.5

Expenses: You shall be reimbursed for all reasonable business expenses actually and properly incurred from time to time in connection with carrying out your duties and responsibilities to the Company and in accordance with its policies. Those policies require provision of original copies of all invoices and/or statements in respect of which you seek reimbursement and obtaining the approval of the CFO of the Company for such expenses and otherwise complying with the terms of any policy of the Company respecting expense claims in effect from time to time.

 

Private and Confidential

 

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Horizon Aircraft – Employment Agreement – Brian Merker

 

Schedule 2

 

EMPLOYEE NON-SOLICITATION AGREEMENT

 

TO:

New Horizon Aircraft Ltd. d/b/a Horizon Aircraft (the “Corporation”)

 

In consideration of my employment with the Corporation and in accordance with my written employment agreement with the Corporation dated January 9, 2024 (the “Employment Agreement”), I hereby execute this Employee Non-Solicitation Agreement (this “Agreement”) and covenant, acknowledge and agree as follows:

 

Relationship

 

1.

By reason of my employment with the Corporation pursuant to the Employment Agreement, I will receive the value and advantage of special training, skills, expert knowledge and experience, as well as contact with existing and prospective customers of the Corporation, its affiliates and associates as such terms are defined in the Business Corporations Act (Ontario) (collectively “Affiliates”) and other employees of the Corporation and its Affiliates. In the course of my employment, I will be assigned duties that will give me Confidential Information (as defined in the Employment Agreement) as it relates to the conduct and details of the Corporation’s and its Affiliates’ businesses, and which will result in irreparable injury to the Corporation and its Affiliates which could not be adequately compensated by monetary damages if I were to act in a manner detrimental to the Corporation’s and/or its Affiliates’ interests, and/or use or disclose such Confidential Information and/or Work Product (as defined in the Employment Agreement).

 

2.

The business of the Corporation and its Affiliates is currently aerospace research and development, and aircraft prototype development. However, I understand that during my employment, the Corporation and its Affiliates will seek to expand and modify their businesses so as to achieve their legitimate business goals. Therefore, I agree that for the purposes of this Agreement, following the end of my active employment, “Business” shall mean the businesses of the Corporation and its Affiliates as they exist at the time that I cease to be actively employed by the Corporation.

 

Non-Solicitation

 

3.

I shall not, either directly or indirectly, individually or in partnership, jointly or in conjunction with any other person, firm, corporation or other entity (“Person”), in any capacity whatsoever including, without limitation, as agent, shareholder, employee, or consultant, except upon the request and on behalf of the Corporation and/or its Affiliates, during my employment and for the period of twelve (12) months following the date that I cease to be actively employed by the Corporation, regardless of who initiated the end of the employment relationship, do any of the following:

 

a.

In any way which could have a detrimental effect upon the Business:

 

i.

solicit; or

 

ii.

have business contact with;

 

iii.

any Person with whom I had direct dealings as a representative of the Corporation or any of its Affiliates and who or which is then either (A) a customer of the Corporation or any of its Affiliates; or (B) a prospective customer of the Corporation or any of its Affiliates with whom the Corporation or any of its Affiliates is then having direct business communication related to a specific business opportunity or has had direct business communication related to a specific business opportunity during the twelve (12) month period immediately preceding the date upon which I cease to be actively employed by the Corporation. For these purposes, “direct dealings” means direct communications with/by me (whether in person or otherwise) for the purposes of servicing, selling or marketing on behalf of the Corporation and/or its Affiliates, but only if such communications are more than trivial in nature, and in any case excluding bulk or mass-marketing communications directed to multiple customers or prospective customers.

 

Private and Confidential

 

11

 

 

Horizon Aircraft – Employment Agreement – Brian Merker

 

 

b.

In respect of any Person known to me to be employed or engaged by the Corporation or any of its Affiliates on the last day of my active employment, save and except any person employed or engaged by the Corporation or any of its Affiliates in an exclusively clerical position, i. offer employment to them; ii. in any manner employ or engage them; iii. interfere with their employment or engagement with the Corporation or any of its Affiliates; or iv.encourage or entice them to terminate their employment or reduce the level or scope of their employment or engagement with the Corporation or any of its Affiliates, irrespective of whether such Person would commit any breach of their contract with the Corporation or any of its Affiliates by altering or ending their relationship with the Corporation or any of its Affiliates.

 

c.

In respect of any Person which is known to me to be a business partner or supplier of goods and/or services to the Corporation or any of its Affiliates on the last day of my active employment, encourage or entice them to terminate their relationship or reduce the level or scope of their relationship with the Corporation or any of its Affiliates, irrespective of whether such Person would commit any breach of their contract with the Corporation or any of its Affiliates by altering or ending their relationship with the Corporation or any of its Affiliates.

 

4.

I hereby acknowledge that the Corporation and I (collectively, the “Parties”) have agreed that all provisions in this Agreement are reasonable as between the Parties in the context of my employment with the Corporation. I acknowledge and agree that all provisions in this Agreement are reasonable with reference to the public interest in free and open competition based upon the Parties’ knowledge of the market and the industry in which the Corporation or any of its Affiliates are engaged. Specifically, I agree that any court of competent jurisdiction shall be ignoring the intention of the Parties and the Parties’ reasoned assessment of the reasonableness of the provisions with reference to the public interest in free and open competition should it find otherwise. I agree that my compliance with my obligations pursuant to this Agreement will not unduly restrict or curtail my legitimate efforts to earn a livelihood in my chosen area of endeavour following my employment with the Corporation.

 

Miscellaneous

 

5.

If any provision or part thereof, including individual words or phrases, contained in this Agreement, to any extent and for any reason is declared to be void, voidable, invalid, illegal, ineffective, frustrated or unenforceable by any court of competent jurisdiction, the remainder of the provision and this Agreement shall not be affected thereby, and each provision of this Agreement or part thereof shall be separately valid and enforceable to the fullest extent permitted by law. If such a provision may be made enforceable or effective by imposing limitations, particularly in respect of its scope in terms of time or territory, such limitations shall be imposed and made so as to render such provision enforceable and effective to the fullest extent permissible by law.

 

6.

I acknowledge and agree that in the event of a breach or threatened breach of a provision contained in this Agreement, the Corporation and/or any of its Affiliates shall be entitled to obtain from any court of competent jurisdiction interim, interlocutory and permanent injunctive relief to prevent or restrain such breach or threatened breach, and an accounting of all profits and benefits arising out of such breach, which rights and remedies shall be cumulative and in addition to any other rights or remedies to which the Corporation and/or any of its Affiliates may be entitled at law or in equity. I hereby waive all defences to the strict enforcement by the Corporation and/or any of its Affiliates of all covenants, provisions and restrictions in this Agreement.

 

Private and Confidential

 

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Horizon Aircraft – Employment Agreement – Brian Merker

 

7.

No failure by the Corporation to pursue any remedy resulting from a breach of this Agreement by me shall be construed as a waiver of that breach, or as a waiver of any subsequent or other breach.

 

8.

I acknowledge and agree that my agreement to the covenants and restrictions contained in this Agreement are the essence of this Agreement and constitute a material inducement to the Corporation to enter into this Agreement and to employ me.

 

9.

This Agreement and the provisions of the Employment Agreement which relate to this Agreement constitute the entire understanding and agreement between me and the Corporation in respect of the subject matter herein contained, and supersede and replace all prior oral or written statements, representations (even if made negligently), negotiations and agreements related thereto. There are no other oral or written collateral agreements in respect of the subject matter herein contained.

 

10.

Except for that body of law related to conflict of laws, this Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein.

 

11.

I acknowledge and agree that the covenants made by me herein shall survive the termination of my employment and shall continue in full force and effect. The existence of any claim or cause of action by me against the Corporation, whether based upon a right pursuant to or a breach of the Employment Agreement or otherwise, shall not constitute a defence to the enforcement of the provisions contained in this Agreement in favour of the Corporation or any of its Affiliates.

 

12.

I acknowledge that the Corporation has urged me to obtain independent legal advice in respect to this Agreement and has offered me adequate opportunity to obtain such independent legal advice prior to my signing it.

 

13.

The provisions of this Agreement shall be binding upon and enure to the benefit of the Parties and their respective heirs, executors, administrators, legal representatives, successors, permitted assigns and any of the Corporation’s Affiliates. Without my consent the Corporation may assign the benefit of this Agreement provided the assignee agrees to comply with all of the obligations of the Corporation under this Agreement. I may not transfer my responsibilities.

 

SIGNED, SEALED AND DELIVERED	)
in the presence of	)
	)

 

/s/ Iva Merker		/s/ Brian Merker
Witness		Brian Merker
Iva Merker		January 12, 2024
Witness Name (Print)		Date

 

Private and Confidential

 

 

13

 

 

Exhibit 10.15

 

 

January 9, 2024

 

Private & Confidential

 

Sent Via Email

 

Brian Robinson

***

***

 

Dear Brian:

 

Re: Offer of Employment with Horizon Aircraft

 

As announced recently, New Horizon Aircraft Ltd. d/b/a Horizon Aircraft (the “Company”) has completed a business combination with Robinson Aircraft Ltd. (“Robinson”) whereby the Company has acquired all of the issued and outstanding shares of Robinson (the “Sale”). Conditioned on the successful closing of the Sale, we are pleased to offer you employment with the Company on the terms and conditions set out below. Once you return this signed offer, the terms of this letter agreement will become a binding employment agreement between you and the Company (the “Agreement”).

 

1.

Duties and Responsibilities

 

(a)

You will serve as Chief Engineer. In this capacity, you will report to and perform such executive duties consistent with your position as may be assigned to you by the Chief Executive Officer and such other executive duties customary to your office and as are reasonably necessary to the operations of the Company. You will: (i) devote all of your business time and attention, your best efforts, and all of your skill and ability to promote the interests of the Company; (ii) carry out your duties and responsibilities with the highest level of integrity and judgment, and exercise at all times the care, skill and diligence consistent with the Company’s policies regarding quality and service; (iii) work with other employees of the Company in a competent and professional manner; (iv) Use best efforts to promote the interests and goodwill of the Company and not act or fail to act, or make or fail to make any statement, oral or written, which would injure the Company’s business, interests or reputation; and (v) comply with all relevant client, and Company policies as in effect from time to time, including the Ethics and Insider Trading Policy.

 

(b)

During the term of your employment, you agree to obtain the prior written approval of the person to whom you report prior to accepting any appointments of any kind (including, but not limited to, appointments to boards of directors) with any third parties other than the Company. It is understood that if approved, any such appointment, and your activities thereunder, must not constitute a violation of any provision of this Agreement.

 

(c)

If requested by the Company, you will act as a director and/or officer of the Company or any of its affiliates and associates as such terms are defined in the Business Corporations Act (Ontario) (collectively, “Affiliates”) as may be determined from time to time by the Company, in its sole discretion. For the period of any such appointment, the Company shall ensure you are entitled to coverage pursuant to any policy of insurance maintained by or for the Company from time to time and related to the liability of the directors and officers of the Company and its Affiliates, which policy shall indemnify you against any amounts payable by you, including damages, fines, penalties, interest and legal expenses incurred by you or for which you are liable by reason of such appointment and your conduct, provided you have acted honestly and in good faith with a view to the best interests of the Company and its Affiliates, and had reasonable grounds for believing that such conduct was lawful. You acknowledge and agree that in the event that an appointment to the Board of Directors of the Company or as a director or officer of any one or more of its Affiliates shall be terminated for any reason whatsoever, you shall not be entitled to any notice or compensation whatsoever with respect to the termination of such appointment.

 

	Private and Confidential

Horizon Aircraft – Employment Agreement – Brian Robinson

 

(d)

As the business needs of the Company may change from time to time, the Company may, from time to time, amend your duties, responsibilities, title, reporting arrangements and place of work without causing termination or a breach of this Agreement.

 

2.

Start Date, Term, Background Verification

 

Your employment with the Company will begin immediately following the successful close of the Sale, which is currently scheduled for January 12, 2024 (“Effective Date”). Thereafter, you employment will continue indefinitely until terminated in accordance with Section 9 of this Agreement.

