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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 8-K

 

 

 

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): May 17, 2022

 

 

 

PROPTECH INVESTMENT CORPORATION II

(Exact Name of Registrant as Specified in its Charter)

 

 

 

Delaware   001-39758   83-2426917
(State or other jurisdiction
of incorporation)
  (Commission File Number)   (I.R.S. Employer
Identification No.)

 

3415 N. Pines Way, Suite 204, Wilson, WY   83014
(Address of Principal Executive Offices)   (Zip Code)

 

(310) 954-9665
(Registrant’s telephone number, including area code)

 

Not Applicable

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

 

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

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

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

 

 

Title of each class

  Trading Symbol   Name of each exchange
on which registered
Units, each consisting of one share of Class A Common Stock and one-third of one Redeemable Warrant   PTICU   The Nasdaq Stock Market LLC
Shares of Class A Common Stock, par value $0.0001 per share   PTIC   The Nasdaq Stock Market LLC
Redeemable Warrants included as part of the Units   PTICW   The Nasdaq Stock Market LLC

 

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

 

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. ☐

 

 

 

 


 

Item 1.01 Entry into a Material Definitive Agreement.

 

Business Combination Agreement

 

On May 17, 2022, PropTech Investment Corporation II (“PTIC II”) entered into a business combination agreement (as the same may be amended, supplemented or otherwise modified from time to time, the “Business Combination Agreement”) with RW National Holdings, LLC, a Delaware limited liability company (the “Company”), and Lake Street Landlords, LLC, a Delaware limited liability company (“Lake Street”), in its capacity as the representative of the Rolling Company Unitholders (as defined in the Business Combination Agreement) (in such capacity, the “Sellers’ Representative”).

 

The terms of the Business Combination Agreement, and the transactions contemplated thereby, are summarized below. Capitalized terms used in this Current Report on Form 8-K but not otherwise defined herein have the meanings given to them in the Business Combination Agreement.

 

The Business Combination

 

The Business Combination Agreement provides that, among other things, and upon the terms and subject to the conditions thereof, the following transactions will occur:

 

(i) Concurrent with the execution of the Business Combination Agreement, HC PropTech Partners II LLC, a Delaware limited liability company (the “Sponsor”), Other Class B Shareholders of PTIC II, PTIC II, and the Company, among others, have entered into the sponsor letter agreement (as the same may be amended, supplemented or otherwise modified from time to time, the “Sponsor Letter Agreement”), pursuant to which, among other things, the Sponsor and each Other Class B Shareholders have agreed to (a) vote all PTIC II Shares owned by the Sponsor and each Other Class B Shareholder in favor of the Business Combination Agreement and the contemplated transactions, (b) subject to, and conditioned upon the Effective Time, waive any adjustment to the conversion ratio set forth in the PTIC II governing documents or waive any anti-dilution or similar protection with respect to the PTIC II Class B Shares and (c) subject to, and conditioned upon the Closing, terminate certain existing agreements or arrangements, in each case, on the terms and subject to the conditions set forth in the Sponsor Letter Agreement;

 

(ii) Immediately prior to the Closing, PTIC II shall form Appreciate Intermediate Holdings, LLC (“NewCo LLC”) for purposes of consummating the transactions contemplated by the Business Combination Agreement and the Ancillary Documents, on the terms and subject to the conditions set forth in the Business Combination Agreement;

 

(iii) On the Closing Date, (a) Rolling Company Unitholders will contribute all of their Existing Company LLC Interests to NewCo LLC in exchange for non-voting NewCo LLC Class B Units, (b) the NewCo LLC Agreement will be amended and restated in the required form, (c) PTIC II will contribute the Closing Date Contribution Amount to NewCo LLC in exchange for NewCo LLC Class A Units and (d) the NewCo LLC Unitholders (other than PTIC II) will receive a number of PTIC II Class B Shares equal to the Transaction Equity Security Amount, on the terms and subject to the conditions set forth in the Business Combination Agreement;

 

(iv) At Closing, PTIC II, the Company, NewCo LLC, certain of the Company Unitholders (excluding St. Cloud Capital Partners III SBIC, L.P. (“St. Cloud”)) and Lake Street will enter into an income tax receivable agreement substantially in the form attached hereto as Exhibit 10.2 (as the same may be amended, supplemented or otherwise modified from time to time, the “Tax Receivable Agreement”);

 

(v) At the Closing, certain Company Unitholders will enter into an Investor Rights Agreement, substantially in the form attached hereto as Exhibit 10.3 (as the same may be amended, supplemented or otherwise modified from time to time, the “Investor Rights Agreement”) pursuant to which, among other things, such Company Unitholders will agree not to effect any sale or distribution of any Equity Securities of PTIC II or NewCo LLC held by any of them during the lock-up period described therein;

 

(vi) In connection with the transactions contemplated by the Business Combination Agreement, PTIC II will file a proxy statement (the “Proxy Statement”) relating to the transactions contemplated by the Business Combination Agreement and the Ancillary Documents and it is a condition to the consummation of the transactions contemplated by the Business Combination Agreement that PTIC II obtain Stockholder Approval; and

 

(vii) Subject to the terms set forth in the Business Combination Agreement, the Sellers’ Representative will serve as the representative of the Rolling Company Unitholders.

 

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As a result of the transactions contemplated by the Business Combination Agreement, among other things:

 

(i) PTIC II will hold limited liability company interests in NewCo LLC (“Company Units”) and will be the managing member of NewCo LLC; and

 

(ii) the Company Unitholders will hold (i) non-voting NewCo LLC Class B Units that are exchangeable on a one-for-one basis for PTIC II Class A Shares (subject to surrendering a corresponding number of shares of PTIC II Class B Shares for cancellation) that will be subject to certain conditions as specified in the Amended and Restated NewCo LLC Agreement, and (ii) a number of shares of PTIC II Class B Shares corresponding to the number of non-voting NewCo LLC Class B Units held.

 

Upon completion of the transactions contemplated by the Business Combination Agreement, the publicly-traded company, PTIC II, will be renamed as Appreciate Holdings, Inc. and the publicly-traded company will become the managing member of NewCo LLC in an “Up-C” structure. Appreciate Holdings, Inc. will continue Appreciate’s business, operated under the Renters Warehouse name, of making available a tech-enabled full-service property management and residential leasing marketplace company for both individual owners of and institutional investors in single-family rental houses.

 

Conditions to Closing

 

The Business Combination Agreement is subject to the satisfaction or waiver of certain customary closing conditions, including, among others, (a) approval of the Business Combination Proposal and related agreements and transactions by PTIC II’s stockholders and the Company’s stockholders, (b) finalization of the Proxy Statement to be filed by PTIC II in connection with the transactions contemplated by the Business Combination Agreement, (c) expiration or termination of any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, (d) receipt of approval for listing on The Nasdaq Capital Market (“Nasdaq”) of the PTIC II Class A Shares to be issued in connection with the transactions contemplated by the Business Combination Agreement, (e) that PTIC II have at least $5,000,001 of net tangible assets immediately after the consummation of the Closing, and (f) the absence of any injunctions. Other conditions to the Company’s obligations to consummate the transactions contemplated by the Business Combination Agreement include, among others, (i) the accuracy of the representations and warranties of PTIC II as of the Closing; (ii) the performance or compliance of each PTIC II covenant in all material respects as of or prior to the Closing; and (iii) receipt of a certificate signed by a PTIC II authorized officer certifying the satisfaction of the preceding clauses (i) and (ii).

