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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| TLG Acquisition One Corp | NYSE:TLGA | NYSE | Common Stock |
| Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 6.06 | 0 | 00:00:00 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
| |
||
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code
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 |
Name of each exchange | ||
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
The Business Combination
As previously announced, on November 13, 2022, TLG Acquisition One Corp., a Delaware corporation (“TLG”), Electriq Power, Inc., a Delaware corporation (“Electriq”) and Eagle Merger Corp., a Delaware corporation and a wholly-owned subsidiary of TLG (“Merger Sub”), entered into a Merger Agreement (as amended by the First Amendment dated December 23, 2022, the Second Amendment dated March 22, 2023 and the Third Amendment dated June 8, 2023, the “Merger Agreement”), and included as Exhibits 2.1 through 2.4 to this Current Report on Form 8-K.
As previously reported on the Current Report on Form 8-K filed by TLG with the Securities and Exchange Commission (“SEC”) on July 26, 2023, TLG held a special meeting of its stockholders on July 25, 2023 (the “Special Meeting”), at which holders of 11,365,663 shares of TLG’s Class A Common Stock and Class F Common Stock (together, the “TLG Common Stock”) were present in person or by proxy, constituting a quorum for the transaction of business. Only stockholders of record as of the close of business on June 8, 2023, the record date (the “Record Date”) for the Special Meeting, were entitled to vote at the Special Meeting. As of the Record Date, 12,948,405 shares of TLG Common Stock were outstanding and entitled to vote at the Special Meeting.
At the Special Meeting, TLG’s stockholders voted to approve the proposals outlined in the final prospectus and definitive proxy statement filed by TLG with the SEC on July 12, 2023 (the “Proxy Statement/Consent Solicitation/Prospectus”), including, among other things, the adoption of the Merger Agreement and approval of the transactions contemplated by the Merger Agreement, including the merger of Merger Sub with and into Electriq, with Electriq continuing as the surviving corporation and as a wholly-owned subsidiary of TLG, and the issuance of TLG securities as consideration thereunder (the “Merger” and, together with the other transactions contemplated by the Merger Agreement, the “Business Combination”), as described in the section titled “Proposal No. 1 – The Business Combination Proposal” beginning on page 128 of the Proxy Statement/Consent Solicitation/Prospectus.
On July 31, 2023 (the “Closing Date”), the Business Combination, including the Merger, was completed (the “Closing”). In connection with the Closing, the registrant changed its name from TLG Acquisition One Corp. to Electriq Power Holdings, Inc. (the “Company”). References herein to “TLG” are to TLG Acquisition One Corp. prior to consummation of the Business Combination and references to the “Company” are to Electriq Power Holdings, Inc. (f/k/a TLG Acquisition One Corp.) following the consummation of the Business Combination. Unless otherwise defined herein, capitalized terms used in this Current Report on Form 8-K have the same respective meanings as set forth in the Proxy Statement/Consent Solicitation/Prospectus.
The Merger Consideration
At the Closing, pursuant to the terms of the Merger Agreement and after giving effect to the redemptions of TLG Class A Common Stock (as defined below) by public stockholders of TLG:
| • | each share of Electriq common stock issued and outstanding immediately prior to the Closing (excluding shares owned by Electriq or any of its direct or indirect wholly-owned subsidiaries as treasury stock or by TLG) was cancelled and converted into the right to receive a number of shares of TLG Class A common stock equal to one (1) multiplied by the Exchange Ratio (as defined in the Merger Agreement); |
| • | each share of Electriq Series B preferred stock issued and outstanding immediately prior to the Closing was cancelled and converted into the right to receive a number of shares of TLG’s Series A Cumulative Redeemable Preferred Stock, par value $0.0001 per share (“TLG preferred stock”), equal to one (1) multiplied by the Exchange Ratio; |
| • | each outstanding vested and unvested Electriq stock option was assumed by TLG, cancelled and converted into an option to purchase a number of shares of Class A common stock equal to (a) the product of the number of shares of Electriq common stock underlying such Electriq stock option immediately prior to the Closing multiplied by the Exchange Ratio at an exercise price per share equal to the quotient obtained by dividing (A) the exercise price per share of Electriq common stock underlying such Electriq stock option immediately prior to the Closing by (B) the Exchange Ratio; and |
| • | the Lawrie Notes converted into equity securities of TLG in accordance with the terms of the Notes Conversion Agreement. |
Item 1.01. Entry into a Material Definitive Agreement.
Amended and Restated Registration Rights Agreement
On July 31, 2023, in connection with the Closing, TLG, Sponsor, John Michael Lawrie, RBC and certain stockholders of Electriq entered into an amended and restated registration rights agreement (the “Registration Rights Agreement”), pursuant to which, among other things, TLG agreed to register for resale, pursuant to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), shares of Class A common stock that are held by the parties thereto from time to time, and Private Placement Warrants (including shares issuable upon the conversion of warrants). Pursuant to the Registration Rights Agreement, TLG agreed to file a shelf registration statement registering the resale of the Class A common stock covered by the Registration Rights Agreement within 45 days of the Closing. Up to four times in any 12-month period, certain legacy Electriq equityholders and Sponsor stockholders may request to sell all or any portion of their Registrable Securities (as defined in the Registration Rights Agreement) in an underwritten offering so long as the total offering price is reasonably expected to exceed $30.0 million. TLG also agreed to provide customary “piggyback” registration rights, subject to certain requirements and customary conditions. The Registration Rights Agreement also provides that TLG will pay certain expenses relating to such registrations and indemnify the stockholders against certain liabilities.
The foregoing summary of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Registration Rights Agreement, a copy of which is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Indemnification of Directors and Officers
Concurrently with the Closing, the Company entered into indemnification agreements with its directors and executive officers. Each indemnification agreement provides that, subject to limited exceptions, the Company will indemnify the applicable indemnified person for certain expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred in any action or proceeding arising out of their services as one of the Company’s directors or officers or any other company or enterprise to which the person provides services at the Company’s request.
The foregoing description of the indemnification agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the indemnification agreement, a form of which is filed as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated herein by reference.
Letter Agreement
On June 28, 2023, TLG entered into a letter agreement (the “Letter Agreement”) with Meteora Capital, LLC (“Meteora”), pursuant to which Meteora has a right of first refusal to participate in future financings of TLG (excluding any equity line of credit arrangement) in an amount up to $50.0 million. The right lasts until June 28, 2026.
The foregoing description of the Letter Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Letter Agreement, which is included as Exhibit 10.3 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 2.01. Completion of Acquisition or Disposition of Assets.
The disclosure set forth in the “Introductory Note” above is incorporated into this Item 2.01 by reference.
On July 31, 2023, 29,924,971 shares of Class A Common Stock and 1,411,500 shares of TLG preferred stock were issued to Electriq stockholders, and 2,720,329 shares of Class A Common Stock and 1,178,318 shares of TLG preferred stock were issued in connection with the Closing Financings. After giving effect to the foregoing issuances, 38,120,937 shares of Class A Common Stock and 2,589,818 shares of TLG preferred stock were outstanding. Stockholders holding 7,736,608 of the TLG’s public shares exercised their right to redeem such shares for a pro rata portion of the funds in TLG’s trust account (the “Trust Account”).
As previously disclosed, on July 23, 2023, TLG and Electriq entered into an agreement (the “Forward Purchase Agreement”) with (i) Meteora Special Opportunity Fund I, LP (“MSOF”), Meteora Capital Partners, LP (“MCP”) and Meteora Select Trading Opportunities Master, LP (“MSTO”) (with MSOF, MCP, and MSTO collectively referred to as “Seller”) for an OTC Equity Prepaid Forward Transaction. Pursuant to the terms of the Forward Purchase Agreement, the Seller purchased 3,534,492 shares of TLG common stock from third parties through a broker in the open market (“Recycled Shares”). On July 31, 2023, 251,194 additional shares of New Electriq common stock were issued to Seller pursuant to the terms of the FPA Funding Amount PIPE Subscription Agreement entered into in connection with the Closing. Capitalized terms used in this Item 2.01 but not otherwise defined herein shall have the meanings ascribed to such terms the Forward Purchase Agreement.
The Forward Purchase Agreement provides that $3,000,000 (the “Prepayment Shortfall”) will be paid by Seller to TLG not later than one local business day following the Closing (which amount shall be netted from the Prepayment Amount). Seller in its sole discretion may sell Shares at any time following the Trade Date at prices (i) at or above $6.67 during the first six months following the Closing and (ii) at any sales price thereafter, without payment by Seller of any Early Termination Obligation until the earlier of such time as the proceeds from the such sales equal 100% of the Prepayment Shortfall (such sales, “Shortfall Sales,” such Shares, “Shortfall Sale Shares”). A sale of Shares is only (a) a “Shortfall Sale,” subject to the terms and conditions herein applicable to Shortfall Sale Shares, when a Shortfall Sale Notice is delivered under the Forward Purchase Agreement, and (b) an Optional Early Termination, subject to the terms and conditions herein applicable to Terminated Shares, when an OET Notice (as defined below) is delivered under the Forward Purchase Agreement, in each case the delivery of such notice in the sole discretion of the Seller.
The Forward Purchase Agreement provides that Seller will be paid directly an aggregate cash amount (the “Prepayment Amount”) equal to (x) the product of (i) the Number of Shares as set forth in a Pricing Date Notice and (ii) the redemption price per share as defined in Section 9.2(a) of the Amended and Restated Certificate of Incorporation of TLG in effect prior to consummation of the Business Combination, as amended, less (y) the Prepayment Shortfall. TLG paid to Seller separately the Prepayment Amount required under the Forward Purchase Agreement directly from TLG’s Trust Account maintained by Continental Stock Transfer and Trust Company that held the net proceeds of the sale of the units in TLG’s initial public offering and the sale of private placement warrants (the “Trust Account”), except that to the extent the Prepayment Amount payable to Seller is to be paid from the purchase of Additional Shares by Seller pursuant to the terms of its FPA Funding Amount PIPE Subscription Agreement, such amount will be netted against such proceeds, with Seller being able to reduce the purchase price for the Additional Shares by the Prepayment Amount. For the avoidance of doubt, any Additional Shares purchased by Seller will be included in the Number of Shares for its Forward Purchase Agreement for all purposes, including for determining the Prepayment Amount.
Seller agreed to waive any redemption rights that it had under TLG’s Amended and Restated Certificate of Incorporation with respect to any TLG common stock purchased through the FPA Funding Amount PIPE Subscription Agreement and any Recycled Shares in connection with the Business Combination, that would require redemption by TLG of the shares of TLG common stock. Such waiver may have reduced the number of shares of TLG common stock redeemed in connection with the Business Combination, and such reduction could alter the perception of the potential strength of the Business Combination. The Forward Purchase Agreement has been structured, and all activity in connection with such agreement has been undertaken, to comply with the requirements of all tender offer regulations applicable to the Business Combination, including Rule 14e-5 under the Exchange Act.
On August 1, 2023, the Company’s Class A Common Stock and warrants to purchase Class A Common Stock of the Company began trading on the NYSE and NYSE American, respectively, under the symbols “ELIQ” and “ELIQ WS”, respectively.
FORM 10 INFORMATION
Item 2.01(f) of Form 8-K states that if the predecessor registrant was a shell company, as TLG 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, the Company, as the successor issuer to TLG, is providing the information below that would be included in a Form 10 if the Company were to file a Form 10. Please note that the information provided below relates to the Company as the combined company after the consummation of the Business Combination, unless otherwise specifically indicated or the context otherwise requires.
Forward-Looking Statements
Certain statements contained in this Current Report on Form 8-K may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and for purposes of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. This includes, without limitation, statements regarding the financial position, business strategy and the plans and objectives of management for future operations, including as they relate to the Company. These statements constitute projections, forecasts, and forward-looking statements, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Current Report on Form 8-K, forward-looking statements may be identified by the words “anticipate,” “believe,” “could,” “expect,” “estimate,” “future,” “intend,” “may,” “might,” “strategy,” “opportunity,” “plan,” “project,” “possible,” “potential,” “project,” “predict,” “scales,” “representative of,” “valuation,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” or other similar expressions that predict or indicate future events or trends or that are not statements of historical facts. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements.
The Company cautions readers of this Current Report on Form 8-K that these forward-looking statements are subject to risks and uncertainties, most of which are difficult to predict and many of which are beyond the Company’s control, which could cause the actual results to differ materially from the expected results. These statements are based on various assumptions, whether or not identified in this Current Report on Form 8-K, and on the current expectations of the Company’s management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. The risk factors and cautionary language contained in this Current Report on Form 8-K, and incorporated herein by reference, provide examples of risks, uncertainties and events that may cause actual results to differ materially from the expectations described in such forward-looking statements, including among other things:
| • | the risk that the consummation of the Business Combination disrupts current plans and operations of the Company; |
| • | litigation, complaints, product liability claims and/or adverse publicity; |
| • | privacy and data protection laws, privacy or data breaches, or the loss of data; |
| • | the risk that the addressable market the Company intends to target does not grow as expected; |
| • | the inability of the Company’s energy storage systems to achieve broad market acceptance; |
| • | changes in the cost and availability of various sources of electric power; |
| • | legal, regulatory or tax changes with respect to the renewable energy industry; |
| • | the impact of changes in consumer spending patterns, consumer preferences, local, regional, national, and international economic conditions, crime, weather, demographic trends, and employee availability; |
| • | geopolitical uncertainty; |
| • | costs related to the Business Combination; |
| • | the impact of any natural disaster, calamity or pandemic (including COVID-19) on the financial condition and results of operations of TLG and Electriq; |
| • | any defects in new products or enhancements to existing products or services; and |
| • | other risks and uncertainties indicated in this Current Report on Form 8-K, including those under “Risk Factors” in the Proxy Statement/Consent Solicitation/Prospectus and other filings that have been made or will be made with the SEC by the Company. |
In addition, there may be events that the Company’s management is not able to predict accurately or over which the Company has no control.
Business
The business of the Company is described in the Proxy Statement/Consent Solicitation/Prospectus in the section titled “Information About Electriq,” which is incorporated herein by reference.
Risk Factors
The risks associated with the Company are described in the Proxy Statement/Consent Solicitation/Prospectus in the section titled “Risk Factors” beginning on page 38 of the Proxy Statement/Consent Solicitation/Prospectus, which is incorporated herein by reference.
Financial Information
The selected statement of operations data and cash flows data of Electriq for the three months ended 2023 and March 31, 2022, and for the years ended December 31, 2022 and 2021, and the selected balance sheets data of Electriq as of March 31, 2023, December 31, 2022 and December 31, 2021, are described in the Proxy Statement/Consent Solicitation/Prospectus in the section titled “Selected Historical Financial Information of Electriq,” which is incorporated herein by reference.
Information responsive to Item 2 of Form 10 is set forth in the Proxy Statement/Consent Solicitation/Prospectus in the section titled “Electriq’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which is incorporated herein by reference.
Quantitative and Qualitative Disclosures about Market Risk
The description of the Company’s quantitative and qualitative disclosures about market risk is contained in the Proxy Statement/Consent Solicitation/Prospectus in the section titled “Electriq’s Management’s Discussion and Analysis of Financial Condition and Results of Operations - Quantitative and Qualitative Disclosures about Market Risk,” beginning on page 171 of the Proxy Statement/Consent Solicitation/Prospectus, which is incorporated herein by reference.
Facilities
The description of the Company’s facilities is contained in the Proxy Statement/Consent Solicitation/Prospectus in the section titled “Information about Electriq - Properties” on page 183 of the Proxy Statement/Consent Solicitation/Prospectus, which 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 Company Class A Common Stock as of July 31, 2023, following the consummation of the Business Combination, by:
| • | each person known by the Company to be the beneficial owner of more than 5% of a class of voting securities on July 31, 2023; |
| • | each of the Company’s officers and directors; and |
| • | all executive officers and directors of the Company as a group. |
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.
The beneficial ownership of shares of Company Common Stock immediately following completion of the Business Combination is based on an aggregate of 38,120,937 shares of Class A Common Stock issued and outstanding immediately following the completion of the Business Combination. The information below excludes the shares of Class A Common Stock reserved for future awards under the Incentive Plan (as defined below).
| Name of Beneficial Owner (1) |
Number of Shares Beneficially Owned |
Percentage of Shares Beneficially Owned |
||||||
| Frank Magnotti (2) |
1,701,148 | 4.5 | % | |||||
| James Van Hoof, Jr. (3) |
44,269 | * | ||||||
| Petrina Thomson (4) |
22,395 | * | ||||||
| Jan Klube (5) |
132,518 | * | ||||||
| Neha Palmer (6) |
95,603 | * | ||||||
| Gideon Soesman |
— | — | ||||||
| Kristina Peterson |
— | — | ||||||
| Carol Coughlin |
— | — | ||||||
| Zainabu Oke |
23,189 | * | ||||||
| John Michael Lawrie (7) |
6,159,352 | 15.7 | % | |||||
| All Directors and Executive Officers as a Group (10 Individuals) |
8,178,474 | 21.5 | % | |||||
| 5% Holders |
||||||||
| Entities affiliated with GBIF Management Ltd. (8) |
14,195,439 | 37.2 | % | |||||
| TLG Acquisition Founder LLC (9) |
2,846,852 | 7.3 | % | |||||
| JEL Partnership (10) |
3,284,212 | 8.6 | % | |||||
| O’Shanter Development Company Ltd. (11) |
2,635,710 | 6.9 | % | |||||
| Entities affiliated with Meteora Capital (12) |
3,885,686 | 10.2 | % | |||||
| * | Less than one percent. |
| (1) | Unless otherwise noted, the business address of each of the following entities or individuals is 625 North Flagler Drive, Suite 1003, West Palm Beach, Florida 33401. |
| (2) | Includes common stock issuable upon exercise of 716,326 options. |
| (3) | Includes common stock issuable upon exercise of 28,754 options. |
| (4) | Includes common stock issuable upon exercise of 22,395 options. |
| (5) | Includes common stock issuable upon exercise of 15,167 options. |
| (6) | Includes common stock issuable upon exercise of 95,603 options. |
| (7) | Represents (i) 1,846,852 shares of common stock held by the Sponsor, (ii) 1,000,000 private warrants held by the Sponsor, (iii) 500,000 shares of common stock held by TLG Fund I, LP, (iv) 1,250,000 shares of common stock held by JMLElectric LLC and (v) 1,562,500 shares of common stock held by Mr. Lawrie. The shares and private warrants held by Sponsor are beneficially owned by Mr. Lawrie, the Chairman of the Board of Directors of the Company, and the manager of Sponsor, who has sole voting and dispositive power over the shares held by Sponsor. The shares held by TLG Fund I, LP are beneficially owned by Mr. Lawrie, the manager of the general partner of TLG Fund I, LP, who has sole voting and dispositive power over the shares held by TLG Fund I, LP. The shares held by JMLElectric LLC are beneficially owned by Mr. Lawrie, the manager of JMLElectric LLC. Mr. Lawrie disclaims beneficial ownership of the securities held by Sponsor, TLG Fund I, LP and JMLElectric LLC except to the extent of his pecuniary interest therein. The business address of Mr. Lawrie is 515 North Flagler Drive, Suite 520, West Palm Beach, Florida 33401. |
| (8) | Consists of (i) 12,930,494 shares of common stock held by GBIF Management Ltd on behalf of Greensoil Building Innovation Fund (Canadian), L.P. and Greensoil Building Innovation Fund (International), L.P. and (ii) 1,264,944 common stock held by Greensoil Building Innovation Fund Co-Investment I, L.P., by its general partner, GBIF Management, Ltd. GBIF Management Ltd. is controlled by a three-person investment committee. The investment committee requires majority approval to make any decision regarding any dispositions and voting of the shares. The business address for GBIF Management Ltd. is 2345 Yonge Street Suite 804 Toronto, ON M4P 2E5. |
| (9) | Represents (i) 1,846,852 shares of common stock and (ii) 1,000,000 private warrants. The members of TLG Acquisition Founder LLC are TLG Capital Partners, LLC, a Delaware limited liability company, which has a 60% membership interest in TLG Acquisition Founder LLC and whose sole member is Mr. Lawrie, and Fenway 07 LLC, a Delaware limited liability company, which has a 40% membership interest in TLG Acquisition Founder LLC and is 99% owned by Mr. Johnson and 1% owned and managed by his spouse. The business address of Sponsor is 515 North Flagler Drive, Suite 520, West Palm Beach, Florida 33401. |
| (10) | Stephen Greenberg holds voting and dispositive power over the shares. The business address for JEL Partnership and for Mr. Greenberg is 1284 Wellington Street W, Ottawa, CA-ON K1Y 3A9, Canada. |
| (11) | The business address for O’Shanter Development Company Ltd. is 245 Carlaw Avenue Suite 107 Toronto, Ontario, M4M 2S1. |
| (12) | Consists of (i) 795,373 shares held by Meteora Special Opportunity Fund I, LP (“MSOF”), (ii) 1,830,148 shares held by Meteora Select Trading Opportunities Master, LP (“MSTO”) and (iii) 1,260,165 shares held by Meteora Capital Partners, LP (“MCP”). Meteora Capital, LLC (“Meteora Capital”) serves as investment manager to MSOF, MSTO and MCP. Voting and investment power over the shares held by MSOF, MSTO and MCP resides with its investment manager, Meteora Capital. Mr. Vik Mittal serves as the managing member of Meteora Capital and may be deemed to be the beneficial owner of the shares held by such entities. Mr. Mittal, however, disclaims any beneficial ownership of the shares held by such entities. The business address of each of MSOF, MSTO, MCP, Meteora Capital and Mr. Mittal is 1200 N. Federal Hwy., Ste. 200, Boca Raton, FL 33432. |
Directors and Executive Officers
The Company’s directors and executive officers after the Closing are described in the Proxy Statement/Consent Solicitation/Prospectus in the section titled “Management of New Electriq Following the Business Combination,” which is incorporated herein by reference.
Director and Executive Compensation
Information regarding the compensation of the named executive officers of Electriq before the Business Combination is set forth in the Proxy Statement/Consent Solicitation/Prospectus in the section titled “Executive Compensation Arrangements,” beginning on page 225 of the Proxy Statement/Consent Solicitation/Prospectus, which is incorporated herein by reference. Information regarding the compensation of the board of directors of Electriq (the “Company Board”) is set forth in the Proxy Statement/Consent Solicitation/Prospectus in the section titled “Non-Employee Director Compensation Table,” beginning on page 220 of the Proxy Statement/Consent Solicitation/Prospectus, which is incorporated herein by reference.
At the Special Meeting held on July 25, 2023, TLG’s stockholders approved the Electriq Power Holdings, Inc. 2023 Equity Incentive Plan (the “Incentive Plan”). A description of the material terms of the Incentive Plan is set forth in the section of the Proxy Statement/Consent Solicitation/Prospectus titled “Proposal No. 6 - The Equity Incentive Plan Proposal” beginning on page 140 of the Proxy Statement/Consent Solicitation/Prospectus, which is incorporated herein by reference. This summary is qualified in its entirety by reference to the complete text of the Incentive Plan, a copy of which is attached as Exhibit 10.4 to this Current Report on Form 8-K.
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.
Certain Relationships and Related Transactions, and Director Independence
Certain relationships and related person transactions of TLG and Electriq are described in the Proxy Statement/Consent Solicitation/Prospectus in the section titled “Certain Relationships and Related Person Transactions” beginning on page 335 of the Proxy Statement/Consent Solicitation/Prospectus, which is incorporated herein by reference.
Reference is made to the disclosure regarding director independence in the section of the Proxy Statement/Consent Solicitation/Prospectus titled “Management of New Electriq Following the Business Combination - Director Independence,” beginning on page 216 of the Proxy Statement/Consent Solicitation/Prospectus, which is incorporated herein by reference.
The information set forth under “Item 1.01 Entry into a Material Definitive Agreement - Amended and Restated Registration Rights Agreement,” and “Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers - Electriq Power, Inc. 2023 Incentive Plan” of this Current Report on Form 8-K is incorporated into this Item 2.01 by reference.
The Company adopted a formal written policy effective upon the Business Combination providing that the Company’s executive officers, directors, director nominees, beneficial owners of more than 5% of any class of the Company’s voting securities and any member of the immediate family of any of the foregoing persons are not permitted to enter into a related party transaction with the Company without the approval of the Company’s audit committee, subject to the exceptions described below.
A related party transaction is a transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships in which the Company was or is to be a participant in which the amount involves exceeds $120,000 in the aggregate in any fiscal year, and in which a related party had or will have a direct or indirect material interest.
Under the policy, the audit committee of the Company Board will review all of the relevant material facts and circumstances of the proposed related party transaction, satisfy itself that it has been fully informed as to the material facts of the applicable related party’s relationship and interest, will determine if the proposed related party transaction is in the best interests of the Company and its shareholders, and will either approve or disapprove of the entry into the proposed related party transaction.
Legal Proceedings
Reference is made to the disclosure regarding legal proceedings in the sections of the Proxy Statement/Consent Solicitation/Prospectus titled “Information About TLG - Legal Proceedings” and “Information About Electriq - Legal Proceedings,” which are incorporated herein by reference.
Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters
Following the Closing of the Business Combination, the Class A Common Stock began trading on the NYSE under the symbol “ELIQ” and the Company’s warrants to purchase Class A Common Stock began trading on NYSE American under the symbol “ELIQ WS” on August 1, 2023. The Company has not paid any cash dividends on its common stock to date.
The Company Board, in its sole discretion, will make any determination from time to time with respect to the use of any excess cash accumulated, which may include, among other uses, the payment of dividends on the Class A Common Stock. It is not contemplated that the Company will pay cash dividends for the foreseeable future.
Recent Sales of Unregistered Securities
The description of the Company’s securities contained in the Proxy Statement/Consent Solicitation/Prospectus in the sections titled “Recent Developments - Pre-Closing Financings and Loan Conversion” and “Closing Financings and Working Capital Loan Conversion” and TLG’s Current Report on Form 8-K filed with the SEC on July 24, 2023 are incorporated herein by reference. The Other Closing TLG Investment for the aggregate of $0.5 million for 50,000 shares of TLG common stock, in the aggregate, and, as an incentive for the investments received, in the aggregate, 25,000 shares of TLG preferred stock, pursuant to the securities purchase agreements dated as of June 23, 2023, July 6, 2023
and July 18, 2023, closed on the Closing Date. In addition, pursuant to a certain securities purchase agreement dated as of July 28, 2023, O’Shanter Development Company Ltd. invested $1 million to purchase 100,000 shares of TLG common stock and, as an incentive for the investment received, 50,000 shares of TLG preferred stock on the Closing Date. The issuances of such securities were made in reliance on Section 4(a)(2) of the Securities Act, Regulation D promulgated thereunder and Regulation S promulgated thereunder.
Description of Registrant’s Securities to be Registered
The description of the Company’s securities is contained in the Proxy Statement/Consent Solicitation/Prospectus in the section titled “Description of Capital Stock of New Electriq,” beginning on page 330 of the Proxy Statement/Consent Solicitation/Prospectus, which is incorporated herein by reference.
Indemnification of Directors and Officers
The description of the indemnification arrangements with the Company’s directors and officers is contained in Item 1.01 of this Current Report on Form 8-K, which is incorporated herein by reference.
Financial Statements and Supplementary Data
Reference is made to the disclosure set forth under Item 9.01 of this Current Report on Form 8-K concerning the Company’s financial statements and supplementary information.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
The information set forth under Item 4.01 of this Current Report on Form 8-K is incorporated herein by reference.
Financial Statements and Exhibits
Reference is made to the disclosure set forth under Item 9.01 of this Current Report on Form 8-K concerning the financial information of the Company.
Item 3.03. Material Modification to Rights of Security Holders.
TLG’s stockholders also approved a new amended and restated certificate of incorporation (“New Charter”) to replace TLG’s Amended and Restated Certificate of Incorporation (the “Charter”) following the consummation of the Business Combination. The terms of the New Charter are described in greater detail in the Proxy Statement/Consent Solicitation/Prospectus beginning on page 129 of the Proxy Statement/Consent Solicitation/Prospectus and is incorporated herein by reference. The New Charter, which became effective upon filing with the Secretary of State of the State of Delaware on the Closing Date, includes the amendments proposed by the Charter Proposal.
On the Closing Date, the Company Board approved and adopted the Amended and Restated Bylaws of the Company (the “Bylaws”), effective as of the Effective Time.
Copies of the New Charter and the Bylaws are attached hereto as Exhibit 3.1 and Exhibit 3.2, respectively, and are incorporated herein by reference.
The description of the New Charter and the general effect of the New Charter and the Bylaws upon the rights of holders of the Company’s capital stock are included in the Proxy Statement/Consent Solicitation/Prospectus under the section titled “Description of Capital Stock of New Electriq” beginning on page 330 of the Proxy Statement/Consent Solicitation/Prospectus, which is incorporated herein by reference.
On the Closing Date, the Company entered into an amendment to the Warrant Agreement, dated January 27, 2021, with Continental Stock Transfer & Trust Company (the “Warrant Agreement Amendment”). Pursuant to the Warrant Agreement Amendment, the exercise price of the New Electriq Warrants was reduced from $11.50 to $6.57 per warrant.
Item 4.01. Change in Registrant’s Certifying Accountant.
On July 31, 2023, the Audit Committee of the Company Board approved the appointment of RSM US LLP (“RSM”) as the Company’s independent registered public accounting firm to audit the Company’s consolidated financial statements effective for the year ended December 31, 2023. RSM served as the independent registered public accounting firm of Electriq prior to the Business Combination. Accordingly, WithumSmith+Brown, PC (“Withum”), the independent registered public accounting firm of TLG, the name of the Company prior to the Business Combination, was informed on July 31, 2023 that it would be replaced by RSM as the Company’s independent registered public accounting firm following the closing of the Business Combination and the filing of the Company’s Quarterly Report on Form 10-Q for the three (3) and six (6) months ended June 30, 2023.
The report of Withum on TLG’s balance sheets as of December 31, 2022 and 2021 and the statements of operations, changes in stockholders’ deficit and cash flows for the fiscal years ended December 31, 2022 and 2021 did not contain an adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainties, audit scope or accounting principles, except that such audit report contained an explanatory paragraph in which Withum expressed substantial doubt as to TLG’s ability to continue as a going concern if it did not complete a business combination by April 1, 2023.
During the fiscal years ended December 31, 2022 and 2021 and the subsequent period through July 31, 2023, there were no “disagreements” (as defined in Item 304(a)(1)(iv) of Regulation S-K under the Exchange Act) between TLG and Withum on any matter of accounting principles or practices, financial disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Withum, would have caused it to make reference to the subject matter of the disagreements in its reports on TLG’s financial statements for such periods.
During the fiscal years ended December 31, 2022 and 2021 and the subsequent period through July 31, 2023, there were no “reportable events” (as defined in Item 304(a)(1)(v) of Regulation S-K under the Exchange Act).
During the fiscal years ended December 31, 2022 and 2021 and the subsequent period through July 31, 2023, TLG and the Company did not consult with RSM regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the financial statements of TLG, and no written report or oral advice was provided that RSM concluded was an important factor considered by TLG in reaching a decision as to the accounting, auditing, or financial reporting issue; or (ii) any matter that was either the subject of a “disagreement” (as defined in Item 304(a)(1)(iv) of Regulation S-K under the Exchange Act) or a “reportable event” (as defined in Item 304(a)(1)(v) of Regulation S-K under the Exchange Act).
The Company has provided Withum with a copy of the foregoing disclosures and has requested that Withum furnish the Company with a letter addressed to the SEC stating whether it agrees with the statements made by the Company set forth above. A copy of Withum’s letter, dated August 4, 2023, is filed as Exhibit 16.1 to this Current Report on Form 8-K.
Item 5.01. Changes in Control of Registrant.
Reference is made to the disclosure in the Proxy Statement/Consent Solicitation/Prospectus in the section titled “Proposal No. 1 - The Business Combination Proposal” 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.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Directors and Executive Officers
The information set forth above in the sections titled “Directors and Executive Officers,” “Executive Compensation,” “Certain Relationships and Related Person Transactions, and Director Independence” and “Indemnification of Directors and Officers” is incorporated herein by reference.
Further, in connection with the Business Combination, effective as of the Closing, each executive officer of TLG resigned from his position, and each of David Johnson, Edward Ho and Kristin Muhlner resigned from their positions as directors of TLG.
Electriq Power Holdings, Inc. 2023 Incentive Plan
At the Special Meeting on July 25, 2023, TLG’s stockholders approved the Incentive Plan. The Incentive Plan became effective immediately upon the Closing of the Business Combination.
A more complete summary of the terms of the Incentive Plan is forth in the section entitled “Proposal No. 6 - The Equity Incentive Plan Proposal” beginning on page 140 of the Proxy Statement/Consent Solicitation/Prospectus, which is incorporated herein by reference. That summary and the foregoing description are qualified in their entirety by reference to the complete text of the Incentive Plan, a copy of which is attached as Exhibit 10.4 to this Current Report on Form 8-K and 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.
Item 5.05. Amendment to the Registrant’s Code of Ethics, or Waiver of a Provision of the Code of Ethics.
In connection with the Closing of the Business Combination, on July 31, 2023 and effective as of such date, the Company Board adopted a new code of business conduct and ethics (the “Code”) applicable to the Company’s employees, officers and directors. We intend to post any amendments to or any waivers from a provision of the Code on our website. A copy of the Code can be found on the Company’s Investor Relations website at www. electriqpower.com.
The foregoing description of the Code does not purport to be complete and is qualified in its entirety by reference to the full text of the Code, which is included as Exhibit 14.1 to this Current Report on Form 8-K and incorporated herein by reference.
Item 5.06. Change in Shell Company Status.
As a result of the Business Combination, TLG ceased being a shell company. Reference is made to the disclosure in the Proxy Statement/Consent Solicitation/Prospectus in the section titled “Proposal No. 1 - The Business Combination Proposal” beginning on page 128 of the Proxy Statement/Consent Solicitation/Prospectus, and such disclosure 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 8.01. Other Events.
The Company has not yet finalized all of the terms of the employment agreements with its executive officers and expects to finalize those terms and execute those agreements in the near future.
Item 9.01. Financial Statements 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/Consent Solicitation/Prospectus on pages F-57 through F-109, which are incorporated herein by reference.
(b) Pro Forma Financial Information
Information responsive to Item 9.01(a) of Form 8-K is set forth in Exhibit 99.1 hereto, which is incorporated herein by reference.
(d) Exhibits
| * | 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. |
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.
| Electriq Power Holdings, Inc. | ||||||
| Date: August 4, 2023 | By: | /s/ Frank Magnotti | ||||
| Name: | Frank Magnotti | |||||
| Title: | Chief Executive Officer | |||||
Exhibit 4.3
Execution Version
AMENDMENT NO. 1 TO WARRANT AGREEMENT
between
TLG ACQUISITION ONE CORP.
and
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
THIS AMENDMENT NO. 1 TO WARRANT AGREEMENT (this “Amendment”), dated as of July 31, 2023, is by and between TLG Acquisition One Corp., a Delaware corporation (the “Company”), and Continental Stock Transfer & Trust Company, a New York corporation, as warrant agent (the “Warrant Agent,” also referred to herein as the “Transfer Agent”).