 

This offer of employment is conditional on your approval for a security clearance with governmental authorities as the Company considers necessary or advisable. The process to secure approval of this clearance may include, but is not limited to, a criminal record check, reference check, and financial check. By signing this Agreement, you are providing the Company with your written consent to undertake the background check required to obtain this clearance, and you agree to complete any documents required. Furthermore, you understand and agree this offer of employment will be void or your employment terminated immediately in the event you do not participate as indicated or as required, or if the results of this background check are not satisfactory to the Company, at its sole discretion.

 

3.

Prior Service

 

Although you will be a new employee with the Company, your prior employment service with Robinson Aircraft Ltd. will be recognized for the purposes of the Ontario Employment Standards Act, 2000, as amended from time to time (the “ESA”). For clarity, the Company will recognize your original employment start date of March 18, 2021 (“Original Hire Date”).

 

4.

Place of Work

 

This position is located at 3187 Hwy 35 in Lindsay, Ontario (“Location”). It is understood that you will regularly work remotely part of the time, and may exclusively work remotely due to restrictions related to public health that may in the future require remote work (“Public Health Restrictions”). Absent such Public Health Restrictions, it is understood that you may work remotely one (1) day per week. Despite any pre-arranged schedule, and subject to Public Health Restrictions, you may be required to attend at the Location or at other business-related locations as directed on short notice so as to ensure the goals of your employment are met.

 

5.

Hours of Work

 

Although you are generally expected to be available during regular business hours, given the nature of your role within the organization, you will be entitled to a flexible work schedule, subject to the needs of the business and the satisfactory completion of your duties hereunder.

 

In light of your managerial and executive position, and the duties and responsibilities associated with this role, you acknowledge and agree that your employment with the Company is not subject to the overtime and hours of work provisions of the ESA.

 

	Private and Confidential	2

Horizon Aircraft – Employment Agreement – Brian Robinson

 

6.

Compensation

 

Your base salary will be at the annual rate of $170,000.00 CAD. You will be paid in accordance with the Company’s payroll practices and your base salary will be subject to review in accordance with the Company’s salary review policy for senior executives then in effect.

 

In addition to your base salary, you will be eligible to receive additional compensation as set forth in Schedule 1 of this Agreement.

 

7.

Benefits

 

You will be eligible to participate in additional benefits in accordance with Schedule 1 of this Agreement and subject to the provisions of the various benefit plans and programs in effect from time to time.

 

8.

Vacation/Time Off, Leaves and Holidays

 

The Company offers flexible vacation/paid time off, meaning that paid vacation/time off is not subject to a particular fixed limit, although you will still require Company approval when requesting vacation days and certain other paid time off. You are expected to use this privilege responsibly, and the following conditions apply:

 

(a)

Under the ESA, based on your Original Hire Date, your current statutory vacation accrues at a rate totalling 15 days for each 12-month period of employment. While you are permitted to take additional vacation, you understand you are required to consume all of the statutory vacation accrued in that vacation entitlement year. The Company’s vacation entitlement year commences on June 1 and ends on May 31. Any paid vacation days taken will be credited first toward satisfying these statutory minimums.

 

(b)

Vacation is to be scheduled in advance by agreement with your manager, but subject always to compliance with ESA requirements, the Company reserves the right to impose a specific vacation schedule, including the right to require employees to use up statutory vacation before the deadline.

 

(c)

To the maximum extent permitted under the ESA, the Company reserves the right to deny any request to take paid vacation/time off in excess of two (2) consecutive calendar weeks.

 

(d)

The Company will provide you with all statutory leaves to which you are entitled under the ESA and other applicable legislation (each, a “Statutory Leave”). If you are taking vacation/time off for reasons that also qualify for any paid or unpaid Statutory Leave, the time taken will be credited toward, and will not be additional to, your Statutory Leave entitlements.

 

Paid vacation/time off is not intended as a substitute or “add-on” to any Statutory Leaves of longer than ten (10) consecutive business days. For example, if you qualify for an 8-week unpaid compassionate care Statutory Leave, you are not entitled to use paid vacation/time off instead of (or as part of) that Statutory Leave, unless you have the Company’s prior consent.

 

(e)

If you take paid vacation/time off due to illness/injury for longer than ten (10) consecutive business days, then (to the extent permitted by the ESA) you may be required to provide appropriate medical documentation to the Company. If you are covered for disability benefits under our benefits plans, you may be required to apply for those benefits.

 

(f)

You are also entitled to all applicable public holidays/public holiday pay for which you are eligible in Ontario.

 

	Private and Confidential	3

Horizon Aircraft – Employment Agreement – Brian Robinson

 

9.

Termination

 

(a)

Resignation: You shall provide the Company with thirty (30) days’ notice of resignation from employment.

 

(b)

Termination Without Notice or Pay in Lieu of Notice: The Company may terminate your employment without notice, payment in lieu of notice, benefit continuation (if applicable) or compensation of any kind where permitted by the ESA, which includes willful misconduct, disobedience or willful neglect of duty that is not trivial and has not been condoned by the Company. Failure by the Company to rely on this provision in any given instance or instances shall not constitute a precedent or be deemed a waiver.

 

(c)

Termination With Notice or Pay in Lieu of Notice: The Company may terminate your employment with notice or pay in lieu of notice by providing you with the following:

 

(i)

the minimum amount of notice, pay in lieu of notice (or a combination of both), severance pay, vacation pay and benefit continuation (if applicable) and any other entitlements strictly required by the ESA, calculated from the Original Hire Date; plus,

 

(ii)

such additional amount of payment of Base Salary in lieu of notice (“Additional Pay in Lieu of Notice”), as is necessary to ensure that the aggregate of the statutory notice, pay in lieu of notice and severance pay entitlements under (i) above and the Additional Pay in Lieu of Notice under this sub-section (ii), at a minimum equals twelve (12) months, and such aggregate shall increase by additional one (1) month payment of Base Salary in lieu of notice for each completed year of service from the Effective Date to an overall cumulative maximum of 24 months of Base Salary; plus,

 

For the purposes of this Agreement, the period for which you receive notice and/or payment under this sub-section 9(c), calculated from the date you are advised of the termination of your employment, is the ‘Severance Period’.

 

(iii)

payment of a prorated portion of any bonuses that you are eligible to receive as of the date of termination, calculated to the end of the Severance Period based upon the average incentive compensation paid to you in the two years prior to the year in which notice of termination is communicated.

 

(d)

The Company agrees that the payment of any amounts payable pursuant to section 9(c) above shall be made as a lump-sump payment to you in the payroll following the effective date of termination of employment.

 

(e)

Upon delivery of notice of termination of your employment with notice or pay in lieu of notice, you will be entitled to continued participation in benefit plans, including group insurance benefit coverage, for the greater of the period during which you are actively employed following receipt of notice of termination and end of the Severance Period.

 

(f)

It is intended that the amounts payable pursuant to section 9(c) of this Agreement include your full entitlement to termination, vacation and/or severance pay and continuation of benefits pursuant to the ESA, and any entitlement to payment of damages at common law and in equity as a result of a termination of your employment with notice or pay in lieu of notice. You agree that you are not entitled to, and waive any right to claim damages for the loss of, an entitlement to earn or receive amounts as a result of the Company’s failure to provide you with notice of termination without just cause at common law.

 

	Private and Confidential	4

Horizon Aircraft – Employment Agreement – Brian Robinson

 

(g)

Notwithstanding anything to the contrary in this Agreement, in no case will the total payments and provision of benefits provided to you in respect of the termination of your employment be less than your entitlements pursuant to the ESA. In the event that your full entitlement under the ESA exceeds these contractual provisions, then those entitlements shall replace these provisions and no further entitlements or payments are due to you pursuant to the ESA or at common law.

 

(h)

The provisions of this Agreement in respect of the termination of your employment shall remain in full force and effect throughout the period of your employment, notwithstanding the length of that employment and any changes in your employment, including changes in your title, position, duties, level of responsibility, reporting structure, remuneration, and location.

 

10.

Change of Control

 

(a)

For the purposes of this Agreement, “Change of Control” means the occurrence of any one or more of the following events:

 

i.

any transaction that results in a person, group of persons or persons acting jointly or in concert, having beneficial ownership of, or control or direction over 50% or more of the voting securities of the Company; or

 

ii.

a merger, arrangement, amalgamation, or other business combination involving the Company that results in any person or group of person that had the beneficial ownership of, or control or direction over the outstanding voting securities of the Company immediately before the transaction having beneficial ownership of, or control or direction over, less than 50% of the outstanding voting securities of the resulting entity;

 

iii.

the sale, lease or exchange of all or substantially all of the Company’s property, other than to a wholly owned subsidiary of the Company or in the ordinary course of business, or

 

iv.

Incumbent Directors, defined as “any member of the Board who was a member of the Board immediately prior to the occurrence of a transaction giving rise to a Change in Control”, ceasing to constitute a majority of the Company’s Board of Directors.

 

“Good Reason” means the occurrence of any of the following:

 

i.

a constructive termination of your employment and of this Agreement;

 

ii.

any material and unilateral change in your title, responsibilities, or authority in place at the time of the Change of Control;

 

iii.

any material reduction in the Base Salary paid to you at the time of the Change of Control;

 

iv.

any termination or material reduction in the aggregate value of the employee benefit programs, including, but not limited to, pension, life, disability, health, medical or dental insurance, in which you participated or under which you were covered at the time of Change of Control; or

 

v.

your assignment to any significant, ongoing duties inconsistent with your skills, position (including status, offices, titles and reporting requirements), authority, duties or responsibilities, or any other action by the Company, which results in material diminution of such position.

 

	Private and Confidential	5

Horizon Aircraft – Employment Agreement – Brian Robinson

 

(b)

If following a Change of Control, the Company gives you Good Reason to terminate your employment and this Agreement, and provided you exercises that right within two (2) years from the date of the Change of Control, you shall be entitled to receive the payments and benefits set forth in section 9(c) as if your employment had been terminated on a without cause basis.

 

11.

Protective Covenant Obligations

 

You agree to abide by the Employee Non-Solicitation Agreement set forth in Scheule 2 of this Agreement.

 

12.

Confidentiality and Intellectual Property

 

During the course of your employment with the Company, you will have access to sensitive and/or non-public confidential or proprietary information, including, without limitation, information that belongs to or relates to the business of the Company or its affiliates’ (such as, for example, information about business practices, pricing and marketing plans), or that belongs to or relates to our (or our affiliates’) current, prospective or former customers. If that information was disclosed without our permission, it could harm the Company’s interests. All such confidential information, in any form, even if not marked as confidential, is “Confidential Information”, and you have no ownership rights in or to any Confidential Information.

 

During the term of this Agreement, you will disclose to the Company all ideas, inventions and business plans developed by you during such period which relate directly or indirectly to the business of the Company, including, without limitation, any process, operation, campaign, product or improvement which may be patentable or copyrightable (the “Work Product”). You agree that all Work Product and all intellectual property rights therein, including all patents, licenses, copyrights, tradenames, trademarks, service marks, campaigns and business plans developed or created by you in the course of your employment hereunder, either individually or in collaboration with others, will be deemed works made for hire and works made in the course of your employment with the Company, and are the sole and absolute property of the Company. For no additional consideration, you hereby assign and transfer to the Company, and agree to assign and transfer to the Company, any and all Work Product and all intellectual property rights therein, including all patents, licenses, copyrights, tradenames, trademarks, and service marks in the Work Product. For no additional consideration, you hereby waive all “moral rights” in the Work Product in favour of the Company and any person designated by the Company. You agree, that at the Company’s request and cost, you will take all steps necessary to secure the rights thereto to the Company in the Work Product, by patent, copyright or otherwise.

 

13.

Representations and Warranties

 

You represent, warrant and acknowledge to the Company the following:

 

(a)

You will not use or disclose any confidential or proprietary information from any previous employer or other person, firm, corporation or other entity (“Person”) which is in your power, possession or control and which use or disclosure could give rise to a legal claim against either you or the Company. Further, you shall comply with all restrictions on the solicitation of employees, contractors, customers or prospective customers of any previous employer or other Person by which you are legally bound. The Company specifically advises you that it does not wish, nor will it knowingly permit you to use or disclose such information or breach such restrictions in the context of performing your duties for the Company.

 

(b)

You will not, during your employment or thereafter, engage in any pattern of conduct that involves the making or publishing of written or oral statements or remarks, including the repetition or distribution of derogatory rumours, allegations, negative reports or comments, which are disparaging, deleterious or damaging to the integrity, reputation or goodwill of the Company or any of its Affiliates or their respective shareholders, directors, officers or employees.