 

Covenants

 

The Business Combination Agreement contains additional covenants, including, among others, providing for (i) the Company to operate its businesses in the ordinary course through to the Closing, subject to certain restrictions contemplated in the Business Combination Agreement (ii) the parties to not initiate any negotiations or enter into any agreements for certain alternative transactions, (iii) the Company to prepare and deliver to PTIC II certain audited and unaudited consolidated financial statements of the Company, (iv) PTIC II and the Company to jointly prepare, and PTIC II to file, the Proxy Statement and take certain other actions to obtain the requisite approval of PTIC II stockholders of certain proposals regarding the transactions contemplated by the Business Combination Agreement, and (v) the parties to use reasonable best efforts to obtain necessary approvals from governmental agencies.

 

Representations and Warranties

 

The Business Combination Agreement contains customary representations and warranties by PTIC II and the Company. The representations and warranties of the respective parties to the Business Combination Agreement generally will not survive the closing of the transactions contemplated by the Business Combination Agreement.

 

Termination

 

The Business Combination Agreement contains certain termination rights for both PTIC II and the Company including (but not limited to) that the Business Combination Agreement may be terminated at any time prior to the consummation of the transactions contemplated by the Business Combination Agreement (i) by mutual written consent of PTIC II and Lake Street, (ii) by written notice from either PTIC II or the Company to the other if certain approvals of the PTIC II stockholders, to the extent required under the Business Combination Agreement, are not obtained as set forth therein, (iii) by written notice from PTIC II, if certain Transaction Support Agreements and the Requisite Company Unitholder Consents of the Requisite Company Unitholders, to the extent required under the Business Combination Agreement, are not obtained within one (1) business day following the date of the Business Combination Agreement, (iv) by either PTIC II and the Company in certain other circumstances set forth in the Business Combination Agreement, including, among others, (a) if the consummation of the transactions contemplated by the Business Combination Agreement is permanently enjoined or prohibited by the terms of a final, non-appealable governmental order, (b) in the event of certain uncured breaches by the other party, or (c) if the Closing has not occurred on or before six (6) months after the date of the Business Combination Agreement.

 

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Certain Related Agreements

 

Sponsor Letter Agreement

 

Concurrent with the execution and delivery of the Business Combination Agreement, PTIC II entered into the Sponsor Letter Agreement, with the Sponsor, Other Class B Shareholders and the Company, among others, pursuant to which, among other things the Sponsor and each Other Class B Shareholder has agreed to: (a) vote all PTIC II Shares owned by him, her or it in favor of approval of the Business Combination Agreement and the transactions contemplated thereby; (b) withhold consent with respect to any matter, action or proposal that would reasonably be expected to result in a material breach of any of PTIC II’s covenants, agreements or obligations under the Business Combination Agreement; (c) subject to, conditioned upon and effective immediately prior to the occurrence of the Closing, waive any rights to adjustment or other anti-dilution or similar protections with respect to the rate that the PTIC II Class B Shares held by the Sponsor will convert into PTIC II Class A Shares in connection with the transactions contemplated by the Business Combination Agreement and the transactions contemplated thereby and (d) subject to, and conditioned upon the Closing, terminate certain existing agreements or arrangements, in each case, on the terms and subject to the conditions set forth in the Sponsor Letter Agreement.

 

Transaction Support Agreements

 

Promptly after the execution and delivery of the Business Combination Agreement, PTIC II, and the Company entered into transaction support agreements (as each may be amended, supplemented or restated from time to time, collectively, the “Transaction Support Agreements”) with the Supporting Company Unitholders. Pursuant to the Transaction Support Agreements, the Supporting Company Unitholders agreed to, among other things: (a) support and vote in favor of the Business Combination Agreement, the Ancillary Documents and the transactions contemplated thereby and (b) vote against or withhold consent or approval with respect to, among other things, any matter, action or proposal that would reasonable be expected to result in a breach of any of the Company’s covenants under the Business Combination Agreement or the Ancillary Documents, or that would result in the non-satisfaction of certain of the conditions to the Closing under the Business Combination Agreement.

 

Pursuant to the Transaction Support Agreements, the Supporting Company Unitholders also agreed to, among other things, (a) to the extent required or applicable, vote or provide consent for purposes of authorizing and approving any and all of the matters, actions and proposals contemplated by the Business Combination Agreement and the Ancillary Documents and the transactions contemplated thereby or (b) when any meeting of Company members (as applicable) is held, cause the Company member’s Subject Company Units (as defined in the Transaction Support Agreements) to be counted as present thereat for the purposes of establishing a quorum.

 

Investor Rights Agreement

 

The Business Combination Agreement contemplates that, at the Closing, PTIC II, the Sponsor, the Company Unitholders, and certain other equityholders of PTIC II will enter into the Investor Rights Agreement, which, provides that PTIC II will agree to register for resale certain PTIC II Class A Shares and other equity securities of PTIC II that are held by the parties thereto from time to time. The Investor Rights Agreement provides for underwritten offerings and piggyback registration rights, in each case subject to certain limitations set forth therein.

 

Under the Investor Rights Agreement, certain of the parties thereto will agree to a 180-day lock-up from the Closing Date, subject to certain limitations set forth therein.

 

Tax Receivable Agreement

 

The Business Combination Agreement contemplates that, at the Closing, PTIC II, the Company, NewCo LLC, the Rolling Company Unitholders (excluding St. Cloud) and Lake Street will enter into the Tax Receivable Agreement. Pursuant to the Tax Receivable Agreement, PTIC II will generally be required to pay the applicable TRA Parties (as defined in the Tax Receivable Agreement) 85% of the amount of savings, if any, in U.S. federal, state, local, and foreign taxes that are based on, or measured with respect to, net income or profits (and any interest related thereto) and an interest amount thereon, that PTIC II (and any applicable subsidiaries thereof, if any) realizes, or is deemed to realize, as a result of certain tax attributes, including: (1) tax basis adjustments resulting from the Initial Sale (as defined in the Tax Receivable Agreement, if any), from certain redemptions of St. Cloud’s Class B Units (if any), and from taxable exchanges of Class B Units and/or Earn Out Units (if any) (each as defined in the Tax Receivable Agreement) (including any such tax basis adjustments resulting from certain payments made by PTIC II under the Tax Receivable Agreement) acquired by PTIC II for PTIC II Class A Shares and/or cash from a TRA Party (as defined in the Tax Receivable Agreement) pursuant to the terms of the Amended and Restated NewCo LLC Agreement or from St. Cloud (if any) and (2) tax deductions in respect of imputed interest deemed to be paid as a result of certain payments made under the Tax Receivable Agreement.