WHEREAS, on January 27, 2021, the Company and Warrant Agent entered into that certain Warrant Agreement (the “Agreement”); and
WHEREAS, pursuant to Section 9.8 of the Agreement, the Agreement may be amended by the parties hereto without the consent of any Registered Holder for the purpose of lowering the Warrant Price; and
WHEREAS, the Company sent notice on July 31, 2023 to the Warrant Agent that the Warrant Price will be lowered to $6.57.
NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows:
1. DEFINITIONS. Except as otherwise indicated, capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Agreement.
2. AMENDMENT.
2.1 Amendment. The first sentence of Section 3.1 of the Agreement is hereby deleted in its entirety and replaced with the following:
“Each Warrant shall, when countersigned by the Warrant Agent (if a physical certificate is issued), entitle the Registered Holder thereof, subject to the provisions of such Warrant and of this Agreement, to purchase from the Company the number of shares of Common Stock stated therein, at the price of $6.57 per share, subject to the adjustments provided in Section 4 hereof and in the last sentence of this Section 3.1.”
2.2 No Other Amendments. The parties agree that all other provisions of the Agreement shall, subject to the amendments expressly set forth in Section 2.1 of this Amendment, continue unmodified, in full force and effect and constitute legal and binding obligations of the parties in accordance with their terms. This Amendment is limited precisely as written and shall not be deemed to be an amendment to any other term or condition of the Agreement or any of the documents referred to therein. This Amendment forms an integral and inseparable part of the Agreement.
2.3 Effect of Amendment. This Amendment shall form a part of the Agreement for all purposes, and each party thereto and hereto shall be bound hereby. This Amendment shall be deemed to be in full force and effect from and after the execution of this Amendment by the parties.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.
| TLG ACQUISITION ONE CORP. | ||
| By: |
/s/ John Michael Lawrie | |
| Name: John Michael Lawrie | ||
| Title: Chief Executive Officer | ||
| CONTINENTAL STOCK TRANSFER & | ||
| TRUST COMPANY, as Warrant Agent | ||
| By: |
/s/ Stacy Aqui | |
| Name: |
Stacy Aqui | |
| Title: |
Vice President | |
[Signature Page to Amendment No. 1 to Warrant Agreement]
Exhibit 10.3
TLG ACQUISITION ONE CORP.
June 28, 2023
Meteora Capital, LLC
To Whom It May Concern:
This letter agreement is entered into in connection with Meteora Capital, LLC’s and its affiliated entities’ (the “Investor”) execution of that certain Non-Redemption Agreement, dated as of the date hereof (the “Agreement”), by and between Investor and TLG Acquisition One Corp., a Delaware corporation (the “Company”). This letter agreement shall be deemed to have been entered into immediately following the execution of such Agreement. Capitalized terms used herein shall have the meanings set forth in the Agreement.
In consideration for and as a material inducement to the Investor to enter into the Agreement and consummate the transactions contemplated thereby, the Company and the Investor hereby agree as follows:
1. ROFR. For the period beginning on the date hereof and ending on the three year anniversary of the date hereof, Investor shall have the right, but not the obligation, in its sole discretion, to invest on the terms offered to Investor by the Company up to $50,000,000 in any future debt, equity, derivative or any other kind of financing (excluding any equity line of credit arrangement) of the Company, as legally permitted (a “Covered Financing”).
2. Notice. The Company will notify the Investor in writing if it intends to pursue or receives a proposal for a Covered Financing, setting out in reasonable detail the terms of the Covered Financing, including economic terms, at least 10 Business Days prior to entering into any binding agreement or understanding with respect to a Covered Financing (the period beginning on delivery of the notice and ending 5 Business Days after such delivery, the “Option Period”). The Investor can exercise its rights with respect thereto by providing notice to the Company within the Option Period.
3. Assignment. The Investor may assign its right under this letter agreement, in whole or in part, to any Affiliate of the Investor.
4. Entire Agreement. This letter agreement constitutes the entire agreement among the parties with respect to the subject matter hereof. No integration provision of any other agreement to which the Investor and the Company are a party shall be deemed to affect the Investor’s rights hereunder.
5. Severability. Each provision of this letter agreement will be considered severable and if for any reason any provision or provisions herein are determined to be invalid, unenforceable or illegal under any existing or future law, such invalidity, unenforceability or illegality will not impair the operation of or affect those portions of this letter agreement that are valid, enforceable and legal.
6. Amendments. This letter agreement may not be modified or amended or the rights of any party hereunder waived unless such modification, amendment or waiver is effected by a written instrument expressly modifying, amending or waiving this letter agreement or the rights of a party hereunder, which instrument is executed by all the parties hereto.
7. Counterparts. This letter agreement may be executed in any number of counterparts, any one of which need not contain the signatures of more than one party, but all of such counterparts together will constitute one agreement. Signatures of parties transmitted by facsimile or as PDF attachments to emails shall be deemed to be their original signatures for any purpose whatsoever.
8. Governing Law. This letter agreement will be governed by and construed in accordance with the laws of the State of Delaware.
9. Termination. This letter agreement shall terminate and be of no further force or effect upon the one year anniversary of the date hereof.
Please confirm your agreement to the foregoing by signing where indicated below and returning a copy of this letter to the Company.
| Sincerely, | ||
| TLG ACQUISITION ONE CORP | ||
| By: | /s/ John Michael Lawrie | |
| Name: John Michael Lawrie | ||
| Title: CEO | ||
| AGREED AND ACCEPTED: | ||
| METEORA CAPITAL, LLC | ||
| AND ITS AFFILIATED ENTITIES | ||
| By: | /s/ Vikas Mittal | |
| Name: Vikas Mittal | ||
| Title: Managing Member | ||
Exhibit 10.13
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT, dated as of July 18, 2023 (this “Agreement ”), is made by and between TLG Acquisition One Corp., a Delaware corporation (the “Company”), and David T. Bell and Alison J. Bell with Joint Rights of Survivorship (the “Investor”). This Agreement is being entered into in connection with the proposed business combination (the “Transaction”) between the Company and Electriq Power, Inc. (“Electriq Power”), a Delaware corporation, pursuant to a merger agreement (as amended from time to time, the “Transaction Agreement”) by and among the Company, Electriq Power and Electriq Power Merger Corp., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”), dated as of November 13, 2022, whereby, among other things, Merger Sub will merge with and into Electriq Power (the “Merger”), with Electriq Power as the surviving company in the Merger. In connection with the Transaction, the Company is seeking commitments from interested investors to purchase in a private placement (the “Private Placement”), prior to the closing of the Transaction, shares of the Company’s Class A common stock, par value $0.0001 per share (each share, a “Share”), for a purchase price of $10.00 per share (the “Subscribed Shares”). As a condition and inducement to such investors purchasing the Subscribed Shares, the Company will issue to the Investor, for each two Subscribed Shares, for no additional consideration, one share of Series A Cumulative Redeemable Preferred Stock having the rights, preferences and privileges set forth in the Certificate of Designation attached to this Agreement as Exhibit A (the “Preferred Shares” and such certificate, the “Certificate of Designation”) (the Preferred Shares, together with the Subscribed Shares, the “Securities”). In connection with the transaction contemplated hereby, certain other “accredited investors” (as defined in Rule 501 under the Securities Act of 1933, as amended (the “Securities Act”)) and “qualified institutional buyers” (as defined in Section 2(a)(51) of the Investment Company Act of 1940, as amended (the “Investment Company Act”)), have entered into separate securities purchase agreements with the Company (the “Other Securities Purchase Agreements” and such other persons “Other Investors”), and have, together with the undersigned pursuant to this Agreement, agreed to purchase Subscribed Shares for a purchase price of $10.00 per Share and will also receive a number of Preferred Shares as described above. The aggregate purchase price to be paid by the Investor for the Subscribed Shares is referred to herein as the “Subscription Amount.” Capitalized terms used but not otherwise defined herein shall have the meaning ascribed to them in the Transaction Agreement.
In connection therewith, and in consideration of the foregoing and the mutual representations, warranties and covenants, and subject to the conditions, set forth herein, and intending to be legally bound hereby, the Investor and the Company agree as follows:
1. Subscription.
a. Subject to and on the terms and conditions set forth herein, the Investor hereby irrevocably subscribes for and agrees to purchase from the Company, and the Company agrees to issue and sell to the Investor, the number of Subscribed Shares as is set forth on the signature page of this Agreement.
b. As a condition and inducement to the Investor purchasing the Subscribed Shares, in connection with and contingent upon the purchase of the Subscribed Shares, the Company agrees to issue for no additional consideration the number of Preferred Shares as is set forth on the signature page of this Agreement.
c. The Preferred Shares shall have the rights, preferences and privileges set forth in the Certificate of Designation.
d. Notwithstanding anything to the contrary herein, no fraction of a share of any Security shall be issued pursuant to this Section 1, and, if the Investor would otherwise be entitled to a fraction of a share of a Security, the Investor shall instead have the number of shares of that Security issued to the Investor rounded down to the nearest whole number of shares of that Security, without payment in lieu of any such fractional shares.
2. Closing.
a. The closing of the sale, purchase and issuance of the Securities contemplated hereby (the “Closing”) shall occur on the date of, and is contingent upon the substantially concurrent consummation of, the Transaction. Upon (i) satisfaction or waiver of the conditions set forth in Section 3 below and (ii) delivery of written notice from (or on behalf of) the Company to the Investor (the “Closing Notice”), that the Company reasonably expects the closing of the Transaction to occur on a specified date that is not less than four (4) business days after the date on which the Closing Notice is delivered to the Investor (the “Closing Date”), the Investor shall deliver to the Company (i) two (2) business days prior to the expected Closing Date, the Subscription Amount by (x) wire transfer of United States dollars in immediately available funds to the account(s) specified by the Company in the Closing Notice, to be held in escrow until the Closing and/or (y) cancellation or conversion of indebtedness of the Company or Electriq Power, and (ii) any other information that is reasonably requested in the Closing Notice in order for the Company to issue the Investor’s Securities, including, without limitation, the legal name of the person whose name such Securities are to be issued and a duly executed Internal Revenue Service Form W-9 or W-8, as applicable. On the Closing Date, the Company shall issue a number of Securities to the Investor set forth on the signature page to this Agreement and subsequently cause the Securities to be registered in book entry form, free and clear of any liens (other than those arising under this Agreement or any applicable securities laws) in the name of the Investor (or its nominee in accordance with its delivery instructions) or to a custodian designated by the Investor, as applicable, on the Company’s securities register, the Company shall cause to be delivered to the Investor evidence from the Company’s transfer agent evidencing the issuance to the Investor of such Securities (in book entry form) on and as of the Closing Date, and the Subscription Amount shall be released from escrow automatically and without further action by the Company or the Investor. For purposes of this Agreement, “business day” shall mean any day other than (a) any Saturday or Sunday or (b) any other day on which banks located in New York, New York are required or authorized by applicable law to be closed for business.
b. If the Transaction does not occur within five (5) business days following the Closing Date specified in the Closing Notice, (I) the Company shall promptly (but not later than two (2) business days thereafter) depending on the form of payment of the Shares either (x) return the Subscription Amount to the undersigned by wire transfer of United States dollars in immediately available funds to the account specified by the undersigned or (y) return the indebtedness to the undersigned, and (II) any book entries for the Securities shall be deemed repurchased and cancelled; provided that, unless this Agreement has been terminated pursuant to Section 9 hereof, such return of funds shall not terminate this Agreement or relieve the Investor of its obligations to purchase the Securities at the Closing in the event the Company delivers a subsequent Closing Notice in accordance with this Section 2.
3. Closing Conditions.
a. The obligation of the parties hereto to consummate the sale, purchase and issuance of the Securities pursuant to this Agreement is subject to the following conditions:
(i) no applicable governmental authority shall have enacted, issued, promulgated, enforced or entered any judgment, order, law, rule or regulation (whether temporary, preliminary or permanent) which is then in effect and has the effect of making consummation of the transactions contemplated hereby illegal or otherwise restraining or prohibiting consummation of the transactions contemplated hereby;
(ii) no suspension of the qualification of the Shares for offering or sale or trading in any jurisdiction, and no suspension or removal from listing of the shares of the Company’s Class A common stock on the New York Stock Exchange shall have occurred; and
(iii) all conditions precedent to the closing of the Transaction set forth in Sections 7.1 and 7.2 of the Transaction Agreement, including all necessary approvals of the Company’s shareholders and all regulatory approvals set forth therein, shall have been satisfied (as determined by the parties to the Transaction Agreement) or waived (other than those conditions which, by their nature, are to be satisfied at the closing of the Transaction.
b. The obligation of the Company to consummate the sale and issuance of the Securities at the Closing pursuant to this Agreement shall be subject to the satisfaction or valid waiver by the Company of the additional conditions that:
(i) all representations and warranties of the Investor contained in this Agreement are true and correct in all material respects (other than representations and warranties that are qualified as to materiality, which representations and warranties shall be true and correct in all respects) at and as of the Closing Date, and consummation of the Closing shall constitute a reaffirmation by the Investor of each of the representations and warranties of the Investor contained in this Agreement as of the Closing Date; and
(ii) the Investor shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by it at or prior to the Closing.
c. The obligation of the Investor to consummate the purchase of the Securities at the Closing pursuant to this Agreement shall be subject to the satisfaction or valid waiver by the Investor of the additional conditions that:
(i) all representations and warranties of the Company contained in this Agreement shall be true and correct in all material respects (other than representations and warranties that are qualified as to materiality or Material Adverse Effect (as defined below), which representations and warranties shall be true and correct in all respects) at and as of the Closing Date, and consummation of the Closing shall constitute a reaffirmation by the Company of each of the representations and warranties of the Company contained in this Agreement in all material respects as of the Closing Date; provided that in the event this condition would otherwise fail to be satisfied as a result of a breach of one or more of the representations and warranties of the Company contained in this Agreement and the facts underlying such breach would also cause a condition to the Company’s obligations under the Transaction Agreement to fail to be satisfied, this condition shall nevertheless be deemed satisfied in the event Electriq Power waives such condition with respect to such breach under the Transaction Agreement;
(ii) the Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by it at or prior to the Closing;
(iii) the New York Stock Exchange (the “NYSE”) shall have conditionally authorized, subject to official notice of issuance, the listing of the Shares to be acquired hereunder and the Issuer shall use commercially reasonable efforts to obtain conditional authorization from the NYSE of the Shares issuable upon conversion of the Preferred Shares to be acquired hereunder;
(iv) no amendment or modification of the Transaction Agreement (as the same exists on the date hereof) shall have occurred that would reasonably be expected to materially and adversely affect the economic benefits that the Investor would reasonably expect to receive under this Agreement without having received the Investor’s prior written consent (not to be unreasonably withheld, conditioned or delayed); and
(v) the filing of the Certificate of Designation with the Delaware Secretary of State.
4. Further Assurances. At the Closing, the Company and the Investor shall execute and deliver such additional documents and take such additional actions as the parties reasonably may deem to be practical and necessary in order to consummate the subscription as contemplated by this Agreement.
5. Company Representations and Warranties. The Company represents and warrants to the Investor that:
a. The Company has been duly incorporated as a Delaware corporation and is validly existing and in good standing under the laws of Delaware, with corporate power and authority to own, lease and operate its properties and conduct its business as presently conducted and to enter into, deliver and perform its obligations under this Agreement.
b. As of the Closing Date, the Securities will be duly authorized and, when issued and delivered to the Investor against full payment therefor in accordance with the terms of this Agreement, the Securities will be validly issued, fully paid and non-assessable and will not have been issued in violation of or subject to any preemptive or similar rights created under the Company’s certificate of incorporation, Certificate of Designation or bylaws (each as amended to the Closing Date) or under the General Corporation Law of the State of Delaware.
c. This Agreement has been duly authorized, executed and delivered by the Company and, assuming that this Agreement constitutes the valid and binding agreement of the Investor, this Agreement constitutes a valid and binding agreement of the Company and is enforceable against the Company in accordance with its terms, except as may be limited or otherwise affected by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws relating to or affecting the rights of creditors generally, or (ii) principles of equity, whether considered at law or equity.
d. The issuance and sale of the Securities and the compliance by the Company with all of the provisions of this Agreement and the consummation of the transactions contemplated herein will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of the Company or any of its subsidiaries pursuant to the terms of (i) any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company is subject that would reasonably be expected to have a material adverse effect on the business, properties, financial condition, stockholders’ equity, or results of operations of the Company and its subsidiaries, taken as a whole or materially affect the validity of the Securities or
the legal authority of the Company to enter into and perform its obligations under this Agreement (a “Material Adverse Effect”); (ii) result in any violation of the provisions of the organizational documents of the Company; or (iii) result in any violation of any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over the Company or any of its properties that would reasonably be expected to have a Material Adverse Effect.
e. Assuming the accuracy of the representations and warranties of the Investor set forth herein, the Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority, self-regulatory organization or other person in connection with the issuance of the Securities pursuant to this Agreement, other than (i) filings with the U.S. Securities and Exchange Commission (the “SEC”), (ii) filings required by applicable state securities laws, (iii) the filings required in accordance with Section 13 of this Agreement; (iv) any consent required by the rules of the NYSE, including with respect to obtaining approval of the Company’s stockholders, (v) consents, waivers, authorizations, orders, notices or filings, required to consummate the Transaction as provided under the Transaction Agreement and (vi) consents, waivers, authorizations, orders, notices or filings, the failure of which to obtain or make, would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
f. The Company is not, and immediately after receipt of payment for the Securities, will not be, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.
g. The Company made available to the Investor (including via the SEC’s EDGAR system) a true, correct and complete copy of each form, report, statement, schedule, prospectus, proxy, registration statement and other documents filed by the Company with the SEC prior to the date of this Agreement (the “SEC Documents”), which SEC Documents, as of their respective dates, complied in all material respects with the applicable requirements of the Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations of the SEC promulgated thereunder, and none of the SEC Documents, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Except as described in (i) Note 9 to the Company’s financial statements included in the Company’s Form 10-Q for the quarterly period ended March 31, 2021 filed with the SEC on May 25, 2021 and (ii) the introduction of Amendment No. 1 to the Company’s Form 10-Q for the quarterly period ended September 30, 2021 filed with the SEC on February 7, 2022, the financial statements of the Company included in the SEC Documents comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing and fairly present in all material respects the financial position of the Company as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, year-end audit adjustments. A copy of each SEC Documents is available to the Investor via the SEC’s EDGAR system. There are no outstanding or unresolved comments in comment letters received by the Company from the staff of the Division of Corporation Finance of the SEC with respect to any of the SEC Documents.
h. The Company is in compliance with all applicable laws, except where such non-compliance would not reasonably be expected to have a Material Adverse Effect. The Company has not received any written communication from a governmental authority that alleges that the Company is not in compliance with or is in default or violation of any applicable law, except where such non-compliance, default or violation would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
i. As of the date hereof, the issued and outstanding Class A Shares of the Company are registered pursuant to Section 12(b) of the Exchange Act, and are listed for trading on the NYSE under the symbol “TLGA” (it being understood that the trading symbol will be changed in connection with the Transaction). Except as disclosed in the SEC Documents, as of the date hereof, there is no suit, action, proceeding or investigation pending or, to the knowledge of the Company, threatened against the Company by the NYSE or the SEC, respectively, to prohibit or terminate the listing of the Company’s Class A Shares on the NYSE or to deregister the Class A Shares under the Exchange Act. The Company has taken no action that is designed to terminate the registration of the Class A Shares under the Exchange Act.
j. Assuming the accuracy of the Investor’s representations and warranties set forth in Section 6 of this Agreement, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Investor.
k. Neither the Company nor any person acting on its behalf has offered or sold the Securities by any form of general solicitation or general advertising and the Securities are not being offered in a manner involving a public offering under, or in a distribution in violation of the Securities Act or any state securities laws.
l. The Company is not under any obligation to pay any broker’s fee or commission in connection with the sale of the Securities to the Investor.
m. As of the date hereof, the authorized capital stock of the Company is (i) 200,000,000 shares of Class A common stock (“Class A Shares”), 7,948,405 of which are issued and outstanding as of the date of this Agreement, (ii) 20,000,000 shares of Class F common stock (“Class F Shares”), 5,000,000 of which are issued and outstanding as of the date of this Agreement, and (iii) 1,000,000 shares of preferred stock of par value $0.0001 each, of which no shares are issued and outstanding as of the date of this Agreement. As of the date hereof (i) 6,666,667 warrants to purchase 6,666,667 Class A Shares (the “Private Placement Warrants”) are outstanding, and (ii) 13,333,333 warrants to purchase 13,333,333 Class A Shares (the “Public Warrants” and, together with the Private Placement Warrant, the “Warrants”) are outstanding. As of or prior to the Closing, TLG Acquisition Founder LLC will forfeit 3,270,652 Class F Shares (such that there will be 1,729,348 Class F Shares outstanding at that time) and 4,666,667 Private Placement Warrants (such that there will be 2,000,000 Private Placement Warrants outstanding at that time excluding the Private Placement Warrants to be issued in connection with the conversion of certain amounts of the working capital loan from TLG Acquisition Founder LLC). All (A) issued and outstanding Class A Shares and Class F Shares have been duly authorized and validly issued, are fully paid and are non-assessable and are not subject to preemptive rights, and (B) outstanding Warrants are validly issued, are fully paid, and are legally binding obligations of the Company enforceable against the Company in accordance with their terms (except (i) as may be limited by bankruptcy, insolvency, reorganization or similar laws’ affecting creditors’ rights generally, (ii) as enforceability of any indemnification or contribution provision may be limited under federal and state securities laws, and (iii) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court before which any proceeding therefor may be brought) and are not subject to preemptive rights. Except as set forth in the Company’s organizational documents, there are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any Class A Shares or any other capital stock of the Company.
n. Other than the Transaction Agreement and the Note Conversion Agreement by and among the Company, Electriq Power and John Michael Lawrie dated on or around the date hereof, no Other Securities Purchase Agreement or other similar agreement includes terms and conditions that are materially more favorable to any investor party thereto which has subscribed for the same or fewer shares of Common Stock as the number of Subscribed Shares subscribed for (in the aggregate) by the Investor and any of its
affiliates, other than terms particular to the regulatory requirements of such investor or its affiliates or related funds that are mutual funds or are otherwise subject to regulations related to the timing of funding and the issuance of securities thereunder, and such Other Securities Purchase Agreements and such other agreements have not been amended or modified in any material respect following the date of this Agreement. The provisions of this Subsection 5(n) shall not apply to terms or conditions related to differences in timing of closing of Other Securities Purchase Agreements.
o. Except for such matters as have not had and would not be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect, as of the date hereof, there is no (i) suit, action, proceeding or arbitration before a governmental authority or arbitrator pending, or, to the knowledge of the Company, threatened against the Company or (ii) judgment, decree, injunction, ruling or order of any governmental entity or arbitrator outstanding against the Company.
6. Investor Representations and Warranties. The Investor represents and warrants to the Company that:
a. The Investor is either a U.S. investor or non-U.S. investor as set forth under its name on the signature page hereto, and accordingly represents the applicable additional matters under clause (i) or (ii) below:
(i) Applicable to U.S. investors: At the time the Investor was offered the Securities, it was, as of the date hereof, the Investor is, and as of the Closing Date the Investor will be (x) a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act), or an “accredited investor” (within the meaning of Rule 501 under the Securities Act), (y) acquiring the Securities only for its own account and not for the account of others, or if the Investor is subscribing for the Securities as a fiduciary or agent for one or more investor accounts, each owner of each such account is independently a qualified institutional buyer, the Investor has full investment discretion with respect to each such account, and the full power and authority to make the acknowledgements, representations and agreements herein on behalf of each owner of each such account and (z) is not acquiring the Securities with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act or the securities law of any other jurisdiction (and shall provide the requested information set forth on Schedule A). The Investor is not an entity formed for the specific purpose of acquiring the Securities.
(ii) Applicable to non-U.S. investors: The Investor understands that the sale of the Securities is made pursuant to and in reliance upon Regulation S promulgated under the Securities Act (“Regulation S”). The Investor is not a U.S. Person (as defined in Regulation S), it is acquiring the Securities in an offshore transaction in reliance on Regulation S, and it has received all the information relevant to its acquisition of the Securities hereunder outside of the United States. The Investor understands and agrees that securities sold pursuant to Regulation S may be subject to restrictions thereunder, including compliance with the distribution compliance period provisions therein. If the Investor is a resident or subject to the laws of Canada, the Investor hereby declares, represents, warrants and agrees as set forth in the attached Schedule B.
b. The Investor acknowledges and agrees that the Securities are being offered in a transaction not involving any public offering within the meaning of the Securities Act and that the offer and sale of Securities have not been registered under the Securities Act. The Investor acknowledges and agrees that the Securities may not be offered, resold, transferred, pledged or otherwise disposed of by the Investor absent an effective registration statement under the Securities Act except (i) to the Company or a subsidiary
thereof, (ii) to non-U.S. persons pursuant to offers and sales that occur outside the United States within the meaning of Regulation S or (iii) pursuant to another applicable exemption from the registration requirements of the Securities Act, and in each of clauses (i) and (iii) in accordance with any applicable securities laws of the states and other jurisdictions of the United States, and that any certificates or book entry positions representing the Securities shall contain a restrictive legend to such effect. The Investor further acknowledges and agrees that (i) the Subscribed Shares may not be offered, resold, transferred, pledged or otherwise disposed of by the Investor until one year after the date of the Transaction and (ii) the Preferred Shares may not be offered, resold, transferred, pledged or otherwise disposed of by the Investor until three years after the date of the Transaction in accordance with the terms of the Certificate of Designation. The Investor acknowledges and agrees that the Securities will be subject to the foregoing transfer restrictions and as a result of these transfer restrictions, the Investor may not be able to readily offer, resell, pledge, transfer or otherwise dispose of the Securities and may be required to bear the financial risk of an investment in the Securities for an indefinite period of time. The Investor acknowledges and agrees that the Securities will not be eligible for resale, offer, transfer, pledge or disposition pursuant to Rule 144 promulgated under the Securities Act until at least one year from the date that the Company files a Current Report on Form 8-K following the Closing Date that includes the “Form 10” information required under the applicable SEC rules and regulations. In connection with this Agreement, the Investor agrees to execute a Lock-Up Agreement. The Investor acknowledges and agrees that it has been advised to consult legal counsel prior to making any offer, resale, pledge or transfer of any of the Securities.
c. The Investor acknowledges and agrees that it is aware the Securities are being offered under the exemption from registration provided by Section 4(a)(2) of the Securities Act, Regulation D or Regulation S.
d. The Investor acknowledges and agrees that the Investor is purchasing the Securities from the Company. The Investor further acknowledges that it is relying exclusively on its own sources of information, investment analysis and due diligence (including professional advice it deems appropriate) with respect to the Transaction, the Securities and the business, condition (financial and otherwise), management, operations, properties and prospects of the Company and Electriq Power, including but not limited to all business, legal, regulatory, accounting, credit and tax matters and that there have been no, representations, warranties, covenants and agreements made to the Investor by or on behalf of the Company, Electriq Power or any of the respective affiliates or any of the respective subsidiaries, control persons, officers, directors, employees, partners, agents or representatives of any of the foregoing or any other person or entity, expressly or by implication, other than those representations, warranties, covenants and agreements of the Company included in this Agreement.
e. Either (1) the Investor’s acquisition and holding of the Securities will not constitute or result in a non-exempt prohibited transaction under Section 406 of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), Section 4975 of the Internal Revenue Code of 1986, as amended, or any applicable similar law or (2) the Investor is not a Benefit Plan Investor as contemplated by ERISA.
f. The Investor acknowledges and agrees that the Investor has received and has had an opportunity to review such information as the Investor deems necessary or desirable in order to make an investment decision with respect to the Securities, including, without limitation, with respect to the Company, the Transaction and the business of Electriq Power and its subsidiaries. Without limiting the generality of the foregoing, the Investor acknowledges that it has reviewed the Company’s filings with the SEC. The Investor acknowledges and agrees that the Investor and the Investor’s professional advisor(s), if any, have conducted its own investigation of the Company, the Transactions, and the Securities, received and reviewed the offering materials made available to the Investor and had the full opportunity to ask such questions, receive such answers and obtain such information as the Investor and the Investor’s professional
advisor(s), if any, have deemed necessary to make an investment decision with respect to the Securities. The Investor further acknowledges that the information provided to the Investor may change after the date hereof and the Company is under no obligation to inform the Investor regarding any such changes, except to the extent such changes would reasonably be expected to cause the failure of the Company to satisfy a condition to the Investor’s obligations at the Closing.
g. The Investor acknowledges and agrees that the Investor has determined based on its own independent review and such professional advice as it has deemed appropriate, that the purchase of the Securities and participation in the Transaction are consistent with the Investor’s financial needs, objectives and condition and comply and are consistent with all material investment policies, guidelines and other restrictions applicable to the Investor.
h. The Investor became aware of this offering of the Securities solely by means of direct contact between the Investor and the Company, Electriq Power or a representative of the Company or Electriq Power, and the Securities were offered to the Investor solely by direct contact between the Investor and the Company, Electriq Power or a representative of the Company or Electriq Power. The Investor did not become aware of this offering of the Securities, nor were the Securities offered to the Investor, by any other means. The Investor acknowledges that the Securities (i) were not offered to it by any form of general solicitation or general advertising and (ii) are not being offered to it in a manner involving a public offering under, or in a distribution in violation of, the Securities Act, or any state securities laws. The Investor acknowledges that it is not relying upon, and has not relied upon, any statement, representation or warranty made by any person, firm or corporation (including, without limitation, the Company, Electriq Power or any of their respective affiliates or any of their respective subsidiaries, control persons, officers, directors, employees, partners, agents or representatives), other than the representations and warranties of the Company contained in Section 5 of this Agreement, in making its investment or decision to invest in the Company, and except for the foregoing, the Investor is relying exclusively on its own sources of information, investment analysis and due diligence (including professional advice it deems appropriate) with respect to the Transaction, the Securities and the business, condition (financial and otherwise), management, operations, properties and prospects of the Company and it has independently satisfied itself concerning the relevant tax and other economic considerations relevant to its investment in the Securities.
i. The Investor acknowledges that it is aware that there are substantial risks incident to the purchase and ownership of the Securities, including those set forth in the Company’s filings with the SEC. The Investor is a sophisticated investor, experienced in private equity transactions and has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Securities, and the Investor has sought such accounting, legal and tax advice as the Investor has considered necessary to make an informed investment decision and the Investor has made its own assessment and has satisfied itself concerning relevant tax or other economic considerations relative to its purchase of the Securities. The Investor is able to sustain a complete loss on its investment in the Securities.
j. Alone, or together with any professional advisor(s), the Investor acknowledges that it has reviewed the documents made available to the Investor and has adequately analyzed and fully considered the risks of an investment in the Securities and determined that the Securities are a suitable investment for the Investor and that the Investor is able at this time and in the foreseeable future to bear the economic risk of a total loss of the Investor’s investment in the Company. The Investor acknowledges specifically that a possibility of total loss exists.
k. In making its decision to purchase the Securities, the Investor has relied solely upon independent investigation made by the Investor.
l. The Investor acknowledges and agrees that no federal or state agency has passed upon or endorsed the merits of the offering of the Securities or made any findings or determination as to the fairness of this investment.
m. If the Investor is not a natural person, the Investor has been duly formed or incorporated and is validly existing and in good standing under the laws of its jurisdiction of incorporation or formation, with power and authority to enter into, deliver and perform its obligations under this Agreement.
n. The execution, delivery and performance by the Investor of this Agreement are within the powers of the Investor and have been duly authorized (if the Investor is not a natural person) and will not constitute or result in a breach or default under or conflict with any order, ruling or regulation of any court or other tribunal or of any governmental commission or agency, or any agreement or other undertaking, to which the Investor is a party or by which the Investor is bound, and, if the Investor is not a natural person, will not conflict with or violate any provisions of the Investor’s organizational documents, including, without limitation, its incorporation or formation papers, bylaws, indenture of trust or partnership or operating agreement, as may be applicable. The signature on this Agreement is genuine, and the signatory has been duly authorized to execute the same, and, this Agreement has been duly executed and delivered by the Investor and, assuming that this Agreement constitutes the valid and binding obligation of the Company, this Agreement constitutes a legal, valid and binding obligation of the Investor, enforceable against the Investor in accordance with its terms except as may be limited or otherwise affected by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws relating to or affecting the rights of creditors generally, or (ii) principles of equity, whether considered at law or equity.
o. The Investor is not (i) a person or entity named on the List of Specially Designated Nationals and Blocked Persons administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) or in any Executive Order issued by the President of the United States and administered by OFAC (“OFAC List”), or a person or entity prohibited by any OFAC sanctions program, (ii) owned, directly or indirectly, or controlled by, or acting on behalf of, one or more persons that are named on the OFAC List; (iii) organized, incorporated, established, located, resident or born in, or a citizen, national or the government, including any political subdivision, agency or instrumentality thereof, of, Cuba, Iran, North Korea, Syria, the Crimea region of Ukraine or any other country or territory embargoed or subject to substantial trade restrictions by the United States, (iv) a Designated National as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515, or (v) a non-U.S. shell bank or providing banking services indirectly to a non-U.S. shell bank (each, a “Prohibited Investor”). The Investor agrees to provide law enforcement agencies, if requested thereby, such records as required by applicable law, provided that the Investor is permitted to do so under applicable law. If the Investor is a financial institution subject to the Bank Secrecy Act (31 U.S.C. Section 5311 et seq.) (the “BSA”), as amended by the USA PATRIOT Act of 2001 (the “PATRIOT Act”), and its implementing regulations (collectively, the “BSA/PATRIOT Act”), the Investor maintains policies and procedures reasonably designed to comply with applicable obligations under the BSA/PATRIOT Act. To the extent required, the Investor maintains policies and procedures reasonably designed to ensure compliance with OFAC-administered sanctions programs, including for the screening of its investors against the OFAC sanctions programs, including the OFAC List. To the extent required by applicable law, the Investor maintains policies and procedures reasonably designed to ensure that the funds held by the Investor and used to purchase the Securities were legally derived and were not obtained, directly or indirectly, from a Prohibited Investor.
p. [Reserved.]
q. [Reserved.]
r. In connection with the issue and purchase of the Securities, none of the Company, Electriq Power nor any of their respective affiliates have acted as the Investor’s financial advisor or fiduciary.
s. [Reserved.]
t. The Investor has or has commitments to have, and, when required to deliver payment to the Company pursuant to Section 2 above, will have, sufficient funds to pay the Subscription Amount and consummate the purchase and sale of the Securities when required pursuant to this Agreement.
u. The Investor acknowledges and agrees that it is not an underwriter within the meaning of Section 2(a)(11) of the Securities Act and that the purchase and sale of Securities hereunder meets the exemptions from filing under FINRA Rule 5123(b)(1).
v. The Investor acknowledges that certain information provided to it was based on projections, and such projections were prepared based on assumptions and estimates that are inherently uncertain and are subject to a wide variety of significant business, economic and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the projections.