 

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Horizon Aircraft – Employment Agreement – Brian Robinson

 

14.

Assignment

 

This Agreement may not be transferred, assigned, pledged or hypothecated by any party hereto, other than by operation of law; provided, however, that the Company shall be permitted to assign this Agreement to an affiliate in connection with a reorganization of the Company’s business or assets. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and assigns.

 

15.

Modification

 

This Agreement may not be orally canceled, changed, modified or amended, and no cancellation, change, modification or amendment shall be effective or binding, unless in writing and signed by the parties to this Agreement.

 

16.

Severability; Survival

 

In the event any provision or portion of this Agreement is determined to be invalid or unenforceable for any reason, in whole or in part, the remaining provisions of this Agreement shall nevertheless be binding upon the parties with the same effect as though the invalid or unenforceable part had been severed and deleted. The respective rights and obligations of the parties hereunder shall survive the termination of your employment to the extent necessary to the intended preservation of such rights and obligations.

 

17.

No Conflict

 

You represent and warrant that you are not subject to any agreement, instrument, obligations, order, judgment or decree of any kind, or any other restrictive agreement or obligation of any character, which would prevent you from entering into this Agreement or which would be breached by you upon the performance of your duties pursuant to this Agreement.

 

18.

Governing Law

 

This Agreement will be governed by and construed in accordance with the laws of the province of Ontario without giving effect to any choice or conflict of law provision or rule (whether in the province of Ontario or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the province of Ontario.

 

19.

Entire Agreement

 

Except as provided herein, this Agreement (including the Schedules, Exhibits and Annexes, as applicable) constitutes the complete agreement between you and the Company and supersedes all prior agreements relating to the subject matter hereof.

 

20.

Withholding

 

The Company may withhold from any amounts payable under this Agreement such federal, provincial or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.

 

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Horizon Aircraft – Employment Agreement – Brian Robinson

 

21.

Compliance with the ESA

 

Should any term of this Agreement fail to comply with a mandatory minimum standard or requirement imposed by applicable legislation, including the ESA, then the employment standard or requirement shall apply in place of the offending term of this Agreement, and shall constitute the rights and obligations of the parties in that respect. Under no circumstances will you receive less than your entitlements under the ESA.

 

22.

Eligibility to Work in Canada

 

You represent and warrant that you are legally permitted to work in Canada. Upon request, you will provide the Company with appropriate documentation confirming your eligibility to work in Canada. For clarity, this offer of employment (and your continued employment with the Company) is conditional upon your being legally entitled to work in Canada at all times.

 

23.

Legal Advice

 

You acknowledge and agree that you have had an adequate opportunity to obtain such independent legal advice as you deem prudent prior to entering into this Agreement.

 

24.

Accommodation

 

The Company provides accommodations for employees with disabilities. If you have specific ergonomic needs or require other accommodation because of a disability or a medical need, please contact Human Resources at [e-mail] to discuss arrangements.

 

25.

Counterparts

 

This Agreement may be executed in counterparts, all of which taken together shall constitute one instrument.

 

To indicate your acceptance of the terms and conditions set out in this Agreement, please in the space provided below and return one copy to Human Resources at [e-mail]. We encourage you to take some time to consider this offer and to seek whatever advice you deem necessary prior to making your decision. We do, however, require a response by no later than January 11, 2024.

 

Best regards,

 

/s/ Stewart Lee                                                 

Stewart Lee

Horizon Aircraft

Head of People and Strategy

 

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Horizon Aircraft – Employment Agreement – Brian Robinson

 

Agreement and Acceptance

 

By signing below, I confirm that I have read, understand and agree to the terms and conditions of employment as set out above. I acknowledge that I have been given the opportunity to obtain independent legal advice with respect to the nature and consequences of entering into this Agreement.

 

IMPORTANT: Before you accept our offer, we draw your attention again to Paragraph 9 (Termination), which contains significant limitations on your rights if your employment with the Company ends for any reason whatsoever.

 

/s/ Brian Robinson                                                

Brian Robinson

 

DATED January 19, 2024

 

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Horizon Aircraft – Employment Agreement – Brian Robinson

 

Schedule 1

 

1.

Additional Compensation

 

1.1

Incentive Compensation: You shall be eligible for annual bonuses of up to 20% of your Base Salary, based upon overall performance and factors to be determined by the Company exercising its sole and unfettered discretion pursuant to and in accordance with the Executive Bonus Plan. The Executive Bonus Plan, as amended from time to time in the sole and absolute discretion of the Company, will govern the terms of your entitlement to such bonus compensation. The entitlement to such bonuses, the amount of any bonuses and the time of payment of such bonuses are in the sole and absolute discretion of the Company. Payment of bonus compensation is not expected compensation, and the payment of a bonus in any one or successive bonus periods shall not create an entitlement to a bonus in any subsequent bonus period. All bonus payments include a base amount plus vacation pay (calculated at the minimum percentage stipulated by the ESA) in respect of that base amount. Accordingly, no additional amount is payable on bonus amounts in respect of vacation pay. Bonuses are not earned on a prorated basis. Except as required by the ESA, you must be actively employed by the Company at the time any bonus is payable in order to be eligible to receive the bonus. For the purpose of the payment of any bonus, except as required by the ESA, “active employment” does not include any period of pay in lieu of notice of termination, or period of notice of resignation which is waived. Except as required by the ESA, any bonus entitlement will be forfeited effective on the date that the Company specifies as the date that the termination of your employment is effective (regardless of any period of pay in lieu of notice to which you may claim to be or are entitled under contract or common law), or on the effective date that the Company waives notice of your resignation (even if you claim constructive dismissal, and regardless of any period of pay in lieu of notice to which you may claim to be or is entitled under contract or common law). You agree that you are not entitled to, and waive any right to claim damages for the loss of an entitlement to receive a bonus as a result of the Company’s failure to provide you with notice of termination without just cause at common law (if applicable).

 

1.2

Stock Option Plan: Subject to the terms of the Omnibus Share Incentive Plan of the Company (the “SOP”), and contingent upon the approval of the Compensation Committee of the Company’s Board of Directors and the Company’s Board of Directors (to be granted in its sole and unfettered discretion), the Company shall provide you with such number of awards of the Company at a price and under such conditions to be determined in accordance with the terms of the SOP. If granted, such awards will vest on the schedule detailed in the terms of the SOP or the terms of the agreement representing such award which you will be required to execute upon the issuance of the stock options. Your participation in the SOP will be strictly governed by its terms, as they may be amended from time to time, and the Stock Option Agreement. You agree to bear responsibility for, and adhere to, any and all tax regulations in connection with the stock options issued to you.

 

1.3

Group Insurance Benefits: On the Effective Date, you will be eligible to make application to participate in such group insurance benefit plans enjoyed by other employees of the Company at a similar level of responsibility. Your eligibility, participation and coverage in respect of any plans will continue to be governed and shall be interpreted in accordance with the written terms of the contract between the Company and the insurer (or other provider) and the policies of the Company.

 

1.4

Resources: You will be provided with all property, equipment, facilities and resources reasonably necessary to perform their duties and responsibilities. These include a laptop with the required applications, credit and/or debit cards, and necessary keys, passwords, access codes and rights. All property, equipment, facilities and resources remain the property of the Company, and are to be used in accordance with its policies. The Company shall have the right to delete and remove, directly or remotely, with or without prior notice, any Company data from any device, including personal devices you may use in the course of carrying out your duties. Such action may result in the deletion or removal of your personal data as stored on such personal device, and you hereby waive any claims against the Company arising or resulting from such deletion or removal of such personal data.

 

1.5

Expenses: You shall be reimbursed for all reasonable business expenses actually and properly incurred from time to time in connection with carrying out your duties and responsibilities to the Company and in accordance with its policies. Those policies require provision of original copies of all invoices and/or statements in respect of which you seek reimbursement and obtaining the approval of the CFO of the Company for such expenses and otherwise complying with the terms of any policy of the Company respecting expense claims in effect from time to time.

 

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Horizon Aircraft – Employment Agreement – Brian Robinson

 

Schedule 2

 

EMPLOYEE NON-SOLICITATION AGREEMENT

 

TO:

New Horizon Aircraft Ltd. d/b/a Horizon Aircraft (the “Corporation”)

 

In consideration of my employment with the Corporation and in accordance with my written employment agreement with the Corporation dated January 9, 2024 (the “Employment Agreement”), I hereby execute this Employee Non-Solicitation Agreement (this “Agreement”) and covenant, acknowledge and agree as follows:

 

Relationship

 

1.

By reason of my employment with the Corporation pursuant to the Employment Agreement, I will receive the value and advantage of special training, skills, expert knowledge and experience, as well as contact with existing and prospective customers of the Corporation, its affiliates and associates as such terms are defined in the Business Corporations Act (Ontario) (collectively “Affiliates”) and other employees of the Corporation and its Affiliates. In the course of my employment, I will be assigned duties that will give me Confidential Information (as defined in the Employment Agreement) as it relates to the conduct and details of the Corporation’s and its Affiliates’ businesses, and which will result in irreparable injury to the Corporation and its Affiliates which could not be adequately compensated by monetary damages if I were to act in a manner detrimental to the Corporation’s and/or its Affiliates’ interests, and/or use or disclose such Confidential Information and/or Work Product (as defined in the Employment Agreement).

 

2.

The business of the Corporation and its Affiliates is currently aerospace research and development, and aircraft prototype development. However, I understand that during my employment, the Corporation and its Affiliates will seek to expand and modify their businesses so as to achieve their legitimate business goals. Therefore, I agree that for the purposes of this Agreement, following the end of my active employment, “Business” shall mean the businesses of the Corporation and its Affiliates as they exist at the time that I cease to be actively employed by the Corporation.

 

Non-Solicitation

 

3.

I shall not, either directly or indirectly, individually or in partnership, jointly or in conjunction with any other person, firm, corporation or other entity (“Person”), in any capacity whatsoever including, without limitation, as agent, shareholder, employee, or consultant, except upon the request and on behalf of the Corporation and/or its Affiliates, during my employment and for the period of twelve (12) months following the date that I cease to be actively employed by the Corporation, regardless of who initiated the end of the employment relationship, do any of the following:

 

a.

In any way which could have a detrimental effect upon the Business:

 

i.

solicit; or

 

ii.

have business contact with;

 

iii.

any Person with whom I had direct dealings as a representative of the Corporation or any of its Affiliates and who or which is then either (A) a customer of the Corporation or any of its Affiliates; or (B) a prospective customer of the Corporation or any of its Affiliates with whom the Corporation or any of its Affiliates is then having direct business communication related to a specific business opportunity or has had direct business communication related to a specific business opportunity during the twelve (12) month period immediately preceding the date upon which I cease to be actively employed by the Corporation. For these purposes, “direct dealings” means direct communications with/by me (whether in person or otherwise) for the purposes of servicing, selling or marketing on behalf of the Corporation and/or its Affiliates, but only if such communications are more than trivial in nature, and in any case excluding bulk or mass-marketing communications directed to multiple customers or prospective customers.

 

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Horizon Aircraft – Employment Agreement – Brian Robinson

 

b.

In respect of any Person known to me to be employed or engaged by the Corporation or any of its Affiliates on the last day of my active employment, save and except any person employed or engaged by the Corporation or any of its Affiliates in an exclusively clerical position, i. offer employment to them; ii. in any manner employ or engage them; iii. interfere with their employment or engagement with the Corporation or any of its Affiliates; or iv.encourage or entice them to terminate their employment or reduce the level or scope of their employment or engagement with the Corporation or any of its Affiliates, irrespective of whether such Person would commit any breach of their contract with the Corporation or any of its Affiliates by altering or ending their relationship with the Corporation or any of its Affiliates.

 

c.

In respect of any Person which is known to me to be a business partner or supplier of goods and/or services to the Corporation or any of its Affiliates on the last day of my active employment, encourage or entice them to terminate their relationship or reduce the level or scope of their relationship with the Corporation or any of its Affiliates, irrespective of whether such Person would commit any breach of their contract with the Corporation or any of its Affiliates by altering or ending their relationship with the Corporation or any of its Affiliates.

 

4.