 

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Cantor Purchase Agreement

 

On May 17, 2022, PTIC II entered into a common stock purchase agreement (the “Cantor Purchase Agreement”) with CF Principal Investments LLC, a Delaware limited liability company (the “Investor”), relating to a committed equity facility (the “Committed Equity Facility”). Pursuant to the Cantor Purchase Agreement, PTIC II will have the right from time to time at its option following the Closing of the transactions contemplated by the Business Combination Agreement to sell to the Investor up to the lesser of (i) $100 million of PTIC II Class A Shares and (ii) the Exchange Cap (as defined below), subject to certain customary conditions and limitations set forth in the Cantor Purchase Agreement.

 

Following the Closing, and upon the initial satisfaction of the conditions to the Investor’s obligation to purchase PTIC II Class A Shares set forth in the Cantor Purchase Agreement (the “Commencement” and such date the “Commencement Date”), PTIC II will have the right, but not the obligation, from time to time at its sole discretion until the first day of the month following the 36-month period from and after the Commencement, to direct the Investor to purchase up to a specified maximum amount of PTIC II Class A Shares as set forth in the Cantor Purchase Agreement by delivering written notice to the Investor prior to the commencement of trading on any trading day. The purchase price of the PTIC II Class A Shares that PTIC II elects to sell to the Investor pursuant to the Cantor Purchase Agreement will be 98% of the volume weighted average price of the PTIC II Class A Shares during the applicable purchase date on which PTIC II has timely delivered written notice to the Investor directing it to purchase PTIC II Class A Shares under the Cantor Purchase Agreement.

 

Sales of PTIC II Class A Shares to the Investor under the Cantor Purchase Agreement, and the timing of any sales, will be determined by PTIC II from time to time in its sole discretion and will depend on a variety of factors, including, among other things, market conditions, the trading price of PTIC II Class A Shares and determinations by PTIC II regarding the use of proceeds of such sales. The net proceeds from any sales under the Cantor Purchase Agreement will depend on the frequency with, and prices at, which the PTIC II Class A Shares are sold to the Investor.

 

Under the applicable rules of Nasdaq, in no event may PTIC II issue to the Investor under the Cantor Purchase Agreement more than 19.99% of the voting power or number of PTIC II Class A Shares outstanding, calculated in accordance with applicable Nasdaq rules (the “Exchange Cap”), unless (i) PTIC II obtains stockholder approval to issue PTIC II Class A Shares in excess of the Exchange Cap in accordance with applicable Nasdaq rules, or (ii) the average purchase price per share for all of the PTIC II Class A Shares sold to the Investor under the Cantor Purchase Agreement equals or exceeds a minimum price as set forth in the Nasdaq rules.

 

In connection with the execution of the Cantor Purchase Agreement, PTIC II agreed to pay to the Investor on the Commencement Date the number of PTIC II Class A Shares equal to the quotient of $2,000,000 divided by the closing price of the PTIC II Class A Shares on the determination date (the “Commitment Shares”) as consideration for the Investor’s irrevocable commitment to purchase the PTIC II Class A Shares upon the terms and subject to the satisfaction of the conditions set forth in the Cantor Purchase Agreement. The Cantor Purchase Agreement contains customary representations, warranties, conditions and indemnification obligations by each party. The representations, warranties and covenants contained in the Cantor Purchase Agreement were made only for purposes of the Cantor Purchase Agreement and as of specific dates, were solely for the benefit of the parties to such agreement and are subject to certain important limitations.

 

PTIC II has the right to terminate the Cantor Purchase Agreement at any time after Commencement, at no cost or penalty, upon three trading days’ prior written notice. No termination of the Cantor Purchase Agreement will alter or otherwise affect PTIC II’s obligations under the Cantor Registration Rights Agreement (as defined below).

 

Cantor Registration Rights Agreement

 

In connection with PTIC II’s entry into the Cantor Purchase Agreement, at the Closing of the transactions contemplated by the Business Combination Agreement, PTIC II will enter into a registration rights agreement with the Investor (the “Cantor Registration Rights Agreement”), pursuant to which PTIC will agree to register for resale, pursuant to Rule 415 under the Securities Act, the PTIC II Class A Shares that are sold to the Investor under the Committed Equity Facility and the Commitment Shares.

 

The foregoing description of each of the Business Combination Agreement, the Sponsor Letter Agreement, the form of Transaction Support Agreement, the form of Investor Rights Agreement, the form of Tax Receivable Agreement, the Cantor Purchase Agreement and the form of Cantor Registration Rights Agreement is not complete and is subject to and qualified in its entirety by reference to the Business Combination Agreement, the Sponsor Letter Agreement, the form of Transaction Support Agreement, the form of Investor Rights Agreement, the form of Tax Receivable Agreement, the Cantor Purchase Agreement and the form of Cantor Registration Rights Agreement, copies of which are filed with this Current Report on Form 8-K as Exhibit 2.1, Exhibit 10.1, Exhibit 10.2, Exhibit 10.3, Exhibit 10.4, Exhibit 10.5 and Exhibit 10.6, respectively, and the terms of which are incorporated by reference herein.

 

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The Business Combination Agreement, Sponsor Letter Agreement, the form of Transaction Support Agreement, the form of Investor Rights Agreement, the form of Tax Receivable Agreement, the Cantor Purchase Agreement and the form of Cantor Registration Rights Agreement have been included to provide investors with information regarding its terms. They are not intended to provide any other factual information about PTIC II or its affiliates. The representations, warranties, covenants and agreements contained in the Business Combination Agreement, the Sponsor Letter Agreement, the Transaction Support Agreement, the form of Investor Rights Agreement, the form of Tax Receivable Agreement, the Cantor Purchase Agreement, the form of Cantor Registration Rights Agreement and the other documents related thereto were made only for purposes of the Business Combination Agreement or such other agreement (as applicable) as of the specific dates therein, were solely for the benefit of the parties to the Business Combination Agreement, the Sponsor Letter Agreement, the Transaction Support Agreement, the form of Investor Rights Agreement, the form of Tax Receivable Agreement, the Cantor Purchase Agreement and the form of Cantor Registration Rights Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Business Combination Agreement, the Sponsor Letter Agreement, the Transaction Support Agreement, the form of Investor Rights Agreement, the form of Tax Receivable Agreement, the Cantor Purchase Agreement or the form of Cantor Registration Rights Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Public investors are not third-party beneficiaries under the Business Combination Agreement, the Sponsor Letter Agreement, the Transaction Support Agreement, the form of Investor Rights Agreement, the form of Tax Receivable Agreement, the Cantor Purchase Agreement or the form of Cantor Registration Rights Agreement and should not rely on the representations, warranties, covenants and agreements or any descriptions thereof as characterizations of the actual state of facts or condition of the parties thereto or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of representations and warranties may change after the date of the Business Combination Agreement, the Sponsor Letter Agreement, the Transaction Support Agreement, the form of Investor Rights Agreement, the form of Tax Receivable Agreement, the Cantor Purchase Agreement or the form of Cantor Registration Rights Agreement, as applicable, which subsequent information may or may not be fully reflected in PTIC II’s public disclosures.