7. Registration Rights.
a. The Company agrees that, as soon as reasonably practicable (but in any case no later than thirty (30) calendar days after the consummation of the Transaction), it will file with the SEC (at its sole cost and expense) a registration statement (the “Registration Statement”) registering the resale of the Subscribed Shares acquired by the Investor pursuant to this Agreement and the Shares issuable upon the mandatory redemption of the Preferred Shares acquired by the Investor pursuant to this Agreement, and it shall use its commercially reasonable efforts to have the Registration Statement declared effective as soon as practicable after the filing thereof. The Company agrees to cause such Registration Statement, or another shelf registration statement that includes the Securities to be sold pursuant to this Agreement, to remain effective until the earliest of (i) the fourth (4th) anniversary of the Closing, (ii) the date on which the Investor ceases to hold any Securities issued pursuant to this Agreement, or (iii) the first date on which the Investor can sell all of its Securities issued pursuant to this Agreement (or shares received in exchange therefor) under Rule 144 of the Securities Act within ninety (90) days without volume or manner of sale limitations. The Investor agrees to disclose its ownership to the Company upon request to assist it in making the determination described above. The Company may amend the Registration Statement so as to convert the Registration Statement into a Registration Statement on Form S-3 at such time as the Company becomes eligible to use such Form S-3. The Investor agrees that the Company may suspend the use of any such registration statement, if it determines that in order for such registration statement not to contain a material misstatement or omission, an amendment thereto would be needed to include information that would at that time not otherwise be required in a current, quarterly or annual report under the Exchange Act; provided, however, that the Company may not suspend the Registration statement for more than ninety (90) total calendar days during any twelve (12)-month period. The Investor may deliver written notice (an “Opt-Out Notice”) to the Company requesting that the Investor not receive notices from the Company regarding the suspension of the Registration Statement; provided, however, that the Investor may later revoke any such Opt-Out Notice in writing. Following receipt of an Opt-Out Notice from the Investor (unless subsequently revoked), (i) the Company shall not deliver any such notices to the Investor and the Investor shall no longer be entitled to the rights associated with any such notice and (ii) each time prior to the Investor’s intended use of an effective Registration Statement, the Investor will notify the Company in writing at least two (2) business days in advance of such intended use, and if a notice of a suspension was previously delivered (or would have been delivered but for the provisions of this Section and the related suspension period remains in effect), the Company will so notify the Investor, within one (1) business day after the Investor’s notification to the Company, by delivering to the Investor a copy of such previous notice of suspension, and thereafter will provide the Investor with the related notice of the conclusion of such suspension promptly following its availability.
b. The Company’s obligations to include the Securities issued pursuant to this Agreement (or shares issued in exchange therefor) for resale in the Registration Statement are contingent upon the Investor furnishing in writing to the Company such information regarding the Investor, the securities of the Company held by the Investor and the intended method of disposition of such Securities as shall be reasonably requested by the Company to effect the registration of such Securities, and shall execute such documents in connection with such registration as the Company may reasonably request that are customary of a selling stockholder in similar situations provided that the Investor shall not in connection with the foregoing be required by the Company to execute any lockup or similar agreement or otherwise be subject to any contractual restriction with the Company on the ability to transfer the Securities. In no event shall the Investor be identified as a statutory underwriter in the Registration Statement unless requested by the SEC; provided, that if the SEC requests that the Investor be identified as a statutory underwriter in the Registration Statement, the Investor will have the option, in its sole and absolute discretion, to either (1) have an opportunity to withdraw from the Registration Statement, in which case the Company’s obligation to register the Securities will be deemed satisfied, or (2) be included as such in the Registration Statement.
c. At the Company’s expense, the Company shall (i) advise the Investor within five (5) business days (1) of the issuance by the SEC of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for such purpose; and (2) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Securities included therein for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. The Company shall not, when so advising the Investor of such events, provide the Investor with any material nonpublic information regarding the Company other than to the extent that providing notice to the Investor of the occurrence of the events listed in clauses (1) and (2) above constitutes material, nonpublic information regarding the Company.
d. The Company agrees to indemnify and hold harmless, to the extent permitted by law, the Investor, its directors, and officers, employees, and agents, and each person who controls the Investor (within the meaning of the Securities Act or the Exchange Act) and each affiliate of the Investor (within the meaning of Rule 405 under the Securities Act) from and against any and all losses, claims, damages, liabilities and expenses (including, without limitation, any reasonable attorneys’ fees and expenses incurred in connection with defending or investigating any such action or claim) caused by any untrue or alleged untrue statement of material fact contained in any Registration Statement, prospectus included in any Registration Statement or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are caused by or contained in any information furnished in writing to the Company by or on behalf of the Investor expressly for use therein.
e. The Investor agrees, severally and not jointly with any person that is a party to the Other Securities Purchase Agreements, to indemnify and hold harmless the Company, its directors and officers and agents and each person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses (including, without limitation, reasonable attorneys’ fees) resulting from any untrue statement of material fact contained in the Registration Statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is contained in any information or affidavit so furnished by or on behalf of the Investor expressly for use therein. In no event shall the liability of the Investor be greater in amount than the dollar amount of the net proceeds received by the Investor upon the sale of the Securities purchased pursuant to this Agreement giving rise to such indemnification obligation.
f. Any person entitled to indemnification herein shall (1) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any person’s right to indemnification hereunder to the extent such failure has not prejudiced the indemnifying party) and (2) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without the indemnifying party’s consent. An indemnifying party who elects not to assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of legal counsel to any indemnified party a conflict of interest exists between such indemnified party and any other of such indemnified parties with respect to such claim. No indemnifying party shall, without the consent of the indemnified party, consent to the entry of any judgment or enter into any settlement which cannot be settled in all respects by the payment of money (and such money is so paid by the indemnifying party pursuant to the terms of such settlement) or which settlement does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.
g. The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director, employee, agent, affiliate or controlling person of such indemnified party and shall survive the transfer of the Securities purchased pursuant to this Agreement.
h. If the indemnification provided under this Section 7 from the indemnifying party is unavailable or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities and expenses referred to herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities and expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations; provided, however, that in no event shall the liability of the Investor be greater than the dollar amount of the net proceeds received by the Investor upon the sale of the Securities purchased pursuant to this Agreement, giving rise to such indemnification obligation. The relative fault of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by, or relates to information supplied by or on behalf of, such indemnifying party or indemnified party, and the indemnifying party’s and indemnified party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses or other liabilities referred to above shall be deemed to include, subject to the limitations set forth above, any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant to this Section 7 from any person who was not guilty of such fraudulent misrepresentation.
i. With a view to making available to the Investor the benefits of Rule 144 that may, at such times as Rule 144 is available to shareholders of the Company, permit the Investor to sell securities of the Company to the public without registration, the Company agrees, for so long as the Securities are held by the Investor: (i) to make and keep public information available, as those terms are understood and defined in Rule 144; and (ii) to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act so long as the Company remains subject to such requirements and so long as the filing of such reports and other documents is required for the applicable provisions of Rule 144.
j. Promptly following the date on which the sale, assignment or transfer of the Securities may be made without registration under the applicable requirements of the Securities Act, the Company will use commercially reasonable efforts to cause the removal of the restrictive legend included on the Securities and the Company shall issue a certificate without such legend to the Investor or issue to the Investor a book entry statement without such legend notated thereon. The Company shall be responsible for the fees of its transfer agent and all DTC fees associated with such issuance. To the extent required by the transfer agent, the Company shall use commercially reasonable efforts to cause its legal counsel to deliver a customary opinion within two (2) business days of the delivery of all reasonably necessary representations and other documentation from the Investor as reasonably requested by the Company, its counsel or the transfer agent by the Investor to the transfer agent to the effect that the removal of the restrictive legend in such circumstances may be effected under the Securities Act; provided that, notwithstanding the foregoing, Issuer will not be required to deliver any such opinion, authorization, certificate or direction if it reasonably believes that removal of the legend could result in or facilitate transfers of securities in violation of applicable law.
8. Short Sales Agreement. The Investor hereby agrees that, from the date of this Agreement, none of the Investor, its controlled affiliates, or any person or entity acting on behalf of the Investor or any of its controlled affiliates or pursuant to any understanding with the Investor or any of its controlled affiliates will engage in any Short Sales with respect to securities of the Company. For purposes of this Section 8, “Short Sales” shall include, without limitation, all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act, and all types of direct and indirect stock pledges (other than pledges in the ordinary course of business as part of prime brokerage arrangements), forward sale contracts, options, puts, calls, swaps and similar arrangements (including on a total return basis). Notwithstanding the foregoing, (i) nothing herein shall prohibit other entities under common management with the Investor that have no knowledge of this Agreement or of the Investor’s participation in the Transaction (including the Investor’s controlled affiliates and/or affiliates) from entering into any Short Sales and (ii) in the case of an Investor that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of the Investor’s assets and the portfolio managers have no knowledge of the investment decisions made by the portfolio managers managing other portions of the Investor’s assets, this Section 8 shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Subscription Amount covered by this Agreement.
9. Termination. This Agreement shall terminate and be void and of no further force and effect, and all rights and obligations of the parties hereunder shall terminate without any further liability on the part of any party in respect thereof, upon the earliest to occur of (a) such date and time as the Transaction Agreement is terminated in accordance with its terms, (b) upon the mutual written agreement of each of the parties hereto to terminate this Agreement, (c) the Termination Date (as defined in the Transaction Agreement), if the Closing has not occurred on or prior to such date, and (d) if any of the conditions to Closing set forth in Section 3 of this Agreement are not satisfied or waived, or are not capable of being satisfied, on or prior to the Closing and, as a result thereof, the transactions contemplated by this Agreement will not be and are not consummated at the Closing; provided that nothing herein will relieve any party from liability for any willful breach hereof prior to the time of termination, and each party will be entitled to any remedies at law or in equity to recover losses, liabilities or damages arising from any such willful breach. The Company shall notify the Investor of the termination of the Transaction Agreement promptly after the termination of such agreement.
10. Trust Account Waiver. The Investor acknowledges that the Company is a blank check company with the powers and privileges to effect a merger, asset acquisition, reorganization or similar business combination involving the Company and one or more businesses or assets. The Investor further acknowledges that, as described in the Company’s prospectus relating to its initial public offering dated January 27, 2021 (the “Prospectus”) available at www.sec.gov, substantially all of the Company’s assets consist of the cash proceeds of the Company’s initial public offering and private placement of its securities, and substantially all of those proceeds have been deposited in a trust account (the “Trust Account”) for the benefit of the Company, its public shareholders and the underwriter of the Company’s initial public offering. Except with respect to interest earned on the funds held in the Trust Account that may be released to the Company to pay its tax obligations, if any, the cash in the Trust Account may be disbursed only for the purposes set forth in the Prospectus. For and in consideration of the Company entering into this Agreement, the receipt and sufficiency of which are hereby acknowledged, the Investor hereby irrevocably waives any and all right, title and interest, or any claim of any kind it has or may have in the future, in or to any monies held in the Trust Account, and agrees not to seek recourse against the Trust Account as a result of, or arising out of, this Agreement or the transactions contemplated hereby, regardless of whether such claim arises based on contract, tort, equity or any other theory of legal liability; provided, however, that nothing in this Section 10 shall be deemed to limit the Investor’s right, title, interest or claim to any monies held in the Trust Account by virtue of its record or beneficial ownership of Class A Shares acquired by means other than pursuant to this Agreement.
11. Miscellaneous.
a. The Company may request from the Investor such additional information as the Company may deem necessary to register the resale of the Securities and evaluate the eligibility of the Investor to acquire the Securities, and the Investor shall reasonably promptly provide such information as may reasonably be requested, to the extent readily available and to the extent consistent with its internal policies and procedures; provided, that, the Company agrees to keep any such information provided by the Investor confidential other than as necessary to include in any registration statement the Company is required to file hereunder. The Investor acknowledges and agrees that if it does not provide the Company with such requested information, the Company may not be able to register the Securities acquired by the Investor pursuant to this Agreement for resale pursuant to Section 7 hereof. The Investor hereby agrees that its identity and the Agreement, as well as the nature of the Investor’s obligations hereunder, may be disclosed in any public announcement or disclosure required by the SEC and in any registration statement, proxy statement, consent solicitation statement or any other SEC filing to be filed by the Company in connection with the issuance of Securities contemplated by this Agreement and/or the Transaction.
b. The Investor acknowledges that the Company, and Electriq Power (as third party beneficiaries with the right to enforce Section 4, Section 5, Section 6, Section 11 and Section 12 hereof) will rely on the acknowledgments, understandings, agreements, representations and warranties contained in this Agreement. Prior to the Closing, the Investor agrees to promptly notify the Company if any of the acknowledgments, understandings, agreements, representations and warranties set forth in Section 6 above are no longer accurate in any material respect (other than those acknowledgments, understandings, agreements, representations and warranties qualified by materiality, in which case the Investor shall notify the Company if they are no longer accurate in all respects). The Investor agrees that each purchase by the Investor of Securities from the Company will constitute a reaffirmation of the acknowledgments, understandings, agreements, representations and warranties herein (as modified by any such notice) by the Investor as of the time of such purchase. Prior to the Closing, each party hereto agrees to promptly notify the other party hereto if any of the acknowledgments, understandings, agreements, representations and warranties made by such party as set forth herein are no longer accurate in all material respects.
c. [Reserved.]
d. The Company, Electriq Power (as a third party beneficiary) and the Investor are each entitled to rely upon this Agreement and each is irrevocably authorized to produce this Agreement or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.
e. All of the agreements, representations and warranties made by each party hereto in this Agreement shall survive the Closing.
f. This Agreement may not be modified, waived or terminated (other than pursuant to the terms of Section 9 above) except by an instrument in writing, signed by each of the parties hereto. No failure or delay of either party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, or any course of conduct, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the parties hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have hereunder.
g. This Agreement (including the schedule hereto) constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, among the parties, with respect to the subject matter hereof. Except as set forth in Section 11(d) and Section 11(k) with respect to the persons specifically referenced therein, and their right to enforce payment of the Subscription Amount in accordance with the terms and subject to the conditions set forth in this Agreement, this Agreement shall not confer any rights or remedies upon any person other than the parties hereto, and their respective successor and assigns.
h. Except as otherwise provided herein, this Agreement shall be binding upon, and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives, and permitted assigns, and the agreements, representations, warranties, covenants and acknowledgments contained herein shall be deemed to be made by, and be binding upon, such heirs, executors, administrators, successors, legal representatives and permitted assigns.
i. If any provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby and shall continue in full force and effect.
j. This Agreement may be executed in one or more counterparts (including by facsimile or electronic mail or in ..pdf) and by different parties in separate counterparts, with the same effect as if all parties hereto had signed the same document. All counterparts so executed and delivered shall be construed together and shall constitute one and the same agreement.
k. The parties hereto agree that irreparable damage may occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement, without posting a bond or undertaking and without proof of damages, to enforce specifically the terms and provisions of this Agreement, this being in addition to any other remedy to which such party is entitled at law, in equity, in contract, in tort or otherwise. The parties hereto acknowledge and agree that Electriq Power shall be entitled to seek specifically and enforce the Investor’s obligations to fund the Subscription Amount in accordance with the terms and subject to the conditions set forth in this Agreement.
l. Any notice or communication required or permitted hereunder shall be in writing and either delivered personally, emailed or sent by overnight mail via a reputable overnight carrier, or sent by certified or registered mail, postage prepaid, and shall be deemed to be given and received (i) when so delivered personally, (ii) when sent, with no mail undeliverable or other rejection notice, if sent by email, or (iii) three (3) business days after the date of mailing to the address below or to such other address or addresses as such person may hereafter designate by notice given hereunder:
| (i) | if to the Investor, to such address(es) or email address(es) set forth herein; |
| (ii) | if to, prior to the Closing, the Company, to: |
c/o TLG Acquisition Founder LLC
515 North Flagler Drive, Suite 520
West Palm Beach, FL 33401
Attention: John Michael Lawrie, Chief Executive Officer
Email: mikelawrie@tlgholding.com
with required copies to (which copies shall not constitute notice):
Gibson, Dunn & Crutcher LLP
811 Main Street, Suite 3000
Houston, TX 77002-6117
Attention: Gerald M. Spedale
Chris Trester
Email: gspedale@gibsondunn.com
ctrester@gibsondunn.com
Electriq Power, Inc.
625 N. Flagler Drive, Suite 520
West Palm Beach, FL 33401
Attention: Legal Department
Email: Jim.vanhoof@electriqpower.com
Ellenoff, Grossman & Schole LLP
1345 Avenue of the Americas
New York, NY 10105
Attention: David Landau
Anthony Ain
Email: dlandau@egsllp.com
aain@egsllp.com
m. The Investor shall pay all of its own expenses in connection with this Agreement and the transactions contemplated herein.
n. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND THE SUPREME COURT OF THE STATE OF NEW YORK SOLELY IN RESPECT OF THE INTERPRETATION AND ENFORCEMENT OF THE PROVISIONS OF THIS AGREEMENT AND THE DOCUMENTS REFERRED TO IN THIS AGREEMENT AND IN RESPECT OF THE TRANSACTIONS CONTEMPLATED HEREBY, AND HEREBY WAIVE, AND AGREE NOT TO
ASSERT, AS A DEFENSE IN ANY ACTION, SUIT OR PROCEEDING FOR INTERPRETATION OR ENFORCEMENT HEREOF OR ANY SUCH DOCUMENT THAT IS NOT SUBJECT THERETO OR THAT SUCH ACTION, SUIT OR PROCEEDING MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN SAID COURTS OR THAT VENUE THEREOF MAY NOT BE APPROPRIATE OR THAT THIS AGREEMENT OR ANY SUCH DOCUMENT MAY NOT BE ENFORCED IN OR BY SUCH COURTS, AND THE PARTIES HERETO IRREVOCABLY AGREE THAT ALL CLAIMS WITH RESPECT TO SUCH ACTION, SUIT OR PROCEEDING SHALL BE HEARD AND DETERMINED BY SUCH A NEW YORK STATE OR FEDERAL COURT. THE PARTIES HEREBY CONSENT TO AND GRANT ANY SUCH COURT JURISDICTION OVER THE PERSON OF SUCH PARTIES AND OVER THE SUBJECT MATTER OF SUCH DISPUTE AND AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH SUCH ACTION, SUIT OR PROCEEDING IN THE MANNER PROVIDED IN THIS SECTION 11(n) OF THIS AGREEMENT OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW SHALL BE VALID AND SUFFICIENT SERVICE THEREOF.
o. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; (II) SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THE FOREGOING WAIVER; (III) SUCH PARTY MAKES THE FOREGOING WAIVER VOLUNTARILY AND (IV) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION 11(o).
12. Non-Reliance and Exculpation. The Investor acknowledges that it is not relying upon, and has not relied upon, any statement, representation or warranty made by any person, firm or corporation (including, without limitation, the Company, Electriq Power or any of the respective affiliates and any of the respective subsidiaries, control persons, officers, directors, employees, partners, agents or representatives of any of the foregoing), other than the statements, representations and warranties of the Company expressly contained in Section 5 of this Agreement, in making its investment or decision to invest in the Company. The Investor agrees that none of (i) any other investor pursuant to, arising out of or relating to this Agreement or any Other Securities Purchase Agreement related to the private placement of the Securities (including the respective controlling persons, officers, directors, partners, agents, and any representatives of any of the foregoing) or (ii) any other party to the Transaction Agreement (for the avoidance of doubt, other than the Company), including any such party’s representatives, affiliates or any of its or their control persons, officers, directors, employees or representatives that is not a party hereto, shall be liable to the Investor, or to any other investor, pursuant to this Agreement or any Other Securities Purchase Agreement related to the private placement of the Securities, the negotiation hereof or thereof or its subject matter, or the transactions contemplated hereby or thereby, including, without limitation, for any action heretofore or hereafter taken or omitted to be taken by any of them in connection with the purchase of the Securities or with respect to any claim (whether in tort, contract or otherwise) for breach of this Agreement or in respect of any written or oral representations made or alleged to be made in connection herewith, as expressly provided herein, or for any actual or alleged inaccuracies, misstatements or omissions with respect to any information or materials of any kind furnished by the Company, Electriq Power or any
Non-Party Affiliates concerning the Company, Electriq Power or any of the respective affiliates and any of the respective subsidiaries, control persons, officers, directors, employees, partners, agents or representatives of the foregoing, this Agreement or the transactions contemplated hereby. For purposes of this Agreement, “Non-Party Affiliates” means each former, current or future officer, director, employee, partner, member, manager, direct or indirect equityholder or affiliate of the Company, Electriq Power or any of the respective affiliates or any of their respective subsidiaries, control persons, officers, directors, employees, partners, agents or representatives or any family member of the foregoing.
13. Disclosure. The Company shall within the time period required by the Exchange Act following the date of this Agreement, issue one or more press releases or file with the SEC a Current Report on Form 8-K (collectively, the “Disclosure Document”) disclosing all material terms of the transactions contemplated hereby and by the Other Securities Purchase Agreements, the Transaction and any other material, nonpublic information that the Company has provided to the Investor at any time prior to the filing of the Disclosure Document. Upon the issuance of the Disclosure Document, to the knowledge of the Company, the Investor shall not be in possession of any material, nonpublic information received from the Company or any of its officers, directors, or employees or agents, and the Investor shall no longer be subject to any confidentiality or similar obligations under any current agreement, whether written or oral, with the Company or any of their respective affiliates, relating to the transactions contemplated by this Agreement. The Investor hereby consents to (i) the publication and disclosure in the Disclosure Document and (ii) as and to the extent otherwise required by the federal securities laws, exchange rules, the SEC or any other securities authorities or any rules and regulations promulgated thereby, any other documents or communications provided by the Company or Electriq Power to any governmental entity or to any securityholders of the Company, of the Investor’s identity and beneficial ownership of the subscribed Securities and the nature of the Investor’s commitments, arrangements and understandings under and relating to this Agreement and, if deemed appropriate by the Company or Electriq Power, a copy of this Agreement, all solely to the extent required by applicable law or any regulation or stock exchange listing requirement. The Investor will promptly provide any information reasonably requested by the Company for any regulatory application or filing made or approval sought in connection with the Transaction (including filings with the SEC).
14. Non-Recourse. This Agreement may only be enforced against, and any claim or cause of action based upon, arising out of, or related to any breach of any term or condition of this Agreement may only be brought against, the entities that are expressly named as parties hereto and then only to the extent of the specific obligations set forth herein with respect to such party.
15. Independent Obligation. The obligations of the Investor under this Agreement are several and not joint with the obligations of any Other Investor under any Other Securities Purchase Agreements, and the Investor shall not be responsible in any way for the performance of the obligations of any Other Investor under any Other Securities Purchase Agreement. The decision of the Investor to purchase Securities pursuant to this Agreement has been made by the Investor independently of any Other Investor and independently of any information, materials, statements or opinions as to the business, affairs, operations, assets, properties, liabilities, results of operations, condition (financial or otherwise) or prospects of the Company or any of its subsidiaries which may have been made or given by any Other Investor or by any agent or employee of any Other Investor, and neither the Investor nor any of its agents or employees shall have any liability to any Other Investor (or any other person) relating to or arising from any such information, materials, statements or opinions. Nothing contained herein or in any Other Securities Purchase Agreement, and no action taken by the Investor or any Other Investors pursuant hereto or thereto, shall be deemed to constitute the Investor and Other Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investor and Other Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this Agreement and the Other Securities Purchase Agreements. The Investor acknowledges that no Other
Investor has acted as agent for the Investor in connection with making its investment hereunder and no Other Investor will be acting as agent of the Investor in connection with monitoring its investment in the Securities or enforcing its rights under this Agreement. The Investor shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any Other Investor or investor to be joined as an additional party in any proceeding for such purpose.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the Investor has executed or caused this Agreement to be executed by its duly authorized representative as of the date set forth below.
| Name of Investor: | State/Country of Formation or Domicile: | |
| David T. Bell and Alison J. Bell with Joint Rights of Survivorship | ||
| By: | /s/ David T. Bell and Alison J. Bell with Joint Rights of Survivorship | |||
| Name: David T. Bell and Alison J. Bell with Joint Rights of Survivorship | ||
| Title: Investor | ||
| Name in which Securities are to be registered (if different): | Date: 7/18/2023 | |
| Investor’s EIN: | ||
| Investor status (mark one): | ☒ U.S. investor ☐ Non U.S. investor | |
| Business Address-Street: | Mailing Address-Street (if different): | |
| City, State, Zip: | City, State, Zip: | |
| Attn: |
|
Attn: |
| |||
| Telephone No.: | Telephone No.: | |
| Facsimile No.: | Facsimile No.: | |
| Email: | Email: | |
| Number of Subscribed Shares subscribed for: | 10,000 | |
| Number of Preferred Shares issued: | 5,000 | |
| Aggregate Subscription Amount: $100,000 | Price Per Subscribed Share: $10.00 | |
You must pay the Subscription Amount by wire transfer of United States dollars in immediately available funds to the account specified by the Company in the Closing Notice and/or cancellation or conversion of indebtedness of the Company or Electriq Power. To the extent the offering is oversubscribed, the number of Subscribed Shares received may be less than the number of Subscribed Shares subscribed for (such reduction, a “Cutback”). Any Cutback will be made pro rata based on the respective number of Subscribed Shares that all persons participating in the offering of Securities contemplated by this Agreement request to purchase.
IN WITNESS WHEREOF, the Company has accepted this Agreement as of the date set forth below.
| TLG ACQUISITION ONE CORP. | ||
| By: | /s/ John Michael Lawrie | |
| Name: |
John Michael Lawrie | |
| Title: |
Chief Executive Officer | |
Date: 7/18/2023
Exhibit 10.14
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT, dated as of July 18, 2023 (this “Agreement”), is made by and between TLG Acquisition One Corp., a Delaware corporation (the “Company”), and James Lovewell (the “Investor”). This Agreement is being entered into in connection with the proposed business combination (the “Transaction”) between the Company and Electriq Power, Inc. (“Electriq Power”), a Delaware corporation, pursuant to a merger agreement (as amended from time to time, the “Transaction Agreement”) by and among the Company, Electriq Power and Electriq Power Merger Corp., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”), dated as of November 13, 2022, whereby, among other things, Merger Sub will merge with and into Electriq Power (the “Merger”), with Electriq Power as the surviving company in the Merger. In connection with the Transaction, the Company is seeking commitments from interested investors to purchase in a private placement (the “Private Placement”), prior to the closing of the Transaction, shares of the Company’s Class A common stock, par value $0.0001 per share (each share, a “Share”), for a purchase price of $10.00 per share (the “Subscribed Shares”). As a condition and inducement to such investors purchasing the Subscribed Shares, the Company will issue to the Investor, for each two Subscribed Shares, for no additional consideration, one share of Series A Cumulative Redeemable Preferred Stock having the rights, preferences and privileges set forth in the Certificate of Designation attached to this Agreement as Exhibit A (the “Preferred Shares” and such certificate, the “Certificate of Designation”) (the Preferred Shares, together with the Subscribed Shares, the “Securities”). In connection with the transaction contemplated hereby, certain other “accredited investors” (as defined in Rule 501 under the Securities Act of 1933, as amended (the “Securities Act”)) and “qualified institutional buyers” (as defined in Section 2(a)(51) of the Investment Company Act of 1940, as amended (the “Investment Company Act”)), have entered into separate securities purchase agreements with the Company (the “Other Securities Purchase Agreements” and such other persons “Other Investors”), and have, together with the undersigned pursuant to this Agreement, agreed to purchase Subscribed Shares for a purchase price of $10.00 per Share and will also receive a number of Preferred Shares as described above. The aggregate purchase price to be paid by the Investor for the Subscribed Shares is referred to herein as the “Subscription Amount.” Capitalized terms used but not otherwise defined herein shall have the meaning ascribed to them in the Transaction Agreement.
In connection therewith, and in consideration of the foregoing and the mutual representations, warranties and covenants, and subject to the conditions, set forth herein, and intending to be legally bound hereby, the Investor and the Company agree as follows:
1. Subscription.
a. Subject to and on the terms and conditions set forth herein, the Investor hereby irrevocably subscribes for and agrees to purchase from the Company, and the Company agrees to issue and sell to the Investor, the number of Subscribed Shares as is set forth on the signature page of this Agreement.
b. As a condition and inducement to the Investor purchasing the Subscribed Shares, in connection with and contingent upon the purchase of the Subscribed Shares, the Company agrees to issue for no additional consideration the number of Preferred Shares as is set forth on the signature page of this Agreement.
c. The Preferred Shares shall have the rights, preferences and privileges set forth in the Certificate of Designation.
d. Notwithstanding anything to the contrary herein, no fraction of a share of any Security shall be issued pursuant to this Section 1, and, if the Investor would otherwise be entitled to a fraction of a share of a Security, the Investor shall instead have the number of shares of that Security issued to the Investor rounded down to the nearest whole number of shares of that Security, without payment in lieu of any such fractional shares.
2. Closing.
a. The closing of the sale, purchase and issuance of the Securities contemplated hereby (the “Closing”) shall occur on the date of, and is contingent upon the substantially concurrent consummation of, the Transaction. Upon (i) satisfaction or waiver of the conditions set forth in Section 3 below and (ii) delivery of written notice from (or on behalf of) the Company to the Investor (the “Closing Notice”), that the Company reasonably expects the closing of the Transaction to occur on a specified date that is not less than four (4) business days after the date on which the Closing Notice is delivered to the Investor (the “Closing Date”), the Investor shall deliver to the Company (i) two (2) business days prior to the expected Closing Date, the Subscription Amount by (x) wire transfer of United States dollars in immediately available funds to the account(s) specified by the Company in the Closing Notice, to be held in escrow until the Closing and/or (y) cancellation or conversion of indebtedness of the Company or Electriq Power, and (ii) any other information that is reasonably requested in the Closing Notice in order for the Company to issue the Investor’s Securities, including, without limitation, the legal name of the person whose name such Securities are to be issued and a duly executed Internal Revenue Service Form W-9 or W-8, as applicable. On the Closing Date, the Company shall issue a number of Securities to the Investor set forth on the signature page to this Agreement and subsequently cause the Securities to be registered in book entry form, free and clear of any liens (other than those arising under this Agreement or any applicable securities laws) in the name of the Investor (or its nominee in accordance with its delivery instructions) or to a custodian designated by the Investor, as applicable, on the Company’s securities register, the Company shall cause to be delivered to the Investor evidence from the Company’s transfer agent evidencing the issuance to the Investor of such Securities (in book entry form) on and as of the Closing Date, and the Subscription Amount shall be released from escrow automatically and without further action by the Company or the Investor. For purposes of this Agreement, “business day” shall mean any day other than (a) any Saturday or Sunday or (b) any other day on which banks located in New York, New York are required or authorized by applicable law to be closed for business.
b. If the Transaction does not occur within five (5) business days following the Closing Date specified in the Closing Notice, (I) the Company shall promptly (but not later than two (2) business days thereafter) depending on the form of payment of the Shares either (x) return the Subscription Amount to the undersigned by wire transfer of United States dollars in immediately available funds to the account specified by the undersigned or (y) return the indebtedness to the undersigned, and (II) any book entries for the Securities shall be deemed repurchased and cancelled; provided that, unless this Agreement has been terminated pursuant to Section 9 hereof, such return of funds shall not terminate this Agreement or relieve the Investor of its obligations to purchase the Securities at the Closing in the event the Company delivers a subsequent Closing Notice in accordance with this Section 2.
3. Closing Conditions.
a. The obligation of the parties hereto to consummate the sale, purchase and issuance of the Securities pursuant to this Agreement is subject to the following conditions:
(i) no applicable governmental authority shall have enacted, issued, promulgated, enforced or entered any judgment, order, law, rule or regulation (whether temporary, preliminary or permanent) which is then in effect and has the effect of making consummation of the transactions contemplated hereby illegal or otherwise restraining or prohibiting consummation of the transactions contemplated hereby;
(ii) no suspension of the qualification of the Shares for offering or sale or trading in any jurisdiction, and no suspension or removal from listing of the shares of the Company’s Class A common stock on the New York Stock Exchange shall have occurred; and
(iii) all conditions precedent to the closing of the Transaction set forth in Sections 7.1 and 7.2 of the Transaction Agreement, including all necessary approvals of the Company’s shareholders and all regulatory approvals set forth therein, shall have been satisfied (as determined by the parties to the Transaction Agreement) or waived (other than those conditions which, by their nature, are to be satisfied at the closing of the Transaction.
b. The obligation of the Company to consummate the sale and issuance of the Securities at the Closing pursuant to this Agreement shall be subject to the satisfaction or valid waiver by the Company of the additional conditions that:
(i) all representations and warranties of the Investor contained in this Agreement are true and correct in all material respects (other than representations and warranties that are qualified as to materiality, which representations and warranties shall be true and correct in all respects) at and as of the Closing Date, and consummation of the Closing shall constitute a reaffirmation by the Investor of each of the representations and warranties of the Investor contained in this Agreement as of the Closing Date; and
(ii) the Investor shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by it at or prior to the Closing.
c. The obligation of the Investor to consummate the purchase of the Securities at the Closing pursuant to this Agreement shall be subject to the satisfaction or valid waiver by the Investor of the additional conditions that:
(i) all representations and warranties of the Company contained in this Agreement shall be true and correct in all material respects (other than representations and warranties that are qualified as to materiality or Material Adverse Effect (as defined below), which representations and warranties shall be true and correct in all respects) at and as of the Closing Date, and consummation of the Closing shall constitute a reaffirmation by the Company of each of the representations and warranties of the Company contained in this Agreement in all material respects as of the Closing Date; provided that in the event this condition would otherwise fail to be satisfied as a result of a breach of one or more of the representations and warranties of the Company contained in this Agreement and the facts underlying such breach would also cause a condition to the Company’s obligations under the Transaction Agreement to fail to be satisfied, this condition shall nevertheless be deemed satisfied in the event Electriq Power waives such condition with respect to such breach under the Transaction Agreement;
(ii) the Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by it at or prior to the Closing;
(iii) the New York Stock Exchange (the “NYSE”) shall have conditionally authorized, subject to official notice of issuance, the listing of the Shares to be acquired hereunder and the Issuer shall use commercially reasonable efforts to obtain conditional authorization from the NYSE of the Shares issuable upon conversion of the Preferred Shares to be acquired hereunder;
(iv) no amendment or modification of the Transaction Agreement (as the same exists on the date hereof) shall have occurred that would reasonably be expected to materially and adversely affect the economic benefits that the Investor would reasonably expect to receive under this Agreement without having received the Investor’s prior written consent (not to be unreasonably withheld, conditioned or delayed); and
(v) the filing of the Certificate of Designation with the Delaware Secretary of State.
4. Further Assurances. At the Closing, the Company and the Investor shall execute and deliver such additional documents and take such additional actions as the parties reasonably may deem to be practical and necessary in order to consummate the subscription as contemplated by this Agreement.