I hereby acknowledge that the Corporation and I (collectively, the “Parties”) have agreed that all provisions in this Agreement are reasonable as between the Parties in the context of my employment with the Corporation. I acknowledge and agree that all provisions in this Agreement are reasonable with reference to the public interest in free and open competition based upon the Parties’ knowledge of the market and the industry in which the Corporation or any of its Affiliates are engaged. Specifically, I agree that any court of competent jurisdiction shall be ignoring the intention of the Parties and the Parties’ reasoned assessment of the reasonableness of the provisions with reference to the public interest in free and open competition should it find otherwise. I agree that my compliance with my obligations pursuant to this Agreement will not unduly restrict or curtail my legitimate efforts to earn a livelihood in my chosen area of endeavour following my employment with the Corporation.

 

Miscellaneous

 

5.

If any provision or part thereof, including individual words or phrases, contained in this Agreement, to any extent and for any reason is declared to be void, voidable, invalid, illegal, ineffective, frustrated or unenforceable by any court of competent jurisdiction, the remainder of the provision and this Agreement shall not be affected thereby, and each provision of this Agreement or part thereof shall be separately valid and enforceable to the fullest extent permitted by law. If such a provision may be made enforceable or effective by imposing limitations, particularly in respect of its scope in terms of time or territory, such limitations shall be imposed and made so as to render such provision enforceable and effective to the fullest extent permissible by law.

 

6.

I acknowledge and agree that in the event of a breach or threatened breach of a provision contained in this Agreement, the Corporation and/or any of its Affiliates shall be entitled to obtain from any court of competent jurisdiction interim, interlocutory and permanent injunctive relief to prevent or restrain such breach or threatened breach, and an accounting of all profits and benefits arising out of such breach, which rights and remedies shall be cumulative and in addition to any other rights or remedies to which the Corporation and/or any of its Affiliates may be entitled at law or in equity. I hereby waive all defences to the strict enforcement by the Corporation and/or any of its Affiliates of all covenants, provisions and restrictions in this Agreement.

 

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Horizon Aircraft – Employment Agreement – Brian Robinson

 

7.

No failure by the Corporation to pursue any remedy resulting from a breach of this Agreement by me shall be construed as a waiver of that breach, or as a waiver of any subsequent or other breach.

 

8.

I acknowledge and agree that my agreement to the covenants and restrictions contained in this Agreement are the essence of this Agreement and constitute a material inducement to the Corporation to enter into this Agreement and to employ me.

 

9.

This Agreement and the provisions of the Employment Agreement which relate to this Agreement constitute the entire understanding and agreement between me and the Corporation in respect of the subject matter herein contained, and supersede and replace all prior oral or written statements, representations (even if made negligently), negotiations and agreements related thereto. There are no other oral or written collateral agreements in respect of the subject matter herein contained.

 

10.

Except for that body of law related to conflict of laws, this Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein.

 

11.

I acknowledge and agree that the covenants made by me herein shall survive the termination of my employment and shall continue in full force and effect. The existence of any claim or cause of action by me against the Corporation, whether based upon a right pursuant to or a breach of the Employment Agreement or otherwise, shall not constitute a defence to the enforcement of the provisions contained in this Agreement in favour of the Corporation or any of its Affiliates.

 

12.

I acknowledge that the Corporation has urged me to obtain independent legal advice in respect to this Agreement and has offered me adequate opportunity to obtain such independent legal advice prior to my signing it.

 

13.

The provisions of this Agreement shall be binding upon and enure to the benefit of the Parties and their respective heirs, executors, administrators, legal representatives, successors, permitted assigns and any of the Corporation’s Affiliates. Without my consent the Corporation may assign the benefit of this Agreement provided the assignee agrees to comply with all of the obligations of the Corporation under this Agreement. I may not transfer my responsibilities.

 

SIGNED, SEALED AND DELIVERED	)
in the presence of	)
	)
/s/ L E Robinson	)	/s/ Brian Robinson
Witness	)	Brian Robinson
LE Robinson		January 19, 2024
Witness Name (Print)		Date

 

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Exhibit 10.16

 

 

CONTRACTOR AGREEMENT

 

THIS CONTRACTOR AGREEMENT is made as of the 12^th day of January, 2024.

 

BETWEEN

 

NEW HORIZON AIRCRAFT LTD. D/B/A HORIZON AIRCRAFT

 

(the “Company”)

 

- and -

 

2195790 Alberta Inc.

 

(the “Contractor”)

 

- and -

 

Stewart Lee

(the “Keyman”)

 

(referred to individually as a “Party” and collectively as the “Parties”)

 

WHEREAS the Contractor has been engaged with Robinson Aircraft Ltd. (“Robinson”) since March 18, 2021 (the “Start Date”);

 

WHEREAS the Company completed a business combination with Robinson Aircraft Ltd. (“Robinson”) whereby the Company has acquired all of the issued and outstanding shares of Robinson (the “Sale”);

 

WHEREAS it is a condition precedent to the closing of the Sale contemplated by the business combination agreement between Robinson, Pono Capital Three, Inc. and Pono Three Merger Acquisitions Corp., dated August 15, 2023 (the “Business Combination Agreement”), that the Contractor enter into this Agreement with the Company;

 

WHEREAS the Keyman is receiving valuable consideration in connection with the Sale as set out in the Business Combination Agreement;

 

WHEREAS contingent upon the closing of the Sale, the Keyman and the Company wish to enter into a written agreement pursuant to which the Contractor will be engaged to provide Services to the Company on the terms and conditions set out in this Contractor Agreement (“Agreement”);

 

	Private and Confidential

 

 

Horizon Aircraft – Contractor Agreement – Stewart Lee (2195790 Alberta Inc.)

 

NOW THEREFORE in consideration of the mutual covenants and agreements herein contained and for other good and valuable consideration, including but not limited the consideration received by the Keyman pursuant to the Business Combination Agreement the sufficiency of which is acknowledged by the Contractor and the Keyman, and the premises and mutual covenants and agreements hereinafter contained in this Agreement, the Parties hereto hereby mutually covenant and agree as follows:

 

1.

Services

 

(a)

The Contractor will be providing services as the Head of People & Strategy, providing through the Keyman, the following services (“Services”):

 

(i)

Human Resources and Business Planning Services; and

 

(ii)

other services as mutually agreed upon by the Parties.

 

(b)

The Keyman is solely responsible for the performance of the Services and will not be replaced or reassigned by the Contractor during the Term.

 

(c)

While the Contractor will receive direction from the Board of Directors in respect of the performance of the Services, the Contractor will determine the manner and means for the provision of the Services. The Contractor has the right to control and direct the performance of the Services, except as provided in this Agreement and subject to the understanding that the Contractor will perform the Services using in a skilful and competent manner with the highest level of integrity and judgment and in a manner that will promote and not harm the interests of the Company.

 

(d)

Notwithstanding the foregoing, the Contractor and the Keyman are required to comply with all relevant client, and Company policies as in effect from time to time, including the Ethics and Insider Trading Policy.

 

(e)

The Contractor is engaged as a contractor in a non-exclusive capacity. It is understood that the Contractor and the Keyman may be employed or engaged to provide services to third parties (including, but not limited to, appointments to boards of directors) (“Outside Activity”) during the Term, subject to the following: The Contractor and the Keyman will not (directly or indirectly) engage in or associate with any other Outside Activity which could or does place in a conflict of interest with the Company, without the Company’s prior written consent.

 

(f)

The Company may request that the Keyman serve as an officer of the Company or any of its affiliates and associates as such terms are defined in the Business Corporations Act (Ontario and Alberta) (collectively, “Affiliates”) as may be determined from time to time by the Company, in its sole discretion. For the period of any such appointment, the Company shall ensure the Keyman is entitled to coverage pursuant to any policy of insurance maintained by or for the Company from time to time and related to the liability of the directors and officers of the Company and its Affiliates, which policy shall indemnify the Keyman against any amounts payable by the Keyman, including damages, fines, penalties, interest and legal expenses incurred by the Keyman or for which the Keyman is liable by reason of such appointment and the Keyman’s conduct, provided he has acted honestly and in good faith with a view to the best interests of the Company and its Affiliates, and had reasonable grounds for believing that such conduct was lawful. The Keyman acknowledges and agrees that in the event that an appointment to the Board of Directors of the Company or as a director or officer of any one or more of its Affiliates shall be terminated for any reason whatsoever, the Contractor and the Keyman shall not be entitled to any notice or compensation whatsoever with respect to the termination of such appointment.

 

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Horizon Aircraft – Contractor Agreement – Stewart Lee (2195790 Alberta Inc.)

 

2.	Start Date; Term; Background Verification

 

The term of engagement (“Term”) under this Agreement will begin immediately following the successful close of the Sale, which is currently scheduled for January 12, 2024 (“Effective Date”), and unless earlier terminated in accordance with section 9 of this Agreement, will automatically expire on December 31, 2025.

 

The Parties may extend the Term by mutual agreement in writing, and the same terms and conditions set out in this Agreement will continue to apply with the Expiry Date adjusted accordingly, except as otherwise specified in writing at the time of such extension.

 

This offer of engagement is conditional on the Keyman’s approval for a security clearance with governmental authorities as the Company considers necessary or advisable. The process to secure approval of this clearance may include, but is not limited to, a criminal record check, reference check, and financial check. By signing this Agreement, the Keyman is providing the Company with his written consent to undertake the background check required to obtain this clearance, and the Keyman agrees to complete any documents required. Furthermore, the Contractor understands and agrees this offer of engagement will be void or the Contractor’s engagement terminated immediately in the event the Keyman does not participate as indicated or as required, or if the results of this background check are not satisfactory to the Company, at its sole discretion.

 

3.	Past Engagement

 

The period from the Start Date to the Effective Date, both as defined above, is referred to as “Past Engagement”.

 

4.	Place of Work

 

This position is located at 3187 Highway 35 in Lindsay, Ontario (“Location”). It is understood that the Contractor will perform the Services remotely part of the time, and may exclusively perform the Services remotely due to restrictions related to public health that may in the future require remote work (“Public Health Restrictions”). Absent such Public Health Restrictions, it is understood that the Contractor will regularly perform the Services remotely five (5) days per week. Subject to Public Health Restrictions, the Contractor and the Keyman may be requested to attend at the Location or at other business-related locations as directed on short notice.

 

5.	Hours of Work

 

The Contractor will perform the Services on an as-needed basis. Hours of service may range from 15-25 hours per week, but there are no guaranteed or fixed hours of service.

 

6.	Taxes; Fees

 

(a)

Where required by law, the Contractor must register for goods and services and/or provincial sales and/or harmonized sales taxes (“Tax”), provide its Tax registration number to the Company and separately itemize any applicable Tax on its invoices. The Contractor is solely responsible for remitting all taxes paid by the Company to the applicable government agencies, as required by law.

 

(b)

The Company will pay the Contractor for performance of the Services fees in the amount of $120.00 CAD per hour (“Fees”), payable on a biweekly basis in accordance with the Company’s regular payment practices. The Contractor is solely responsible for providing payment for provision of Services to the Keyman.

 

(c)

In addition to the Fees set out herein, the Contractor will be eligible to receive additional remuneration as set forth in 0 of this Agreement.

 

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Horizon Aircraft – Contractor Agreement – Stewart Lee (2195790 Alberta Inc.)

 

7.	Timesheets; Invoicing and Payment

 

The Contractor will submit invoices for all Services performed in a format approved by the Company on the 15^th and end of the month during the Term.

 

Subject always to the Company’s approval of the invoice, invoices will be paid within 30 days, together with any applicable Tax, after receipt of an invoice.

 

8.

Benefits

 

The Contractor (and the Keyman) are not eligible for, and shall not participate in, any employee benefits of the Company, including but not limited to vacation, pension, group insurance, health and all other benefits.

 

9.	Termination

 

(a)

Automatic: Unless terminated earlier in accordance with this section 9, this Agreement will automatically expire upon the Expiry Date.

 

(b)

By Mutual Agreement: This Agreement may be terminated at any time before the Expiry Date by mutual agreement in writing.

 

(c)

For Convenience: This Agreement may be terminated at any time before the Expiry Date by either party for convenience, upon delivery of:

 

(i)

if by the Contractor, 90 calendar days’ prior written notice to the Company; and

 

(ii)

if by the Company, 60 calendar days’ prior written notice to the Contractor.