 

Forward-Looking Statements

 

Certain statements in this Current Report on Form 8-K may be considered forward-looking statements. Forward-looking statements generally relate to future events or PTIC II’s or the Company’s future financial or operating performance, and other “forward-looking statements” (as such term is defined in the Private Securities Litigation Reform Act of 1995). In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expect”, “intend”, “will”, “estimate”, “anticipate”, “believe”, “predict”, “potential” or “continue”, or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks, uncertainties, contingencies and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements.

 

These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by the Company and its management, and/or PTIC II and its management, as the case may be, are inherently uncertain. Factors that may cause actual results to differ materially from current expectations include, but are not limited to: (1) the occurrence of any event, change or other circumstances that could give rise to the termination of the Business Combination Agreement; (2) the outcome of any legal proceedings that may be instituted against the Company, PTIC II, the combined company or others following the announcement of the Business Combination Agreement; (3) the inability to complete the transactions contemplated by the Business Combination Agreement due to the failure to obtain approval of the stockholders of PTIC II, to obtain financing to complete the transactions contemplated by the Business Combination Agreement or to satisfy other conditions to closing; (4) the failure of any condition precedent to the Committed Equity Facility which could cause the termination of such facility; (5) changes to the proposed structure of the transactions contemplated by the Business Combination Agreement that may be required or appropriate as a result of applicable laws or regulations or as a condition to obtaining regulatory approval of the transactions contemplated by the Business Combination Agreement; (6) the ability to meet stock exchange listing standards following the consummation of the transactions contemplated by the Business Combination Agreement; (7) the risk that the transactions contemplated by the Business Combination Agreement disrupt current plans and operations of the Company as a result of the announcement and consummation of the Business Combination Agreement and the transactions contemplated thereby; (8) the ability to recognize the anticipated benefits of the transactions contemplated by the Business Combination Agreement, which may be affected by, among other things, competition, the ability of the combined company to grow and manage growth profitably, maintain relationships with customers and suppliers and retain its management and key employees; (9) costs related to the transactions contemplated by the Business Combination Agreement; (10) changes in applicable laws or regulations; (11) the possibility that the Company or the combined company may be adversely affected by other economic, business, and/or competitive factors; (12) the Company’s estimates of expenses and profitability; (13) the failure to realize anticipated pro forma results or projections and underlying assumptions, including with respect to estimated stockholder redemptions, purchase price and other adjustments; and (14) other risks and uncertainties set forth in the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in PTIC II’s Annual Report on Form 10-K for the year ended December 31, 2021 and Form 10-Q for the quarter ended March 31, 2022, in the Proxy Statement relating to the business combination to be filed with the Securities and Exchange Commission (the “SEC”), and in subsequent filings with the SEC, including the definitive proxy statement relating to the business combination. There may be additional risks that neither PTIC II nor the Company presently know or that PTIC II and the Company currently believe are immaterial that could also cause actual results to differ from those contained in the forward-looking statements.

 

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Nothing in this Current Report on Form 8-K should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Neither the Company nor PTIC II undertakes any duty, and each of the Company and PTIC II expressly disclaims any obligation, to update or alter this Current Report on Form 8-K or any projections or forward-looking statements, whether as a result of new information, future events or otherwise.

 

Additional Information about the Proposed Business Combination and Where to Find It

 

In connection with the Business Combination Proposal, PTIC II intends to file with the SEC a Proxy Statement, and PTIC II will mail a definitive proxy statement relating to the Business Combination Proposal to its stockholders. This Current Report on Form 8-K does not contain all the information that should be considered concerning the Business Combination Proposal and is not intended to form the basis of any investment decision or any other decision in respect of transactions contemplated by the Business Combination Agreement. PTIC II’s stockholders and other interested persons are advised to read, when available, the preliminary proxy statement and the amendments thereto and the definitive proxy statement and other documents filed in connection with the Business Combination Proposal, as these materials will contain important information about PTIC II, the Company and the Business Combination Proposal. When available, the definitive proxy statement and other relevant materials for the Business Combination Proposal will be mailed to stockholders of PTIC II as of a record date to be established for voting on the Business Combination Proposal. Stockholders will also be able to obtain copies of the preliminary proxy statement, the definitive proxy statement and other documents filed with the SEC, without charge, once available, at the SEC’s website at www.sec.gov, or by directing a request to: PropTech Investment Corporation II, 3415 N. Pines Way, Suite 204, Wilson, Wyoming 83014.

 

Before making any voting or investment decision, investors and security holders of PTIC II are urged to carefully read the entire proxy statement, when they become available, and any other relevant documents filed with the SEC, as well as any amendments or supplements to these documents, because they will contain important information about the proposed transaction.

 

Participants in the Solicitation

 

PTIC II and its directors and executive officers may be deemed participants in the solicitation of proxies from PTIC II’s stockholders with respect to the Business Combination Proposal. A list of the names of those directors and executive officers and a description of their interests in PTIC II is contained in PTIC II’s Annual Report on Form 10-K filed with the SEC on March 9, 2022 and is available free of charge at the SEC’s website at www.sec.gov, or by directing a request to PropTech Investment Corporation II, 3415 N. Pines Way, Suite 204, Wilson, Wyoming 83014. Additional information regarding the interests of such participants will be contained in the proxy statement for the Business Combination Proposal when available.

 

The Company and its directors and executive officers may also be deemed to be participants in the solicitation of proxies from the stockholders of PTIC II in connection with the Business Combination Proposal. A list of the names of such directors and executive officers and information regarding their interests in the Business Combination Proposal will be included in the proxy statement for the Business Combination Proposal when available.

 

No Offer or Solicitation

 

This Current Report on Form 8-K shall not constitute a solicitation of a proxy, consent or authorization with respect to any securities or in respect of the Business Combination Proposal. This Current Report on Form 8-K shall not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amendment (the “Securities Act”), or an exemption therefrom.

 

Item 3.02. Unregistered Sales of Equity Securities.

 

The disclosure set forth above in Item 1.01 of this Current Report on Form 8-K is incorporated by reference herein. The shares to be issued in connection with the transactions contemplated by the Business Combination Agreement and the shares to be offered and sold in connection with the Cantor Purchase Agreement have not been registered under the Securities Act in reliance upon the exemption provided in Section 4(a)(2) thereof.

 

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Item 7.01. Regulation FD Disclosure.

 

On May 17, 2022, PTIC II issued a press release discussing the proposed business combination with the Company. The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

 

On May 17, 2022, PTIC II posted an investor presentation relating to the business combination on its website at https://www.proptechinvestmentcorp.com. This presentation is furnished as Exhibit 99.2 to this Current Report on Form 8-K. In addition, PTIC II posted a recorded webcast from management discussing the business combination on its website at https://www.proptechinvestmentcorp.com. A transcript of this presentation is furnished as Exhibit 99.3 to this Current Report on Form 8-K.

 

The foregoing (including Exhibits 99.1, 99.2 and 99.3) is being furnished pursuant to Item 7.01, and it, along with information contained on PTIC II’s website and the websites of the Company or any of their affiliates (or linked therein or otherwise connected thereto), will not be deemed to be filed, or incorporated by reference into, this Current Report on Form 8-K, for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise be subject to the liabilities of that section, nor will it be deemed to be incorporated by reference in any filing under the Securities Act or the Exchange Act.

 

Item 9.01. Financial Statements and Exhibits.