5. Company Representations and Warranties. The Company represents and warrants to the Investor that:
a. The Company has been duly incorporated as a Delaware corporation and is validly existing and in good standing under the laws of Delaware, with corporate power and authority to own, lease and operate its properties and conduct its business as presently conducted and to enter into, deliver and perform its obligations under this Agreement.
b. As of the Closing Date, the Securities will be duly authorized and, when issued and delivered to the Investor against full payment therefor in accordance with the terms of this Agreement, the Securities will be validly issued, fully paid and non-assessable and will not have been issued in violation of or subject to any preemptive or similar rights created under the Company’s certificate of incorporation, Certificate of Designation or bylaws (each as amended to the Closing Date) or under the General Corporation Law of the State of Delaware.
c. This Agreement has been duly authorized, executed and delivered by the Company and, assuming that this Agreement constitutes the valid and binding agreement of the Investor, this Agreement constitutes a valid and binding agreement of the Company and is enforceable against the Company in accordance with its terms, except as may be limited or otherwise affected by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws relating to or affecting the rights of creditors generally, or (ii) principles of equity, whether considered at law or equity.
d. The issuance and sale of the Securities and the compliance by the Company with all of the provisions of this Agreement and the consummation of the transactions contemplated herein will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of the Company or any of its subsidiaries pursuant to the terms of (i) any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company is subject that would reasonably be expected to have a material adverse effect on the business, properties, financial condition, stockholders’ equity, or results of operations of the Company and its subsidiaries, taken as a whole or materially affect the validity of the Securities or
the legal authority of the Company to enter into and perform its obligations under this Agreement (a “Material Adverse Effect”); (ii) result in any violation of the provisions of the organizational documents of the Company; or (iii) result in any violation of any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over the Company or any of its properties that would reasonably be expected to have a Material Adverse Effect.
e. Assuming the accuracy of the representations and warranties of the Investor set forth herein, the Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority, self-regulatory organization or other person in connection with the issuance of the Securities pursuant to this Agreement, other than (i) filings with the U.S. Securities and Exchange Commission (the “SEC”), (ii) filings required by applicable state securities laws, (iii) the filings required in accordance with Section 13 of this Agreement; (iv) any consent required by the rules of the NYSE, including with respect to obtaining approval of the Company’s stockholders, (v) consents, waivers, authorizations, orders, notices or filings, required to consummate the Transaction as provided under the Transaction Agreement and (vi) consents, waivers, authorizations, orders, notices or filings, the failure of which to obtain or make, would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
f. The Company is not, and immediately after receipt of payment for the Securities, will not be, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.
g. The Company made available to the Investor (including via the SEC’s EDGAR system) a true, correct and complete copy of each form, report, statement, schedule, prospectus, proxy, registration statement and other documents filed by the Company with the SEC prior to the date of this Agreement (the “SEC Documents”), which SEC Documents, as of their respective dates, complied in all material respects with the applicable requirements of the Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations of the SEC promulgated thereunder, and none of the SEC Documents, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Except as described in (i) Note 9 to the Company’s financial statements included in the Company’s Form 10-Q for the quarterly period ended March 31, 2021 filed with the SEC on May 25, 2021 and (ii) the introduction of Amendment No. 1 to the Company’s Form 10-Q for the quarterly period ended September 30, 2021 filed with the SEC on February 7, 2022, the financial statements of the Company included in the SEC Documents comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing and fairly present in all material respects the financial position of the Company as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, year-end audit adjustments. A copy of each SEC Documents is available to the Investor via the SEC’s EDGAR system. There are no outstanding or unresolved comments in comment letters received by the Company from the staff of the Division of Corporation Finance of the SEC with respect to any of the SEC Documents.
h. The Company is in compliance with all applicable laws, except where such non-compliance would not reasonably be expected to have a Material Adverse Effect. The Company has not received any written communication from a governmental authority that alleges that the Company is not in compliance with or is in default or violation of any applicable law, except where such non-compliance, default or violation would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
i. As of the date hereof, the issued and outstanding Class A Shares of the Company are registered pursuant to Section 12(b) of the Exchange Act, and are listed for trading on the NYSE under the symbol “TLGA” (it being understood that the trading symbol will be changed in connection with the Transaction). Except as disclosed in the SEC Documents, as of the date hereof, there is no suit, action, proceeding or investigation pending or, to the knowledge of the Company, threatened against the Company by the NYSE or the SEC, respectively, to prohibit or terminate the listing of the Company’s Class A Shares on the NYSE or to deregister the Class A Shares under the Exchange Act. The Company has taken no action that is designed to terminate the registration of the Class A Shares under the Exchange Act.
j. Assuming the accuracy of the Investor’s representations and warranties set forth in Section 6 of this Agreement, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Investor.
k. Neither the Company nor any person acting on its behalf has offered or sold the Securities by any form of general solicitation or general advertising and the Securities are not being offered in a manner involving a public offering under, or in a distribution in violation of the Securities Act or any state securities laws.
l. The Company is not under any obligation to pay any broker’s fee or commission in connection with the sale of the Securities to the Investor.
m. As of the date hereof, the authorized capital stock of the Company is (i) 200,000,000 shares of Class A common stock (“Class A Shares”), 7,948,405 of which are issued and outstanding as of the date of this Agreement, (ii) 20,000,000 shares of Class F common stock (“Class F Shares”), 5,000,000 of which are issued and outstanding as of the date of this Agreement, and (iii) 1,000,000 shares of preferred stock of par value $0.0001 each, of which no shares are issued and outstanding as of the date of this Agreement. As of the date hereof (i) 6,666,667 warrants to purchase 6,666,667 Class A Shares (the “Private Placement Warrants”) are outstanding, and (ii) 13,333,333 warrants to purchase 13,333,333 Class A Shares (the “Public Warrants” and, together with the Private Placement Warrant, the “Warrants”) are outstanding. As of or prior to the Closing, TLG Acquisition Founder LLC will forfeit 3,270,652 Class F Shares (such that there will be 1,729,348 Class F Shares outstanding at that time) and 4,666,667 Private Placement Warrants (such that there will be 2,000,000 Private Placement Warrants outstanding at that time excluding the Private Placement Warrants to be issued in connection with the conversion of certain amounts of the working capital loan from TLG Acquisition Founder LLC). All (A) issued and outstanding Class A Shares and Class F Shares have been duly authorized and validly issued, are fully paid and are non-assessable and are not subject to preemptive rights, and (B) outstanding Warrants are validly issued, are fully paid, and are legally binding obligations of the Company enforceable against the Company in accordance with their terms (except (i) as may be limited by bankruptcy, insolvency, reorganization or similar laws’ affecting creditors’ rights generally, (ii) as enforceability of any indemnification or contribution provision may be limited under federal and state securities laws, and (iii) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court before which any proceeding therefor may be brought) and are not subject to preemptive rights. Except as set forth in the Company’s organizational documents, there are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any Class A Shares or any other capital stock of the Company.
n. Other than the Transaction Agreement and the Note Conversion Agreement by and among the Company, Electriq Power and John Michael Lawrie dated on or around the date hereof, no Other Securities Purchase Agreement or other similar agreement includes terms and conditions that are materially more favorable to any investor party thereto which has subscribed for the same or fewer shares of Common Stock as the number of Subscribed Shares subscribed for (in the aggregate) by the Investor and any of its
affiliates, other than terms particular to the regulatory requirements of such investor or its affiliates or related funds that are mutual funds or are otherwise subject to regulations related to the timing of funding and the issuance of securities thereunder, and such Other Securities Purchase Agreements and such other agreements have not been amended or modified in any material respect following the date of this Agreement. The provisions of this Subsection 5(n) shall not apply to terms or conditions related to differences in timing of closing of Other Securities Purchase Agreements.
o. Except for such matters as have not had and would not be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect, as of the date hereof, there is no (i) suit, action, proceeding or arbitration before a governmental authority or arbitrator pending, or, to the knowledge of the Company, threatened against the Company or (ii) judgment, decree, injunction, ruling or order of any governmental entity or arbitrator outstanding against the Company.
6. Investor Representations and Warranties. The Investor represents and warrants to the Company that:
a. The Investor is either a U.S. investor or non-U.S. investor as set forth under its name on the signature page hereto, and accordingly represents the applicable additional matters under clause (i) or (ii) below:
(i) Applicable to U.S. investors: At the time the Investor was offered the Securities, it was, as of the date hereof, the Investor is, and as of the Closing Date the Investor will be (x) a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act), or an “accredited investor” (within the meaning of Rule 501 under the Securities Act), (y) acquiring the Securities only for its own account and not for the account of others, or if the Investor is subscribing for the Securities as a fiduciary or agent for one or more investor accounts, each owner of each such account is independently a qualified institutional buyer, the Investor has full investment discretion with respect to each such account, and the full power and authority to make the acknowledgements, representations and agreements herein on behalf of each owner of each such account and (z) is not acquiring the Securities with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act or the securities law of any other jurisdiction (and shall provide the requested information set forth on Schedule A). The Investor is not an entity formed for the specific purpose of acquiring the Securities.
(ii) Applicable to non-U.S. investors: The Investor understands that the sale of the Securities is made pursuant to and in reliance upon Regulation S promulgated under the Securities Act (“Regulation S”). The Investor is not a U.S. Person (as defined in Regulation S), it is acquiring the Securities in an offshore transaction in reliance on Regulation S, and it has received all the information relevant to its acquisition of the Securities hereunder outside of the United States. The Investor understands and agrees that securities sold pursuant to Regulation S may be subject to restrictions thereunder, including compliance with the distribution compliance period provisions therein. If the Investor is a resident or subject to the laws of Canada, the Investor hereby declares, represents, warrants and agrees as set forth in the attached Schedule B.
b. The Investor acknowledges and agrees that the Securities are being offered in a transaction not involving any public offering within the meaning of the Securities Act and that the offer and sale of Securities have not been registered under the Securities Act. The Investor acknowledges and agrees that the Securities may not be offered, resold, transferred, pledged or otherwise disposed of by the Investor absent an effective registration statement under the Securities Act except (i) to the Company or a subsidiary
thereof, (ii) to non-U.S. persons pursuant to offers and sales that occur outside the United States within the meaning of Regulation S or (iii) pursuant to another applicable exemption from the registration requirements of the Securities Act, and in each of clauses (i) and (iii) in accordance with any applicable securities laws of the states and other jurisdictions of the United States, and that any certificates or book entry positions representing the Securities shall contain a restrictive legend to such effect. The Investor further acknowledges and agrees that (i) the Subscribed Shares may not be offered, resold, transferred, pledged or otherwise disposed of by the Investor until one year after the date of the Transaction and (ii) the Preferred Shares may not be offered, resold, transferred, pledged or otherwise disposed of by the Investor until three years after the date of the Transaction in accordance with the terms of the Certificate of Designation. The Investor acknowledges and agrees that the Securities will be subject to the foregoing transfer restrictions and as a result of these transfer restrictions, the Investor may not be able to readily offer, resell, pledge, transfer or otherwise dispose of the Securities and may be required to bear the financial risk of an investment in the Securities for an indefinite period of time. The Investor acknowledges and agrees that the Securities will not be eligible for resale, offer, transfer, pledge or disposition pursuant to Rule 144 promulgated under the Securities Act until at least one year from the date that the Company files a Current Report on Form 8-K following the Closing Date that includes the “Form 10” information required under the applicable SEC rules and regulations. In connection with this Agreement, the Investor agrees to execute a Lock-Up Agreement. The Investor acknowledges and agrees that it has been advised to consult legal counsel prior to making any offer, resale, pledge or transfer of any of the Securities.
c. The Investor acknowledges and agrees that it is aware the Securities are being offered under the exemption from registration provided by Section 4(a)(2) of the Securities Act, Regulation D or Regulation S.
d. The Investor acknowledges and agrees that the Investor is purchasing the Securities from the Company. The Investor further acknowledges that it is relying exclusively on its own sources of information, investment analysis and due diligence (including professional advice it deems appropriate) with respect to the Transaction, the Securities and the business, condition (financial and otherwise), management, operations, properties and prospects of the Company and Electriq Power, including but not limited to all business, legal, regulatory, accounting, credit and tax matters and that there have been no, representations, warranties, covenants and agreements made to the Investor by or on behalf of the Company, Electriq Power or any of the respective affiliates or any of the respective subsidiaries, control persons, officers, directors, employees, partners, agents or representatives of any of the foregoing or any other person or entity, expressly or by implication, other than those representations, warranties, covenants and agreements of the Company included in this Agreement.
e. Either (1) the Investor’s acquisition and holding of the Securities will not constitute or result in a non-exempt prohibited transaction under Section 406 of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), Section 4975 of the Internal Revenue Code of 1986, as amended, or any applicable similar law or (2) the Investor is not a Benefit Plan Investor as contemplated by ERISA.
f. The Investor acknowledges and agrees that the Investor has received and has had an opportunity to review such information as the Investor deems necessary or desirable in order to make an investment decision with respect to the Securities, including, without limitation, with respect to the Company, the Transaction and the business of Electriq Power and its subsidiaries. Without limiting the generality of the foregoing, the Investor acknowledges that it has reviewed the Company’s filings with the SEC. The Investor acknowledges and agrees that the Investor and the Investor’s professional advisor(s), if any, have conducted its own investigation of the Company, the Transactions, and the Securities, received and reviewed the offering materials made available to the Investor and had the full opportunity to ask such questions, receive such answers and obtain such information as the Investor and the Investor’s professional
advisor(s), if any, have deemed necessary to make an investment decision with respect to the Securities. The Investor further acknowledges that the information provided to the Investor may change after the date hereof and the Company is under no obligation to inform the Investor regarding any such changes, except to the extent such changes would reasonably be expected to cause the failure of the Company to satisfy a condition to the Investor’s obligations at the Closing.
g. The Investor acknowledges and agrees that the Investor has determined based on its own independent review and such professional advice as it has deemed appropriate, that the purchase of the Securities and participation in the Transaction are consistent with the Investor’s financial needs, objectives and condition and comply and are consistent with all material investment policies, guidelines and other restrictions applicable to the Investor.
h. The Investor became aware of this offering of the Securities solely by means of direct contact between the Investor and the Company, Electriq Power or a representative of the Company or Electriq Power, and the Securities were offered to the Investor solely by direct contact between the Investor and the Company, Electriq Power or a representative of the Company or Electriq Power. The Investor did not become aware of this offering of the Securities, nor were the Securities offered to the Investor, by any other means. The Investor acknowledges that the Securities (i) were not offered to it by any form of general solicitation or general advertising and (ii) are not being offered to it in a manner involving a public offering under, or in a distribution in violation of, the Securities Act, or any state securities laws. The Investor acknowledges that it is not relying upon, and has not relied upon, any statement, representation or warranty made by any person, firm or corporation (including, without limitation, the Company, Electriq Power or any of their respective affiliates or any of their respective subsidiaries, control persons, officers, directors, employees, partners, agents or representatives), other than the representations and warranties of the Company contained in Section 5 of this Agreement, in making its investment or decision to invest in the Company, and except for the foregoing, the Investor is relying exclusively on its own sources of information, investment analysis and due diligence (including professional advice it deems appropriate) with respect to the Transaction, the Securities and the business, condition (financial and otherwise), management, operations, properties and prospects of the Company and it has independently satisfied itself concerning the relevant tax and other economic considerations relevant to its investment in the Securities.
i. The Investor acknowledges that it is aware that there are substantial risks incident to the purchase and ownership of the Securities, including those set forth in the Company’s filings with the SEC. The Investor is a sophisticated investor, experienced in private equity transactions and has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Securities, and the Investor has sought such accounting, legal and tax advice as the Investor has considered necessary to make an informed investment decision and the Investor has made its own assessment and has satisfied itself concerning relevant tax or other economic considerations relative to its purchase of the Securities. The Investor is able to sustain a complete loss on its investment in the Securities.
j. Alone, or together with any professional advisor(s), the Investor acknowledges that it has reviewed the documents made available to the Investor and has adequately analyzed and fully considered the risks of an investment in the Securities and determined that the Securities are a suitable investment for the Investor and that the Investor is able at this time and in the foreseeable future to bear the economic risk of a total loss of the Investor’s investment in the Company. The Investor acknowledges specifically that a possibility of total loss exists.
k. In making its decision to purchase the Securities, the Investor has relied solely upon independent investigation made by the Investor.
l. The Investor acknowledges and agrees that no federal or state agency has passed upon or endorsed the merits of the offering of the Securities or made any findings or determination as to the fairness of this investment.
m. If the Investor is not a natural person, the Investor has been duly formed or incorporated and is validly existing and in good standing under the laws of its jurisdiction of incorporation or formation, with power and authority to enter into, deliver and perform its obligations under this Agreement.
n. The execution, delivery and performance by the Investor of this Agreement are within the powers of the Investor and have been duly authorized (if the Investor is not a natural person) and will not constitute or result in a breach or default under or conflict with any order, ruling or regulation of any court or other tribunal or of any governmental commission or agency, or any agreement or other undertaking, to which the Investor is a party or by which the Investor is bound, and, if the Investor is not a natural person, will not conflict with or violate any provisions of the Investor’s organizational documents, including, without limitation, its incorporation or formation papers, bylaws, indenture of trust or partnership or operating agreement, as may be applicable. The signature on this Agreement is genuine, and the signatory has been duly authorized to execute the same, and, this Agreement has been duly executed and delivered by the Investor and, assuming that this Agreement constitutes the valid and binding obligation of the Company, this Agreement constitutes a legal, valid and binding obligation of the Investor, enforceable against the Investor in accordance with its terms except as may be limited or otherwise affected by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws relating to or affecting the rights of creditors generally, or (ii) principles of equity, whether considered at law or equity.
o. The Investor is not (i) a person or entity named on the List of Specially Designated Nationals and Blocked Persons administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) or in any Executive Order issued by the President of the United States and administered by OFAC (“OFAC List”), or a person or entity prohibited by any OFAC sanctions program, (ii) owned, directly or indirectly, or controlled by, or acting on behalf of, one or more persons that are named on the OFAC List; (iii) organized, incorporated, established, located, resident or born in, or a citizen, national or the government, including any political subdivision, agency or instrumentality thereof, of, Cuba, Iran, North Korea, Syria, the Crimea region of Ukraine or any other country or territory embargoed or subject to substantial trade restrictions by the United States, (iv) a Designated National as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515, or (v) a non-U.S. shell bank or providing banking services indirectly to a non-U.S. shell bank (each, a “Prohibited Investor”). The Investor agrees to provide law enforcement agencies, if requested thereby, such records as required by applicable law, provided that the Investor is permitted to do so under applicable law. If the Investor is a financial institution subject to the Bank Secrecy Act (31 U.S.C. Section 5311 et seq.) (the “BSA”), as amended by the USA PATRIOT Act of 2001 (the “PATRIOT Act”), and its implementing regulations (collectively, the “BSA/PATRIOT Act”), the Investor maintains policies and procedures reasonably designed to comply with applicable obligations under the BSA/PATRIOT Act. To the extent required, the Investor maintains policies and procedures reasonably designed to ensure compliance with OFAC-administered sanctions programs, including for the screening of its investors against the OFAC sanctions programs, including the OFAC List. To the extent required by applicable law, the Investor maintains policies and procedures reasonably designed to ensure that the funds held by the Investor and used to purchase the Securities were legally derived and were not obtained, directly or indirectly, from a Prohibited Investor.
p. [Reserved.]
q. [Reserved.]
r. In connection with the issue and purchase of the Securities, none of the Company, Electriq Power nor any of their respective affiliates have acted as the Investor’s financial advisor or fiduciary.
s. [Reserved.]
t. The Investor has or has commitments to have, and, when required to deliver payment to the Company pursuant to Section 2 above, will have, sufficient funds to pay the Subscription Amount and consummate the purchase and sale of the Securities when required pursuant to this Agreement.
u. The Investor acknowledges and agrees that it is not an underwriter within the meaning of Section 2(a)(11) of the Securities Act and that the purchase and sale of Securities hereunder meets the exemptions from filing under FINRA Rule 5123(b)(1).
v. The Investor acknowledges that certain information provided to it was based on projections, and such projections were prepared based on assumptions and estimates that are inherently uncertain and are subject to a wide variety of significant business, economic and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the projections.
7. Registration Rights.
a. The Company agrees that, as soon as reasonably practicable (but in any case no later than thirty (30) calendar days after the consummation of the Transaction), it will file with the SEC (at its sole cost and expense) a registration statement (the “Registration Statement”) registering the resale of the Subscribed Shares acquired by the Investor pursuant to this Agreement and the Shares issuable upon the mandatory redemption of the Preferred Shares acquired by the Investor pursuant to this Agreement, and it shall use its commercially reasonable efforts to have the Registration Statement declared effective as soon as practicable after the filing thereof. The Company agrees to cause such Registration Statement, or another shelf registration statement that includes the Securities to be sold pursuant to this Agreement, to remain effective until the earliest of (i) the fourth (4th) anniversary of the Closing, (ii) the date on which the Investor ceases to hold any Securities issued pursuant to this Agreement, or (iii) the first date on which the Investor can sell all of its Securities issued pursuant to this Agreement (or shares received in exchange therefor) under Rule 144 of the Securities Act within ninety (90) days without volume or manner of sale limitations. The Investor agrees to disclose its ownership to the Company upon request to assist it in making the determination described above. The Company may amend the Registration Statement so as to convert the Registration Statement into a Registration Statement on Form S-3 at such time as the Company becomes eligible to use such Form S-3. The Investor agrees that the Company may suspend the use of any such registration statement, if it determines that in order for such registration statement not to contain a material misstatement or omission, an amendment thereto would be needed to include information that would at that time not otherwise be required in a current, quarterly or annual report under the Exchange Act; provided, however, that the Company may not suspend the Registration statement for more than ninety (90) total calendar days during any twelve (12)-month period. The Investor may deliver written notice (an “Opt-Out Notice”) to the Company requesting that the Investor not receive notices from the Company regarding the suspension of the Registration Statement; provided, however, that the Investor may later revoke any such Opt-Out Notice in writing. Following receipt of an Opt-Out Notice from the Investor (unless subsequently revoked), (i) the Company shall not deliver any such notices to the Investor and the Investor shall no longer be entitled to the rights associated with any such notice and (ii) each time prior to the Investor’s intended use of an effective Registration Statement, the Investor will notify the Company in writing at least two (2) business days in advance of such intended use, and if a notice of a suspension was previously delivered (or would have been delivered but for the provisions of this Section and the related suspension period remains in effect), the Company will so notify the Investor, within one (1) business day after the Investor’s notification to the Company, by delivering to the Investor a copy of such previous notice of suspension, and thereafter will provide the Investor with the related notice of the conclusion of such suspension promptly following its availability.
b. The Company’s obligations to include the Securities issued pursuant to this Agreement (or shares issued in exchange therefor) for resale in the Registration Statement are contingent upon the Investor furnishing in writing to the Company such information regarding the Investor, the securities of the Company held by the Investor and the intended method of disposition of such Securities as shall be reasonably requested by the Company to effect the registration of such Securities, and shall execute such documents in connection with such registration as the Company may reasonably request that are customary of a selling stockholder in similar situations provided that the Investor shall not in connection with the foregoing be required by the Company to execute any lockup or similar agreement or otherwise be subject to any contractual restriction with the Company on the ability to transfer the Securities. In no event shall the Investor be identified as a statutory underwriter in the Registration Statement unless requested by the SEC; provided, that if the SEC requests that the Investor be identified as a statutory underwriter in the Registration Statement, the Investor will have the option, in its sole and absolute discretion, to either (1) have an opportunity to withdraw from the Registration Statement, in which case the Company’s obligation to register the Securities will be deemed satisfied, or (2) be included as such in the Registration Statement.
c. At the Company’s expense, the Company shall (i) advise the Investor within five (5) business days (1) of the issuance by the SEC of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for such purpose; and (2) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Securities included therein for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. The Company shall not, when so advising the Investor of such events, provide the Investor with any material nonpublic information regarding the Company other than to the extent that providing notice to the Investor of the occurrence of the events listed in clauses (1) and (2) above constitutes material, nonpublic information regarding the Company.
d. The Company agrees to indemnify and hold harmless, to the extent permitted by law, the Investor, its directors, and officers, employees, and agents, and each person who controls the Investor (within the meaning of the Securities Act or the Exchange Act) and each affiliate of the Investor (within the meaning of Rule 405 under the Securities Act) from and against any and all losses, claims, damages, liabilities and expenses (including, without limitation, any reasonable attorneys’ fees and expenses incurred in connection with defending or investigating any such action or claim) caused by any untrue or alleged untrue statement of material fact contained in any Registration Statement, prospectus included in any Registration Statement or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are caused by or contained in any information furnished in writing to the Company by or on behalf of the Investor expressly for use therein.
e. The Investor agrees, severally and not jointly with any person that is a party to the Other Securities Purchase Agreements, to indemnify and hold harmless the Company, its directors and officers and agents and each person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses (including, without limitation, reasonable attorneys’ fees) resulting from any untrue statement of material fact contained in the Registration Statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is contained in any information or affidavit so furnished by or on behalf of the Investor expressly for use therein. In no event shall the liability of the Investor be greater in amount than the dollar amount of the net proceeds received by the Investor upon the sale of the Securities purchased pursuant to this Agreement giving rise to such indemnification obligation.
f. Any person entitled to indemnification herein shall (1) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any person’s right to indemnification hereunder to the extent such failure has not prejudiced the indemnifying party) and (2) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without the indemnifying party’s consent. An indemnifying party who elects not to assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of legal counsel to any indemnified party a conflict of interest exists between such indemnified party and any other of such indemnified parties with respect to such claim. No indemnifying party shall, without the consent of the indemnified party, consent to the entry of any judgment or enter into any settlement which cannot be settled in all respects by the payment of money (and such money is so paid by the indemnifying party pursuant to the terms of such settlement) or which settlement does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.
g. The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director, employee, agent, affiliate or controlling person of such indemnified party and shall survive the transfer of the Securities purchased pursuant to this Agreement.
h. If the indemnification provided under this Section 7 from the indemnifying party is unavailable or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities and expenses referred to herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities and expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations; provided, however, that in no event shall the liability of the Investor be greater than the dollar amount of the net proceeds received by the Investor upon the sale of the Securities purchased pursuant to this Agreement, giving rise to such indemnification obligation. The relative fault of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by, or relates to information supplied by or on behalf of, such indemnifying party or indemnified party, and the indemnifying party’s and indemnified party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses or other liabilities referred to above shall be deemed to include, subject to the limitations set forth above, any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant to this Section 7 from any person who was not guilty of such fraudulent misrepresentation.
i. With a view to making available to the Investor the benefits of Rule 144 that may, at such times as Rule 144 is available to shareholders of the Company, permit the Investor to sell securities of the Company to the public without registration, the Company agrees, for so long as the Securities are held by the Investor: (i) to make and keep public information available, as those terms are understood and defined in Rule 144; and (ii) to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act so long as the Company remains subject to such requirements and so long as the filing of such reports and other documents is required for the applicable provisions of Rule 144.
j. Promptly following the date on which the sale, assignment or transfer of the Securities may be made without registration under the applicable requirements of the Securities Act, the Company will use commercially reasonable efforts to cause the removal of the restrictive legend included on the Securities and the Company shall issue a certificate without such legend to the Investor or issue to the Investor a book entry statement without such legend notated thereon. The Company shall be responsible for the fees of its transfer agent and all DTC fees associated with such issuance. To the extent required by the transfer agent, the Company shall use commercially reasonable efforts to cause its legal counsel to deliver a customary opinion within two (2) business days of the delivery of all reasonably necessary representations and other documentation from the Investor as reasonably requested by the Company, its counsel or the transfer agent by the Investor to the transfer agent to the effect that the removal of the restrictive legend in such circumstances may be effected under the Securities Act; provided that, notwithstanding the foregoing, Issuer will not be required to deliver any such opinion, authorization, certificate or direction if it reasonably believes that removal of the legend could result in or facilitate transfers of securities in violation of applicable law.
8. Short Sales Agreement. The Investor hereby agrees that, from the date of this Agreement, none of the Investor, its controlled affiliates, or any person or entity acting on behalf of the Investor or any of its controlled affiliates or pursuant to any understanding with the Investor or any of its controlled affiliates will engage in any Short Sales with respect to securities of the Company. For purposes of this Section 8, “Short Sales” shall include, without limitation, all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act, and all types of direct and indirect stock pledges (other than pledges in the ordinary course of business as part of prime brokerage arrangements), forward sale contracts, options, puts, calls, swaps and similar arrangements (including on a total return basis). Notwithstanding the foregoing, (i) nothing herein shall prohibit other entities under common management with the Investor that have no knowledge of this Agreement or of the Investor’s participation in the Transaction (including the Investor’s controlled affiliates and/or affiliates) from entering into any Short Sales and (ii) in the case of an Investor that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of the Investor’s assets and the portfolio managers have no knowledge of the investment decisions made by the portfolio managers managing other portions of the Investor’s assets, this Section 8 shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Subscription Amount covered by this Agreement.
9. Termination. This Agreement shall terminate and be void and of no further force and effect, and all rights and obligations of the parties hereunder shall terminate without any further liability on the part of any party in respect thereof, upon the earliest to occur of (a) such date and time as the Transaction Agreement is terminated in accordance with its terms, (b) upon the mutual written agreement of each of the parties hereto to terminate this Agreement, (c) the Termination Date (as defined in the Transaction Agreement), if the Closing has not occurred on or prior to such date, and (d) if any of the conditions to Closing set forth in Section 3 of this Agreement are not satisfied or waived, or are not capable of being satisfied, on or prior to the Closing and, as a result thereof, the transactions contemplated by this Agreement will not be and are not consummated at the Closing; provided that nothing herein will relieve any party from liability for any willful breach hereof prior to the time of termination, and each party will be entitled to any remedies at law or in equity to recover losses, liabilities or damages arising from any such willful breach. The Company shall notify the Investor of the termination of the Transaction Agreement promptly after the termination of such agreement.
10. Trust Account Waiver. The Investor acknowledges that the Company is a blank check company with the powers and privileges to effect a merger, asset acquisition, reorganization or similar business combination involving the Company and one or more businesses or assets. The Investor further acknowledges that, as described in the Company’s prospectus relating to its initial public offering dated January 27, 2021 (the “Prospectus”) available at www.sec.gov, substantially all of the Company’s assets consist of the cash proceeds of the Company’s initial public offering and private placement of its securities, and substantially all of those proceeds have been deposited in a trust account (the “Trust Account”) for the benefit of the Company, its public shareholders and the underwriter of the Company’s initial public offering. Except with respect to interest earned on the funds held in the Trust Account that may be released to the Company to pay its tax obligations, if any, the cash in the Trust Account may be disbursed only for the purposes set forth in the Prospectus. For and in consideration of the Company entering into this Agreement, the receipt and sufficiency of which are hereby acknowledged, the Investor hereby irrevocably waives any and all right, title and interest, or any claim of any kind it has or may have in the future, in or to any monies held in the Trust Account, and agrees not to seek recourse against the Trust Account as a result of, or arising out of, this Agreement or the transactions contemplated hereby, regardless of whether such claim arises based on contract, tort, equity or any other theory of legal liability; provided, however, that nothing in this Section 10 shall be deemed to limit the Investor’s right, title, interest or claim to any monies held in the Trust Account by virtue of its record or beneficial ownership of Class A Shares acquired by means other than pursuant to this Agreement.
11. Miscellaneous.
a. The Company may request from the Investor such additional information as the Company may deem necessary to register the resale of the Securities and evaluate the eligibility of the Investor to acquire the Securities, and the Investor shall reasonably promptly provide such information as may reasonably be requested, to the extent readily available and to the extent consistent with its internal policies and procedures; provided, that, the Company agrees to keep any such information provided by the Investor confidential other than as necessary to include in any registration statement the Company is required to file hereunder. The Investor acknowledges and agrees that if it does not provide the Company with such requested information, the Company may not be able to register the Securities acquired by the Investor pursuant to this Agreement for resale pursuant to Section 7 hereof. The Investor hereby agrees that its identity and the Agreement, as well as the nature of the Investor’s obligations hereunder, may be disclosed in any public announcement or disclosure required by the SEC and in any registration statement, proxy statement, consent solicitation statement or any other SEC filing to be filed by the Company in connection with the issuance of Securities contemplated by this Agreement and/or the Transaction.
b. The Investor acknowledges that the Company, and Electriq Power (as third party beneficiaries with the right to enforce Section 4, Section 5, Section 6, Section 11 and Section 12 hereof) will rely on the acknowledgments, understandings, agreements, representations and warranties contained in this Agreement. Prior to the Closing, the Investor agrees to promptly notify the Company if any of the acknowledgments, understandings, agreements, representations and warranties set forth in Section 6 above are no longer accurate in any material respect (other than those acknowledgments, understandings, agreements, representations and warranties qualified by materiality, in which case the Investor shall notify the Company if they are no longer accurate in all respects). The Investor agrees that each purchase by the Investor of Securities from the Company will constitute a reaffirmation of the acknowledgments, understandings, agreements, representations and warranties herein (as modified by any such notice) by the Investor as of the time of such purchase. Prior to the Closing, each party hereto agrees to promptly notify the other party hereto if any of the acknowledgments, understandings, agreements, representations and warranties made by such party as set forth herein are no longer accurate in all material respects.
c. [Reserved.]
d. The Company, Electriq Power (as a third party beneficiary) and the Investor are each entitled to rely upon this Agreement and each is irrevocably authorized to produce this Agreement or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.
e. All of the agreements, representations and warranties made by each party hereto in this Agreement shall survive the Closing.
f. This Agreement may not be modified, waived or terminated (other than pursuant to the terms of Section 9 above) except by an instrument in writing, signed by each of the parties hereto. No failure or delay of either party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, or any course of conduct, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the parties hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have hereunder.
g. This Agreement (including the schedule hereto) constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, among the parties, with respect to the subject matter hereof. Except as set forth in Section 11(d) and Section 11(k) with respect to the persons specifically referenced therein, and their right to enforce payment of the Subscription Amount in accordance with the terms and subject to the conditions set forth in this Agreement, this Agreement shall not confer any rights or remedies upon any person other than the parties hereto, and their respective successor and assigns.
h. Except as otherwise provided herein, this Agreement shall be binding upon, and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives, and permitted assigns, and the agreements, representations, warranties, covenants and acknowledgments contained herein shall be deemed to be made by, and be binding upon, such heirs, executors, administrators, successors, legal representatives and permitted assigns.
i. If any provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby and shall continue in full force and effect.
j. This Agreement may be executed in one or more counterparts (including by facsimile or electronic mail or in ..pdf) and by different parties in separate counterparts, with the same effect as if all parties hereto had signed the same document. All counterparts so executed and delivered shall be construed together and shall constitute one and the same agreement.
k. The parties hereto agree that irreparable damage may occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement, without posting a bond or undertaking and without proof of damages, to enforce specifically the terms and provisions of this Agreement, this being in addition to any other remedy to which such party is entitled at law, in equity, in contract, in tort or otherwise. The parties hereto acknowledge and agree that Electriq Power shall be entitled to seek specifically and enforce the Investor’s obligations to fund the Subscription Amount in accordance with the terms and subject to the conditions set forth in this Agreement.
l. Any notice or communication required or permitted hereunder shall be in writing and either delivered personally, emailed or sent by overnight mail via a reputable overnight carrier, or sent by certified or registered mail, postage prepaid, and shall be deemed to be given and received (i) when so delivered personally, (ii) when sent, with no mail undeliverable or other rejection notice, if sent by email, or (iii) three (3) business days after the date of mailing to the address below or to such other address or addresses as such person may hereafter designate by notice given hereunder:
| (i) | if to the Investor, to such address(es) or email address(es) set forth herein; |
| (ii) | if to, prior to the Closing, the Company, to: |
c/o TLG Acquisition Founder LLC
515 North Flagler Drive, Suite 520
West Palm Beach, FL 33401
Attention: John Michael Lawrie, Chief Executive Officer
Email: mikelawrie@tlgholding.com
with required copies to (which copies shall not constitute notice):
Gibson, Dunn & Crutcher LLP
811 Main Street, Suite 3000
Houston, TX 77002-6117
Attention: Gerald M. Spedale
Chris Trester
Email: gspedale@gibsondunn.com
ctrester@gibsondunn.com
Electriq Power, Inc.