 

(d)

By the Company for Material Breach: Upon the delivery of written notice by the Company to the Contractor, this Agreement will automatically terminate on the date of such delivery (or on such later date specified by the Company) if the Company determines, in its sole discretion exercised reasonably, that the Contractor (or the Keyman) is in breach of its or their material obligations under this Agreement, including but not limited to:

 

(i)

the Contractor or the Keyman materially breaches any obligations required hereunder; or

 

(ii)

the Contractor or the Keyman’s actions or statements cause harm or loss of reputation to the Company, including breach of confidentiality.

 

(e)

Upon expiration or earlier termination of this Agreement for any reason, the Company will provide the Contractor with only the Fees, accrued and owing to the Contractor up to and including the Expiry Date or earlier termination date pursuant to this section 9.

 

(f)

General; Any Termination: Upon the termination for any reason whatsoever of this Agreement:

 

(i)

The Contractor will deliver a final invoice for any Services provided and approved expenses incurred up to and including the effective date of such termination, in accordance with section 9 of this Agreement;

 

(ii)

The Contractor will forthwith deliver or cause to be delivered to the Company any of the following which is then in its or their possession or control, in any medium or form: (1) all Confidential Information and Work Product, defined in Paragraph 12 below; (2) all other property and equipment owned or supplied by the Company; (3) any copies or reproductions of any of the foregoing; and (4) any property of a third party which has been leased or rented by the Company for the Contractor’s use during the engagement;

 

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Horizon Aircraft – Contractor Agreement – Stewart Lee (2195790 Alberta Inc.)

 

(iii)

The Contractor will promptly take all necessary steps to ensure that any electronically-stored Confidential Information and Work Product has been transferred to the Company from (and fully deleted from) the Contractor (or the Keyman’s) business, personal or household cell-phone, computer/lap-top or similar devices and systems, and that any the Company-licensed software and the Company access rights have been “wiped” from those devices and systems;

 

(iv)

The Contractor acknowledges that compliance with its obligations, including the Keyman, under this section 9(f) is a pre-requisite to the Company’s payment of any payments to the Contractor that remain outstanding as of, or fall due after, such termination; and

 

(v)

The Contractor expressly acknowledges that it is waiving any right to claim any form of common law reasonable notice of termination or compensation/damages in lieu of such reasonable notice of termination, and is also waiving any right to claim any additional compensation/damages for any unexpired remainder of the Term.

 

10.

Records

 

The Contractor will keep proper records of the time spent and expenses incurred in the performance of the Services in a form and detail satisfactory to the Company. Those records will at all times, both before and after the Term, be open to audit and inspection upon reasonable advance notice from the Company, who may make copies and take extracts from them. The Contractor will furnish the Company with all additional information about those records as the Company may reasonably require.

 

11.	Confidentiality and Intellectual Property, Privacy

 

(a)

During the Term and the Contractor’s engagement with the Company, the Contractor will have access to sensitive and/or non-public confidential or proprietary information, including, without limitation, information that belongs to or relates to the business of the Company or its affiliates’ (such as, for example, information about business practices, pricing and marketing plans), or that belongs to or relates to our (or our affiliates’) current, prospective or former customers. If that information was disclosed without our permission, it could harm the Company’s interests. All such confidential information, in any form, even if not marked as confidential, is “Confidential Information”, and the Contractor and the Keyman have no ownership rights in or to any Confidential Information.

 

(b)

During the Term of this Agreement, the Contractor will disclose to the Company all ideas, inventions and business plans developed by the Contractor or the Keyman during such period or the Past Engagement which relate directly or indirectly to the business of the Company, including, without limitation, any process, operation, campaign, product or improvement which may be patentable or copyrightable (the “Work Product”). The Contractor agrees that all Work Product and all intellectual property rights therein, including all patents, licenses, copyrights, tradenames, trademarks, service marks, campaigns and business plans developed or created by the Contractor or the Keyman during the Past Engagement or in the course of the engagement hereunder, either individually or in collaboration with others, will be deemed works made for hire and works made in the course of employment with the Company, as that term is defined in the Copyright Act of Canada (Canada), and are the sole and absolute property of the Company. For no additional consideration, the Contractor hereby assigns and transfers to the Company, and agrees to assign and transfer to the Company, any and all Work Product and all intellectual property rights therein, including all patents, licenses, copyrights, tradenames, trademarks, and service marks in the Work Product. For no additional consideration, the Contractor hereby waives all “moral rights” in the Work Product in favour of the Company and any person designated by the Company. The Contractor agrees, that at the Company’s request and cost, the Contractor and the Keyman will take all steps necessary to secure the rights thereto to the Company in the Work Product, by patent, copyright or otherwise.

 

	Private and Confidential	5

 

 

Horizon Aircraft – Contractor Agreement – Stewart Lee (2195790 Alberta Inc.)

 

(c)

The Contractor acknowledges and agrees that the Contractor will take all necessary steps to protect and maintain the Personal Information of employees, contractors/consultants or clients of the Company obtained in the course of performing the Services under this Agreement. Personal information means information about an identifiable individual. The Contractor shall at all times comply, and shall assist the Company to comply with all applicable privacy laws including the Personal Information Protection and Electronic Documents Act (Canada) and/or any comparable provincial law including the Personal Information Protection Act (Alberta) (“Applicable Privacy Laws”).

 

The Keyman acknowledges and agrees that the disclosure of the Personal Information of the Keyman may be required as part of the ongoing operations of the Company’s business, as required or permitted by law or regulatory agencies, as part of the Company’s audit process, or as part of a potential business or commercial transaction (the “Personal Information Disclosure”), and the Keyman hereby grants consent as may be required by Applicable Privacy Laws to the Personal Information Disclosure.

 

12.	Representations and Warranties

 

The Contractor represents, warrants and acknowledges to the Company the following:

 

(a)

The Contractor and the Keyman will not use or disclose any confidential or proprietary information from any previous employer or other person, firm, corporation or other entity (“Person”) which is in the Contractor or the Keyman’s power, possession or control and which use or disclosure could give rise to a legal claim against either the Contractor or the Keyman or the Company. Further, the Contractor and the Keyman shall comply with all restrictions on the solicitation of employees, contractors, customers or prospective customers of any previous employer or other Person by which the Contractor or the Keyman are legally bound. The Company specifically advises the Contractor and the Keyman that it does not wish, nor will it knowingly permit the Contractor and the Keyman to use or disclose such information or breach such restrictions in the context of performing the Services.

 

13.	Relationship of the Parties

 

(a)

The Contractor enters into this Agreement as an independent contractor. The Contractor and the Keyman will not be deemed to be (nor will the Contractor nor the Keyman identify themselves as) an employee, servant, dependent contractor or agent of the Company, for any purpose whatsoever.

 

(b)

If the relationship between the Company and the Contractor (or the Keyman) is deemed to constitute an employer/employee relationship, it is expressly agreed that the Company’s employer liabilities to the Contractor or the Keyman in relation to such deemed employment and also in relation to the termination for any reason whatsoever of such deemed employment, will equal and be limited to only the minimum statutory requirements (if any) as set out in the Employment Standards Code (Alberta), as amended from time to time (“Employment Standards”). The Contractor and the Keyman acknowledge and expressly agree that the Contractor and the Keyman will not be entitled to nor receive any common law reasonable notice or any amounts other than the minimally required amounts under Employment Standards. Any payments made and any termination notice provided to the Contractor pursuant to this Agreement will be credited towards any applicable minimum statutory requirements.

 

	Private and Confidential	6

 

 

Horizon Aircraft – Contractor Agreement – Stewart Lee (2195790 Alberta Inc.)

 

(c)

If the Contractor or the Keyman is deemed to be a dependent contractor, it is expressly agreed that the Company’s liabilities to such dependent contractor in relation to the termination for any reason whatsoever of the relationship with the Company or the Keyman, will be equivalent to and will be limited to the greater of: (i) the notice required under section 9(c) above, or (ii) the equivalent to the total of the minimum statutory notice (or pay in lieu) that would have been payable by the Company in accordance with Employment Standards, had the Contractor or Keyman been deemed to be an employee of the Company. Any payments made and any termination notice provided to the Contractor or Keyman pursuant to this Agreement will be credited towards such minimum statutory requirements.

 

14.	Compliance with Law

 

(a)

The Contractor will be wholly responsible for complying with, and submitting the requisite filings and payments under applicable federal, provincial, municipal or local law, including but not limited to income tax, Employment Insurance, Canada Pension Plan, workplace/occupational health and safety legislation, workers’ compensation legislation and health insurance legislation, tax legislation and local taxing legislation; and including but not limited to equivalent or similar applicable legislation of any government entity, agency, ministry or collecting body having jurisdiction in relation to the Contractor as a contractor to the Company and in relation to the Keyman as an employee of the Contractor.

 

(b)

For greater clarity, the Company is not responsible to collect and withhold income taxes or to deduct and remit Employment insurance or Canada Pension Plan contributions in connection with payment of the Fees.

 

15.

Indemnity

 

The Contractor and the Keyman agree to indemnify and save harmless the Company (together with its predecessors, successors, affiliates, officers, directors, employees, agents, administrators and assigns) from any and all claims, actions, causes of action, debts or demands (including related liability for interest or penalties, and also including any related costs or expenses incurred by the Company) which may arise as a result of or in relation to this Agreement, including the performance or non-performance of Services provided under this Agreement.

 

16.	Assignment

 

This Agreement may not be transferred, assigned, pledged or hypothecated by any party hereto, other than by operation of law; provided, however, that the Company shall be permitted to assign this Agreement to an affiliate in connection with a reorganization of the Company’s business or assets. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and assigns.

 

17.	Modification

 

This Agreement may not be orally canceled, changed, modified or amended, and no cancellation, change, modification or amendment shall be effective or binding, unless in writing and signed by the Parties to this Agreement.

 

18.	Severability; Survival; Enforcement

 

In the event any provision or portion of this Agreement is determined to be invalid or unenforceable for any reason, in whole or in part, the remaining provisions of this Agreement shall nevertheless be binding upon the parties with the same effect as though the invalid or unenforceable part had been severed and deleted.

 

	Private and Confidential	7

 

 

Horizon Aircraft – Contractor Agreement – Stewart Lee (2195790 Alberta Inc.)

 

Each of the covenants and obligations set out in sections 11 to 16 will be construed as constituting obligations independent of each other and of any other obligations in the Agreement. Upon the termination for any reason whatsoever of this Agreement, the provisions set out in sections 11 to 16, and this section 19, will each survive and remain binding on the Contractor in accordance with their terms, and may be enforced by the Company in a court of competent jurisdiction, notwithstanding any claim that may be asserted by or on behalf of the Contractor or the Keyman against the Company or its affiliates, whether predicated on this Agreement or otherwise.

 

Furthermore, the Contractor acknowledges that it would be difficult to compute the monetary loss to the Company arising from the Contractor or the Keyman’s breach or threatened breach of sections 12 and 16, and that, accordingly, the Company will be entitled, in addition to any other rights and remedies that it may have at law or equity, to a temporary or permanent injunction restraining the Contractor or the Keyman from engaging in or continuing any such breach.

 

19.	No Conflict

 

The Contractor and the Keyman represent and warrant that it and they are not subject to any agreement, instrument, obligations, order, judgment or decree of any kind, or any other restrictive agreement or obligation of any character, which would prevent the Contractor and the Keyman from entering into this Agreement or which would be breached by the Contractor or the Keyman upon the performance of the Services pursuant to this Agreement.

 

20.	Governing Law

 

This Agreement will be governed by and construed in accordance with the laws of the province of Alberta without giving effect to any choice or conflict of law provision or rule (whether in the province of Alberta or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the province of Alberta.

 

21.	Entire Agreement

 

Except as provided herein, this Agreement (including the Schedule) constitutes the complete agreement between the Contractor, the Keyman and the Company and supersedes all prior agreements relating to the subject matter hereof.

 

22.	Eligibility to Work in Canada

 

The Contractor represents and warrants that the Keyman is legally permitted to work in Canada. Upon request, the Keyman will provide the Company with appropriate documentation confirming his eligibility to work in Canada. For clarity, this offer of engagement (and continued engagement with the Company) is conditional upon the Keyman being legally entitled to work in Canada at all times.

 

23.	Legal Advice

 

The Contractor acknowledges and agrees that it has had an adequate opportunity to obtain such independent legal advice prior to entering into this Agreement.

 

24.	Counterparts

 

This Agreement may be executed in counterparts, all of which taken together shall constitute one instrument.