 

(d)   Exhibits.

 

Exhibit No.

  Description
2.1*   Business Combination Agreement, dated as of May 17, 2022
10.1   Sponsor Letter Agreement, dated as of May 17, 2022
10.2   Form of Transaction Support Agreement
10.3   Form of Investor Rights Agreement
10.4   Form of Tax Receivable Agreement
10.5*   Common Stock Purchase Agreement, dated May 17, 2022
10.6   Form of Registration Rights Agreement
99.1   Press Release, dated May 17, 2022
99.2   Investor Presentation, dated May 2022
99.3   Transcript of May 17, 2022 management webcast relating to the business combination
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

* Certain schedules and exhibits to this Exhibit have been omitted in accordance with Items 601(b)(2) and 601(b)(10) of Regulation S-K. PTIC II hereby agrees to hereby furnish supplementally a copy of all omitted schedules and exhibits to the SEC upon its request.

 

7


 

SIGNATURES

 

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.

 

Dated: May 17, 2022   PROPTECH INVESTMENT CORPORATION II
       
       
    By: /s/ Thomas D. Hennessy
    Name: Thomas D. Hennessy
    Title: Co-Chief Executive Officer and President

 

 

 

 

EX-2.1 2 ea159964ex2-1_proptech2.htm BUSINESS COMBINATION AGREEMENT, DATED AS OF MAY 17, 2022

Exhibit 2.1

 

BUSINESS COMBINATION AGREEMENT

 

BY AND AMONG

 

PROPTECH INVESTMENT CORPORATION II

 

RW NATIONAL HOLDINGS, LLC

 

AND

 

IN ITS CAPACITY AS THE SELLERS’ REPRESENTATIVE,

 

LAKE STREET LANDLORDS, LLC

 

DATED AS OF May 17, 2022

 .

 

 


 

TABLE OF CONTENTS

 

  Page
Article 1 CERTAIN DEFINITIONS 4
Section 1.1 Definitions 4
Article 2 TRANSACTIONS 24
Section 2.1 Pre-Closing Transactions 24
Section 2.2 Closing Transactions 25
Section 2.3 Closing of the Transactions Contemplated by this Agreement 26
Section 2.4 Deliverables 27
Section 2.5 Withholding 28
Section 2.6 Earn-Out 28
Article 3 REPRESENTATIONS AND WARRANTIES RELATING TO THE GROUP COMPANIES 30
Section 3.1 Organization and Qualification 30
Section 3.2 Capitalization of the Group Companies 31
Section 3.3 Authority 32
Section 3.4 Financial Statements; Undisclosed Liabilities 32
Section 3.5 Consents and Requisite Governmental Approvals; No Violations 34
Section 3.6 Permits 35
Section 3.7 Material Contracts 35
Section 3.8 Absence of Changes 38
Section 3.9 Litigation 38
Section 3.10 Compliance with Applicable Law 39
Section 3.11 Employee Plans 39
Section 3.12 Environmental Matters 41
Section 3.13 Intellectual Property 41
Section 3.14 Labor Matters 43
Section 3.15 Tax Matters 44
Section 3.16 Brokers 48
Section 3.17 Real and Personal Property 48
Section 3.18 Transactions with Affiliates 49
Section 3.19 Data Privacy and Security 49
Section 3.20 Compliance with International Trade & Anti-Corruption Laws 50
Section 3.21 Information Supplied 50
Section 3.22 Franchises 51
Section 3.23 Investigation; No Other Representations 53
Section 3.24 EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES 53
Article 4 REPRESENTATIONS AND WARRANTIES RELATING TO PTIC II 54
Section 4.1 Organization and Qualification 54
Section 4.2 Authority 54
Section 4.3 Consents and Requisite Government Approvals; No Violations 55
Section 4.4 Brokers 55
Section 4.5 Information Supplied 56
Section 4.6 Capitalization of PTIC II 56

 

i


 

Section 4.7 SEC Filings 57
Section 4.8 Trust Account 58
Section 4.9 Litigation 58
Section 4.10 Compliance with Applicable Law 58
Section 4.11 Internal Controls; Listing; Financial Statements 58
Section 4.12 No Undisclosed Liabilities 59
Section 4.13 Tax Matters 59
Section 4.14 No PTIC II Material Adverse Effect 62
Section 4.15 Investigation; No Other Representations 62
Section 4.16 EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES 63
Article 5 COVENANTS 63
Section 5.1 Conduct of Business of the Company 63
Section 5.2 Efforts to Consummate; Litigation 69
Section 5.3 Confidentiality and Access to Information 71
Section 5.4 Public Announcements 72
Section 5.5 Exclusive Dealing 73
Section 5.6 Preparation of Registration Statement / Proxy Statement 74
Section 5.7 PTIC II Shareholder Approval 75
Section 5.8 Company Related Party Transactions 76
Section 5.9 No Trading 76
Section 5.10 Conduct of Business of PTIC II 76
Section 5.11 Trust Account 78
Section 5.12 Transaction Support Agreements; Company Unitholder Approval 78
Section 5.13 PTIC II Indemnification; Directors’ and Officers’ Insurance 79
Section 5.14 Company Indemnification; Directors’ and Officers’ Insurance 80
Section 5.15 Post-Closing Directors and Officers 81
Section 5.16 PCAOB Financials 83
Section 5.17 Additional Capital Financing 84
Section 5.18 New PTIC II Equity Incentive Plan 84
Section 5.19 Conduct of Business of NewCo LLC 84
Article 6 TAX MATTERS 85
Section 6.1 Certain Tax Matters 85
Article 7 CONDITIONS TO CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT 88
Section 7.1 Conditions to the Obligations of the Parties 88
Section 7.2 Other Conditions to the Obligations of PTIC II 88
Section 7.3 Other Conditions to the Obligations of the Company 89
Section 7.4 Frustration of Closing Conditions 90
Article 8 TERMINATION 91
Section 8.1 Termination 91
Section 8.2 Effect of Termination 91
Article 9 MISCELLANEOUS 92
Section 9.1 Survival 92

 

ii


 

Section 9.2 Entire Agreement; Assignment 92
Section 9.3 Amendment 92
Section 9.4 Notices 92
Section 9.5 Governing Law 93
Section 9.6 Fees and Expenses 93
Section 9.7 Construction; Interpretation 93
Section 9.8 Exhibits and Schedules 94
Section 9.9 Parties in Interest 94
Section 9.10 Severability 95
Section 9.11 Counterparts; Electronic Signatures 95
Section 9.12 Knowledge of Company; Knowledge of PTIC II 95
Section 9.13 No Recourse 95
Section 9.14 Extension; Waiver 96
Section 9.15 Waiver of Jury Trial 96
Section 9.16 Submission to Jurisdiction 96
Section 9.17 Remedies 96
Section 9.18 Sellers’ Representative 97
Section 9.19 Trust Account Waiver 100
Section 9.20 Acknowledgement; Waiver of Conflicts; Retention of Privilege 100

 

SCHEDULES AND EXHIBITS

 