625 N. Flagler Drive, Suite 520
West Palm Beach, FL 33401
Attention: Legal Department
Email: Jim.vanhoof@electriqpower.com
Ellenoff, Grossman & Schole LLP
1345 Avenue of the Americas
New York, NY 10105
Attention: David Landau
Anthony Ain
Email: dlandau@egsllp.com
aain@egsllp.com
m. The Investor shall pay all of its own expenses in connection with this Agreement and the transactions contemplated herein.
n. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND THE SUPREME COURT OF THE STATE OF NEW YORK SOLELY IN RESPECT OF THE INTERPRETATION AND ENFORCEMENT OF THE PROVISIONS OF THIS AGREEMENT AND THE DOCUMENTS REFERRED TO IN THIS AGREEMENT AND IN RESPECT OF THE TRANSACTIONS CONTEMPLATED HEREBY, AND HEREBY WAIVE, AND AGREE NOT TO
ASSERT, AS A DEFENSE IN ANY ACTION, SUIT OR PROCEEDING FOR INTERPRETATION OR ENFORCEMENT HEREOF OR ANY SUCH DOCUMENT THAT IS NOT SUBJECT THERETO OR THAT SUCH ACTION, SUIT OR PROCEEDING MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN SAID COURTS OR THAT VENUE THEREOF MAY NOT BE APPROPRIATE OR THAT THIS AGREEMENT OR ANY SUCH DOCUMENT MAY NOT BE ENFORCED IN OR BY SUCH COURTS, AND THE PARTIES HERETO IRREVOCABLY AGREE THAT ALL CLAIMS WITH RESPECT TO SUCH ACTION, SUIT OR PROCEEDING SHALL BE HEARD AND DETERMINED BY SUCH A NEW YORK STATE OR FEDERAL COURT. THE PARTIES HEREBY CONSENT TO AND GRANT ANY SUCH COURT JURISDICTION OVER THE PERSON OF SUCH PARTIES AND OVER THE SUBJECT MATTER OF SUCH DISPUTE AND AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH SUCH ACTION, SUIT OR PROCEEDING IN THE MANNER PROVIDED IN THIS SECTION 11(n) OF THIS AGREEMENT OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW SHALL BE VALID AND SUFFICIENT SERVICE THEREOF.
o. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; (II) SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THE FOREGOING WAIVER; (III) SUCH PARTY MAKES THE FOREGOING WAIVER VOLUNTARILY AND (IV) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION 11(o).
12. Non-Reliance and Exculpation. The Investor acknowledges that it is not relying upon, and has not relied upon, any statement, representation or warranty made by any person, firm or corporation (including, without limitation, the Company, Electriq Power or any of the respective affiliates and any of the respective subsidiaries, control persons, officers, directors, employees, partners, agents or representatives of any of the foregoing), other than the statements, representations and warranties of the Company expressly contained in Section 5 of this Agreement, in making its investment or decision to invest in the Company. The Investor agrees that none of (i) any other investor pursuant to, arising out of or relating to this Agreement or any Other Securities Purchase Agreement related to the private placement of the Securities (including the respective controlling persons, officers, directors, partners, agents, and any representatives of any of the foregoing) or (ii) any other party to the Transaction Agreement (for the avoidance of doubt, other than the Company), including any such party’s representatives, affiliates or any of its or their control persons, officers, directors, employees or representatives that is not a party hereto, shall be liable to the Investor, or to any other investor, pursuant to this Agreement or any Other Securities Purchase Agreement related to the private placement of the Securities, the negotiation hereof or thereof or its subject matter, or the transactions contemplated hereby or thereby, including, without limitation, for any action heretofore or hereafter taken or omitted to be taken by any of them in connection with the purchase of the Securities or with respect to any claim (whether in tort, contract or otherwise) for breach of this Agreement or in respect of any written or oral representations made or alleged to be made in connection herewith, as expressly provided herein, or for any actual or alleged inaccuracies, misstatements or omissions with respect to any information or materials of any kind furnished by the Company, Electriq Power or any
Non-Party Affiliates concerning the Company, Electriq Power or any of the respective affiliates and any of the respective subsidiaries, control persons, officers, directors, employees, partners, agents or representatives of the foregoing, this Agreement or the transactions contemplated hereby. For purposes of this Agreement, “Non-Party Affiliates” means each former, current or future officer, director, employee, partner, member, manager, direct or indirect equityholder or affiliate of the Company, Electriq Power or any of the respective affiliates or any of their respective subsidiaries, control persons, officers, directors, employees, partners, agents or representatives or any family member of the foregoing.
13. Disclosure. The Company shall within the time period required by the Exchange Act following the date of this Agreement, issue one or more press releases or file with the SEC a Current Report on Form 8-K (collectively, the “Disclosure Document”) disclosing all material terms of the transactions contemplated hereby and by the Other Securities Purchase Agreements, the Transaction and any other material, nonpublic information that the Company has provided to the Investor at any time prior to the filing of the Disclosure Document. Upon the issuance of the Disclosure Document, to the knowledge of the Company, the Investor shall not be in possession of any material, nonpublic information received from the Company or any of its officers, directors, or employees or agents, and the Investor shall no longer be subject to any confidentiality or similar obligations under any current agreement, whether written or oral, with the Company or any of their respective affiliates, relating to the transactions contemplated by this Agreement. The Investor hereby consents to (i) the publication and disclosure in the Disclosure Document and (ii) as and to the extent otherwise required by the federal securities laws, exchange rules, the SEC or any other securities authorities or any rules and regulations promulgated thereby, any other documents or communications provided by the Company or Electriq Power to any governmental entity or to any securityholders of the Company, of the Investor’s identity and beneficial ownership of the subscribed Securities and the nature of the Investor’s commitments, arrangements and understandings under and relating to this Agreement and, if deemed appropriate by the Company or Electriq Power, a copy of this Agreement, all solely to the extent required by applicable law or any regulation or stock exchange listing requirement. The Investor will promptly provide any information reasonably requested by the Company for any regulatory application or filing made or approval sought in connection with the Transaction (including filings with the SEC).
14. Non-Recourse. This Agreement may only be enforced against, and any claim or cause of action based upon, arising out of, or related to any breach of any term or condition of this Agreement may only be brought against, the entities that are expressly named as parties hereto and then only to the extent of the specific obligations set forth herein with respect to such party.
15. Independent Obligation. The obligations of the Investor under this Agreement are several and not joint with the obligations of any Other Investor under any Other Securities Purchase Agreements, and the Investor shall not be responsible in any way for the performance of the obligations of any Other Investor under any Other Securities Purchase Agreement. The decision of the Investor to purchase Securities pursuant to this Agreement has been made by the Investor independently of any Other Investor and independently of any information, materials, statements or opinions as to the business, affairs, operations, assets, properties, liabilities, results of operations, condition (financial or otherwise) or prospects of the Company or any of its subsidiaries which may have been made or given by any Other Investor or by any agent or employee of any Other Investor, and neither the Investor nor any of its agents or employees shall have any liability to any Other Investor (or any other person) relating to or arising from any such information, materials, statements or opinions. Nothing contained herein or in any Other Securities Purchase Agreement, and no action taken by the Investor or any Other Investors pursuant hereto or thereto, shall be deemed to constitute the Investor and Other Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investor and Other Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this Agreement and the Other Securities Purchase Agreements. The Investor acknowledges that no Other
Investor has acted as agent for the Investor in connection with making its investment hereunder and no Other Investor will be acting as agent of the Investor in connection with monitoring its investment in the Securities or enforcing its rights under this Agreement. The Investor shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any Other Investor or investor to be joined as an additional party in any proceeding for such purpose.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the Investor has executed or caused this Agreement to be executed by its duly authorized representative as of the date set forth below.
| Name of Investor: | State/Country of Formation or Domicile: | |
| James Lovewell | ||
| By: | /s/ Jim Lovewell | |||
| Name: | Jim Lovewell | |||
| Title: | ||||
| Name in which Securities are to be registered (if different): | Date: 7/18/2023 | |
| Investor’s EIN: | ||
| Investor status (mark one): | ☒ U.S. investor ☐ Non U.S. investor | |
| Business Address-Street: | Mailing Address-Street (if different): | |
| City, State, Zip: | City, State, Zip: | |
| Attn: |
|
Attn: |
| |||
| Telephone No.: | Telephone No.: | |
| Facsimile No.: | Facsimile No.: | |
| Email: | Email: | |
| Number of Subscribed Shares subscribed for: | 10,000 | |
| Number of Preferred Shares issued: | 5,000 | |
| Aggregate Subscription Amount: $100,000 | Price Per Subscribed Share: $10.00 | |
You must pay the Subscription Amount by wire transfer of United States dollars in immediately available funds to the account specified by the Company in the Closing Notice and/or cancellation or conversion of indebtedness of the Company or Electriq Power. To the extent the offering is oversubscribed, the number of Subscribed Shares received may be less than the number of Subscribed Shares subscribed for (such reduction, a “Cutback”). Any Cutback will be made pro rata based on the respective number of Subscribed Shares that all persons participating in the offering of Securities contemplated by this Agreement request to purchase.
IN WITNESS WHEREOF, the Company has accepted this Agreement as of the date set forth below.
| TLG ACQUISITION ONE CORP. | ||
| By: | /s/ John Michael Lawrie | |
| Name: | John Michael Lawrie | |
| Title: | Chief Executive Officer | |
Date: 7/19/2023
Exhibit 10.15
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT, dated as of July 28, 2023 (this “ Agreement”), is made by and between TLG Acquisition One Corp., a Delaware corporation (the “Company”), and O’Shanter Development Company Ltd. (the “Investor”). This Agreement is being entered into in connection with the proposed business combination (the “Transaction”) between the Company and Electriq Power, Inc. (“Electriq Power”), a Delaware corporation, pursuant to a merger agreement (as amended from time to time, the “Transaction Agreement”) by and among the Company, Electriq Power and Electriq Power Merger Corp., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”), dated as of November 13, 2022, whereby, among other things, Merger Sub will merge with and into Electriq Power (the “Merger”), with Electriq Power as the surviving company in the Merger. In connection with the Transaction, the Company is seeking commitments from interested investors to purchase in a private placement (the “Private Placement”), prior to the closing of the Transaction, shares of the Company’s Class A common stock, par value $0.0001 per share (each share, a “Share”), for a purchase price of $10.00 per share (the “Subscribed Shares”). As a condition and inducement to such investors purchasing the Subscribed Shares, the Company will issue to the Investor, for each two Subscribed Shares, for no additional consideration, one share of Series A Cumulative Redeemable Preferred Stock having the rights, preferences and privileges set forth in the Certificate of Designation attached to this Agreement as Exhibit A (the “Preferred Shares” and such certificate, the “Certificate of Designation”) (the Preferred Shares, together with the Subscribed Shares, the “Securities”). In connection with the transaction contemplated hereby, certain other “accredited investors” (as defined in Rule 501 under the Securities Act of 1933, as amended (the “Securities Act”)) and “qualified institutional buyers” (as defined in Section 2(a)(51) of the Investment Company Act of 1940, as amended (the “Investment Company Act”)), have entered into separate securities purchase agreements with the Company (the “Other Securities Purchase Agreements” and such other persons “Other Investors”), and have, together with the undersigned pursuant to this Agreement, agreed to purchase Subscribed Shares for a purchase price of $10.00 per Share and will also receive a number of Preferred Shares as described above. The aggregate purchase price to be paid by the Investor for the Subscribed Shares is referred to herein as the “Subscription Amount.” Capitalized terms used but not otherwise defined herein shall have the meaning ascribed to them in the Transaction Agreement.
In connection therewith, and in consideration of the foregoing and the mutual representations, warranties and covenants, and subject to the conditions, set forth herein, and intending to be legally bound hereby, the Investor and the Company agree as follows:
1. Subscription.
a. Subject to and on the terms and conditions set forth herein, the Investor hereby irrevocably subscribes for and agrees to purchase from the Company, and the Company agrees to issue and sell to the Investor, the number of Subscribed Shares as is set forth on the signature page of this Agreement.
b. As a condition and inducement to the Investor purchasing the Subscribed Shares, in connection with and contingent upon the purchase of the Subscribed Shares, the Company agrees to issue for no additional consideration the number of Preferred Shares as is set forth on the signature page of this Agreement.
c. The Preferred Shares shall have the rights, preferences and privileges set forth in the Certificate of Designation.
d. Notwithstanding anything to the contrary herein, no fraction of a share of any Security shall be issued pursuant to this Section 1, and, if the Investor would otherwise be entitled to a fraction of a share of a Security, the Investor shall instead have the number of shares of that Security issued to the Investor rounded down to the nearest whole number of shares of that Security, without payment in lieu of any such fractional shares.
2. Closing.
a. The closing of the sale, purchase and issuance of the Securities contemplated hereby (the “Closing”) shall occur on the date of, and is contingent upon the substantially concurrent consummation of, the Transaction. Upon (i) satisfaction or waiver of the conditions set forth in Section 3 below and (ii) delivery of written notice from (or on behalf of) the Company to the Investor (the “Closing Notice”), that the Company reasonably expects the closing of the Transaction to occur on a specified date that is not less than four (4) business days after the date on which the Closing Notice is delivered to the Investor (the “Closing Date”), the Investor shall deliver to the Company (i) two (2) business days prior to the expected Closing Date, the Subscription Amount by (x) wire transfer of United States dollars in immediately available funds to the account(s) specified by the Company in the Closing Notice, to be held in escrow until the Closing and/or (y) cancellation or conversion of indebtedness of the Company or Electriq Power, and (ii) any other information that is reasonably requested in the Closing Notice in order for the Company to issue the Investor’s Securities, including, without limitation, the legal name of the person whose name such Securities are to be issued and a duly executed Internal Revenue Service Form W-9 or W-8, as applicable. On the Closing Date, the Company shall issue a number of Securities to the Investor set forth on the signature page to this Agreement and subsequently cause the Securities to be registered in book entry form, free and clear of any liens (other than those arising under this Agreement or any applicable securities laws) in the name of the Investor (or its nominee in accordance with its delivery instructions) or to a custodian designated by the Investor, as applicable, on the Company’s securities register, the Company shall cause to be delivered to the Investor evidence from the Company’s transfer agent evidencing the issuance to the Investor of such Securities (in book entry form) on and as of the Closing Date, and the Subscription Amount shall be released from escrow automatically and without further action by the Company or the Investor. For purposes of this Agreement, “business day” shall mean any day other than (a) any Saturday or Sunday or (b) any other day on which banks located in New York, New York are required or authorized by applicable law to be closed for business.
b. If the Transaction does not occur within five (5) business days following the Closing Date specified in the Closing Notice, (I) the Company shall promptly (but not later than two (2) business days thereafter) depending on the form of payment of the Shares either (x) return the Subscription Amount to the undersigned by wire transfer of United States dollars in immediately available funds to the account specified by the undersigned or (y) return the indebtedness to the undersigned, and (II) any book entries for the Securities shall be deemed repurchased and cancelled; provided that, unless this Agreement has been terminated pursuant to Section 9 hereof, such return of funds shall not terminate this Agreement or relieve the Investor of its obligations to purchase the Securities at the Closing in the event the Company delivers a subsequent Closing Notice in accordance with this Section 2.
3. Closing Conditions.
a. The obligation of the parties hereto to consummate the sale, purchase and issuance of the Securities pursuant to this Agreement is subject to the following conditions:
(i) no applicable governmental authority shall have enacted, issued, promulgated, enforced or entered any judgment, order, law, rule or regulation (whether temporary, preliminary or permanent) which is then in effect and has the effect of making consummation of the transactions contemplated hereby illegal or otherwise restraining or prohibiting consummation of the transactions contemplated hereby;
(ii) no suspension of the qualification of the Shares for offering or sale or trading in any jurisdiction, and no suspension or removal from listing of the shares of the Company’s Class A common stock on the New York Stock Exchange shall have occurred; and
(iii) all conditions precedent to the closing of the Transaction set forth in Sections 7.1 and 7.2 of the Transaction Agreement, including all necessary approvals of the Company’s shareholders and all regulatory approvals set forth therein, shall have been satisfied (as determined by the parties to the Transaction Agreement) or waived (other than those conditions which, by their nature, are to be satisfied at the closing of the Transaction.
b. The obligation of the Company to consummate the sale and issuance of the Securities at the Closing pursuant to this Agreement shall be subject to the satisfaction or valid waiver by the Company of the additional conditions that:
(i) all representations and warranties of the Investor contained in this Agreement are true and correct in all material respects (other than representations and warranties that are qualified as to materiality, which representations and warranties shall be true and correct in all respects) at and as of the Closing Date, and consummation of the Closing shall constitute a reaffirmation by the Investor of each of the representations and warranties of the Investor contained in this Agreement as of the Closing Date; and
(ii) the Investor shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by it at or prior to the Closing.
c. The obligation of the Investor to consummate the purchase of the Securities at the Closing pursuant to this Agreement shall be subject to the satisfaction or valid waiver by the Investor of the additional conditions that:
(i) all representations and warranties of the Company contained in this Agreement shall be true and correct in all material respects (other than representations and warranties that are qualified as to materiality or Material Adverse Effect (as defined below), which representations and warranties shall be true and correct in all respects) at and as of the Closing Date, and consummation of the Closing shall constitute a reaffirmation by the Company of each of the representations and warranties of the Company contained in this Agreement in all material respects as of the Closing Date; provided that in the event this condition would otherwise fail to be satisfied as a result of a breach of one or more of the representations and warranties of the Company contained in this Agreement and the facts underlying such breach would also cause a condition to the Company’s obligations under the Transaction Agreement to fail to be satisfied, this condition shall nevertheless be deemed satisfied in the event Electriq Power waives such condition with respect to such breach under the Transaction Agreement;
(ii) the Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by it at or prior to the Closing;
(iii) the New York Stock Exchange (the “NYSE”) shall have conditionally authorized, subject to official notice of issuance, the listing of the Shares to be acquired hereunder and the Issuer shall use commercially reasonable efforts to obtain conditional authorization from the NYSE of the Shares issuable upon conversion of the Preferred Shares to be acquired hereunder;
(iv) no amendment or modification of the Transaction Agreement (as the same exists on the date hereof) shall have occurred that would reasonably be expected to materially and adversely affect the economic benefits that the Investor would reasonably expect to receive under this Agreement without having received the Investor’s prior written consent (not to be unreasonably withheld, conditioned or delayed); and
(v) the filing of the Certificate of Designation with the Delaware Secretary of State.
4. Further Assurances. At the Closing, the Company and the Investor shall execute and deliver such additional documents and take such additional actions as the parties reasonably may deem to be practical and necessary in order to consummate the subscription as contemplated by this Agreement.
5. Company Representations and Warranties. The Company represents and warrants to the Investor that:
a. The Company has been duly incorporated as a Delaware corporation and is validly existing and in good standing under the laws of Delaware, with corporate power and authority to own, lease and operate its properties and conduct its business as presently conducted and to enter into, deliver and perform its obligations under this Agreement.
b. As of the Closing Date, the Securities will be duly authorized and, when issued and delivered to the Investor against full payment therefor in accordance with the terms of this Agreement, the Securities will be validly issued, fully paid and non-assessable and will not have been issued in violation of or subject to any preemptive or similar rights created under the Company’s certificate of incorporation, Certificate of Designation or bylaws (each as amended to the Closing Date) or under the General Corporation Law of the State of Delaware.
c. This Agreement has been duly authorized, executed and delivered by the Company and, assuming that this Agreement constitutes the valid and binding agreement of the Investor, this Agreement constitutes a valid and binding agreement of the Company and is enforceable against the Company in accordance with its terms, except as may be limited or otherwise affected by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws relating to or affecting the rights of creditors generally, or (ii) principles of equity, whether considered at law or equity.
d. The issuance and sale of the Securities and the compliance by the Company with all of the provisions of this Agreement and the consummation of the transactions contemplated herein will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of the Company or any of its subsidiaries pursuant to the terms of (i) any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company is subject that would reasonably be expected to have a material adverse effect on the business, properties, financial condition, stockholders’ equity, or results of operations of the Company and its subsidiaries, taken as a whole or materially affect the validity of the Securities or
the legal authority of the Company to enter into and perform its obligations under this Agreement (a “Material Adverse Effect”); (ii) result in any violation of the provisions of the organizational documents of the Company; or (iii) result in any violation of any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over the Company or any of its properties that would reasonably be expected to have a Material Adverse Effect.
e. Assuming the accuracy of the representations and warranties of the Investor set forth herein, the Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority, self-regulatory organization or other person in connection with the issuance of the Securities pursuant to this Agreement, other than (i) filings with the U.S. Securities and Exchange Commission (the “SEC”), (ii) filings required by applicable state securities laws, (iii) the filings required in accordance with Section 13 of this Agreement; (iv) any consent required by the rules of the NYSE, including with respect to obtaining approval of the Company’s stockholders, (v) consents, waivers, authorizations, orders, notices or filings, required to consummate the Transaction as provided under the Transaction Agreement and (vi) consents, waivers, authorizations, orders, notices or filings, the failure of which to obtain or make, would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
f. The Company is not, and immediately after receipt of payment for the Securities, will not be, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.
g. The Company made available to the Investor (including via the SEC’s EDGAR system) a true, correct and complete copy of each form, report, statement, schedule, prospectus, proxy, registration statement and other documents filed by the Company with the SEC prior to the date of this Agreement (the “SEC Documents”), which SEC Documents, as of their respective dates, complied in all material respects with the applicable requirements of the Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations of the SEC promulgated thereunder, and none of the SEC Documents, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Except as described in (i) Note 9 to the Company’s financial statements included in the Company’s Form 10-Q for the quarterly period ended March 31, 2021 filed with the SEC on May 25, 2021 and (ii) the introduction of Amendment No. 1 to the Company’s Form 10-Q for the quarterly period ended September 30, 2021 filed with the SEC on February 7, 2022, the financial statements of the Company included in the SEC Documents comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing and fairly present in all material respects the financial position of the Company as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, year-end audit adjustments. A copy of each SEC Documents is available to the Investor via the SEC’s EDGAR system. There are no outstanding or unresolved comments in comment letters received by the Company from the staff of the Division of Corporation Finance of the SEC with respect to any of the SEC Documents.
h. The Company is in compliance with all applicable laws, except where such non-compliance would not reasonably be expected to have a Material Adverse Effect. The Company has not received any written communication from a governmental authority that alleges that the Company is not in compliance with or is in default or violation of any applicable law, except where such non-compliance, default or violation would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
i. As of the date hereof, the issued and outstanding Class A Shares of the Company are registered pursuant to Section 12(b) of the Exchange Act, and are listed for trading on the NYSE under the symbol “TLGA” (it being understood that the trading symbol will be changed in connection with the Transaction). Except as disclosed in the SEC Documents, as of the date hereof, there is no suit, action, proceeding or investigation pending or, to the knowledge of the Company, threatened against the Company by the NYSE or the SEC, respectively, to prohibit or terminate the listing of the Company’s Class A Shares on the NYSE or to deregister the Class A Shares under the Exchange Act. The Company has taken no action that is designed to terminate the registration of the Class A Shares under the Exchange Act.
j. Assuming the accuracy of the Investor’s representations and warranties set forth in Section 6 of this Agreement, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Investor.
k. Neither the Company nor any person acting on its behalf has offered or sold the Securities by any form of general solicitation or general advertising and the Securities are not being offered in a manner involving a public offering under, or in a distribution in violation of the Securities Act or any state securities laws.
l. The Company is not under any obligation to pay any broker’s fee or commission in connection with the sale of the Securities to the Investor.
m. As of the date hereof, the authorized capital stock of the Company is (i) 200,000,000 shares of Class A common stock (“Class A Shares”), 7,948,405 of which are issued and outstanding as of the date of this Agreement, (ii) 20,000,000 shares of Class F common stock (“Class F Shares”), 5,000,000 of which are issued and outstanding as of the date of this Agreement, and (iii) 1,000,000 shares of preferred stock of par value $0.0001 each, of which no shares are issued and outstanding as of the date of this Agreement. As of the date hereof (i) 6,666,667 warrants to purchase 6,666,667 Class A Shares (the “Private Placement Warrants”) are outstanding, and (ii) 13,333,333 warrants to purchase 13,333,333 Class A Shares (the “Public Warrants” and, together with the Private Placement Warrant, the “Warrants”) are outstanding. As of or prior to the Closing, TLG Acquisition Founder LLC will forfeit 3,270,652 Class F Shares (such that there will be 1,729,348 Class F Shares outstanding at that time) and 4,666,667 Private Placement Warrants (such that there will be 2,000,000 Private Placement Warrants outstanding at that time excluding the Private Placement Warrants to be issued in connection with the conversion of certain amounts of the working capital loan from TLG Acquisition Founder LLC). All (A) issued and outstanding Class A Shares and Class F Shares have been duly authorized and validly issued, are fully paid and are non-assessable and are not subject to preemptive rights, and (B) outstanding Warrants are validly issued, are fully paid, and are legally binding obligations of the Company enforceable against the Company in accordance with their terms (except (i) as may be limited by bankruptcy, insolvency, reorganization or similar laws’ affecting creditors’ rights generally, (ii) as enforceability of any indemnification or contribution provision may be limited under federal and state securities laws, and (iii) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court before which any proceeding therefor may be brought) and are not subject to preemptive rights. Except as set forth in the Company’s organizational documents, there are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any Class A Shares or any other capital stock of the Company.
n. Other than the Transaction Agreement and the Note Conversion Agreement by and among the Company, Electriq Power and John Michael Lawrie dated on or around the date hereof, no Other Securities Purchase Agreement or other similar agreement includes terms and conditions that are materially more favorable to any investor party thereto which has subscribed for the same or fewer shares of Common Stock as the number of Subscribed Shares subscribed for (in the aggregate) by the Investor and any of its
affiliates, other than terms particular to the regulatory requirements of such investor or its affiliates or related funds that are mutual funds or are otherwise subject to regulations related to the timing of funding and the issuance of securities thereunder, and such Other Securities Purchase Agreements and such other agreements have not been amended or modified in any material respect following the date of this Agreement. The provisions of this Subsection 5(n) shall not apply to terms or conditions related to differences in timing of closing of Other Securities Purchase Agreements.
o. Except for such matters as have not had and would not be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect, as of the date hereof, there is no (i) suit, action, proceeding or arbitration before a governmental authority or arbitrator pending, or, to the knowledge of the Company, threatened against the Company or (ii) judgment, decree, injunction, ruling or order of any governmental entity or arbitrator outstanding against the Company.
6. Investor Representations and Warranties. The Investor represents and warrants to the Company that:
a. The Investor is either a U.S. investor or non-U.S. investor as set forth under its name on the signature page hereto, and accordingly represents the applicable additional matters under clause (i) or (ii) below:
(i) Applicable to U.S. investors: At the time the Investor was offered the Securities, it was, as of the date hereof, the Investor is, and as of the Closing Date the Investor will be (x) a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act), or an “accredited investor” (within the meaning of Rule 501 under the Securities Act), (y) acquiring the Securities only for its own account and not for the account of others, or if the Investor is subscribing for the Securities as a fiduciary or agent for one or more investor accounts, each owner of each such account is independently a qualified institutional buyer, the Investor has full investment discretion with respect to each such account, and the full power and authority to make the acknowledgements, representations and agreements herein on behalf of each owner of each such account and (z) is not acquiring the Securities with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act or the securities law of any other jurisdiction (and shall provide the requested information set forth on Schedule A). The Investor is not an entity formed for the specific purpose of acquiring the Securities.
(ii) Applicable to non-U.S. investors: The Investor understands that the sale of the Securities is made pursuant to and in reliance upon Regulation S promulgated under the Securities Act (“Regulation S”). The Investor is not a U.S. Person (as defined in Regulation S), it is acquiring the Securities in an offshore transaction in reliance on Regulation S, and it has received all the information relevant to its acquisition of the Securities hereunder outside of the United States. The Investor understands and agrees that securities sold pursuant to Regulation S may be subject to restrictions thereunder, including compliance with the distribution compliance period provisions therein. If the Investor is a resident or subject to the laws of Canada, the Investor hereby declares, represents, warrants and agrees as set forth in the attached Schedule B.
b. The Investor acknowledges and agrees that the Securities are being offered in a transaction not involving any public offering within the meaning of the Securities Act and that the offer and sale of Securities have not been registered under the Securities Act. The Investor acknowledges and agrees that the Securities may not be offered, resold, transferred, pledged or otherwise disposed of by the Investor absent an effective registration statement under the Securities Act except (i) to the Company or a subsidiary
thereof, (ii) to non-U.S. persons pursuant to offers and sales that occur outside the United States within the meaning of Regulation S or (iii) pursuant to another applicable exemption from the registration requirements of the Securities Act, and in each of clauses (i) and (iii) in accordance with any applicable securities laws of the states and other jurisdictions of the United States, and that any certificates or book entry positions representing the Securities shall contain a restrictive legend to such effect. The Investor further acknowledges and agrees that (i) the Subscribed Shares may not be offered, resold, transferred, pledged or otherwise disposed of by the Investor until one year after the date of the Transaction and (ii) the Preferred Shares may not be offered, resold, transferred, pledged or otherwise disposed of by the Investor until three years after the date of the Transaction in accordance with the terms of the Certificate of Designation. The Investor acknowledges and agrees that the Securities will be subject to the foregoing transfer restrictions and as a result of these transfer restrictions, the Investor may not be able to readily offer, resell, pledge, transfer or otherwise dispose of the Securities and may be required to bear the financial risk of an investment in the Securities for an indefinite period of time. The Investor acknowledges and agrees that the Securities will not be eligible for resale, offer, transfer, pledge or disposition pursuant to Rule 144 promulgated under the Securities Act until at least one year from the date that the Company files a Current Report on Form 8-K following the Closing Date that includes the “Form 10” information required under the applicable SEC rules and regulations. In connection with this Agreement, the Investor agrees to execute a Lock-Up Agreement. The Investor acknowledges and agrees that it has been advised to consult legal counsel prior to making any offer, resale, pledge or transfer of any of the Securities.
c. The Investor acknowledges and agrees that it is aware the Securities are being offered under the exemption from registration provided by Section 4(a)(2) of the Securities Act, Regulation D or Regulation S.
d. The Investor acknowledges and agrees that the Investor is purchasing the Securities from the Company. The Investor further acknowledges that it is relying exclusively on its own sources of information, investment analysis and due diligence (including professional advice it deems appropriate) with respect to the Transaction, the Securities and the business, condition (financial and otherwise), management, operations, properties and prospects of the Company and Electriq Power, including but not limited to all business, legal, regulatory, accounting, credit and tax matters and that there have been no, representations, warranties, covenants and agreements made to the Investor by or on behalf of the Company, Electriq Power or any of the respective affiliates or any of the respective subsidiaries, control persons, officers, directors, employees, partners, agents or representatives of any of the foregoing or any other person or entity, expressly or by implication, other than those representations, warranties, covenants and agreements of the Company included in this Agreement.
e. Either (1) the Investor’s acquisition and holding of the Securities will not constitute or result in a non-exempt prohibited transaction under Section 406 of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), Section 4975 of the Internal Revenue Code of 1986, as amended, or any applicable similar law or (2) the Investor is not a Benefit Plan Investor as contemplated by ERISA.
f. The Investor acknowledges and agrees that the Investor has received and has had an opportunity to review such information as the Investor deems necessary or desirable in order to make an investment decision with respect to the Securities, including, without limitation, with respect to the Company, the Transaction and the business of Electriq Power and its subsidiaries. Without limiting the generality of the foregoing, the Investor acknowledges that it has reviewed the Company’s filings with the SEC. The Investor acknowledges and agrees that the Investor and the Investor’s professional advisor(s), if any, have conducted its own investigation of the Company, the Transactions, and the Securities, received and reviewed the offering materials made available to the Investor and had the full opportunity to ask such questions, receive such answers and obtain such information as the Investor and the Investor’s professional
advisor(s), if any, have deemed necessary to make an investment decision with respect to the Securities. The Investor further acknowledges that the information provided to the Investor may change after the date hereof and the Company is under no obligation to inform the Investor regarding any such changes, except to the extent such changes would reasonably be expected to cause the failure of the Company to satisfy a condition to the Investor’s obligations at the Closing.
g. The Investor acknowledges and agrees that the Investor has determined based on its own independent review and such professional advice as it has deemed appropriate, that the purchase of the Securities and participation in the Transaction are consistent with the Investor’s financial needs, objectives and condition and comply and are consistent with all material investment policies, guidelines and other restrictions applicable to the Investor.
h. The Investor became aware of this offering of the Securities solely by means of direct contact between the Investor and the Company, Electriq Power or a representative of the Company or Electriq Power, and the Securities were offered to the Investor solely by direct contact between the Investor and the Company, Electriq Power or a representative of the Company or Electriq Power. The Investor did not become aware of this offering of the Securities, nor were the Securities offered to the Investor, by any other means. The Investor acknowledges that the Securities (i) were not offered to it by any form of general solicitation or general advertising and (ii) are not being offered to it in a manner involving a public offering under, or in a distribution in violation of, the Securities Act, or any state securities laws. The Investor acknowledges that it is not relying upon, and has not relied upon, any statement, representation or warranty made by any person, firm or corporation (including, without limitation, the Company, Electriq Power or any of their respective affiliates or any of their respective subsidiaries, control persons, officers, directors, employees, partners, agents or representatives), other than the representations and warranties of the Company contained in Section 5 of this Agreement, in making its investment or decision to invest in the Company, and except for the foregoing, the Investor is relying exclusively on its own sources of information, investment analysis and due diligence (including professional advice it deems appropriate) with respect to the Transaction, the Securities and the business, condition (financial and otherwise), management, operations, properties and prospects of the Company and it has independently satisfied itself concerning the relevant tax and other economic considerations relevant to its investment in the Securities.
i. The Investor acknowledges that it is aware that there are substantial risks incident to the purchase and ownership of the Securities, including those set forth in the Company’s filings with the SEC. The Investor is a sophisticated investor, experienced in private equity transactions and has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Securities, and the Investor has sought such accounting, legal and tax advice as the Investor has considered necessary to make an informed investment decision and the Investor has made its own assessment and has satisfied itself concerning relevant tax or other economic considerations relative to its purchase of the Securities. The Investor is able to sustain a complete loss on its investment in the Securities.
j. Alone, or together with any professional advisor(s), the Investor acknowledges that it has reviewed the documents made available to the Investor and has adequately analyzed and fully considered the risks of an investment in the Securities and determined that the Securities are a suitable investment for the Investor and that the Investor is able at this time and in the foreseeable future to bear the economic risk of a total loss of the Investor’s investment in the Company. The Investor acknowledges specifically that a possibility of total loss exists.
k. In making its decision to purchase the Securities, the Investor has relied solely upon independent investigation made by the Investor.
l. The Investor acknowledges and agrees that no federal or state agency has passed upon or endorsed the merits of the offering of the Securities or made any findings or determination as to the fairness of this investment.
m. If the Investor is not a natural person, the Investor has been duly formed or incorporated and is validly existing and in good standing under the laws of its jurisdiction of incorporation or formation, with power and authority to enter into, deliver and perform its obligations under this Agreement.
n. The execution, delivery and performance by the Investor of this Agreement are within the powers of the Investor and have been duly authorized (if the Investor is not a natural person) and will not constitute or result in a breach or default under or conflict with any order, ruling or regulation of any court or other tribunal or of any governmental commission or agency, or any agreement or other undertaking, to which the Investor is a party or by which the Investor is bound, and, if the Investor is not a natural person, will not conflict with or violate any provisions of the Investor’s organizational documents, including, without limitation, its incorporation or formation papers, bylaws, indenture of trust or partnership or operating agreement, as may be applicable. The signature on this Agreement is genuine, and the signatory has been duly authorized to execute the same, and, this Agreement has been duly executed and delivered by the Investor and, assuming that this Agreement constitutes the valid and binding obligation of the Company, this Agreement constitutes a legal, valid and binding obligation of the Investor, enforceable against the Investor in accordance with its terms except as may be limited or otherwise affected by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws relating to or affecting the rights of creditors generally, or (ii) principles of equity, whether considered at law or equity.
o. The Investor is not (i) a person or entity named on the List of Specially Designated Nationals and Blocked Persons administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) or in any Executive Order issued by the President of the United States and administered by OFAC (“OFAC List”), or a person or entity prohibited by any OFAC sanctions program, (ii) owned, directly or indirectly, or controlled by, or acting on behalf of, one or more persons that are named on the OFAC List; (iii) organized, incorporated, established, located, resident or born in, or a citizen, national or the government, including any political subdivision, agency or instrumentality thereof, of, Cuba, Iran, North Korea, Syria, the Crimea region of Ukraine or any other country or territory embargoed or subject to substantial trade restrictions by the United States, (iv) a Designated National as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515, or (v) a non-U.S. shell bank or providing banking services indirectly to a non-U.S. shell bank (each, a “Prohibited Investor”). The Investor agrees to provide law enforcement agencies, if requested thereby, such records as required by applicable law, provided that the Investor is permitted to do so under applicable law. If the Investor is a financial institution subject to the Bank Secrecy Act (31 U.S.C. Section 5311 et seq.) (the “BSA”), as amended by the USA PATRIOT Act of 2001 (the “PATRIOT Act”), and its implementing regulations (collectively, the “BSA/PATRIOT Act”), the Investor maintains policies and procedures reasonably designed to comply with applicable obligations under the BSA/PATRIOT Act. To the extent required, the Investor maintains policies and procedures reasonably designed to ensure compliance with OFAC-administered sanctions programs, including for the screening of its investors against the OFAC sanctions programs, including the OFAC List. To the extent required by applicable law, the Investor maintains policies and procedures reasonably designed to ensure that the funds held by the Investor and used to purchase the Securities were legally derived and were not obtained, directly or indirectly, from a Prohibited Investor.
p. [Reserved.]
q. [Reserved.]
r. In connection with the issue and purchase of the Securities, none of the Company, Electriq Power nor any of their respective affiliates have acted as the Investor’s financial advisor or fiduciary.
s. [Reserved.]
t. The Investor has or has commitments to have, and, when required to deliver payment to the Company pursuant to Section 2 above, will have, sufficient funds to pay the Subscription Amount and consummate the purchase and sale of the Securities when required pursuant to this Agreement.
u. The Investor acknowledges and agrees that it is not an underwriter within the meaning of Section 2(a)(11) of the Securities Act and that the purchase and sale of Securities hereunder meets the exemptions from filing under FINRA Rule 5123(b)(1).
v. The Investor acknowledges that certain information provided to it was based on projections, and such projections were prepared based on assumptions and estimates that are inherently uncertain and are subject to a wide variety of significant business, economic and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the projections.