 

	Private and Confidential	8

 

 

Horizon Aircraft – Contractor Agreement – Stewart Lee (2195790 Alberta Inc.)

 

IN WITNESS WHEREOF, this Agreement has been executed by the Parties hereto:

 

/s/ Stewart Lee		/s/ Brandon Robinson
2195790 Alberta Inc.		Horizon Aircraft
Per: Stewart Lee		Per: Brandon Robinson
January 12, 2024		January 19, 2024
Date		Date

 

	Private and Confidential	9

 

 

Horizon Aircraft – Contractor Agreement – Stewart Lee (2195790 Alberta Inc.)

 

Schedule 1

 

1.	Additional Remuneration

 

1.1

Stock Option Plan: Subject to the terms of the Omnibus Share Incentive Plan of the Company (the “SOP”), and contingent upon the approval of the Compensation Committee of the Company’s Board of Directors and the Company’s Board of Directors (to be granted in its sole and unfettered discretion), the Company shall provide the Keyman with such number of awards of the Company at a price and under such conditions to be determined in accordance with the terms of the SOP. If granted, such awards will vest on the schedule detailed in the terms of the SOP or the terms of the agreement representing such award which the Keyman will be required to execute upon the issuance of the stock options. The Keyman’s participation in the SOP will be strictly governed by its terms, as they may be amended from time to time, and the Stock Option Agreement. The Keyman agrees to bear responsibility for, and adhere to, any and all tax regulations in connection with the stock options issued to him.

 

1.2	Resources:

 

If any tools, equipment, software, or other goods are purchased by the Contractor and invoiced to the Company or are supplied by the Company to the Contractor, they will be and remain the property of the Company, will be deemed to be loaned to the Contractor, and must be returned to the Company (or as otherwise directed by the Company) upon the termination for any reason whatsoever of the Agreement.

 

1.3

Expenses: Unless otherwise approved by the Company in writing in advance, the Contractor will be solely responsible for any expenses incurred in performing the Services. Where expenses are reimbursable, any such reimbursement will be conditional upon compliance with the Company’s expense reimbursement policies and practices, and presentation of proper receipts and expense reports.

 

	Private and Confidential	10

 

 

Exhibit 21.1

 

SUBSIDIARIES OF THE REGISTRANT

 

Name		Jurisdiction of Formation
1460391 B.C. LTD.		British Columbia

 

 

Exhibit 99.1

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED COMBINED FINANCIAL INFORMATION

 

References in this section to “Horizon” refer to Legacy Horizon prior to the Closing. Capitalized terms used but not defined in this Exhibit 99.1 shall have the meanings ascribed to them in the Current Report on Form 8-K to which this Exhibit 99.1 is attached.

 

The Company is providing the following unaudited pro forma condensed combined and consolidated financial information to aid you in your analysis of the financial aspects of the Business Combination and related transactions. The following unaudited pro forma condensed combined and consolidated financial information presents the combination of the financial information of Pono and Horizon adjusted to give effect to the Business Combination and related transactions. The following unaudited pro forma condensed combined and consolidated financial information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses.”

 

The historical financial information of Pono was derived from the unaudited financial statements of Pono as of September 30, 2023, nine months ended September 30, 2023, six months ended June 30, 2023 and for the period from March 11, 2022 (inception) through December 31, 2022. The historical financial information of Horizon was derived from the unaudited consolidated financial statements of Horizon as of August 31, 2023, for the three months ended August 31, 2023 and the audited consolidated financial statements for the year ended May 31, 2023. Such unaudited pro forma financial information has been prepared on a basis consistent with the audited financial statements of Pono and Horizon, respectively, and should be read in conjunction with the historical financial statements and related notes, each of which are incorporated in this Current Report on Form 8-K by reference. This information should be read together with Pono’s and Horizon’s financial statements and related notes, the sections titled “Pono Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Horizon Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

 

The Business Combination was accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with GAAP. Under this method of accounting, Pono was treated as the “acquired” company for financial reporting purposes. Horizon has been determined to be the accounting acquirer because existing Horizon shareholders, as a group, retained the largest portion of the voting rights in the combined entity, the executive officers of Horizon are the initial executive officers of the combined company, and the operations of Horizon will be the continued operations of the combined company.

 

Horizon and Pono have different fiscal year ends. Horizon is May 31, and Pono is December 31. The historical financial information of Pono was derived from the unaudited financial statements of Pono as of September 30, 2023, for the three months ended September 30, 2023 and for the six months ended June 30, 2023, the audited financial statements of Pono as of December 31, 2022 and for the year ended December 31, 2022, and the unaudited financial statements of Pono as of September 30, 2022 and for the period from March 11, 2022 (inception) through September 30, 2022.

 

The unaudited pro forma condensed combined and consolidated balance sheet as of August 31, 2023 (Horizon) and September 30, 2023 (Pono) assumes that the Business Combination and related transactions occurred on August 31, 2023. The unaudited pro forma condensed combined and consolidated statements of operations for the three months ended September 30, 2023, for the three months ended August 31, 2023, for the year ended June 30, 2023 and for the year ended May 31, 2023 gives pro forma effect to the Business Combination and related transactions as if they had occurred on June 1, 2022. Pono and Horizon have not had any historical relationship prior to the Business Combination. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.

 

 

 

 

These unaudited pro forma condensed combined and consolidated financial statements are for informational purposes only. They do not purport to indicate the results that would have been obtained had the Business Combination and related transactions actually been completed on the assumed date or for the periods presented, or which may be realized in the future. The pro forma adjustments are based on the information currently available and the assumptions and estimates underlying the pro forma adjustments are described in the accompanying notes. Actual results may differ materially from the assumptions within the accompanying unaudited pro forma condensed combined and consolidated financial information.

 

The transaction accounting adjustments for the Business Combination consist of those necessary to account for the Business Combination and related transactions. The unaudited pro forma condensed combined consolidated financial statements have been adjusted to give effect to the following adjustments:

 

●

the effect of the Business Combination as described in the Merger Agreement;

 

●

the Convertible Promissory Notes (as defined below) that Horizon issued in the amount of $CAD6.7 million on October 24, 2023, and related interest expense, which are expected to be converted into shares of Horizon and Amalco immediately prior to and concurrently with the closing of the Business Combination; and

 

●

the PIPE Agreement (as defined below), pursuant to which a certain investor purchased Pono’s Class A ordinary shares in an aggregate value of $2,000,000 representing 200,000 PIPE Shares at a price of $10.00 per share.

 

Description of the Business Combination

 

On August 15, 2023, Pono, and Horizon, entered into the Business Combination Agreement pursuant to which, among other things and subject to the terms and conditions contained in the Business Combination Agreement and the Plan of Arrangement, (i) Pono continued from the Cayman Islands to the Province of British Columbia under the BCBCA, (ii) Horizon amalgamated with Merger Sub, with as the amalgamated entity, Horizon Amalco, became a wholly-owned subsidiary of Pono.

 

In accordance with the terms and subject to the conditions of the Business Combination Agreement, the holders of Horizon Common Shares collectively were entitled to receive in the aggregate, a number of New Pono Class A ordinary shares equal to the quotient derived from dividing (a) the difference of (i) $96 million, and (ii) the Closing Net Indebtedness, by (b) the Redemption Price (as defined below), with each Horizon shareholder receiving, for each Horizon share held, a number of Pono Class A ordinary shares equal to such shareholder’s pro rata portion of the Exchange Consideration. Each outstanding option to purchase Horizon common shares was exchanged for New Pono Options at Closing.

 

The Exchange Consideration otherwise payable to Horizon shareholders was subject to the withholding of a number of Pono ordinary shares equal to (i) three percent (3.0%) of the Exchange Consideration to be placed in escrow for post-closing adjustments (if any) to the Exchange Consideration, and (ii) such number of additional number of Pono ordinary shares equal a maximum of the quotient derived from dividing (i) Eight Million Dollars ($8,000,000) by (ii) the redemption price per share (the “Redemption Price”) as defined in Pono’s Amended and Restated Memorandum and Articles of Association (the “Incentive Shares”), provided such Incentive Shares were allotted and issued on or prior to the Closing Date to such third parties as Horizon and Pono agreed (A) in connection with post-closing financing structures in the form of a PIPE, convertible debt, forward purchase agreement, backstop, or equity line of credit; or (B) to one or more existing holders of Pono ordinary shares as an inducement for them not to proceed with a redemption, subject to certain restrictions. The Exchange Consideration is subject to adjustment after the Closing based on confirmed amounts of the Closing Net Indebtedness as of the Closing Date. If the adjustment is a negative adjustment in favor of Pono, the escrow agent shall distribute to Pono a number of Pono Class A ordinary shares with a value equal to the absolute value of the adjustment amount. If the adjustment is a positive adjustment in favor of Horizon, Pono will issue to the Horizon shareholders an additional number Pono Class A ordinary shares with a value equal to the adjustment amount.

 

2

 

 

Forward Purchase Agreement

 

Pursuant to the terms of the Forward Purchase Agreement, Meteora purchased 1,580,127 of total outstanding shares from Public Shareholders who elected to redeem such shares in connection with the Business Combination. Meteora waived any redemption rights in connection with the Business Combination with respect to the Recycled Shares. Purchases of Recycled Shares by Meteora was made after the redemption deadline in connection with the Business Combination at a price no higher than the redemption price paid by Pono in connection with the Business Combination.

 

The Forward Purchase Agreement provides that, not later than the Prepayment Date, Pono will pay Meteora, out of funds held in the Trust Account, a Prepayment Amount equal to the product of the number of Recycled Shares and the Initial Price, less the 10% Prepayment Shortfall. Meteora has agreed to waive any redemption rights in connection with the Business Combination with respect to the Recycled Shares.

 

From time to time following the Closing and prior to the Maturity Date, being the earliest to occur of (a) the first anniversary of the Closing (or, upon the mutual written agreement of Pono and Meteora, 3 years following the Closing) and (b) the date specified by Meteora in a written notice to be delivered to Pono at Meteora’s discretion after the occurrence of a Seller Price Trigger Event or a Delisting Event (each as defined in the Forward Purchase Agreement), Meteora may, in its sole discretion, sell some or all of the Recycled Shares. On the last trading day of each calendar month following the Business Combination, in the event that Meteora has sold any Recycled Shares (other than sales to recover the Prepayment Shortfall), an amount will be paid to Pono from the Trust Account equal to the product of the number of Recycled Shares sold multiplied by the Reset Price and to Meteora from the Trust Account equal to the excess of the Initial Price over the Reset Price for each sold Recycled Share. The “Reset Price” will be subject to reset on a bi-weekly basis commencing the first week following the thirtieth day after the closing of the Business Combination to be the lowest of (a) the then-current Reset Price, (b) the Initial Price and (c) the VWAP Price of the Shares of the prior two weeks; provided the Reset Price shall not be less than $6.00, except pursuant to reduction upon a Dilutive Offering Reset immediately upon the occurrence of such Dilutive Offering.

 

At the Maturity Date, an amount equal to the Initial Price for each Matured Share shall be transferred to Meteora from the Trust Account, and Meteora shall transfer the Matured Shares to Pono. Additionally, at the Maturity Date, Pono shall pay to Meteora an amount equal to $3.00 for each Matured Share, which may be paid in cash or in shares of NewCo Common Stock at the 15-day volume weighted average price of the NewCo Common Stock.

 

FPA Funding Amount Subscription Agreements

 

Pono entered into the FPA Funding Amount Subscription Agreement with Meteora. Pursuant to the FPA Funding Subscription Agreement, Seller agreed to subscribe for and purchase, and Pono agreed to issue and sell to Seller, on the Closing Date at a price of $10.00 per share, an aggregate of up to the Maximum Amount, less the Recycled Shares in connection with the Forward Purchase Agreements. No shares were issued under the FPA Funding Amount Subscription Agreement at the Closing Date.