Schedule I Supporting Company Unitholders
Exhibit A Form of Investor Rights Agreement
Exhibit B Form of Tax Receivable Agreement
Exhibit C Form of Transaction Support Agreement
Exhibit D Form of Amended and Restated NewCo LLC Agreement
Exhibit E Form of PTIC II Post-Closing Certificate of Incorporation
Exhibit F Form of PTIC II Post-Closing Bylaws
Exhibit G Form of New PTIC II Equity Incentive Plan

 

iii


 

BUSINESS COMBINATION AGREEMENT

 

This BUSINESS COMBINATION AGREEMENT (this “Agreement”), dated as of May 17, 2022 (the “Effective Date”), is made by and between, (a) PropTech Investment Corporation II, a Delaware corporation (“PTIC II”), (b) RW National Holdings, LLC, a Delaware limited liability company (the “Company”), and (c) Lake Street Landlords, LLC, a Delaware limited liability company (“Lake Street”), in its capacity as the representative of applicable Company Unitholders (in such capacity, the “Sellers’ Representative”). PTIC II, the Company and the Sellers’ Representative shall be referred to herein from time to time collectively as the “Parties”. Capitalized terms used but not otherwise defined herein have the meanings set forth in Section 1.1.

 

WHEREAS, PTIC II is a blank check company incorporated as a Delaware corporation on August 6, 2020 and incorporated for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses;

 

WHEREAS, pursuant to the Governing Documents of PTIC II, PTIC II is required to provide an opportunity for its shareholders to have their outstanding PTIC II Class A Shares redeemed on the terms and subject to the conditions set forth therein in connection with obtaining the PTIC II Shareholder Approval;

 

WHEREAS, as of the date of this Agreement, HC PropTech Partners II LLC, a Delaware limited liability company (the “Sponsor”), and the Other Class B Shareholders collectively own 5,725,000 PTIC II Class B Shares;

 

WHEREAS, as of the date of this Agreement and immediately prior to giving effect to the transactions contemplated by this Agreement, the Sponsor owns, and shall own, 4,833,333 PTIC II Warrants;

 

WHEREAS, concurrently with the execution of this Agreement, the Sponsor, the Other Class B Shareholders, PTIC II, and the Company are entering into the sponsor letter agreement (the “Sponsor Letter Agreement”), pursuant to which, among other things, the Sponsor and each Other Class B Shareholder have agreed to (a) vote in favor of this Agreement and the transactions contemplated hereby, (b) waive any adjustment to the conversion ratio set forth in the Governing Documents of PTIC II or waive any anti-dilution or similar protection with respect to the PTIC II Class B Shares held by him, her or it and (c) and subject to, and conditioned upon the occurrence of and effective as of, the Closing terminate certain existing agreements or arrangements, in each case, on the terms and subject to the conditions set forth in the Sponsor Letter Agreement;

 

WHEREAS, immediately prior to the Closing, PTIC II shall form NewCo LLC for purposes of consummating the transactions contemplated by this Agreement and the Ancillary Documents, on the terms and subject to the conditions set forth in this Agreement;

 

WHEREAS, on the Closing Date, (a) Rolling Company Unitholders will contribute all of their Existing Company LLC Interests to NewCo LLC in exchange for NewCo LLC Class B Units, (b) NewCo LLC Agreement will be amended and restated to be in substantially the form as the Amended and Restated NewCo LLC Agreement, (c) PTIC II shall contribute the Closing Date Contribution Amount to NewCo LLC in exchange for NewCo LLC Class A Units and (d) the NewCo LLC Unitholders (other than PTIC II) shall receive a number of PTIC II Class B Shares equal to the Transaction Equity Security Amount, in the case of each of clause (a), (b), (c), and (d) on the terms and subject to the conditions set forth in this Agreement; WHEREAS, at the Closing, certain Company Unitholders will enter into an Investor Rights Agreement, substantially in the form attached hereto as Exhibit A (the “Investor Rights Agreement”) pursuant to which, among other things, such Company Unitholders will agree not to effect any sale or distribution of any Equity Securities of PTIC II or NewCo LLC held by any of them during the lock-up period described therein;

 

2


 

WHEREAS, at the Closing, PTIC II, the Company, NewCo LLC and the Rolling Company Unitholders (excluding St. Cloud Capital Partners III SBIC, L.P.) will enter into a tax receivable agreement substantially in the form attached hereto as Exhibit B (the “Tax Receivable Agreement”);

 

 

WHEREAS, in connection with the transactions contemplated by this Agreement, PTIC II shall file a Registration Statement / Proxy Statement (as defined below) relating to the transactions contemplated by this Agreement and the Ancillary Documents and it is a condition to the consummation of the transactions contemplated by this Agreement that the PTIC II Shareholder Approval has been obtained;

 

WHEREAS, subject to the terms set forth herein, the Sellers’ Representative shall serve as the representative of the Rolling Company Unitholders;

 

WHEREAS, the board of directors of PTIC II (the “PTIC II Board”) has (a) determined that it is in the best interests of PTIC II and the holders of PTIC II Shares and declared it advisable to enter into this Agreement and the Ancillary Documents to which PTIC II is or will be a party and the transactions contemplated hereby and thereby, (b) approved this Agreement and the Ancillary Documents to which PTIC II is or will be a party and the transactions contemplated hereby and thereby, on the terms and subject to the conditions contemplated hereby and thereby and (c) adopted a resolution recommending, among other things, approval of this Agreement and the Ancillary Documents to which PTIC II is or will be a party and the transactions contemplated hereby and thereby by the holders of PTIC II Shares entitled to vote thereon;

 

WHEREAS, the board of managers of the Company has unanimously (a) approved this Agreement, the Ancillary Documents to which the Company is or will be a party and the transactions contemplated hereby and thereby and (b) recommended, among other things, the approval of this Agreement, the Ancillary Documents to which the Company is or will be a party and the transactions contemplated hereby and thereby by the holders of Company Units entitled to vote thereon;

 

WHEREAS, promptly after the execution of this Agreement, each Company Unitholder listed on Schedule I attached hereto (collectively, the “Supporting Company Unitholders”) will duly execute and deliver to PTIC II a transaction support agreement, substantially in the form attached hereto as Exhibit C (collectively, the “Transaction Support Agreements”), pursuant to which, among other things, each such Supporting Company Unitholder will agree to, among other things, (a) support and vote in favor of this Agreement, the Ancillary Documents to which the Company is or will be a party and the transactions contemplated hereby and thereby, and (b) take, or cause to be taken, any actions necessary or advisable to cause certain agreements to be terminated effective as of the Closing; WHEREAS, it is intended for applicable U.S. federal and, as applicable, state and local income Tax purposes, that (A) (1) the payment by PTIC II of a portion of the Closing Date Contribution Amount to NewCo LLC pursuant to Section 2.2(a), or the payment by PTIC II to NewCo LLC of other cash of PTIC II (if any), in exchange for NewCo LLC Class A Units viewed together with any payment or distribution to the applicable Company Unitholders of such amount in cash as set forth opposite such Person’s name on Schedule I pursuant to Section 2.2(b)(v) and Section 2.2(c) and/or in accordance with Section 4.3(c) of the NewCo LLC Agreement, if any, be treated as a “disguised sale” of membership interests under Section 707(a)(2)(B) of the Code (the “Disguised Sale”), and (2) the Disguised Sale give rise to an adjustment to PTIC II’s basis in the direct and indirect assets of the NewCo LLC and the Company pursuant to Section 743 of the Code (and, in each case, any equivalent adjustments for applicable state and local income Tax purposes), (B) the payment by PTIC II of the portion of the Closing Date Contribution Amount to NewCo LLC not described in the foregoing clause (A) pursuant to Section 2.2 or the payment by PTIC II to NewCo LLC of other cash of PTIC II not described in the foregoing clause (A) (if any) in exchange for NewCo LLC Class A Units be treated as a contribution under Section 721 of the Code, (C) assuming all Company Unitholders are Rolling Company Unitholders, NewCo LLC shall be treated as a continuation of the Company for purposes of Section 708 of the Code, and (D) if so treated as a continuation of the Company, NewCo LLC shall take any necessary, tax-related administrative actions (including with respect to the filing of Tax Returns) consistent therewith (clauses (A)-(D), the “Intended Tax Treatment”); and