7. Registration Rights.
a. The Company agrees that, as soon as reasonably practicable (but in any case no later than thirty (30) calendar days after the consummation of the Transaction), it will file with the SEC (at its sole cost and expense) a registration statement (the “Registration Statement”) registering the resale of the Subscribed Shares acquired by the Investor pursuant to this Agreement and the Shares issuable upon the mandatory redemption of the Preferred Shares acquired by the Investor pursuant to this Agreement, and it shall use its commercially reasonable efforts to have the Registration Statement declared effective as soon as practicable after the filing thereof. The Company agrees to cause such Registration Statement, or another shelf registration statement that includes the Securities to be sold pursuant to this Agreement, to remain effective until the earliest of (i) the fourth (4th) anniversary of the Closing, (ii) the date on which the Investor ceases to hold any Securities issued pursuant to this Agreement, or (iii) the first date on which the Investor can sell all of its Securities issued pursuant to this Agreement (or shares received in exchange therefor) under Rule 144 of the Securities Act within ninety (90) days without volume or manner of sale limitations. The Investor agrees to disclose its ownership to the Company upon request to assist it in making the determination described above. The Company may amend the Registration Statement so as to convert the Registration Statement into a Registration Statement on Form S-3 at such time as the Company becomes eligible to use such Form S-3. The Investor agrees that the Company may suspend the use of any such registration statement, if it determines that in order for such registration statement not to contain a material misstatement or omission, an amendment thereto would be needed to include information that would at that time not otherwise be required in a current, quarterly or annual report under the Exchange Act; provided, however, that the Company may not suspend the Registration statement for more than ninety (90) total calendar days during any twelve (12)-month period. The Investor may deliver written notice (an “Opt-Out Notice”) to the Company requesting that the Investor not receive notices from the Company regarding the suspension of the Registration Statement; provided, however, that the Investor may later revoke any such Opt-Out Notice in writing. Following receipt of an Opt-Out Notice from the Investor (unless subsequently revoked), (i) the Company shall not deliver any such notices to the Investor and the Investor shall no longer be entitled to the rights associated with any such notice and (ii) each time prior to the Investor’s intended use of an effective Registration Statement, the Investor will notify the Company in writing at least two (2) business days in advance of such intended use, and if a notice of a suspension was previously delivered (or would have been delivered but for the provisions of this Section and the related suspension period remains in effect), the Company will so notify the Investor, within one (1) business day after the Investor’s notification to the Company, by delivering to the Investor a copy of such previous notice of suspension, and thereafter will provide the Investor with the related notice of the conclusion of such suspension promptly following its availability.
b. The Company’s obligations to include the Securities issued pursuant to this Agreement (or shares issued in exchange therefor) for resale in the Registration Statement are contingent upon the Investor furnishing in writing to the Company such information regarding the Investor, the securities of the Company held by the Investor and the intended method of disposition of such Securities as shall be reasonably requested by the Company to effect the registration of such Securities, and shall execute such documents in connection with such registration as the Company may reasonably request that are customary of a selling stockholder in similar situations provided that the Investor shall not in connection with the foregoing be required by the Company to execute any lockup or similar agreement or otherwise be subject to any contractual restriction with the Company on the ability to transfer the Securities. In no event shall the Investor be identified as a statutory underwriter in the Registration Statement unless requested by the SEC; provided, that if the SEC requests that the Investor be identified as a statutory underwriter in the Registration Statement, the Investor will have the option, in its sole and absolute discretion, to either (1) have an opportunity to withdraw from the Registration Statement, in which case the Company’s obligation to register the Securities will be deemed satisfied, or (2) be included as such in the Registration Statement.
c. At the Company’s expense, the Company shall (i) advise the Investor within five (5) business days (1) of the issuance by the SEC of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for such purpose; and (2) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Securities included therein for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. The Company shall not, when so advising the Investor of such events, provide the Investor with any material nonpublic information regarding the Company other than to the extent that providing notice to the Investor of the occurrence of the events listed in clauses (1) and (2) above constitutes material, nonpublic information regarding the Company.
d. The Company agrees to indemnify and hold harmless, to the extent permitted by law, the Investor, its directors, and officers, employees, and agents, and each person who controls the Investor (within the meaning of the Securities Act or the Exchange Act) and each affiliate of the Investor (within the meaning of Rule 405 under the Securities Act) from and against any and all losses, claims, damages, liabilities and expenses (including, without limitation, any reasonable attorneys’ fees and expenses incurred in connection with defending or investigating any such action or claim) caused by any untrue or alleged untrue statement of material fact contained in any Registration Statement, prospectus included in any Registration Statement or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are caused by or contained in any information furnished in writing to the Company by or on behalf of the Investor expressly for use therein.
e. The Investor agrees, severally and not jointly with any person that is a party to the Other Securities Purchase Agreements, to indemnify and hold harmless the Company, its directors and officers and agents and each person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses (including, without limitation, reasonable attorneys’ fees) resulting from any untrue statement of material fact contained in the Registration Statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is contained in any information or affidavit so furnished by or on behalf of the Investor expressly for use therein. In no event shall the liability of the Investor be greater in amount than the dollar amount of the net proceeds received by the Investor upon the sale of the Securities purchased pursuant to this Agreement giving rise to such indemnification obligation.
f. Any person entitled to indemnification herein shall (1) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any person’s right to indemnification hereunder to the extent such failure has not prejudiced the indemnifying party) and (2) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without the indemnifying party’s consent. An indemnifying party who elects not to assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of legal counsel to any indemnified party a conflict of interest exists between such indemnified party and any other of such indemnified parties with respect to such claim. No indemnifying party shall, without the consent of the indemnified party, consent to the entry of any judgment or enter into any settlement which cannot be settled in all respects by the payment of money (and such money is so paid by the indemnifying party pursuant to the terms of such settlement) or which settlement does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.
g. The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director, employee, agent, affiliate or controlling person of such indemnified party and shall survive the transfer of the Securities purchased pursuant to this Agreement.
h. If the indemnification provided under this Section 7 from the indemnifying party is unavailable or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities and expenses referred to herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities and expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations; provided, however, that in no event shall the liability of the Investor be greater than the dollar amount of the net proceeds received by the Investor upon the sale of the Securities purchased pursuant to this Agreement, giving rise to such indemnification obligation. The relative fault of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by, or relates to information supplied by or on behalf of, such indemnifying party or indemnified party, and the indemnifying party’s and indemnified party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses or other liabilities referred to above shall be deemed to include, subject to the limitations set forth above, any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant to this Section 7 from any person who was not guilty of such fraudulent misrepresentation.
i. With a view to making available to the Investor the benefits of Rule 144 that may, at such times as Rule 144 is available to shareholders of the Company, permit the Investor to sell securities of the Company to the public without registration, the Company agrees, for so long as the Securities are held by the Investor: (i) to make and keep public information available, as those terms are understood and defined in Rule 144; and (ii) to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act so long as the Company remains subject to such requirements and so long as the filing of such reports and other documents is required for the applicable provisions of Rule 144.
j. Promptly following the date on which the sale, assignment or transfer of the Securities may be made without registration under the applicable requirements of the Securities Act, the Company will use commercially reasonable efforts to cause the removal of the restrictive legend included on the Securities and the Company shall issue a certificate without such legend to the Investor or issue to the Investor a book entry statement without such legend notated thereon. The Company shall be responsible for the fees of its transfer agent and all DTC fees associated with such issuance. To the extent required by the transfer agent, the Company shall use commercially reasonable efforts to cause its legal counsel to deliver a customary opinion within two (2) business days of the delivery of all reasonably necessary representations and other documentation from the Investor as reasonably requested by the Company, its counsel or the transfer agent by the Investor to the transfer agent to the effect that the removal of the restrictive legend in such circumstances may be effected under the Securities Act; provided that, notwithstanding the foregoing, Issuer will not be required to deliver any such opinion, authorization, certificate or direction if it reasonably believes that removal of the legend could result in or facilitate transfers of securities in violation of applicable law.
8. Short Sales Agreement. The Investor hereby agrees that, from the date of this Agreement, none of the Investor, its controlled affiliates, or any person or entity acting on behalf of the Investor or any of its controlled affiliates or pursuant to any understanding with the Investor or any of its controlled affiliates will engage in any Short Sales with respect to securities of the Company. For purposes of this Section 8, “Short Sales” shall include, without limitation, all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act, and all types of direct and indirect stock pledges (other than pledges in the ordinary course of business as part of prime brokerage arrangements), forward sale contracts, options, puts, calls, swaps and similar arrangements (including on a total return basis). Notwithstanding the foregoing, (i) nothing herein shall prohibit other entities under common management with the Investor that have no knowledge of this Agreement or of the Investor’s participation in the Transaction (including the Investor’s controlled affiliates and/or affiliates) from entering into any Short Sales and (ii) in the case of an Investor that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of the Investor’s assets and the portfolio managers have no knowledge of the investment decisions made by the portfolio managers managing other portions of the Investor’s assets, this Section 8 shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Subscription Amount covered by this Agreement.
9. Termination. This Agreement shall terminate and be void and of no further force and effect, and all rights and obligations of the parties hereunder shall terminate without any further liability on the part of any party in respect thereof, upon the earliest to occur of (a) such date and time as the Transaction Agreement is terminated in accordance with its terms, (b) upon the mutual written agreement of each of the parties hereto to terminate this Agreement, (c) the Termination Date (as defined in the Transaction Agreement), if the Closing has not occurred on or prior to such date, and (d) if any of the conditions to Closing set forth in Section 3 of this Agreement are not satisfied or waived, or are not capable of being satisfied, on or prior to the Closing and, as a result thereof, the transactions contemplated by this Agreement will not be and are not consummated at the Closing; provided that nothing herein will relieve any party from liability for any willful breach hereof prior to the time of termination, and each party will be entitled to any remedies at law or in equity to recover losses, liabilities or damages arising from any such willful breach. The Company shall notify the Investor of the termination of the Transaction Agreement promptly after the termination of such agreement.
10. Trust Account Waiver. The Investor acknowledges that the Company is a blank check company with the powers and privileges to effect a merger, asset acquisition, reorganization or similar business combination involving the Company and one or more businesses or assets. The Investor further acknowledges that, as described in the Company’s prospectus relating to its initial public offering dated January 27, 2021 (the “Prospectus”) available at www.sec.gov, substantially all of the Company’s assets consist of the cash proceeds of the Company’s initial public offering and private placement of its securities, and substantially all of those proceeds have been deposited in a trust account (the “Trust Account”) for the benefit of the Company, its public shareholders and the underwriter of the Company’s initial public offering. Except with respect to interest earned on the funds held in the Trust Account that may be released to the Company to pay its tax obligations, if any, the cash in the Trust Account may be disbursed only for the purposes set forth in the Prospectus. For and in consideration of the Company entering into this Agreement, the receipt and sufficiency of which are hereby acknowledged, the Investor hereby irrevocably waives any and all right, title and interest, or any claim of any kind it has or may have in the future, in or to any monies held in the Trust Account, and agrees not to seek recourse against the Trust Account as a result of, or arising out of, this Agreement or the transactions contemplated hereby, regardless of whether such claim arises based on contract, tort, equity or any other theory of legal liability; provided, however, that nothing in this Section 10 shall be deemed to limit the Investor’s right, title, interest or claim to any monies held in the Trust Account by virtue of its record or beneficial ownership of Class A Shares acquired by means other than pursuant to this Agreement.
11. Miscellaneous.
a. The Company may request from the Investor such additional information as the Company may deem necessary to register the resale of the Securities and evaluate the eligibility of the Investor to acquire the Securities, and the Investor shall reasonably promptly provide such information as may reasonably be requested, to the extent readily available and to the extent consistent with its internal policies and procedures; provided, that, the Company agrees to keep any such information provided by the Investor confidential other than as necessary to include in any registration statement the Company is required to file hereunder. The Investor acknowledges and agrees that if it does not provide the Company with such requested information, the Company may not be able to register the Securities acquired by the Investor pursuant to this Agreement for resale pursuant to Section 7 hereof. The Investor hereby agrees that its identity and the Agreement, as well as the nature of the Investor’s obligations hereunder, may be disclosed in any public announcement or disclosure required by the SEC and in any registration statement, proxy statement, consent solicitation statement or any other SEC filing to be filed by the Company in connection with the issuance of Securities contemplated by this Agreement and/or the Transaction.
b. The Investor acknowledges that the Company, and Electriq Power (as third party beneficiaries with the right to enforce Section 4, Section 5, Section 6, Section 11 and Section 12 hereof) will rely on the acknowledgments, understandings, agreements, representations and warranties contained in this Agreement. Prior to the Closing, the Investor agrees to promptly notify the Company if any of the acknowledgments, understandings, agreements, representations and warranties set forth in Section 6 above are no longer accurate in any material respect (other than those acknowledgments, understandings, agreements, representations and warranties qualified by materiality, in which case the Investor shall notify the Company if they are no longer accurate in all respects). The Investor agrees that each purchase by the Investor of Securities from the Company will constitute a reaffirmation of the acknowledgments, understandings, agreements, representations and warranties herein (as modified by any such notice) by the Investor as of the time of such purchase. Prior to the Closing, each party hereto agrees to promptly notify the other party hereto if any of the acknowledgments, understandings, agreements, representations and warranties made by such party as set forth herein are no longer accurate in all material respects.
c. [Reserved.]
d. The Company, Electriq Power (as a third party beneficiary) and the Investor are each entitled to rely upon this Agreement and each is irrevocably authorized to produce this Agreement or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.
e. All of the agreements, representations and warranties made by each party hereto in this Agreement shall survive the Closing.
f. This Agreement may not be modified, waived or terminated (other than pursuant to the terms of Section 9 above) except by an instrument in writing, signed by each of the parties hereto. No failure or delay of either party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, or any course of conduct, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the parties hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have hereunder.
g. This Agreement (including the schedule hereto) constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, among the parties, with respect to the subject matter hereof. Except as set forth in Section 11(d) and Section 11(k) with respect to the persons specifically referenced therein, and their right to enforce payment of the Subscription Amount in accordance with the terms and subject to the conditions set forth in this Agreement, this Agreement shall not confer any rights or remedies upon any person other than the parties hereto, and their respective successor and assigns.
h. Except as otherwise provided herein, this Agreement shall be binding upon, and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives, and permitted assigns, and the agreements, representations, warranties, covenants and acknowledgments contained herein shall be deemed to be made by, and be binding upon, such heirs, executors, administrators, successors, legal representatives and permitted assigns.
i. If any provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby and shall continue in full force and effect.
j. This Agreement may be executed in one or more counterparts (including by facsimile or electronic mail or in ..pdf) and by different parties in separate counterparts, with the same effect as if all parties hereto had signed the same document. All counterparts so executed and delivered shall be construed together and shall constitute one and the same agreement.
k. The parties hereto agree that irreparable damage may occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement, without posting a bond or undertaking and without proof of damages, to enforce specifically the terms and provisions of this Agreement, this being in addition to any other remedy to which such party is entitled at law, in equity, in contract, in tort or otherwise. The parties hereto acknowledge and agree that Electriq Power shall be entitled to seek specifically and enforce the Investor’s obligations to fund the Subscription Amount in accordance with the terms and subject to the conditions set forth in this Agreement.
l. Any notice or communication required or permitted hereunder shall be in writing and either delivered personally, emailed or sent by overnight mail via a reputable overnight carrier, or sent by certified or registered mail, postage prepaid, and shall be deemed to be given and received (i) when so delivered personally, (ii) when sent, with no mail undeliverable or other rejection notice, if sent by email, or (iii) three (3) business days after the date of mailing to the address below or to such other address or addresses as such person may hereafter designate by notice given hereunder:
| (i) | if to the Investor, to such address(es) or email address(es) set forth herein; |
| (ii) | if to, prior to the Closing, the Company, to: |
c/o TLG Acquisition Founder LLC
515 North Flagler Drive, Suite 520
West Palm Beach, FL 33401
Attention: John Michael Lawrie, Chief Executive Officer
Email: mikelawrie@tlgholding.com
with required copies to (which copies shall not constitute notice):
Gibson, Dunn & Crutcher LLP
811 Main Street, Suite 3000
Houston, TX 77002-6117
Attention: Gerald M. Spedale
Chris Trester
Email: gspedale@gibsondunn.com
ctrester@gibsondunn.com
Electriq Power, Inc.
625 N. Flagler Drive, Suite 520
West Palm Beach, FL 33401
Attention: Legal Department
Email: Jim.vanhoof@electriqpower.com
Ellenoff, Grossman & Schole LLP
1345 Avenue of the Americas
New York, NY 10105
Attention: David Landau
Anthony Ain
Email: dlandau@egsllp.com
aain@egsllp.com
m. The Investor shall pay all of its own expenses in connection with this Agreement and the transactions contemplated herein.
n. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND THE SUPREME COURT OF THE STATE OF NEW YORK SOLELY IN RESPECT OF THE INTERPRETATION AND ENFORCEMENT OF THE PROVISIONS OF THIS AGREEMENT AND THE DOCUMENTS REFERRED TO IN THIS AGREEMENT AND IN RESPECT OF THE TRANSACTIONS CONTEMPLATED HEREBY, AND HEREBY WAIVE, AND AGREE NOT TO
ASSERT, AS A DEFENSE IN ANY ACTION, SUIT OR PROCEEDING FOR INTERPRETATION OR ENFORCEMENT HEREOF OR ANY SUCH DOCUMENT THAT IS NOT SUBJECT THERETO OR THAT SUCH ACTION, SUIT OR PROCEEDING MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN SAID COURTS OR THAT VENUE THEREOF MAY NOT BE APPROPRIATE OR THAT THIS AGREEMENT OR ANY SUCH DOCUMENT MAY NOT BE ENFORCED IN OR BY SUCH COURTS, AND THE PARTIES HERETO IRREVOCABLY AGREE THAT ALL CLAIMS WITH RESPECT TO SUCH ACTION, SUIT OR PROCEEDING SHALL BE HEARD AND DETERMINED BY SUCH A NEW YORK STATE OR FEDERAL COURT. THE PARTIES HEREBY CONSENT TO AND GRANT ANY SUCH COURT JURISDICTION OVER THE PERSON OF SUCH PARTIES AND OVER THE SUBJECT MATTER OF SUCH DISPUTE AND AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH SUCH ACTION, SUIT OR PROCEEDING IN THE MANNER PROVIDED IN THIS SECTION 11(n) OF THIS AGREEMENT OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW SHALL BE VALID AND SUFFICIENT SERVICE THEREOF.
o. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; (II) SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THE FOREGOING WAIVER; (III) SUCH PARTY MAKES THE FOREGOING WAIVER VOLUNTARILY AND (IV) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION 11(o).
12. Non-Reliance and Exculpation. The Investor acknowledges that it is not relying upon, and has not relied upon, any statement, representation or warranty made by any person, firm or corporation (including, without limitation, the Company, Electriq Power or any of the respective affiliates and any of the respective subsidiaries, control persons, officers, directors, employees, partners, agents or representatives of any of the foregoing), other than the statements, representations and warranties of the Company expressly contained in Section 5 of this Agreement, in making its investment or decision to invest in the Company. The Investor agrees that none of (i) any other investor pursuant to, arising out of or relating to this Agreement or any Other Securities Purchase Agreement related to the private placement of the Securities (including the respective controlling persons, officers, directors, partners, agents, and any representatives of any of the foregoing) or (ii) any other party to the Transaction Agreement (for the avoidance of doubt, other than the Company), including any such party’s representatives, affiliates or any of its or their control persons, officers, directors, employees or representatives that is not a party hereto, shall be liable to the Investor, or to any other investor, pursuant to this Agreement or any Other Securities Purchase Agreement related to the private placement of the Securities, the negotiation hereof or thereof or its subject matter, or the transactions contemplated hereby or thereby, including, without limitation, for any action heretofore or hereafter taken or omitted to be taken by any of them in connection with the purchase of the Securities or with respect to any claim (whether in tort, contract or otherwise) for breach of this Agreement or in respect of any written or oral representations made or alleged to be made in connection herewith, as expressly provided herein, or for any actual or alleged inaccuracies, misstatements or omissions with respect to any information or materials of any kind furnished by the Company, Electriq Power or any
Non-Party Affiliates concerning the Company, Electriq Power or any of the respective affiliates and any of the respective subsidiaries, control persons, officers, directors, employees, partners, agents or representatives of the foregoing, this Agreement or the transactions contemplated hereby. For purposes of this Agreement, “Non-Party Affiliates” means each former, current or future officer, director, employee, partner, member, manager, direct or indirect equityholder or affiliate of the Company, Electriq Power or any of the respective affiliates or any of their respective subsidiaries, control persons, officers, directors, employees, partners, agents or representatives or any family member of the foregoing.
13. Disclosure. The Company shall within the time period required by the Exchange Act following the date of this Agreement, issue one or more press releases or file with the SEC a Current Report on Form 8-K (collectively, the “Disclosure Document”) disclosing all material terms of the transactions contemplated hereby and by the Other Securities Purchase Agreements, the Transaction and any other material, nonpublic information that the Company has provided to the Investor at any time prior to the filing of the Disclosure Document. Upon the issuance of the Disclosure Document, to the knowledge of the Company, the Investor shall not be in possession of any material, nonpublic information received from the Company or any of its officers, directors, or employees or agents, and the Investor shall no longer be subject to any confidentiality or similar obligations under any current agreement, whether written or oral, with the Company or any of their respective affiliates, relating to the transactions contemplated by this Agreement. The Investor hereby consents to (i) the publication and disclosure in the Disclosure Document and (ii) as and to the extent otherwise required by the federal securities laws, exchange rules, the SEC or any other securities authorities or any rules and regulations promulgated thereby, any other documents or communications provided by the Company or Electriq Power to any governmental entity or to any securityholders of the Company, of the Investor’s identity and beneficial ownership of the subscribed Securities and the nature of the Investor’s commitments, arrangements and understandings under and relating to this Agreement and, if deemed appropriate by the Company or Electriq Power, a copy of this Agreement, all solely to the extent required by applicable law or any regulation or stock exchange listing requirement. The Investor will promptly provide any information reasonably requested by the Company for any regulatory application or filing made or approval sought in connection with the Transaction (including filings with the SEC).
14. Non-Recourse. This Agreement may only be enforced against, and any claim or cause of action based upon, arising out of, or related to any breach of any term or condition of this Agreement may only be brought against, the entities that are expressly named as parties hereto and then only to the extent of the specific obligations set forth herein with respect to such party.
15. Independent Obligation. The obligations of the Investor under this Agreement are several and not joint with the obligations of any Other Investor under any Other Securities Purchase Agreements, and the Investor shall not be responsible in any way for the performance of the obligations of any Other Investor under any Other Securities Purchase Agreement. The decision of the Investor to purchase Securities pursuant to this Agreement has been made by the Investor independently of any Other Investor and independently of any information, materials, statements or opinions as to the business, affairs, operations, assets, properties, liabilities, results of operations, condition (financial or otherwise) or prospects of the Company or any of its subsidiaries which may have been made or given by any Other Investor or by any agent or employee of any Other Investor, and neither the Investor nor any of its agents or employees shall have any liability to any Other Investor (or any other person) relating to or arising from any such information, materials, statements or opinions. Nothing contained herein or in any Other Securities Purchase Agreement, and no action taken by the Investor or any Other Investors pursuant hereto or thereto, shall be deemed to constitute the Investor and Other Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investor and Other Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this Agreement and the Other Securities Purchase Agreements. The Investor acknowledges that no Other
Investor has acted as agent for the Investor in connection with making its investment hereunder and no Other Investor will be acting as agent of the Investor in connection with monitoring its investment in the Securities or enforcing its rights under this Agreement. The Investor shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any Other Investor or investor to be joined as an additional party in any proceeding for such purpose.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the Investor has executed or caused this Agreement to be executed by its duly authorized representative as of the date set forth below.
| Name of Investor: O’Shanter Development Company Ltd. | State/Country of Formation or Domicile: | |||||||
| By: | /s/ Jonathan Krehm | |||||||
| Name: | Jonathan Krehm | |||||||
| Title: | President and Secretary | |||||||
| Name in which Securities are to be registered (if different): | Date: | 7/28/2023 | ||||||
| Investor’s EIN: | ||||||||
| Investor status (mark one): | ☐ | U.S. investor X Non U.S. investor | ||||||
| Business Address-Street: | Mailing Address-Street (if different): | |||||||
| City, State, Zip: | City, State, Zip: | |||||||
| Attn: | Attn: | |||||||
| Telephone No.: | Telephone No.: | |||||||
| Facsimile No.: | Facsimile No.: | |||||||
| Email: | Email: | |||||||
| Number of Subscribed Shares subscribed for: | 100,000 | |||||||
| Number of Preferred Shares issued: | 50,000 | |||||||
| Aggregate Subscription Amount: $1,000,000 | Price Per Subscribed Share: $10.00 | |||||||
You must pay the Subscription Amount by wire transfer of United States dollars in immediately available funds to the account specified by the Company in the Closing Notice and/or cancellation or conversion of indebtedness of the Company or Electriq Power. To the extent the offering is oversubscribed, the number of Subscribed Shares received may be less than the number of Subscribed Shares subscribed for (such reduction, a “Cutback”). Any Cutback will be made pro rata based on the respective number of Subscribed Shares that all persons participating in the offering of Securities contemplated by this Agreement request to purchase.
IN WITNESS WHEREOF, the Company has accepted this Agreement as of the date set forth below.
| TLG ACQUISITION ONE CORP. | ||
| By: | /s/ John Michael Lawrie | |
| Name: | John Michael Lawrie | |
| Title: | Chief Executive Officer | |
Date: 7/28/2023
Exhibit 14.1
CODE OF BUSINESS CONDUCT AND ETHICS
OF
ELECTRIQ POWER HOLDINGS, INC.
| 1 | Introduction |
The Board of Directors (the “Board”) of Electriq Power Holdings, Inc., a Delaware corporation (the “Company”) has adopted this Code of Business Conduct and Ethics (this “Code”), as amended from time to time by the Board and which is applicable to all of the Company’s directors, officers, employees, contractors and consultants. To the extent this Code requires a higher standard than required by commercial practice or applicable laws, rules or regulations, the Company adheres to these higher standards.
This Code applies to all of our directors, officers and employees. We refer to all Company executive and subordinate officers and employees covered by this Code as “Company employees” or simply “employees,” unless the context otherwise requires. In this Code, we refer to our principal executive officer, principal financial officer, principal accounting officer and controller, or persons performing similar functions, as our “principal financial officers.”
This Code is intended to supplement, and not replace, the various guidelines and documents that the Company has prepared on specific laws, rules, regulations and policies that all officers, directors and employees of the Company should be aware of, such as the Company’s Employee Handbook and Insider Trading Policy.
It is the Company’s policy that all Company directors, officers and employees:
| • | promote honest and ethical conduct, including fair dealing and the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; |
| • | promote the full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with, or submits to, the Securities and Exchange Commission (the “SEC”), as well as in other public communications made by or on behalf of the Company; |
| • | promote compliance with applicable governmental laws, rules and regulations; |
| • | protect the Company’s legitimate business interests, including corporate opportunities, assets and confidential information; |
| • | deter wrongdoing; and |
| • | require prompt internal reporting of breaches of, and accountability for adherence to, this Code. |
This Code may be amended and modified by the Board. In this Code, references to the “Company” means Electriq Power Holdings, Inc. and, in appropriate context, the Company’s subsidiaries, if any.
| 2 | Honest, Ethical and Fair Conduct |
Each person owes a duty to the Company to act with integrity. Integrity requires, among other things, being honest, fair and candid. Deceit, dishonesty and subordination of principle are inconsistent with integrity. Service to the Company should never be subordinated to personal gain or advantage.
Each person must:
| • | act with integrity, including being honest and candid while still maintaining the confidentiality of the Company’s information where required or when in the Company’s interests; |
| • | observe all applicable governmental laws, rules and regulations; |
| • | comply with the requirements of applicable accounting and auditing standards, as well as Company policies, in order to maintain a high standard of accuracy and completeness in the Company’s financial records and other business-related information and data; |
| • | adhere to a high standard of business ethics and not seek competitive advantage through unlawful or unethical business practices; |
| • | deal fairly with the Company’s customers, suppliers, competitors and employees; |
| • | refrain from taking advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair-dealing practice; |
| • | protect the assets of the Company and ensure their proper use; |
| • | until such time as such person ceases to be an officer or director of the Company, to first present to the Company for its consideration, prior to presentation to any other entity, any business opportunity suitable for the Company, subject to any pre-existing fiduciary or contractual obligations such officer may have or as otherwise set forth in the prospectus related to the Company’s initial public offering; and |
| • | avoid conflicts of interest, wherever possible, except as may be allowed under guidelines or resolutions approved by the Board (or the appropriate committee of the Board) or as disclosed in the Company’s public filings with the SEC. |
A conflict of interest can arise whenever an officer, director or employee, takes action or has an interest that prevents that person from performing their Company duties and responsibilities honestly, objectively and effectively. Anything that would be a conflict for a person subject to this Code also will be a conflict for that person’s family members. For purposes of this Code, “family members” includes your spouse or life-partner, siblings, parents, aunts, uncles, nieces, nephews, cousins, in-laws and children whether such relationships are by blood or adoption. Examples of conflict of interest situations include, but are not limited to, the following:
| • | any significant ownership interest in any supplier or customer; |
| • | any consulting or employment relationship with any supplier, customer or competitor of the Company; |
| • | serving on a board of directors or trustees or on a committee of any entity (whether profit or not-for-profit) whose interests reasonably would be expected to conflict with those of the Company; |
| • | the receipt of any money, non-nominal gifts or excessive entertainment from any entity with which the Company has current or prospective business dealings; |
| • | selling anything to the Company or buying anything from the Company, except on the same terms and conditions as comparable officers or directors are permitted to so purchase or sell; |
| • | any other financial transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) involving the Company; and |
| • | any other circumstance, event, relationship or situation in which the personal interest of a person subject to this Code interferes — or even appears to interfere — with the interests of the Company as a whole. |
| 3 | Corporate Opportunities |
As an officer, director or employee of the Company, you have an obligation to advance the Company’s interests when the opportunity to do so arises. If you discover or are presented with a corporate opportunity through the use of corporate property or information or because of your position with the Company, you should first present the corporate opportunity to the Company before pursuing the opportunity in your individual capacity. No officer, director or employee may use corporate property, information or his or her position with the Company for personal gain or compete with the Company while employed by or associated with the Company.