 

Horizon Convertible Promissory Notes

 

On October 24, 2023, in connection with the Business Combination, Horizon raised $CAD6,700,000 in proceeds through the issuance of convertible notes (“Convertible Promissory Notes”) from third parties. The Convertible Promissory Notes have an interest rate of 10% per annum or the maximum rate permissible by law, whichever is less. The Convertible Promissory Notes would have converted into Horizon common stock in the event Horizon (i) issued and sold Horizon’s preferred or common shares (the “Equity Securities’) to investors on or before the date of the repayment in full of the Convertible Promissory Notes in an equity financing resulting in gross proceeds to Horizon of at least $CAD5,000,000, or (ii) listed Equity Securities for trading pursuant to a prospectus filed under applicable Canadian securities laws or a registration statement filed under the 1933 Act (either (i) or (ii), a “Qualified Transaction”), then the outstanding principal and unpaid accrued interest balance of these Convertible Promissory Note would have automatically converted in whole without any further action by the noteholder into such Equity Securities at a conversion price equal to eighty percent (80%) of the per share price applicable in the Qualified Transaction, and otherwise on the same terms and conditions as given to the participants in such transaction. The Convertible Promissory Notes were converted into Amalco Common Shares upon consummation of the Business Combination. The accounting treatment for Convertible Promissory Notes is still being evaluated.

 

3

 

 

If these Convertible Promissory Notes have not been previously converted pursuant to a Qualified Transaction, then the shareholders may elect by giving five (5) days’ notice (the “Voluntary Conversion Date”) to convert (the “Voluntary Conversion”) these Convertible Promissory Notes and any unpaid accrued interest thereon into Class B Common Shares of the Horizon at a conversion price equal to the quotient of $CAD40,000,000 divided by the aggregate number of outstanding common shares of the Horizon as of the Voluntary Conversion Date.

 

The issuance of the Convertible Promissory Notes, and the subsequent conversion of the Convertible Promissory Notes into 1,362,962 shares under the Voluntary Conversion terms is reflected as a series of adjustments in the unaudited pro forma condensed combined consolidated financial statements.

 

PIPE Agreement

 

On December 27, 2023, Pono entered into a PIPE agreement (the “PIPE Agreement”), pursuant to which a certain investor purchased Pono’s Class A ordinary shares (such shares, collectively, “PIPE Shares”) in an aggregate value of $2,000,000, representing 200,000 PIPE Shares at a price of $10.00 per share. The purpose of the sale of the Subscription Shares was to raise additional capital for use in connection with the Business Combination.

 

Letter Agreement

 

On December 27, 2023, Pono entered into a letter agreement (the “Letter Agreement”) with Horizon, pursuant to which, as an inducement for the Subscriber to enter into the PIPE Agreement, Horizon agreed to transfer or cause to be transferred an aggregate of 330,000 Incentive Shares (as defined in the Business Combination Agreement) to the Subscriber and an additional 424,013 Incentive Shares to the Subscriber’s designees.

 

Accounting Treatment

 

The Business Combination was accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with GAAP. Under this method of accounting, Pono was treated as the “acquired” company for financial reporting purposes. Horizon has been determined to be the accounting acquirer because existing Horizon shareholders, as a group, will retain the largest portion of the voting rights in the combined entity, the executive officers of Horizon are the initial executive officers of the combined company, and the operations of Horizon will be the continued operations of the combined company.

 

Basis of Pro Forma Presentation

 

Pono reports its historical financial information in U.S. Dollars (“$USD”) and Horizon reports its historical financial information in Canadian Dollars (“$CAD”). For purposes of this presentation, all $USD balance sheet amounts have been translated into $CAD using an exchange rate of $USD1.00 to $CAD1.36, which was the exchange rate published by the Federal Reserve Board as of September 30, 2023. All $USD statement of profit or loss and other comprehensive profit or loss amounts have been translated into $CAD using an average exchange rate of $USD1.00 to $CAD1.34 for the three months ended September 30, 2023 and for the year ended June 30, 2023. All amounts reported within this pro forma financial information are $CAD unless otherwise noted as $USD.

 

4

 

 

The following summarizes the pro forma common stock outstanding following the Business Combination and related transactions:

 

		Shares				%
Shares held by current Pono Public Shareholders			67,315				0.4	%
Shares held by current PIPE Shareholders(1)			954,013				5.6	%
Shares held by current Pono Founder Shareholders(2)			5,500,997				32.4	%
Shares held by current Horizon Shareholders(3)			8,665,071				51.1	%
Shares held by the Representative(4)			207,000				1.2	%
Shares held by the Meteora Capital(5)			1,580,127				9.3	%
Pro forma Common Shares			16,974,523				100.0	%

 

(1)	Includes 200,000 shares issued related to the PIPE Agreement and 754,013 incentive shares.

 

(2)	Includes 4,935,622 Pono Class B Ordinary Shares related to the Founder Shares and 565,375 Pono Class A Ordinary Shares related to the Private Placement Units.

 

(3)	Includes 517,532 shares issued upon the conversion of convertible notes outstanding, 693,265 shares issued upon the exercise of outstanding Horizon stock options, and 1,362,962 shares issued upon the conversion of certain Convertible Promissory Notes under the Voluntary Conversion terms.

 

(4)	Represents Pono Class A Ordinary Shares held by the Underwriter, including 103,500 additional shares being issued as partial settlement for $1,035,000 of the deferred underwriting fees.

 

(5)	Represents 1,580,127 Recycled Shares purchased by Meteora as defined in the Forward Purchase Agreement.

 

5

 

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED COMBINED STATEMENT OF OPERATIONS

 

(in thousands, except share and per share amounts)

 

		Horizon Aircraft (As of August 31, 2023)				Pono Capital Three Inc. (As of September 30, 2023)				Issuance of Convertible Promissory Note						Transaction Accounting Adjustments						Pro Forma Combined
ASSETS
Current assets:
Cash and cash equivalents		$	103			$	93			$	6,700			A		$	164,957			B		$	5,205
											—						(4,489	)		D
											—						(102	)		E
											—						(142,917	)		M
											—						(21,856	)		N
											—						2,716			O
Accounts receivable			15				—				—						—						15
Prepaid expenses			35				210				—						(33	)		D			212
Total current assets			153				303				6,700						(1,724	)					5,432
Non-current assets:
Property and equipment, net			67				—				—						—						67
Operating lease assets			110				—				—						—						110
Deferred development costs			988				—				—						—						988
Forward Purchase Agreement			—				—				—						2,661			L			2,661
Marketable Securities held in Trust Account			—				164,957				—						(164,957	)		B			—
Total non-current assets			1,165				164,957				—						(162,296	)					3,826
Total assets		$	1,318			$	165,260			$	6,700					$	(164,020	)				$	9,258
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued liabilities		$	213			$	481			$	—					$	(313	)		D		$	381
Accrued expenses			—				80				—						(56	)		D			24
Accrued expenses - related party			—				14				—						122			E			136
Term loans			40				—				—						—						40
Current portion of operating lease liabilities			47				—				—						—						47
Current portion of financing lease liabilities			—				—				—						—						—
Current portion of convertible debentures			984				—				6,700			A			(984	)		H			—
																	(6,700	)		I
Current portion of promissory note payable			53				—				—						—						53
Accrued offering costs			—				95				—						693			D			788
Income tax payable			—				1,028				—						—						1,028
Total current liabilities			1,337				1,698				6,700						(7,238	)					2,497
Non-current liabilities:
Promissory note payable			247				—				—						—						247
Convertible debentures			489				—				—						(489	)		H			—
Operating lease liabilities			61				—				—						—						61
Forward Purchase Agreement			—				12,072				—						(12,072	)		F			—
Deferred underwriting fee payable			—				4,685				—						(3,184	)		D			96
																	(1,405	)		P
Total non-current liabilities			797				16,757				—						(17,150	)					404
Total liabilities			2,134				18,455				6,700						(24,388	)					2,901
Class A ordinary shares subject to possible redemption, $0.0001 par value, 11,500,000 shares at redemption value of $10.42 per share as of June 30, 2023			—				163,794				—						(163,794	)		C			—
Stockholders’ Equity (Deficit)
Common stock: no par value; unlimited authorized; 6,012,391 Voting A, 1,258,344 Voting B, and 200,000 Non-voting common stocks issued and outstanding			5,083				—				—						(5,081	)		K			2
Class A ordinary shares, $0.0001 par value; 100,000,000 shares authorized; 668,875 shares issued and outstanding (excluding 11,500,000 shares subject to possible redemption)  as of September 30, 2023			—				—				—						1			C			—
																	(1	)		K
Class B ordinary shares, $0.0001 par value; 10,000,000 shares authorized; 4,935,622 issued and outstanding			—				1				—						6,700			I			—
																	(6,701	)		K
Additional paid-in capital			68				—				—						163,793			C			1,625
																	(585	)		D
																	(16,990	)		G
																	1,473			H
																	74			J
																	11,783			K
																	2,661			L
																	(142,917	)		M
																	(21,856	)		N
																	2,716			O
																	1,405			P
Accumulated deficit			(5,967	)			(16,990	)			—						(1,077	)		D			4,730
																	(224	)		E
																	12,072			F
																	16,990			G
																	(74	)		J
Total shareholders’ equity (deficit)			(816	)			(16,989	)		$	—						24,162						6,357
Total liabilities and shareholders’ equity (deficit)		$	1,318			$	165,260			$	6,700					$	(164,020	)				$	9,258

 

6

 

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED COMBINED STATEMENT OF OPERATIONS

 

(in thousands, except share and per share amounts)

 

		Horizon Aircraft Historical (For the Three Months Ended August 31, 2023)				Pono Historical (For the Three Months Ended September 30, 2023)				Issuance of Convertible Promissory Note						Transaction Accounting Adjustments						Pro Forma Combined
Operating Expenses:
Salaries, wages and benefits		$	79			$	—			$	—					$	—					$	79
Professional fees			90				—				—						—						90
Depreciation and amortization			7				—				—						—						7
Research and development			145				—				—						—						145
General and administrative			46				—				—						—						46
Stock-based compensation			13				—				—						—						13
Operating and formation costs			—				822				—						—						822
Total expenses			380				822				—						—						1,202
Loss from operations			(380	)			(822	)			—						—						(1,202	)
Other income (expense):
Interest expenses			(38	)			—				(168	)		AA			171			DD			(35	)
Interest income on investments held in Trust Account			—				2,096				—						(2,096	)		BB			—
Change in fair value of Forward Purchase Agreement			—				(107	)			—						—						(107	)
(Gain)/loss on foreign exchange			2				—				—						—						2
Net comprehensive (loss) income			(416	)			1,167				(168	)					(1,925	)					(1,342	)
Income tax expense			—				(1,016	)			—						—						(1,016	)
(Loss) income for the period		$	(416	)		$	151			$	(168	)				$	(1,925	)				$	(2,358	)
Net profit (loss) per share (Note 4):
Weighted average shares outstanding - basic and diluted			7,470,735
Net loss per common share - basic and diluted		$	(0.06	)
Basic and diluted weighted average shares outstanding - Class A							12,168,875
Net income per share, Class A Ordinary Shares subject to possible redemption - basic and diluted						$	0.01
Basic and diluted weighted average shares outstanding - Class B							4,935,622
Net income per share, Class B non-redeemable ordinary shares - basic and diluted						$	0.01
Weighted average shares outstanding - basic and diluted																							16,974,523
Net loss per share - basic and diluted																						$	(0.14	)

 

7

 

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED COMBINED STATEMENT OF OPERATIONS

 

(in thousands, except share and per share amounts)

 

		Horizon Aircraft Historical (For the Year Ended May 31, 2023)				Pono Historical (For the Year Ended June 30, 2023)				Issuance of Convertible Promissory Note						Transaction Accounting Adjustments						Pro Forma Combined
Operating Expenses:
Salaries, wages and benefits		$	409			$	—			$	—					$	—					$	409
Professional fees			87				—				—						—						87
Depreciation and amortization			27				—				—						—						27
Research and development			599				—				—						—						599
General and administrative			209				—				—						1,077			CC			1,286
Stock-based compensation			55				—				—						74			EE			129
Operating and formation costs			—				583				—						—						583
Total expenses			1,386				583				—						1,151						3,120
Loss from operations			(1,386	)			(583	)			—						(1,151	)					(3,120	)
Other income (expense):			—				—				—
Grant income			300				—				—						—						300
Other income			(10	)			—				—						—						(10	)
Interest expenses			(74	)			—				(670	)		AA			680			DD			(64	)
Interest income on investments held in Trust Account			—				2,740				—						(2,740	)		BB			—
Net comprehensive (loss) income			(1,170	)			2,157				(670	)					(3,211	)					(2,894	)
Income tax expense			—				—				—						—						—
(Loss) income for the period		$	(1,170	)		$	2,157			$	(670	)				$	(3,211	)				$	(2,894	)
Net profit (loss) per share (Note 4):
Weight-average common shares outstanding, basic and diluted			7,326,310
Net loss per common share - basic and diluted		$	(0.16	)
Basic and diluted weighted average shares outstanding - Class A							9,143,464
Net income per share, Class A Ordinary Shares subject to possible redemption - basic and diluted						$	0.16
Basic and diluted weighted average shares outstanding - Class B							4,935,622
Net income per share, Class B non-redeemable ordinary shares - basic and diluted						$	0.16
Weighted average shares outstanding - basic and diluted																							16,974,523
Net loss per share - basic and diluted																						$	(0.17	)

 

8

 

 

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED COMBINED FINANCIAL INFORMATION

 

Note 1. Basis of Presentation

 

The Business Combination was accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded. Under this method of accounting, Pono was treated as the “accounting acquiree” and Horizon as the “accounting acquirer” for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Horizon issuing shares for the net assets of Pono, followed by a recapitalization. The net assets of Horizon were stated at historical cost. Operations prior to the Business Combination were those of Horizon.