 

3


 

 

NOW, THEREFORE, in consideration of the premises and the mutual promises set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, each intending to be legally bound, hereby agree as follows:

 

ARTICLE 1

CERTAIN DEFINITIONS

 

Section 1.1 Definitions. As used in this Agreement, the following terms have the respective meanings set forth below.

 

“$12.50 Earn Out Shares” has the meaning set forth in Section 2.6(a)(i).

 

“$15.00 Earn Out Shares” has the meaning set forth in Section 2.6(a)(ii).

 

“$17.50 Earn Out Shares” has the meaning set forth in Section 2.6(a)(iii).

 

“Acquisition Proposal” has the meaning set forth in Section 5.5.

 

“Additional Capital Financing” has the meaning set forth in Section 5.17.

 

“Additional PTIC II SEC Reports” has the meaning set forth in Section 4.7.

 

“Affiliate” means, with respect to any Person, any other Person directly or indirectly Controlling, Controlled by, or under common Control with such Person. The term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlled” and “controlling” have meanings correlative thereto.

 

4


 

“Affiliated Group” means a group of Persons that elects to, is required to, or otherwise files a Tax Return or pays a Tax as an affiliated group, aggregate group, consolidated group, combined group, unitary group or other group recognized by applicable Tax Law.

 

“Agreement” has the meaning set forth in the introductory paragraph to this Agreement.

 

“Allocation Schedule” has the meaning set forth in Section 2.2(b).

 

“Allocation Schedule Requirements” has the meaning set forth in Section 2.2(d).

 

“Amended and Restated NewCo LLC Agreement” has the meaning set forth in Section 2.2(a).

 

“Ancillary Documents” means the Tax Receivable Agreement, the Sponsor Letter Agreement, the Transaction Support Agreements, the Investor Rights Agreements and each other agreement, document, instrument and/or certificate contemplated by this Agreement executed or to be executed in connection with the transactions contemplated hereby.

 

“Anti-Corruption Laws” means, collectively, (a) the U.S. Foreign Corrupt Practices Act (FCPA), (b) the UK Bribery Act 2010 and (c) any other applicable anti-bribery or anti-corruption Laws related to combatting bribery, corruption and money laundering.

 

“Beneficially Own” and correlative terms such as “Beneficial Ownership” shall have the meaning set forth in Rule 13d-3 under the Exchange Act and shall be calculated in accordance therewith.

 

“Business”, the “business of the Group Companies” or any similar term means all of the current and former businesses of each of the Group Companies, including making available a tech-enabled full-service property management, residential leasing and investment services company for both individual owners of and institutional investors in single-family rental houses.

 

“Business Combination Proposal” has the meaning set forth in Section 5.7.

 

“Business Day” means a day, other than a Saturday or Sunday, on which commercial banks in New York, New York are open for the general transaction of business.

 

“CBA” means any collective bargaining agreement or other Contract with any labor union, works council, labor organization or employee representative.

 

“Change of Control Payment” means (a) any success, change of control, retention, transaction bonus or other similar payment or amount to any Person as a result of, or in connection with this Agreement or the transactions contemplated hereby or any other Change of Control Transaction (including any such payments or similar amounts that may become due and payable based upon the occurrence of one or more additional circumstances, matters or events) or (b) any payments made or required to be made pursuant to or in connection with or upon termination of, and any fees, expenses or other payments owing or that will become owing in respect of, any Company Related Party Transaction during the period beginning on the date of the Latest Balance Sheet and ending on the Closing Date.

 

5


 

“Change of Control Transaction” means any transaction or series of related transactions (a) under which any Person(s), directly or indirectly, acquires or otherwise purchases (i) another Person or any of its Affiliates or (ii) all or a material portion of assets, businesses or equity securities of another Person, (b) that results, directly or indirectly, in the shareholders of a Person as of immediately prior to such transaction holding, in the aggregate, less than fifty percent (50%) of the voting shares of such Person (or any successor or parent company of such Person) immediately after the consummation thereof (in the case of each of clause (a) and (b), whether by merger, consolidation, tender offer, recapitalization, purchase or issuance of equity securities, tender offer or otherwise) or (c) under which any Persons(s) makes any equity or similar investment in another Person.

 

“Charter Proposal” has the meaning set forth in Section 5.7.

 

“Closing” has the meaning set forth in Section 2.3.

 

“Closing Company Audited Financial Statements” has the meaning set forth in Section 3.4(b).

 

“Closing Date” has the meaning set forth in Section 2.3.

 

“Closing Date Contribution Amount” means an amount equal to (a) the amount of cash in the Trust Account as of immediately prior to the Closing (and before, for the avoidance of doubt, giving effect to the PTIC II Shareholder Redemptions), less (b) the aggregate amount of cash required to fund PTIC II Shareholder Redemptions from the Trust Account.

 

“Closing Filing” has the meaning set forth in Section 5.4(b).

 

“Closing Press Release” has the meaning set forth in Section 5.4(b).

 

“Closing Price” means, on any day of determination, the closing price on Nasdaq for a PTIC II Share.

 

“COBRA” means Part 6 of Subtitle B of Title I of ERISA, Section 4980B of the Code and any similar state Law.

 

“Code” means the U.S. Internal Revenue Code of 1986, as amended.

 

“Company” has the meaning set forth in the introductory paragraph to this Agreement.

 

“Company Advised Parties” has the meaning set forth in Section 9.20(b).

 

“Company Class A-1 Units” means the “Class A-1 Preferred Units” of the Company (as defined in the Company LLC Agreement).

 

“Company Class A Units” means the “Class A Preferred Units” of the Company (as defined in the Company LLC Agreement).

 

6


 

“Company Class B Units” means, the “Class B Units” of the Company (as defined in the Company LLC Agreement).

 

“Company Contribution” has the meaning set forth in Section 2.2(a).

 

“Company Counsel” has the meaning set forth in Section 9.20(a).

 

“Company D&O Persons” has the meaning set forth in Section 5.14(a).

 

“Company D&O Tail Policy” has the meaning set forth in Section 5.14(c).