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You should disclose to your supervisor the terms and conditions of each business opportunity covered by this Code that you wish to pursue. Your supervisor will contact the Company’s chief legal officer and the appropriate management personnel to determine whether the Company wishes to pursue the business opportunity. If the Company waives its right to pursue the business opportunity, you may pursue the business opportunity on the same terms and conditions as originally proposed and consistent with the other ethical guidelines set forth in this Code.
| 4 | Confidential Information |
Officers, directors and employees have access to a variety of confidential information regarding the Company. Confidential information includes all non-public information that might be of use to competitors, or, if disclosed, harmful to the Company or its counterparties, collaborators, customers or suppliers. Officers, directors and employees have a duty to safeguard all confidential information of the Company or third parties with which the Company conducts business, except when disclosure is authorized or legally mandated. Unauthorized disclosure of any confidential information is prohibited. Additionally, officers, directors and employees should take appropriate precautions to ensure that confidential or sensitive business information, whether it is proprietary to the Company or another company, is not communicated within the Company except to employees and directors who have a need to know such information to perform their responsibilities for the Company. An officer’s, director’s and employee’s obligation to protect confidential information continues after he or she leaves the Company. Unauthorized disclosure of confidential information could cause competitive harm to the Company or its counterparties, collaborators, customers or suppliers and could result in legal liability to you and the Company. Any questions or concerns regarding whether disclosure of Company information is legally mandated should be promptly referred to the Company’s chief legal officer.
| 5 | Competition and Fair Dealing |
Officers, directors and employees should not take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair-dealing practice. Officers, directors and employees should maintain and protect any intellectual property licensed from licensors with the same care as they employ with regard to Company-developed intellectual property.
| 6 | Disclosure |
The Company strives to ensure that the contents of and the disclosures in the reports and documents that the Company files with the SEC and other public communications shall be full, fair, accurate, timely and understandable in accordance with applicable disclosure standards, including standards of materiality, where appropriate. Each person must:
| • | not knowingly misrepresent, or cause others to misrepresent, facts about the Company to others, whether within or outside the Company, including to the Company’s independent registered public accountants, governmental regulators, self-regulating organizations and other governmental officials, as appropriate; and |
| • | in relation to his or her area of responsibility, properly review and critically analyze proposed disclosure for accuracy and completeness. |
In addition to the foregoing, the Chief Executive Officer and Chief Financial Officer of the Company and each subsidiary of the Company (or persons performing similar functions), and each other person that typically is involved in the financial reporting of the Company must familiarize himself or herself with the disclosure requirements applicable to the Company as well as the business and financial operations of the Company.
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Each person must promptly bring to the attention of the Chairman of the Board any information he or she may have concerning (a) significant deficiencies in the design or operation of internal and/or disclosure controls that could adversely affect the Company’s ability to record, process, summarize and report financial data or (b) any fraud that involves management or other employees who have a significant role in the Company’s financial reporting, disclosures or internal controls.
| 7 | Compliance |
It is the Company’s obligation and policy to comply with all applicable governmental laws, rules and regulations. All directors, officers and employees of the Company are expected to understand, respect and comply with all of the laws, regulations, policies and procedures that apply to them in their positions with the Company. Employees are responsible for talking to their supervisors to determine which laws, regulations and Company policies apply to their position and what training is necessary to understand and comply with them.
Directors, officers and employees are directed to specific policies and procedures available to persons they supervise.
| 8 | Protection and Use of Company Assets |
Employees should protect the Company’s assets and ensure their efficient use for legitimate business purposes only and not for any personal benefit or the personal benefit of anyone else. Theft, carelessness and waste have a direct impact on the Company’s financial performance. The use of Company funds or assets, whether or not for personal gain, for any unlawful or improper purpose is prohibited. Employees should be aware that Company property includes all data and communications transmitted or received to or by, or contained in, the Company’s electronic or telephonic systems. Company property also includes all written communications. Employees and other users of this property should have no expectation of privacy with respect to these communications and data. Employees may not copy, retrieve, modify or forward copyrighted materials, except with permission or as a single copy to reference only. Transmission of customer information should be encrypted as applicable. To the extent permitted by law, the Company has the ability, and reserves the right, to monitor all electronic and telephonic communication. These communications may also be subject to disclosure to law enforcement or government officials.
| 9 | Reporting and Accountability |
The Board is responsible for applying this Code to specific situations in which questions are presented to it and has the authority to interpret this Code in any particular situation. The Company requires that officers, directors and employees disclose any situation that reasonably would be expected to give rise to a conflict of interest. If you suspect that you have a situation that could give rise to a conflict of interest, you must report it in writing to the Company’s chief legal officer. Any person who becomes aware of any existing or potential breach of this Code is required to notify the Chairman of the Board promptly. Failure to do so is, in and of itself, a breach of this Code.
Specifically, each person must:
| • | Notify the Chairman of the Board promptly of any existing or potential violation of this Code; and |
| • | Not retaliate against any other person for reports of potential violations that are made in good faith. |
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The Company will follow the following procedures in investigating and enforcing this Code and in reporting on the Code:
| • | The Board will take all appropriate action to investigate any breaches reported to it. |
| • | Upon determination by the Board that a breach has occurred, the Board (by majority decision) will take or authorize such disciplinary or preventive action as it deems appropriate, after consultation with the Company’s General Counsel (or outside counsel), up to and including dismissal or, in the event of criminal or other serious violations of law, notification of the SEC or other appropriate law enforcement authorities. |
No person following the above procedure shall, as a result of following such procedure, be subject by the Company or any officer or employee thereof to discharge, demotion suspension, threat, harassment or, in any manner, discrimination against such person in terms and conditions of employment.
It is Company policy that any officer, director or employee who violates this Code will be subject to appropriate discipline, which may include termination of employment or, in the case of a director, a request that such director resign from the Board of Directors. This determination will be based upon the facts and circumstances of each particular situation. If you are accused of violating this Code, you will be given an opportunity to present your version of the events at issue prior to any determination of appropriate discipline, if any. Officers, directors and employees who violate the law or this Code may expose themselves to substantial civil damages, criminal fines and prison terms. The Company may also face substantial fines and penalties and may incur damage to its reputation and standing in the community. Your conduct as a representative of the Company, if it does not comply with the law or with this Code, can result in serious consequences for both you and the Company.
| 10 | Policy Against Retaliation |
The Company prohibits retaliation against an officer, director or employee who, in good faith, seeks help or reports known or suspected violations or potential conflicts of interest. If an officer, director or employee believes that they have been retaliated against, he or she should speak with the Human Resources Director. Any reprisal or retaliation against an employee because the employee, in good faith, sought help or filed a report will be subject to disciplinary action, including potential termination of employment.
| 11 | Waivers and Amendments |
Any waiver (defined below) or an implicit waiver (defined below) from a provision of this Code for the principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions or any amendment (as defined below) to this Code is required to be disclosed in a current report on Form 8-K filed with the SEC. In lieu of filing a current report on Form 8-K to report any such waivers or amendments, the Company may provide such information on its website and if it keeps such information on the website for at least 12 months and discloses the website address as well as any intention to provide such disclosures in this manner in its most recently filed Annual Report on Form 10-K.
A “waiver” means the approval by the Company’s Board of a material departure from a provision of the Code. An “implicit waiver” means the Company’s failure to take action within a reasonable period of time regarding a material departure from a provision of the Code that has been made known to an executive officer of the Company. An “amendment” means any amendment to this Code other than minor technical, administrative or other non-substantive amendments hereto.
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| 12 | Insider Information and Securities Trading |
The Company’s directors, officers or employees who have access to material, non-public information are not permitted to use that information for share trading purposes or for any purpose unrelated to the Company’s business. It is also against the law to trade or to “tip” others who might make an investment decision based on inside company information. For example, using non-public information to buy or sell the Company shares, options in the Company shares or the shares of any Company supplier, customer or competitor is prohibited. The consequences of insider trading violations can be severe. These rules also apply to the use of material, nonpublic information about other companies (including, for example, our customers, competitors and potential business partners). In addition to directors, officers or employees, these rules apply to such person’s spouse, children, parents and siblings, as well as any other family members living in such person’s home. All of the Company’s directors, officers and employees must familiarize themselves and comply with the Company’s Insider Trading Policy.
| 13 | Financial Statements and Other Records |
All of the Company’s books, records, accounts and financial statements must be maintained in reasonable detail, must appropriately reflect the Company’s transactions and must both conform to applicable legal requirements and to the Company’s system of internal controls. Unrecorded or “off the books” funds or assets should not be maintained unless permitted by applicable law or regulation. All Company records must be complete, accurate and reliable in all material respects.
Records should always be retained or destroyed according to the Company’s record retention policies. In accordance with those policies, in the event of litigation or governmental investigation, please consult the board of directors or the Company’s counsel.
| 14 | Improper Influence on Conduct of Audits |
No director or officer, or any other person acting under the direction thereof, shall directly or indirectly take any action to coerce, manipulate, mislead or fraudulently influence any public or certified public accountant engaged in the performance of an audit or review of the financial statements of the Company or take any action that such person knows or should know that if successful could result in rendering the Company’s financial statements materially misleading. Any person who believes such improper influence is being exerted should report such action to such person’s supervisor or Chief Financial Officer, or if that is impractical under the circumstances, to any of our directors.
Types of conduct that could constitute improper influence include, but are not limited to, directly or indirectly:
| • | Offering or paying bribes or other financial incentives, including future employment or contracts for non-audit services; |
| • | Providing an auditor with an inaccurate or misleading legal analysis; |
| • | Threatening to cancel or canceling existing non-audit or audit engagements if the auditor objects to the Company’s accounting; |
| • | Seeking to have a partner removed from the audit engagement because the partner objects to the Company’s accounting; |
| • | Blackmailing; and |
| • | Making physical threats. |
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| 15 | Anti-Corruption Laws |
The Company complies with the anti-corruption laws of the countries in which it does business, including the U.S. Foreign Corrupt Practices Act (FCPA). Directors, officers and employees will not directly or indirectly give anything of value to government officials, including employees of state-owned enterprises or foreign political candidates. These requirements apply both to Company employees and agents, such as third party sales representatives, no matter where they are doing business. If you are authorized to engage agents, you are responsible for ensuring they are reputable and for obtaining a written agreement to uphold the Company’s standards in this area.
| 16 | Violations |
All directors, officers and employees have a duty to report any known or suspected violation of this Code, including violations by the Company’s agents or violations of the laws, rules, regulations or policies that apply to the Company. Violation of this Code is grounds for disciplinary action up to and including termination of employment. Such action is in addition to any civil or criminal liability which might be imposed by any court or regulatory agency.
| 17 | Gifts and Entertainment |
The giving and receiving of gifts can be a common business practice. Appropriate business gifts and entertainment are welcome courtesies designed to build relationships and understanding among business partners. Gifts and entertainment, however, should not compromise, or appear to compromise, your ability to make objective and fair business decisions. In addition, it is important to note that the giving and receiving of gifts are subject to a variety of laws, rules and regulations applicable to the Company’s operations. These include, without limitation, laws covering the marketing of products, bribery and kickbacks. You are expected to understand and comply with all laws, rules and regulations that apply to activities you engage in when acting on the Company’s behalf.
It is your responsibility to use good judgment in this area. As a general rule, you may give or receive gifts or entertainment to or from collaborators, customers or suppliers only if the gift or entertainment is infrequent, modest, intended to further legitimate business goals, in compliance with applicable law, and provided the gift or entertainment would not be viewed as an inducement to or reward for any particular business decision. All gifts and entertainment expenses should be properly accounted for on expense reports.
If you conduct business in other countries, you must be particularly careful that gifts and entertainment are not construed as bribes, kickbacks or other improper payments.
You should make every effort to refuse or return a gift that is beyond these permissible guidelines. If it would be inappropriate to refuse a gift or you are unable to return a gift, you should promptly report the gift to your supervisor. Your supervisor will bring the gift to the attention of the chief legal officer, who may require you to donate the gift to an appropriate community organization. If you have any questions about whether it is permissible to accept a gift or something else of value, contact your supervisor or a principal financial officer for additional guidance.
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Note: Gifts and entertainment may not be offered or exchanged under any circumstances to or with any employees of the United States or any foreign government or state, city, provincial or local governments. If you have any questions about this policy, contact your supervisor or the Company’s chief legal officer for additional guidance.
| 18 | Other Policies and Procedures |
Any other policy or procedure set out by the Company in writing or made generally known to employees, officers or directors of the Company prior to the date hereof or hereafter are separate requirements and remain in full force and effect.
| 19 | Inquiries |
This Code is not intended to be a comprehensive rulebook and cannot address every situation that you may face. If you feel uncomfortable about a situation or have any doubts about whether it is consistent with the Company’s ethical standards, seek help. All inquiries and questions in relation to this Code or its applicability to particular people or situations should be addressed to the Company’s chief legal officer or chief compliance officer, or such other compliance officer as shall be designated from time to time by the Company.
| 20 | Conclusion |
This Code contains general guidelines for conducting the business of the Company consistent with the highest standards of business ethics. If you have any questions about these guidelines, please contact your supervisor or the Company’s chief legal officer. The Company expects all of its employees and directors to adhere to these standards.
This Code, as applied to the Company’s principal financial officers, shall be our “code of ethics” within the meaning of Section 406 of the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder.
This Code and the matters contained herein are neither a contract of employment nor a guarantee of continuing Company policy. The Company reserves the right to amend, supplement or discontinue this Code and the matters addressed herein, without prior notice, at any time.
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PROVISIONS FOR CHIEF EXECUTIVE OFFICER AND SENIOR FINANCIAL OFFICERS
The Chief Executive Officer and all senior financial officers, including the Chief Financial Officer and principal accounting officer, are bound by the provisions set forth therein relating to ethical conduct, conflicts of interest, and compliance with law. In addition to the Code, the Chief Executive Officer and senior financial officers are subject to the following specific policies, under which each of them must:
1. Act with honesty and integrity, avoiding actual or apparent conflicts between personal, private interests and the interests of the Company, including receiving improper personal benefits as a result of his or her position.
2. Disclose to the Board (and the Chief Executive Officer in the case of a senior financial officer) any material transaction or relationship that reasonably could be expected to give rise to a conflict of interest.
3. Perform responsibilities with a view to causing periodic reports and documents filed with or submitted to the SEC and all other public communications made by the Company to contain information that is accurate, complete, fair, objective, relevant, timely and understandable, including full review of all annual and quarterly reports.
4. Comply with laws, rules and regulations of federal, state and local governments applicable to the Company and with the rules and regulations of private and public regulatory agencies having jurisdiction over the Company.
5. Act in good faith, responsibly, with due care, competence and diligence, without misrepresenting or omitting material facts or allowing independent judgment to be compromised or subordinated.
6. Respect the confidentiality of information acquired in the course of performance of his or her responsibilities except when authorized or otherwise legally obligated to disclose any such information; not use confidential information acquired in the course of performing his or her responsibilities for personal advantage.
7. Share knowledge and maintain skills important and relevant to the needs of the Company, its stockholders and other constituencies and the general public.
8. Proactively promote ethical behavior among subordinates and peers in his or her work environment and community.
9. Use and control all corporate assets and resources employed by or entrusted to him or her in a responsible manner.
10. Not use corporate information, corporate assets, corporate opportunities or his or her position with the Company for personal gain; not compete directly or indirectly with the Company.
11. Comply in all respects with the Company’s Code.
12. Advance the Company’s legitimate interests when the opportunity arises.
The Board will investigate any reported violations and will oversee an appropriate response, including corrective action and preventative measures. Any officer who violates this Code will face appropriate, case specific disciplinary action, which may include demotion or discharge.
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Any request for a waiver of any provision of this Code must be in writing and addressed to the Chairman of the Board. Any waiver of this Code will be disclosed promptly on Form 8-K or any other means approved by the SEC.
It is the policy of the Company that each officer covered by this Code shall acknowledge and certify to the foregoing annually and file a copy of such certification with the Chairman of the Board of Directors.
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ACKNOWLEDGEMENT
I have read and understand the foregoing Code. I hereby certify that I am in compliance with the foregoing Code, and I will comply with the Code in the future. I understand that any violation of the Code will subject me to appropriate disciplinary action, which may include demotion or discharge.
| Dated: | ||
| Name: | ||
| Signature: | ||
| Title: | ||
11
Exhibit 16.1
August 4, 2023
Office of the Chief Accountant
Securities and Exchange Commission
100 F Street, NE
Washington, D.C. 20549
Ladies and Gentlemen:
We have read Electriq Power Holdings, Inc.’s (formerly known as TLG Acquisition One Corp.) statements included under Item 4.01 of its Form 8-K dated August 4, 2023. We agree with the statements concerning our Firm under Item 4.01, in which we were informed of our dismissal on July 31, 2023. We are not in a position to agree or disagree with other statements contained therein.
Very truly yours,
WithumSmith+Brown, PC
New York, New York
Exhibit 21.1
SUBSIDIARIES
| Legal Name |
State of Organization | |
| Electriq Power, Inc. | Delaware | |
| Parlier Home Solar, LLC | California | |
| Santa Barbara Home Power Program, LLC | California | |
| Electriq Microgrid Services LLC | Delaware |
Exhibit 99.1
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Defined terms included below have the same meaning as terms defined and included elsewhere in this Current Report on Form 8-K and, if not defined in the Form 8-K, the Registration Statement on Form S-4 (File No. 333-268349) (the “Registration Statement”). Unless the context otherwise requires, the “Company” or “New Electriq” refers to Electriq Power Holdings, Inc. after the Closing, “TLG” refers to TLG Acquisition One Corp. prior to the Closing, and “Electriq” refers to Electriq Power, Inc. prior to the Closing.
Introduction
The following unaudited pro forma condensed combined financial information presents the combination of the financial data of Electriq and TLG adjusted to give effect to the Business Combination and other transactions contemplated by the Merger Agreement as amended. The following unaudited pro forma condensed combined 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 unaudited pro forma condensed combined balance sheet as of March 31, 2023 gives pro forma effect to the Business Combination and other transaction adjustments, as summarized below, as if each had been consummated as of that date. The unaudited pro forma combined statements of operations for the periods ended March 31, 2023 and December 31, 2022 give pro forma effect to the Business Combination as if it had occurred as of January 1, 2022. The historical condensed financial information of TLG was derived from the unaudited condensed consolidated financial statements of TLG as of and for three months ended March 31, 2023 and the audited condensed financial statements for the year ended December 31, 2022, included elsewhere in the Registration Statement. The historical condensed financial information of Electriq was derived from the unaudited condensed consolidated financial statements of Electriq as of and for the three months ended March 31, 2023 and the audited consolidated financial statements for the year ended December 31, 2022, included elsewhere in the Registration Statement.
This information should be read together with Electriq’s and TLG’s respective unaudited condensed combined consolidated financial statements and related notes, “Electriq’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “TLG’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other financial information included elsewhere in the Registration Statement.
The unaudited pro forma condensed combined balance sheet as of March 31, 2023 has been prepared using the following:
| • | Electriq’s unaudited historical condensed consolidated balance sheet as of March 31, 2023, as included in the Registration Statement; and |
| • | TLG’s unaudited historical condensed consolidated balance sheet as of March 31, 2023, as included in the Registration Statement. |
The unaudited pro forma combined statement of operations for the three months ended March 31, 2023 has been prepared using the following:
| • | Electriq’s unaudited historical condensed consolidated statement of operations for the three months ended March 31, 2023, as included in the Registration Statement; and |
| • | TLG’s unaudited historical condensed consolidated statement of operations for the three months ended March 31, 2023, as included in the Registration Statement. |
The unaudited pro forma combined statement of operations for the year ended December 31, 2022 has been prepared using the following:
| • | Electriq’s audited historical consolidated statement of operations for the year ended December 31, 2022, as included in the Registration Statement; and |
| • | TLG’s audited historical consolidated statement of operations for the year ended December 31, 2022, as included in the Registration Statement. |
Description of the Business Combination
On November 13, 2022, TLG entered into the Merger Agreement with Electriq, which was amended on December 23, 2022, March 22, 2023 and June 8, 2023. The Business Combination was completed on July 31, 2023. At the Closing, Merger Sub merged with and into Electriq, with Electriq surviving such merger as a wholly-owned subsidiary of TLG. The separate corporate existence of Electriq ceased and the Electriq equityholders became equityholders of TLG, which changed its name to Electriq Power Holdings, Inc.
As part of the Merger, Electriq equityholders received aggregate merger consideration, consisting of 27,500,000 shares of TLG’s common stock, par value $0.0001 per share, at an assumed value of $10.00 per share or $275,000,000, plus 3,528,750 additional shares of TLG common stock, being equal to the quotient obtained by dividing (x) the amount of equity raised by Electriq in any equity, debt or similar investments obtained by Electriq prior to closing of the Merger in connection with a private capital raise, by (y) $8.00. In addition, holders of Electriq’s Series B Cumulative Redeemable Preferred Stock, par value $0.0001 per share received 1,411,500 shares of TLG’s Series A Cumulative Redeemable Preferred Stock, par value $0.0001 per share, being equal to the number of shares of Electriq cumulative preferred stock outstanding immediately prior to the closing of the Merger multiplied by the Exchange Ratio. The TLG preferred stock has a cumulative dividend, payable in kind, of 15% per share, plus any accrued and unpaid dividends on each such share, and is subject to mandatory redemption on the third anniversary of the original issue date of such shares, payable either in cash or in TLG common stock, at the option of the holder. As part of the merger consideration, holders of Electriq’s options not exercised prior to the Merger received replacement options to purchase shares of TLG common stock based on the value of the merger consideration per share of Electriq common stock.
In June 2023, certain investors entered into subscription agreements with Electriq to purchase shares of Electriq common stock for $18.1 million, including (i) $10.0 million from John Michael Lawrie, the Chief Executive Officer of TLG and Chairman of the TLG board of directors, (ii) $4.5 million from an affiliate of an existing Electriq stockholder, (iii) $2.5 million in the aggregate from funds managed by GBIF Management Ltd. and another Electriq stockholder, and (iv) $1.1 million from new Electriq investors. In addition, on June 8, 2023, certain noteholders of Electriq entered into subscription agreements with Electriq pursuant to which such investors converted approximately $10.1 million of Electriq notes, including accrued interest (excluding the Lawrie Notes), into shares of Electriq common stock plus additional shares of Electriq common stock and Electriq cumulative preferred stock as an incentive.
In connection with the Pre-Closing Financings and Pre-Closing Loan Conversion, Mr. Lawrie, the Additional Investor, the Pre-Closing Electriq Investors and the Electriq noteholders received shares of Electriq common stock and shares of Electriq cumulative preferred stock as an incentive for their investment. Upon conversion in the Merger, the shares of Electriq common stock and Electriq cumulative preferred stock received in the Electriq Incentive converted into shares of TLG common stock and shares of TLG preferred stock.
In June and July 2023, certain investors entered into subscription agreements with TLG to purchase 650,000 shares of TLG common stock for $6.5 million, including (i) $5.0 million from Mr. Lawrie for 500,000 shares of TLG common stock and (ii) $1.5 million from other Electriq investors to purchase 150,000 shares of TLG common stock. In connection with the Closing Financings, Mr. Lawrie and the other Electriq investors received, as an incentive for their investment, 250,000 shares and 75,000 shares, respectively, of TLG preferred stock at closing of the Merger. In addition, Mr. Lawrie entered into a subscription agreement to purchase up to 300,000 shares of TLG common stock at $10.00 per share for up to $3.0 million. To the extent Mr. Lawrie is required to purchase any shares of TLG common stock pursuant to the Post-Closing Lawrie Investment, Mr. Lawrie will receive up to 150,000 shares of TLG preferred stock as an incentive (one (1) share of TLG preferred stock for every two (2) shares of TLG common stock Mr. Lawrie purchases pursuant to the Post-Closing Lawrie Investment). The Post-Closing Lawrie Investment is only required to be funded 90 days after closing of the Merger to the extent the total funded in the Pre-Closing Financings, the Closing Financings, any amounts remaining in the trust account at closing of the Merger and any additional amounts raised by TLG from any other sources is less than $28.0 million in the aggregate.
In addition, Mr. Lawrie signed an agreement on June 8, 2023 to convert his two secured convertible promissory notes in the aggregate amount of $8.5 million into 1,062,500 shares of TLG common stock and 425,000 shares of TLG preferred stock. At the closing of the Merger, the Sponsor (i) relinquished and cancelled, for no consideration, an additional 3,270,652 shares of its TLG Class F common stock and all of the 4,666,667 private placement warrants that it received in connection with TLG’s initial public offering and (ii) converted approximately $7.6 million of working capital loans into approximately 756,635 shares of TLG common stock and 378,318 shares of TLG preferred stock. The remaining $1.5 million of working capital loans were converted into 1,000,000 warrants with terms identical to the terms of the Sponsor IPO Private Placement Warrants.
Forward Purchase Agreement
As previously disclosed, on July 23, 2023, TLG and Electriq entered into an agreement (the “Forward Purchase Agreement”) with (i) Meteora Special Opportunity Fund I, LP (“MSOF”), Meteora Capital Partners, LP (“MCP”) and Meteora Select Trading Opportunities Master, LP (“MSTO”) (with MSOF, MCP, and MSTO collectively referred to as “Seller”) for an OTC Equity Prepaid Forward Transaction. Pursuant to the terms of the Forward Purchase Agreement, the Seller purchased 3,534,492 shares of TLG common stock from third parties through a broker in the open market (“Recycled Shares”). On July 31, 2023, 251,194 additional shares of New Electriq common stock were issued to Seller pursuant to the terms of the FPA Funding Amount PIPE Subscription Agreement entered into in connection with the closing of the Business Combination (the “Closing”). Capitalized terms used but not otherwise defined in this section shall have the meanings ascribed to such terms the Forward Purchase Agreement.
The Forward Purchase Agreement provides that $3,000,000 (the “Prepayment Shortfall”) will be paid by Seller to TLG not later than one local business day following the Closing (which amount shall be netted from the Prepayment Amount). Seller in its sole discretion may sell Shares at any time following the Trade Date at prices (i) at or above $6.67 during the first six months following the Closing and (ii) at any sales price thereafter, without payment by Seller of any Early Termination Obligation until the earlier of such time as the proceeds from the such sales equal 100% of the Prepayment Shortfall (such sales, “Shortfall Sales,” such Shares, “Shortfall Sale Shares,”). A sale of Shares is only (a) a “Shortfall Sale,” subject to the terms and conditions herein applicable to Shortfall Sale Shares, when a Shortfall Sale Notice is delivered under the Forward Purchase Agreement, and (b) an Optional Early Termination, subject to the terms and conditions herein applicable to Terminated Shares, when an OET Notice (as defined below) is delivered under the Forward Purchase Agreement, in each case the delivery of such notice in the sole discretion of the Seller.
The Forward Purchase Agreement provides that Seller will be paid directly an aggregate cash amount (the “Prepayment Amount”) equal to (x) the product of (i) the Number of Shares as set forth in a Pricing Date Notice and (ii) the redemption price per share as defined in Section 9.2(a) of the Amended and Restated Certificate of Incorporation of TLG in effect prior to consummation of the Business Combination, as amended, less (y) the Prepayment Shortfall.
TLG paid to Seller separately the Prepayment Amount required under the Forward Purchase Agreement directly from TLG’s Trust Account maintained by Continental Stock Transfer and Trust Company that held the net proceeds of the sale of the units in TLG’s initial public offering and the sale of private placement warrants (the “Trust Account”), except that to the extent the Prepayment Amount payable to Seller is to be paid from the purchase of Additional Shares by Seller pursuant to the terms of its FPA Funding Amount PIPE Subscription Agreement, such amount will be netted against such proceeds, with Seller being able to reduce the purchase price for the Additional Shares by the Prepayment Amount. For the avoidance of doubt, any Additional Shares purchased by Seller will be included in the Number of Shares for its Forward Purchase Agreement for all purposes, including for determining the Prepayment Amount.
Seller agreed to waive any redemption rights that it had under TLG’s Amended and Restated Certificate of Incorporation with respect to any TLG common stock purchased through the FPA Funding Amount PIPE Subscription Agreement and any Recycled Shares in connection with the Business Combination, that would require redemption by TLG of the shares of TLG common stock. Such waiver may have reduced the number of shares of TLG common stock redeemed in connection with the Business Combination, and such reduction could alter the perception of the potential strength of the Business Combination. The Forward Purchase Agreement has been structured, and all activity in connection with such agreement has been undertaken, to comply with the requirements of all tender offer regulations applicable to the Business Combination, including Rule 14e-5 under the Exchange Act.
The Company accounts for the Forward Purchase Agreement as a derivative instrument in accordance with the guidance in ASC 480-10. The instrument is subject to re-measurement at each balance sheet date, with changes in fair value recognized in the statements of operations. The ability of the Company to receive any of the proceeds from the Forward Purchase Agreement is dependent upon factors outside the control of the Company. The Company established the fair value of the forward purchase contract derivative on the date of the Closing, with amounts included in net loss as a change in fair value of forward purchase contract derivative. The estimated fair value of the forward purchase contract derivative was calculated using a Black Scholes option pricing model and used significant assumptions including the risk free rate and volatility. Given the limited trading history of the Company, the Company utilized the volatility of a peer group of similar public companies. Future estimates of trading prices were based on volatility assumptions that impact the estimated share price and Meteora’s corresponding sales in the open market.
FPA Funding Amount PIPE Subscription Agreement
On July 23, 2023, TLG entered into a subscription agreement (the “FPA Funding Amount PIPE Subscription Agreement”) with Meteora.
Pursuant to the FPA Funding Amount PIPE Subscription Agreement and in connection with the Forward Purchase Agreement, and on the terms of and subject to the conditions set forth in the FPA Funding Amount PIPE Subscription Agreement, Meteora agreed to subscribe for and purchase, and TLG agreed to issue and sell to Meteora, on the Closing Date, an aggregate of a number of shares of TLG Common Stock up to the Maximum Number of Shares as set forth in the Forward Purchase Agreement (the “Subscribed Shares”) less the number of Recycled Shares, as defined in the Forward Purchase Agreement, provided, however, that Meteora shall not be required to purchase an amount of shares of TLG Common Stock, such that following the issuance of the Subscribed Shares, its ownership would exceed 9.9% ownership of the total shares of TLG Common Stock outstanding immediately after giving effect to such issuance unless Meteora at its sole discretion waives such 9.9% ownership limitation.
Expected Accounting Treatment of the Business Combination
The Business Combination will be accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, TLG will be treated as the “acquired” company for financial reporting purposes and Electriq will be treated as the accounting acquirer, even though TLG will acquire all of the outstanding interests in Electriq in the Business Combination. Electriq has been determined to be the accounting acquirer based on evaluation of the following facts and circumstances under all redemption scenarios:
| • | The business of Electriq will comprise the ongoing operations of New Electriq, and the business of New Electriq will continue to focus on the Electriq’s energy storage systems and software-enabled services; |
| • | Electriq’s senior management will be the senior management of New Electriq; |
| • | The directors nominated by Electriq will represent the majority of New Electriq Board; and |
| • | Electriq’s existing stockholders will hold a majority voting interest in New Electriq. |
Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of a capital transaction in which Electriq is issuing stock for the net assets of TLG. The net assets of TLG will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination will be those of Electriq.
The unaudited pro forma condensed combined financial information has been presented for informational purposes only and is not necessarily indicative of what New Electriq’s financial position or results of operations actually would have been had the Business Combination been completed as of the dates indicated or for the periods presented. In addition, the summary of unaudited pro forma condensed combined financial information does not purport to project the future financial position or operating results of New Electriq following the reverse recapitalization. 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 financial information.
The pro forma adjustments giving effect to the Business Combination and related transactions are discussed
in further detail in the footnotes to the unaudited pro forma condensed combined financial information included
elsewhere in the Registration Statement. The unaudited pro forma condensed combined financial information has been prepared after giving effect to the Business Combination as contemplated by the Merger Agreement, as amended:
Transactions Pre-Closing
| • | Raise of $18.1 million through the issuance of shares of common stock and Electriq cumulative preferred stock in connection with the Pre-Closing Financings prior to Closing; and |
| • | Conversion of approximately $10.1 million of Electriq loans payable, including accrued interest (excluding the Lawrie Notes), into shares of Electriq common stock plus additional shares of Electriq common stock and Electriq cumulative preferred stock as an incentive, prior to Closing. |
Transactions at Closing
| • | Raise of $6.5 million as part of the Financing Transactions through the issuance of 650,000 shares of Class A common stock and 325,000 shares of New Electriq preferred stock at Closing; |
| • | Conversion of the Lawrie Notes in the principal amount of $8.5 million in exchange for 1,062,500 shares of Class A common stock and 425,000 shares of New Electriq preferred stock at Closing; |
| • | Settlement of Sponsor’s $9.1 million working capital loan through the issuance of 756,635 shares of Class A common stock, 378,318 shares of New Electriq preferred stock and 1,000,000 Private Placement Warrants at Closing; |
| • | Conversion and exchange of existing Electriq warrants for 360,603 shares of Class A common stock in New Electriq at Closing; |
| • | Cancellation of 4,666,667 Private Placement Warrants by Sponsor; |
| • | Waiver of $14.0 million in deferred underwriter fees with RBC pursuant to the Underwriter Agreement Fee Waiver Letter Agreement dated May 10, 2023; |
| • | Deferral of approximately $9.6 million in transaction costs, including legal fees of approximately $6.5 million, investment banking fees of approximately $1.4 million, and other services of $0.4 million, with all parties agreeing to defer payment for up to 12 months from Closing pursuant to the deferral agreements with respective service providers; in addition approximately $1.3 million of retention bonuses are payable six months after Closing; |
| • | On July 26, 2023, holders of approximately 97.3% or 7,736,608 shares of TLG Class A Common Stock had validly elected to redeem their shares of TLG Class A Common Stock for a pro rata portion of the trust account holding the proceeds from TLG’s initial public offering and the sale of private placement warrants, or approximately $10.63 per share and $82.2 million in the aggregate as of July 25, 2023 ; and |
| • | On July 23, 2023, TLG and Electriq entered into a Forward Purchase Agreement with Meteora for an OTC Equity Prepaid Forward Transaction. On July 26, 2023, pursuant to the terms of the Forward Purchase Agreement, Meteora purchased from third parties through a broker in the open market and elected to reverse previously submitted redemption requests for a total of 3,534,492 TLG Common Stock (“Recycled Shares”). Furthermore, 251,194 Additional Shares were issued to Meteora in conjunction with the Closing. |
The shares of New Electriq preferred stock issued in connection with the Financing Transactions have been reflected in the unaudited pro forma condensed combined balance sheet as liabilities at fair value pursuant to ASC 480. The carrying value of the New Electriq preferred stock is accreted to its redemption value over the three-year period ending in the redemption date. The Company utilized a third-party valuation specialist to determine the fair value of the preferred stock. The fair value calculation was based on a variety of assumptions, including the use of a market yield to discount the future payout to present value and applying a discount related to the lack of marketability, which resulted in a fair value of $6.50 per share. The preferred stock qualifies as a mandatorily redeemable financial instrument as it embodies an unconditional obligation requiring the issuer to redeem the instrument by transferring its assets at a specified or determinable date (or dates) or upon an event that is certain to occur. Pursuant to the respective preferred stock agreements, the issued and outstanding preferred stock (including a cumulative dividend, payable in kind, of 15% per share, plus any accrued and unpaid dividends on each such share) shall be subject to mandatory redemption by the issuer upon the date which is the third (3rd) anniversary of their original issue date in the form of either cash or an equivalent value in common shares.