 

The unaudited pro forma condensed consolidated statement of financial position as of August 31, 2023 (Horizon) and September 30, 2023 (Pono) gives effect to the Business Combination and related transactions as if they occurred on August 31, 2023. The unaudited pro forma condensed consolidated statements of profit (loss) and comprehensive profit (loss) for the three months ended August 31, 2023 and for the year ended May 31, 2023 (Horizon) and for the three months ended September 30, 2023 and for the year ended June 30, 2023 (Pono) give effect to the Business Combination and related transactions as if they occurred on June 1, 2022. These periods are presented on the basis that Horizon is the acquirer for accounting purposes.

 

The pro forma adjustments reflecting the consummation of the Business Combination and the related transaction are based on currently available information and certain assumptions and methodologies that Pono believes are reasonable under the circumstances. The unaudited condensed combined and consolidated pro forma adjustments, which are described in the accompanying notes, may be revised as additional information becomes available and is evaluated. Therefore, it is likely that the actual adjustments will differ from the pro forma adjustments and it is possible the difference may be material. Pono believes that its assumptions and methodologies provide a reasonable basis for presenting all of the significant effects of the Business Combination and related transactions based on information available to management at the time and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined and consolidated financial information.

 

The unaudited pro forma condensed combined and consolidated financial information does not give effect to any anticipated synergies, operating efficiencies, tax savings, or cost savings that may be associated with the Business Combination. The unaudited pro forma condensed combined and consolidated financial information is not necessarily indicative of what the actual results of operations and financial position would have been had the Business Combination and related transactions taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of the post-combination company. They should be read in conjunction with the historical financial statements and notes thereto of Pono and Horizon.

 

Note 2. Accounting Policies and Reclassifications

 

Management has performed a comprehensive review of the two entities’ accounting policies. Based on this review, management did not identify any differences that would have a material impact on the unaudited pro forma condensed combined financial information. As a result, the unaudited pro forma condensed combined financial information does not assume any differences in accounting policies.

 

As part of the preparation of these unaudited pro forma condensed combined and consolidated financial statements, certain reclassifications were made to align Pono financial statement presentation with that of Horizon.

 

9

 

 

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED COMBINED FINANCIAL INFORMATION

 

Note 3. Adjustments to Unaudited Pro Forma Condensed Consolidated Combined Financial Information

 

The unaudited pro forma condensed combined and consolidated financial information has been prepared to illustrate the effect of the Business Combination and related transactions, including the issuance of Horizon Convertible Promissory Notes, and has been prepared for informational purposes only.

 

The following unaudited pro forma condensed combined and consolidated financial information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses.” Release No. 33-10786 replaces the existing pro forma adjustment criteria with simplified requirements to depict the accounting for the transaction (“Transaction Accounting Adjustments”) and present the reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur (“Management’s Adjustments”). Pono has elected not to present Management’s Adjustments and will only be presenting Transaction Accounting Adjustments in the unaudited pro forma condensed combined and consolidated financial information. Pono and Horizon have not had any historical relationship prior to the Business Combination. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.

 

The pro forma basic and diluted earnings per share amounts presented in the unaudited pro forma condensed combined and consolidated statement of operations are based upon the number of shares of Horizon’ common stock outstanding, assuming the Business Combination and related transactions occurred on June 1, 2022.

 

Adjustments to Unaudited Pro Forma Condensed Consolidated Statement of Financial Position

 

The adjustments included in the unaudited pro forma condensed consolidated statement of financial position as of August 31, 2023 and September 30, 2023 are as follows:

 

A.

Reflects the issuance of Horizon Convertible Promissory Notes on October 24, 2023, totaling $CAD 6.7 million.

 

B.

Reflects the reclassification of $CAD165.0 million ($USD121.5 million) held in the Trust Account to cash that becomes available at closing of the Business Combination.

 

C.

Reflects the reclassification of approximately $CAD163.8 million ($USD120.6 million) of Pono Class A Ordinary Shares that are subject to possible redemption into Amalco Class A Common Shares as a result of a series of transactions as part of the Business Combination.

 

 

D.

Represents payment of Pono’s transactions costs of $CAD$4.5 million inclusive of advisory, banking, printing, legal and accounting fees that are expensed as a part of the Business Combination, partial payment of deferred underwriting fees and equity issuance costs that are capitalized into additional paid-in capital. Of the transaction costs, approximately $CAD$5.1 million has been incurred and reflected in the historical financial statements of Pono. Represents additional accrual of Horizon’s transaction costs of $CAD0.6 million, and of Pono’s transactions costs of $CAD0.1 million.

 

E.

Reflects additional accruals and partial repayment of amounts due to related parties of Pono for general operating costs.

 

F.

Represents the elimination of the Forward Purchase Agreement liability on Pono’s historical balance sheet.

 

G.

Reflects the elimination of Pono’s historical accumulated deficit.

 

H.

Represents the conversion of $CAD1.5 million of convertible debentures into 517,532 shares of Horizon common stock.

 

10

 

 

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED COMBINED FINANCIAL INFORMATION

 

I.

Represents the conversion of $CAD6.7 million of Convertible Promissory Notes under the Voluntary Conversion terms into 1,362,962 shares of Horizon Class B common stock immediately prior to the close of the Business Combination.

 

J.

Reflects an acceleration of share-based compensation expense of approximately $CAD0.1 million related to the expectation to accelerate the vesting of certain unvested Horizon share-based awards in connection with the Business Combination.

 

K.

Represents the recapitalization of Pono outstanding equity (inclusive of 1,647,442 Class A ordinary shares held by Pono Public Shareholders, 565,375 Pono Class A Ordinary Shares related to the Private Placement Units, and 4,935,622 Class B ordinary shares issued to Founders at historical par value of $USD0.0001) and the issuance of Amalco Class A Common Shares to existing Horizon Shareholders pursuant to the Business Combination.

 

L.

Reflects the recording of the fair value of the derivative Forward Share Purchase Agreement related to 1,580,127 Recycled Shares. On January 12, 2024, the Forward Share Purchase Agreement was valued at $CAD2.7 million ($USD2.0 million). A Monte Carlo simulation was used for the valuation. In the Monte-Carlo simulation, the common equity price per share of the Company was simulated based on a Geometric Brownian Motion process with a trend rate equal to the risk-free rate and identical error factors for each step to calculate the share proceeds received by the Company at the Settlement Date. Under the no redemption scenario, no Recycled Shares are purchased under this agreement.

 

M.

Reflects 9,919,873 Pono Class A Ordinary Shares redeemed in connection with the Business Combination, for aggregate payments to redeeming Pono Public Shareholders of approximately $CAD142.9 million ($USD105.2 million) (at a redemption price of $CAD14.41 ($USD10.61) per share). 1,580,127 shares not redeemed under the Forward Share Purchase Agreement.

 

N.

Reflects the recording of the prepayment amount associated with 1,580,127 Recycled Shares made by the Amalco company to Meteora under the terms of the Forward Purchase Agreement.

 

O.

Represents the net proceeds from the Seller of approximately $CAD2.7 million ($USD2.0 million) for 200,000 shares of Pono Class A Ordinary Shares at a price of $CAD13.60 ($USD10.00) per share in connection with the PIPE Agreement. The accounting treatment for PIPE Agreement is still being evaluated.

 

P.

Represents the partial settlement of $CAD1.4 million ($USD1.0 million) in deferred underwriter fees for 103,500 Pono Class A Ordinary Shares at a price of $10.00 per share.

 

Adjustments to Unaudited Pro Forma Condensed Consolidated Statement of Operations

 

The adjustments included in the unaudited pro forma condensed consolidated statement of operations for the three months ended August 31, 2023 and for the year ended May 31, 2023 are as follows:

 

AA.

Reflects the accrual of interest expense incurred in connection with issuance of the Horizon Convertible Promissory Notes.

 

BB.

Reflects elimination of investment income on the Trust Account.

 

CC.

Reflects non-recurring transaction costs not already reflected in the historical financial statements of approximately $CAD1.1 million ($USD0.8 million) as if incurred on June 1, 2022, the date the Business Combination occurred for the purposes of the unaudited pro forma condensed combined and consolidated statement of operations.

 

DD.

Reflects the reversal of interest expense incurred in connection with the Horizon Convertible Promissory Notes and convertible debentures converted into shares immediately prior to and at the closing of the Business Combination.

 

EE.

Reflects an acceleration of share-based compensation expense of $CAD0.1 million related to the expectation to accelerate the vesting of certain unvested Horizon share-based awards in connection with the Business Combination.

 

11

 

 

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED COMBINED FINANCIAL INFORMATION

 

Note 4. Net Loss per Share

 

Net loss per share was calculated using the historical weighted average shares outstanding, and the issuance of additional shares in connection with the Business Combination, assuming the shares were outstanding since June 1, 2022 (amounts in thousands except share and per share amounts). As the Business Combination is being reflected as if it had occurred at the beginning of the period presented, the calculation of weighted average shares outstanding for basic and diluted net loss per share assumes that the shares issuable relating to the Business Combination have been outstanding for the entirety of all periods presented.

 

		For the Three Months Ended August 31, 2023 (1)				For the Year Ended May 31, 2023 (1)
Numerator:
Pro forma net loss		$	(2,358	)		$	(2,894	)
Denominator:
Weighted average shares outstanding - basic and diluted(2)			16,974,523				16,974,523
Net loss per share:
Basic and diluted		$	(0.14	)		$	(0.17	)
Potentially dilutive securities(2)
Pono Public Warrants			11,500,000				11,500,000
Pono Private Placement Warrants			565,375				565,375

 

(1)	Pro forma net loss per share includes the related pro forma adjustments as referred to within the section “Unaudited Pro Forma Condensed Combined and Consolidated Financial Information.”

 

(2)

The potentially dilutive outstanding securities were excluded from the computation of pro forma net loss per share, basic and diluted, because their effect would have been anti-dilutive and/or issuance or vesting of such shares is contingent upon the satisfaction of certain conditions which were not satisfied by the end of the periods presented.

 

 

12

 

 

Cover	Jan. 12, 2024
Document Type	8-K
Amendment Flag	false
Document Period End Date	Jan. 12, 2024
Current Fiscal Year End Date	--05-31
Entity File Number	001-41607
Entity Registrant Name	NEW HORIZON AIRCRAFT LTD.
Entity Central Index Key	0001930021
Entity Tax Identification Number	00-0000000
Entity Incorporation, State or Country Code	A1
Entity Address, Address Line One	3187 Highway 35
Entity Address, City or Town	Lindsay
Entity Address, State or Province	ON
Entity Address, Postal Zip Code	K9V 4R1
City Area Code	613
Local Phone Number	866-1935
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false
Class A Ordinary Share, no par value
Title of 12(b) Security	Class A Ordinary Share, no par value
Trading Symbol	HOVR
Security Exchange Name	NASDAQ
Warrants, each whole warrant exercisable for one Class A Ordinary Share at an exercise price of $11.50 per share
Title of 12(b) Security	Warrants, each whole warrant exercisable for one Class A Ordinary Share at an exercise price of $11.50 per share
Trading Symbol	HOVRW
Security Exchange Name	NASDAQ

---