The Merger Agreement has a closing condition that states TLG will have net tangible assets of at least $5,000,001 either prior to or upon the Closing Date of such business combination. TLG considers all committed sources of capital that would be available to it in its measurement of redeemable shares, including the Financing Transactions. The condition that TLG have net tangible assets of at least $5,000,001 can be measured upon consummation of a business combination. As disclosed in the Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 2023, after giving effect to the Business Combination and the other transactions contemplated by the Merger Agreement as amended, the combined company’s pro forma combined total net tangible assets are approximately $27.3 million, which exceed the $5,000,001 net tangible assets requirement.
The following summarizes the pro forma New Electriq Common Stock issued and outstanding immediately after the Business Combination after considering redemptions of TLG stockholders and the effect of the purchases pursuant to the Forward Purchase Agreement:
| Share ownership (issued and outstanding) in the Post-Combination Company |
||||||||
| Stockholder |
Shares | % | ||||||
| Electriq stockholders (1)(2)(3) |
29,778,750 | 75.9 | % | |||||
| Public stockholders (4) (5)(6) |
3,746,289 | 9.6 | % | |||||
| Sponsor and certain affiliates (7)(8)(9) |
5,298,483 | 13.5 | % | |||||
| Other financing stockholders (10) |
401,194 | 1.0 | % | |||||
|
|
|
|
|
|||||
| Total (11)(12) |
39,224,716 | 100 | % | |||||
|
|
|
|
|
|||||
| (1) | Excludes 405,000 shares of New Electriq preferred stock issued to Electriq stockholders upon conversion of their shares of Electriq cumulative preferred stock issued in the Pre-Closing Financings. |
| (2) | Excludes 506,500 shares of New Electriq preferred stock issued to holders of shares of Electriq cumulative preferred stock in connection with the Pre-Closing Loan Conversion. |
| (3) | Includes 1,103,779 shares of Class A common stock underlying Electriq stock options to be assumed at Closing. |
| (4) | Excludes 13,333,333 Public Warrants as such warrants are not expected to be in the money at Closing. |
| (5) | Includes 3,534,492 Recycled Shares Meteora purchased from third parties and elected to reverse previously submitted redemption requests. |
| (6) | Excludes 50,000 shares of New Electriq preferred stock issued to Meteora pursuant to the Non-Redemption Agreement. |
| (7) | Excludes 500,000 shares of New Electriq preferred stock issued to Mr. Lawrie upon conversion of shares of Electriq cumulative preferred stock issued to Mr. Lawrie in the Pre-Closing Financings stock and 250,000 shares of New Electriq preferred stock issued to Mr. Lawrie in connection with the Closing Financings. |
| (8) | Excludes 425,000 shares of New Electriq preferred stock issued to Mr. Lawrie in connection with the Lawrie Notes Conversion. |
| (9) | Excludes 378,318 shares of New Electriq preferred stock and 1,000,000 Private Placement Warrants issued to Sponsor in exchange for settlement of the Working Capital Loans; warrants are not expected to be in the money at Closing. |
| (10) | Excludes 75,000 shares of New Electriq preferred stock issued in connection with the Financing Transactions to other financing stockholders at Closing. |
| (11) | Excludes shares of Class A common stock of New Electriq to potentially be reserved, subject to stockholder approval, in an amount equal to approximately 10% of the number of outstanding shares of Class A common stock on a fully diluted basis as of immediately following the Closing pursuant to the Equity Incentive Plan. |
| (12) | Excludes 2,000,000 Private Placement Warrants issued to RBC as the warrants are not expected to be in the money at Closing. |
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF MARCH 31, 2023
(in thousands except share and per share data)
| Electriq Power | ||||||||||||||||||||||||||||||||
| Other | TLG | Pro Forma | ||||||||||||||||||||||||||||||
| March 31, 2023 | Transaction | March 31, 2023 | Transaction | Pro Forma | ||||||||||||||||||||||||||||
| (Historical) | Adjustments | Adjusted | (Historical) | Adjustments | Combined | |||||||||||||||||||||||||||
| ASSETS |
||||||||||||||||||||||||||||||||
| Current assets: |
||||||||||||||||||||||||||||||||
| Cash |
3,814 | 18,100 | (a) | 21,914 | 15 | 82,988 | (c) | 24,071 | ||||||||||||||||||||||||
| (82,240 | ) | (m) | ||||||||||||||||||||||||||||||
| 40,072 | (p) | |||||||||||||||||||||||||||||||
| (37,262 | ) | (q) | ||||||||||||||||||||||||||||||
| 6,500 | (d) | |||||||||||||||||||||||||||||||
| 5,169 | (e) | |||||||||||||||||||||||||||||||
| (13,085 | ) | (f) | ||||||||||||||||||||||||||||||
| Accounts receivable, net of allowances |
323 | — | 323 | — | — | 323 | ||||||||||||||||||||||||||
| Inventory |
14,462 | — | 14,462 | — | — | 14,462 | ||||||||||||||||||||||||||
| Inventory deposits |
5,017 | — | 5,017 | — | — | 5,017 | ||||||||||||||||||||||||||
| Forward purchase contract asset, net |
— | — | — | — | 18,597 | (q) | 18,597 | |||||||||||||||||||||||||
| Prepaid expenses and other current assets |
274 | — | 274 | 156 | — | 430 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Total current assets |
23,890 | 18,100 | 41,990 | 171 | 20,739 | 62,900 | ||||||||||||||||||||||||||
| Investments held in Trust Account |
— | — | — | 82,988 | (82,988 | ) | (c) | — | ||||||||||||||||||||||||
| Deposits |
88 | — | 88 | — | — | 88 | ||||||||||||||||||||||||||
| Right of use assets |
3,087 | — | 3,087 | — | — | 3,087 | ||||||||||||||||||||||||||
| Property and equipment, net |
1,468 | — | 1,468 | — | — | 1,468 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Total assets |
28,533 | 18,100 | 46,633 | 83,159 | (62,249 | ) | 67,543 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
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|
|
|||||||||||||||||||||
| LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS’ EQUITY |
|
|||||||||||||||||||||||||||||||
| Current liabilities: |
||||||||||||||||||||||||||||||||
| Current portion of loans payable |
11,200 | (7,792 | ) | (b) | 3,408 | — | — | 3,408 | ||||||||||||||||||||||||
| Accounts payable |
3,458 | — | 3,458 | 230 | — | 3,688 | ||||||||||||||||||||||||||
| Accrued expenses and other current liabilities |
6,793 | (2,338 | ) | (b) | 4,455 | 5,374 | 14,434 | (f) | 12,402 | |||||||||||||||||||||||
| (11,861 | ) | (f) | ||||||||||||||||||||||||||||||
| Working capital loan - related party |
— | — | — | 3,897 | 5,169 | (e) | — | |||||||||||||||||||||||||
| (9,066 | ) | (g) | ||||||||||||||||||||||||||||||
| Income tax payable |
— | — | — | 1,174 | (1,174 | ) | (f) | — | ||||||||||||||||||||||||
| Franchise tax payable |
— | — | — | 50 | (50 | ) | (f) | — | ||||||||||||||||||||||||
| SAFE notes |
51,860 | — | 51,860 | — | (51,860 | ) | (i) | — | ||||||||||||||||||||||||
| Warrants liability |
15,328 | — | 15,328 | — | (11,722 | ) | (j) | — | ||||||||||||||||||||||||
| (3,606 | ) | (j) | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Total current liabilities |
88,639 | (10,130 | ) | 78,509 | 10,725 | (69,736 | ) | 19,498 | ||||||||||||||||||||||||
| Loans payable |
— | — | — | — | ||||||||||||||||||||||||||||
| Convertible notes payable |
8,500 | — | 8,500 | — | (8,500 | ) | (k) | — | ||||||||||||||||||||||||
| Other long-term liabilities |
2,375 | — | 2,375 | — | — | 2,375 | ||||||||||||||||||||||||||
| Preferred stock related to Financings and non-redemptions |
— | 5,883 | (a) | 9,175 | — | 2,113 | (d) | 16,835 | ||||||||||||||||||||||||
| 3,292 | (b) | 2,763 | (k) | |||||||||||||||||||||||||||||
| 2,459 | (g) | |||||||||||||||||||||||||||||||
| 325 | (m) | |||||||||||||||||||||||||||||||
| Derivative warrant liabilities |
— | — | — | 1,400 | (933 | ) | (l) | 1,500 | ||||||||||||||||||||||||
| (467 | ) | (l) | ||||||||||||||||||||||||||||||
| 1,500 | (g) | |||||||||||||||||||||||||||||||
| Deferred underwriting commissions |
— | — | — | 14,000 | (14,000 | ) | (h) | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Total liabilities |
99,514 | (955 | ) | 98,559 | 26,125 | (84,476 | ) | 40,208 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
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|
|
|
|||||||||||||||||||||
| TLG Class A common stock subject to redemption |
— | — | — | 81,615 | (81,615 | ) | (m) | — | ||||||||||||||||||||||||
| New Electriq Class A common stock subject to forward purchase contract |
|
40,072 | (p) | 40,072 | ||||||||||||||||||||||||||||
| Preferred stock |
34,792 | — | 34,792 | — | (34,792 | ) | (n) | — | ||||||||||||||||||||||||
| Stockholders’ (deficit) equity: |
||||||||||||||||||||||||||||||||
| Electriq common stock |
24 | 0 | (a) | 24 | — | (24 | ) | (n) | — | |||||||||||||||||||||||
| 0 | (b) | |||||||||||||||||||||||||||||||
| TLG Class F common stock |
0 | (0 | ) | (m) | — | |||||||||||||||||||||||||||
| New Electriq Class A common stock |
1 | (m) | 4 | |||||||||||||||||||||||||||||
| 2 | (n) | |||||||||||||||||||||||||||||||
| 1 | (d)(g)(i)(j)(k) | |||||||||||||||||||||||||||||||
| Warrants |
— | — | — | — | 933 | (l) | 933 | |||||||||||||||||||||||||
| Additional paid-in capital |
9,229 | 12,217 | (a) | 28,284 | — | (951 | ) | (m) | 115,213 | |||||||||||||||||||||||
| 6,838 | (b) | 34,814 | (n) | |||||||||||||||||||||||||||||
| (24,581 | ) | (o) | ||||||||||||||||||||||||||||||
| 51,860 | (i) | |||||||||||||||||||||||||||||||
| 3,606 | (j) | |||||||||||||||||||||||||||||||
| 4,387 | (d) | |||||||||||||||||||||||||||||||
| 5,736 | (k) | |||||||||||||||||||||||||||||||
| 5,107 | (g) | |||||||||||||||||||||||||||||||
| (7,516 | ) | (f) | ||||||||||||||||||||||||||||||
| 14,000 | (h) | |||||||||||||||||||||||||||||||
| 467 | (l) | |||||||||||||||||||||||||||||||
| Accumulated deficit |
(115,026 | ) | — | (115,026 | ) | (24,581 | ) | 24,581 | (o) | (128,887 | ) | |||||||||||||||||||||
| 11,722 | (j) | |||||||||||||||||||||||||||||||
| (6,918 | ) | (f) | ||||||||||||||||||||||||||||||
| (18,665 | ) | (q) | ||||||||||||||||||||||||||||||
| Accumulated other comprehensive loss |
— | — | — | — | — | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Total stockholders’ (deficit) equity |
(105,773 | ) | 19,055 | (86,718 | ) | (24,581 | ) | 98,562 | (12,737 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Total liabilities, preferred stock and stockholders’ (deficit) equity |
28,533 | 18,100 | 46,633 | 83,159 | (62,249 | ) | 67,543 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 2023
(in thousands, except share and per share data)
| Electriq Power | ||||||||||||||||||||||||||||||||
| Other | TLG | Pro Forma | ||||||||||||||||||||||||||||||
| March 31, 2023 | Transaction | March 31, 2023 | Transaction | Pro Forma | ||||||||||||||||||||||||||||
| (Historical) | Adjustments | Adjusted | (Historical) | Adjustments | Combined | |||||||||||||||||||||||||||
| Net revenues |
$ | 141 | $ | — | $ | 141 | $ | — | $ | — | $ | 141 | ||||||||||||||||||||
| Cost of goods sold |
673 | — | 673 | — | — | 673 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Gross profit |
(532 | ) | — | (532 | ) | — | — | (532 | ) | |||||||||||||||||||||||
| Operating expenses: |
||||||||||||||||||||||||||||||||
| Research and development |
1,069 | — | 1,069 | — | — | 1,069 | ||||||||||||||||||||||||||
| Sales and marketing |
1,219 | — | 1,219 | — | — | 1,219 | ||||||||||||||||||||||||||
| General administrative and other expenses |
4,719 | — | 4,719 | 1,456 | — | 6,175 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Total operating expenses |
7,007 | — | 7,007 | 1,456 | — | 8,463 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Loss from operations |
(7,539 | ) | — | (7,539 | ) | (1,456 | ) | — | (8,995 | ) | ||||||||||||||||||||||
| Other expense (income): |
||||||||||||||||||||||||||||||||
| Income from investments held in Trust Account |
— | — | — | (612 | ) | 612 | (b) | — | ||||||||||||||||||||||||
| Interest expense |
1,016 | (840 | ) | (a) | 176 | — | 1,827 | (g) | 2,003 | |||||||||||||||||||||||
| Fair value adjustments |
1,474 | — | 1,474 | — | (1,474 | ) | (c) | — | ||||||||||||||||||||||||
| Change in fair value of derivative warrant liabilities |
— | — | — | 600 | (600 | ) | (d) | — | ||||||||||||||||||||||||
| Change in fair value of working capital loan - related party |
— | — | — | (458 | ) | 458 | (e) | — | ||||||||||||||||||||||||
| Other expense (income), net |
4 | — | 4 | — | — | 4 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| (Loss) earnings before income taxes |
(10,033 | ) | 840 | (9,193 | ) | (986 | ) | (823 | ) | (11,002 | ) | |||||||||||||||||||||
| Income tax expense |
— | — | — | (118 | ) | — | (118 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Net (loss) income |
(10,033 | ) | 840 | (9,193 | ) | (1,104 | ) | (823 | ) | (11,120 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Less: Cumulative preferred stock dividends |
459 | — | 459 | — | (459 | ) | (f) | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Net (loss) income per share attributable to common shareholders |
$ | (10,492 | ) | $ | 840 | $ | (9,652 | ) | $ | (1,104 | ) | $ | (364 | ) | $ | (11,120 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Net loss per share attributable to common shareholders, basic and diluted |
$ | (0.05 | ) | $ | (0.04 | ) | — | $ | (0.29 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Weighted-average shares of common stock used in computing net loss per share, basic and diluted |
220,912,263 | 220,912,263 | — | 38,120,937 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Weighted average shares outstanding of Class A common stock |
— | 7,948,405 | — | — | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Basic and diluted net income per share, Class A common stock |
— | $ | (0.08 | ) | — | — | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Weighted average shares outstanding of Class F common stock |
— | 6,611,111 | — | — | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Basic and diluted net income per share, Class F common stock |
— | $ | (0.08 | ) | — | — | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2022
(in thousands, except share and per share data)
| Electriq Power | ||||||||||||||||||||||||||||
| Other | TLG | Pro Forma | ||||||||||||||||||||||||||
| December 31, 2022 | Transaction | December 31, 2022 | Transaction | Pro Forma | ||||||||||||||||||||||||
| (Historical) | Adjustments | Adjusted | (Historical) | Adjustments | Combined | |||||||||||||||||||||||
| Net revenues |
$ | 15,976 | $ | — | $ | 15,976 | $ | — | $ | — | $ | 15,976 | ||||||||||||||||
| Cost of goods sold |
15,601 | — | 15,601 | — | — | 15,601 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Gross profit |
375 | — | 375 | — | — | 375 | ||||||||||||||||||||||
| Operating expenses: |
||||||||||||||||||||||||||||
| Research and development |
3,303 | — | 3,303 | — | — | 3,303 | ||||||||||||||||||||||
| Sales and marketing |
3,784 | — | 3,784 | — | — | 3,784 | ||||||||||||||||||||||
| General administrative and other expenses |
11,829 | — | 11,829 | 4,677 | 6,918 | (hh) | 23,424 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total operating expenses |
18,916 | — | 18,916 | 4,677 | 6,918 | 30,511 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Loss from operations |
(18,541 | ) | — | (18,541 | ) | (4,677 | ) | (6,918 | ) | (30,136 | ) | |||||||||||||||||
| Other expense (income): |
||||||||||||||||||||||||||||
| Income from investments held in Trust Account |
— | — | — | (5,684 | ) | 5,684 | (bb) | — | ||||||||||||||||||||
| Interest expense |
2,073 | 1,400 | (aa) | 1,135 | — | 6,484 | (gg) | 7,619 | ||||||||||||||||||||
| (2,338 | ) | (aa) | — | |||||||||||||||||||||||||
| Fair value adjustments |
31,730 | — | 31,730 | — | (31,730 | ) | (cc) | — | ||||||||||||||||||||
| Change in fair value of derivative warrant liabilities |
— | — | — | (9,800 | ) | 9,800 | (dd) | — | ||||||||||||||||||||
| Change in fair value of working capital loan - related party |
— | — | — | (690 | ) | 690 | (ee) | — | ||||||||||||||||||||
| Change in fair value of forward purchase contract derivative |
— | — | — | — | 18,665 | (ii) | 18,665 | |||||||||||||||||||||
| Other expense (income), net |
5 | — | 5 | — | — | 5 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| (Loss) earnings before income taxes |
(52,349 | ) | 938 | (51,411 | ) | 11,497 | (16,511 | ) | (56,426 | ) | ||||||||||||||||||
| Income tax expense |
— | — | — | (1,056 | ) | — | (1,056 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Net (loss) income |
(52,349 | ) | 938 | (51,411 | ) | 10,441 | (16,511 | ) | (57,482 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Less: Cumulative preferred stock dividends |
1,744 | — | 1,744 | — | (1,744 | ) | (ff) | — | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Net (loss) income per share attributable to common shareholders |
$ | (54,093 | ) | $ | 938 | $ | (53,155 | ) | $ | 10,441 | $ | (14,767 | ) | $ | (57,482 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Net loss per share attributable to common shareholders, basic and diluted |
$ | (0.26 | ) | $ | (0.26 | ) | — | $ | (1.51 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Weighted-average shares of common stock used in computing net loss per share, basic and diluted |
207,458,865 | 207,458,865 | — | 38,120,937 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Weighted average shares outstanding of Class A common stock |
— | 39,824,375 | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Basic and diluted net income per share, Class A common stock |
— | $ | 0.21 | — | — | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Weighted average shares outstanding of Class F common stock |
— | 10,000,000 | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Basic and diluted net income per share, Class F common stock |
— | $ | 0.21 | — | — | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
1. Basis of Pro Forma Presentation
The Business Combination will be accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, TLG will be treated as the “acquired” company and Electriq as the accounting acquirer” for financial reporting purposes. Accordingly, for accounting purposes, the financial statements of New Electriq will represent a continuation of the financial statements of Electriq with the Business Combination treated as the equivalent of Electriq issuing shares for the net assets of TLG, accompanied by a recapitalization. The net assets of TLG will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination will be presented as those of Electriq in future reports of New Electriq.
The unaudited pro forma condensed combined balance sheet as of March 31, 2023 gives pro forma effect to the Business Combination and the other events as if consummated on that date. The unaudited pro forma condensed combined statements of operations for the three months ended March 31, 2023 and for the year ended December 31, 2022 gives pro forma effect to the Business Combination and the other events as if consummated on January 1, 2022, the beginning of the earliest period presented. These periods are presented on the basis of Electriq as the accounting acquirer.
The unaudited pro forma condensed combined financial information was derived from and should be read in conjunction with the following historical financial statements and the accompanying notes, which are included elsewhere in the Registration Statement:
| • | the historical unaudited condensed consolidated financial statements of TLG as of and for the three months ended March 31, 2023 and the historical audited consolidated financial statements of TLG as of and for the year ended December 31, 2022; and |
| • | the historical unaudited condensed consolidated financial statements of Electriq as of and for the three months ended March 31, 2023 and the historical audited consolidated financial statements of Electriq as of and for the year ended December 31, 2022. |
Management has made significant estimates and assumptions and has used methodologies that it believes are reasonable in its determination of the pro forma adjustments based on information available as of the date of the Registration Statement. As the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, this 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, and the final amounts recorded are likely to differ and may differ materially from the information presented as additional information becomes available. Management 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 financial information.
One-time direct and incremental transaction costs anticipated to be incurred prior to, or concurrent with, the Closing that are related to the raise of capital are reflected in the unaudited pro forma condensed combined balance sheet as a direct reduction to New Electriq’s additional paid-in capital, and the remaining transaction costs have been expensed. One-time direct and incremental transaction costs incurred in connection with the Business Combination allocated to the liability classified warrants and preferred shares are recorded as a charge to accumulated deficit.
Upon consummation of the Business Combination, management will perform a comprehensive review of the two entities’ accounting policies. As a result of the review, management may identify differences between the accounting policies of the two entities which, when conformed, could have a material impact on the financial statements of the post-combination company. Based on its initial analysis, management has not identified any differences between the accounting policies of the two entities which, when conformed, would have a material impact on the financial statements of New Electriq. Certain reclassifications have been reflected to conform financial statement presentation as described in the notes to the pro forma condensed combined financial statements below.
2. Adjustments to Unaudited Pro Forma Condensed Combined Financial Information
The unaudited pro forma condensed combined financial information has been prepared to illustrate the effect of the Business Combination and has been prepared for informational purposes only. The following unaudited pro forma condensed combined 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”).
The pro forma condensed combined financial information does not include an income tax adjustment. The pro forma combined provision for income taxes does not necessarily reflect the amounts that would have resulted had New Electriq filed consolidated income tax returns during the periods presented.
Other Transaction Adjustments to the Unaudited Pro Forma Condensed Combined Balance Sheet
The Other Transaction Adjustments included in the unaudited pro forma condensed combined balance sheet as of March 31, 2023 reflect the subsequent events, which are not included in the historical financial statements of Electriq as of that date; however, the Other Transaction Adjustments are contemplated to be completed prior to Business Combination and are therefore presented:
| (a) | To reflect $18.1 million in cash received as part of the Pre-Closing Financings to be received prior to Closing in exchange for shares of Electriq common stock and Electriq cumulative preferred stock; upon consummation of the business combination these Electriq common shares and Electriq cumulative preferred shares will convert into 2,262,500 shares of Class A common stock and 905,000 shares of Series A preferred shares of New Electriq, respectively. |
| (b) | To reflect the Pre-Closing Loan Conversion in which approximately $10.1 million of loans payable (including $2.3 million of accrued interest) are converted into shares of Electriq common stock and Electriq cumulative preferred stock; upon consummation of the business combination these shares of Electriq common stock and shares of New Electriq preferred stock will convert into 1,266,250 shares of Class A common stock and 506,500 shares of New Electriq preferred stock, respectively. |
Transaction Accounting Adjustments to the Unaudited Pro Forma Condensed Combined Balance Sheet
The Transaction Accounting Adjustments included in the unaudited pro forma condensed combined balance sheet as of March 31, 2023 are as follows:
| (c) | To reflect the release of cash currently invested in marketable securities held in the Trust Account. |
| (d) | To offset the reduction in cash related to Public Share redemptions, TLG raised approximately $6.5 million as part of the Financing Transactions at Closing through the issuance of 650,000 shares of Class A common stock of New Electriq, and the issuance of 325,000 shares of New Electriq preferred stock. |
| (e) | To reflect $5.2 million in proceeds from the increase in the working capital loan used to pay transaction costs at Closing in connection with the Business Combination. |
| (f) | To reflect approximately $14.4 million in transaction costs related to legal, financial advisory and other professional fees incurred in connection with the Business Combination as additional accrued expenses as these costs were not previously reflected in the historical financial statements presented for TLG and Electriq at March 31, 2023. Of the $14.4 million in transaction costs, approximately $7.5 million has been determined to be directly attributable to the raise of capital and has been reflected as an adjustment to additional paid in capital and the remaining $6.9 million has been expensed. |
To reflect the aggregate cash payment of approximately $13.1 million at Closing for transaction costs incurred in connection with the Business Combination; approximately $9.6 million of transaction costs are deferred and expected to be subsequently paid within 12 months of the Closing pursuant to deferral agreements with various service providers.
| (g) | To reflect the Working Capital Loan Conversion in which $9.1 million of working capital loans are converted into approximately 756,635 shares of Class A common stock, 378,318 shares of Series A preferred stock and 1,000,000 private placement warrants of New Electriq at Closing. |
| (h) | To reflect the waiver of the $14.0 million deferred underwriting commissions with RBC pursuant to the Underwriter Agreement Fee Waiver Letter Agreement dated May 10, 2023. |
| (i) | To reflect the conversion of Electriq’s SAFE notes into 4,090,384 shares of Class A common stock of New Electriq. |
| (j) | To reflect the conversion and exchange of Electriq’s warrants into 360,603 shares of Class A common stock; the warrants are expected to be exchanged on a cashless basis. The difference between the fair value of the warrants at the transaction date, which equaled the conversion price, and the historical carrying value of the warrants has been reflected in accumulated deficit. |
| (k) | To reflect the conversion of the Lawrie Note into 1,062,500 shares of Class A common stock and 425,000 shares of New Electriq preferred stock. |
| (l) | To reflect the cancellation of Private Placement Warrants and reclassification of Public Warrants recorded at fair value to equity as a result of the Business Combination. |
Upon completion of the Business Combination, the surviving combined entity will only have a single class of participating securities. Therefore, in the event of a tender offer of more than 50% of outstanding equity, a change of control would occur and settlement of warrants in cash or other assets would not preclude equity classification under ASC 815-40-25. Further the Company notes that there are no settlement features that otherwise preclude the public warrants from being considered fixed-for-fixed under ASC 815-40-15 and being considered equity classified under ASC 815-40-25 post-merger. Therefore, we have presented these warrants as equity classified instruments in post-merger pro forma statements.
| (m) | To reflect the redemption of approximately 97.3% or 7,736,608 shares of TLG Common Stock at approximately $10.63 per share and the non-redemption of 211,797 shares of TLG Common Stock which included the issuance of 50,000 shares of New Electriq preferred stock to certain stockholders subject to the Non-Redemption Agreement. |
| (n) | To reflect the conversion of shares of Electriq’s seed preferred stock and common stock into Class A common stock of New Electriq. |
| (o) | To reflect the reclassification of TLG’s historical accumulated deficit into additional paid-in capital as part of the reverse recapitalization. |
| (p) | To reflect Meteora’s purchase of 3,534,492 TLG Common Stock at approximately $10.63 per share and 251,194 additional shares at approximately $10.00 per share for approximately $40.1 million to reverse previously submitted redemption requests pursuant to the terms of the Forward Purchase Agreement. These shares are classified as mezzanine equity on the balance sheet as they are contingently redeemable upon the occurrence of certain events not solely within the control of the Company that allow for the effective redemption of such shares in cash at the option of Meteora. |
| (q) | To reflect the fair value of the forward purchase contract, net of $18.6 million, which includes a forward purchase contract asset related to the payment of the $37.3 million (including approximately $0.2 million transaction costs) to Meteora at Closing, offset by the change in the fair value of the forward purchase derivative liability of $18.7 million which has been recorded in accumulated deficit on the pro forma balance sheet and reflected in the pro forma statement of operations as of December 31, 2022 (refer to note (ii) below) |
Other Transaction Adjustments to Unaudited Pro Forma Condensed Combined Statements of Operations
The Other Transaction Adjustments included in the unaudited pro forma condensed combined statements of operations for the three months ended March 31, 2023 reflect the subsequent events, which are not included in the historical financial statements of Electriq as of that date; however, the Other Transaction Adjustments are contemplated to be completed prior to Business Combination and are therefore presented:
| (a) | To reflect the elimination of interest expense related to the conversion of notes payable at Closing giving pro forma effect to the Business Combination as if it had occurred as of January 1, 2022 (refer to item (b) above in the Other Transaction Adjustments to the Unaudited Pro Forma Condensed Combined Balance Sheet). |
The Other Transaction Adjustments included in the unaudited pro forma condensed combined statements of operations for the year ended December 31, 2022 reflect the subsequent events, which are not included in the historical financial statements of Electriq as of that date; however, the Other Transaction Adjustments are contemplated to be completed prior to Business Combination and are therefore presented:
| (aa) | To reflect the addition of $1.4 million in interest expense to reflect a full year of interest expense on existing notes payable. Additionally, to reflect the elimination of interest expense related to the conversion of notes payable at Closing giving pro forma effect to the Business Combination as if it had occurred as of January 1, 2022 (refer to item (b) above in the Other Transaction Adjustments to the Unaudited Pro Forma Condensed Combined Balance Sheet). |
Transaction Accounting Adjustments to Unaudited Pro Forma Condensed Combined Statements of Operations
The pro forma adjustments included in the unaudited pro forma condensed combined statements of operations for the three months ended March 31, 2023 are as follows:
| (b) | To reflect the elimination of interest income related to the Trust Account, as it will not continue after the Business Combination. |
| (c) | To reflect the elimination of the change in fair market value of Electriq’s warrants and SAFE notes which were converted to Class A common stock in New Electriq giving pro forma effect to the Business Combination as if it had occurred as of January 1, 2022. |
| (d) | To reflect the elimination of the change in fair market value of Private Placement Warrants which were cancelled and the Public Warrants that were reclassified to equity giving pro forma effect to the Business Combination as if it had occurred as of January 1, 2022. |
| (e) | To reflect the elimination of the change in fair value of the working capital loan which was converted to Class A common stock in New Electriq giving pro forma effect to the Business Combination as if it had occurred as of January 1, 2022. |
| (f) | To reflect the elimination of the pre-2023 seed preferred stock dividends giving pro forma effect to the conversion of the seed preferred stock as part of the Business Combination as if it had occurred as of January 1, 2022. |
| (g) | To reflect three months of interest expense of approximately $1.9 million, including approximately $1.2 million related to the New Electriq preferred stock dividends and approximately $0.7 million related to the accretion from carrying value of the New Electriq preferred stock to its redemption value, giving pro forma effect to the Business Combination as if it had occurred as of January 1, 2022. |
The pro forma adjustments included in the unaudited pro forma condensed combined statements of operations for the year ended December 31, 2022 giving effect to the Business Combination as if it had occurred as of January 1, 2022 are as follows:
| (bb) | To reflect the elimination of interest income related to the Trust Account, as it will not continue after the Business Combination. |
| (cc) | To reflect the elimination of the change in fair market value of Electriq’s warrants and SAFE notes which were converted to Class A common stock in New Electriq. |
| (dd) | To reflect the elimination of the change in fair market value of Private Placement Warrants which were cancelled and the Public Warrants that were reclassified to equity giving pro forma effect to the Business Combination as if it had occurred as of January 1, 2022. |
| (ee) | To reflect the elimination of the change in fair value of the working capital loan which was converted to shares of Class A common stock in New Electriq, shares of Series A preferred stock in New Electriq and warrants in New Electriq. |
| (ff) | To reflect the elimination of the pre-2023 seed preferred stock dividends giving pro forma effect to the conversion of the seed preferred stock as part of the Business Combination as if it had occurred as of January 1, 2022. |
| (gg) | To reflect twelve months of interest expense of approximately $6.7 million, including approximately $4.0 million related to the New Electriq preferred stock dividends and approximately $2.7 million related to the accretion from carrying value of the New Electriq preferred stock to its redemption value, giving pro forma effect to the Business Combination as if it had occurred as of January 1, 2022. |
| (hh) | To reflect $6.9 million in transaction costs related financial advisory, accounting and other professional fees that have been expensed in connection with the Business Combination, as these costs were previously not included in the historical financial statements presented as of December 31, 2022. |
| (ii) | To reflect $18.7 million related to the change in fair value of the forward purchase contract derivative liability which was marked to market on the transaction date as if it had occurred as of January 1, 2022. |
3. Loss Per Share
Represents the net loss per share attributable to common stockholders 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 January 1, 2022. 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 in connection with the Business Combination have been outstanding for the entire period presented. The 3,534,492 TLG Common Stock recorded in mezzanine equity is included in the net loss per share attributable to common shareholders calculation.
| Pro Forma Combined | ||||||||
| For the Three Months Ended March 31, 2023 |
For the Year Ended December 31, 2022 |
|||||||
| Net loss |
$ | (11,120 | ) | $ | (57,482 | ) | ||
| Net loss per share attributable to common shareholders |
$ | (0.29 | ) | $ | (1.51 | ) | ||
| Weighted average shares outstanding, basic and diluted (1) |
38,120,937 | 38,120,937 | ||||||
| Excluded Securities (2) |
||||||||
| New Electriq preferred stock (3) |
39,387,887 | 39,387,887 | ||||||
| Public Warrants |
13,333,333 | 13,333,333 | ||||||
| Private Placement Warrants |
1,000,000 | 1,000,000 | ||||||
| RBC Warrants |
2,000,000 | 2,000,000 | ||||||
| Electriq Equity Incentive Plan |
1,103,779 | 1,103,779 | ||||||
| New Equity Incentive Plan Pool |
4,358,302 | 4,358,302 | ||||||
| (1) | Diluted loss per share is the same as basic loss per share for both scenarios presented because the effects of potentially dilutive instruments were anti-dilutive as a result of the net loss. |
| (2) | The potentially dilutive outstanding securities were excluded from the computation of pro forma net loss per share attributable to common stockholders, basic and diluted, because their effect would have been antidilutive, 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. Also, excludes shares of TLG Class A common stock to be reserved, subject to stockholder approval, in an amount equal to approximately 10% of the number of shares of outstanding TLG Class A common stock on a fully diluted basis as of immediately following the Closing pursuant to the Equity Incentive Plan. |
| (3) | Assumes the redemption of 3,938,789 shares of New Electriq preferred stock (including 1,348,971 shares of New Electriq preferred stock expected to be issued over three years as payable in kind dividends) for 39,387,887 shares of New Electriq common stock, which is the maximum number of shares of New Electriq common stock that may be issued pursuant to the terms of the New Electriq preferred stock (which would require a trading price of the New Electriq common stock of $1.00 per share at the time of redemption). |
1 Year TLG Acquisition One Chart |
1 Month TLG Acquisition One Chart |
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