 

“Company Data” means all Data, including all Personal Data (whether of employees, contractors, consultants, customers, consumers, or other Persons and whether in electronic or any other form or medium), that is Processed by or on behalf of any Group Company or any of the Company IT Systems.

 

“Company Deal Communications” has the meaning set forth in Section 9.20(c).

 

“Company Disclosure Schedules” means the disclosure schedules to this Agreement delivered to PTIC II by the Company and the Sellers’ Representative on the date of this Agreement.

 

“Company Expenses” means, without duplication, the aggregate amount payable by any Group Company that is unpaid as of any time of determination for (a) out-of-pocket fees, costs and expenses incurred in connection with the negotiation, preparation or execution of this Agreement or any Ancillary Documents and the consummation of the transactions contemplated hereby and thereby (including the fees and expenses of outside legal counsel, accountants, advisors, investment bankers, brokers, consultants or other agents (including, for the avoidance of doubt, to perform any compensation studies, and a fee to Northern Pacific Growth Investment Partners, L.P. in the amount of $5,000,000)), (b) the cost of the Company D&O Tail Policy to be obtained pursuant to Section 5.14, (c) the costs and expenses of any consultant or advisor engaged to prepare a compensation study in connection with implementation of the New PTIC II Equity Incentive Plan, (d) the filing fee to be paid pursuant to the HSR Act, (e) any filing fee to be paid for the Registration Statement/ Proxy Statement and (f) any other fees, expenses, commissions or other amounts that are expressly allocated to any Group Company, the Sellers’ Representative or the Company Unitholders pursuant to this Agreement or any Ancillary Document, in each case as of such determination time.

 

“Company Fundamental Representations” means the representations and warranties set forth in Section 3.1(a) (Organization and Qualification), Section 3.1(b) (Organization & Qualification), Section 3.2(a) – (c) (Capitalization), Section 3.3 (Authority), Section 3.5(a)(i) – (ii) and (b)(i) – (ii) (No Violations), Section 3.8(b)(ii) (Absence of Changes) (only with respect to Section 5.1(b)(i), Section 5.1(b)(ii), Section 5.1(b)(iii), Section 5.1(b)(iv), Section 5.1(b)(v), Section 5.1(b)(vi), Section 5.1(b)(viii), Section 5.1(b)(x), Section 5.1(b)(xi), Section 5.1(b)(xiii), Section 5.1(b)(xv), Section 5.1(b)(xvii), Section 5.1(b)(xviii), Section 5.1(b)(xix), Section 5.1(b)(xiv), and Section 5.1(b)(xxv) (to the extent related to any of the foregoing)), Section 3.16 (Brokers) and Section 9.18.

 

7


 

“Company IT Systems” means all information technology and computer systems, Software (including Company Products) and hardware, communication systems, servers, network equipment and related documentation, in each case, owned, licensed or leased, or relied on by a Group Company.

 

“Company LLC Agreement” means the Second Amended and Restated Limited Liability Company Agreement of the Company, dated August 5, 2016, as subsequently amended by that certain Amendment No. 1, dated November 7, 2016, as further amended by that certain Amendment No. 2, dated September 30, 2017 and as further amended by that Amendment No. 3 dated March 31, 2021, by and among the Company and the Company Unitholders party thereto.

 

“Company Material Adverse Effect” means any change, event, effect or occurrence that, individually or in the aggregate with any other change, event, effect, development or occurrence, has had or would reasonably be expected to have a material adverse effect on (a) the condition (financial or otherwise), business, regulatory environment, assets, or results of operations of the Group Companies, taken as a whole or (b) the ability of the Sellers’ Representative, any Company Unitholder or any Group Company to consummate the transactions contemplated under this Agreement or any Ancillary Documents in accordance with the terms of this Agreement and the Ancillary Documents, as applicable; provided, however, that, in the case of clause (a), none of the following shall be taken into account in determining whether a Company Material Adverse Effect has occurred or would reasonably be expected to occur: any adverse change, event, effect, development or occurrence to the extent resulting from (i) general business or economic conditions in or affecting the United States, or the global economy generally, (ii) any national or international political or social conditions in the United States or any other country, including the engagement by the United States or any other country in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence in any place of any military or terrorist attack, sabotage or cyberterrorism or worsening of such conditions threatened or existing as of the date hereof, (iii) changes in conditions of the financial, banking, capital or securities markets generally or any material worsening of such conditions threatened or existing as of the date of this Agreement (including (w) any disruption of any of the foregoing markets, (x) any change in currency exchange rates, (y) any decline or rise in the price of any security, commodity, contract or index and (z) any increased cost, or decreased availability, of capital or pricing or terms related to any financing for the transactions contemplated by this Agreement), (iv) changes in any applicable Laws or GAAP (or authoritative interpretation of GAAP), (v) any change, event, effect or occurrence that is generally applicable to the industries or markets in which any Group Company operates, (vi) the execution or public announcement of this Agreement or the pendency or consummation of the transactions contemplated by this Agreement (provided that the exception in this clause (vi) shall not apply to the representations and warranties set forth in Section 3.5(b) to the extent that its purpose is to address the consequences resulting from the public announcement or pendency or consummation of the transactions contemplated by this Agreement or the condition set forth in Section 7.2(a) to the extent it relates to such representations and warranties), (vii) the taking of any action expressly required to be taken by the terms and conditions of this Agreement by the Company (it being understood that any actions permitted to be taken pursuant to Section 5.1(a) shall not be “expressly required” for the purposes of this clause (vii)), (viii) any failure, in and of itself, by any Group Company to meet, or changes to, any internal or published budgets, projections, forecasts, estimates or predictions in respect of revenues, earnings or other financial operation metrics (although the underlying facts and circumstances resulting in such failure may be taken into account to the extent not otherwise excluded from this definition pursuant to clauses (i) through (vi) or (ix)), or (ix) the effects of any hurricane, tornado, flood, earthquake, tsunami, natural disaster, mudslides, wild fires, epidemics, outbreaks, pandemics (including COVID-19 and any loss of customers, suppliers, orders, Contracts or other business relationships resulting from, or in connection with, COVID-19), widespread occurrence of infectious disease, or quarantines, acts of God or other natural disasters or comparable events; provided, however, that any change, event, effect or occurrence resulting from a matter described in any of the foregoing clauses (i) through (v) or (ix) may be taken into account in determining whether a Company Material Adverse Effect has occurred or would reasonably be expected to occur to the extent such change, event, effect, development or occurrence has, had or would reasonably be expected to have a disproportionate adverse effect on the Group Companies, taken as a whole, relative to other participants operating in the industries or markets in the geographies in which the Group Companies operate.

 

8


 

“Company Owned Intellectual Property” means all Intellectual Property Rights that are owned or purported to be owned by any of the Group Companies.

 

“Company Product” means all Software and other products and services from which any Group Company has derived within the past (3) years, is currently deriving, or is schedule to derive, revenue from the sale, license, provision, or making available thereof.

 

“Company Registered Intellectual Property” means all of the following owned by, or filed by or in the name of, any Group Company: issued Patents, pending Patent applications, registered Marks, pending applications for registration of Marks, registered Copyrights, pending applications for registration of Copyrights, Internet domain name registrations and social media accounts.

 

“Company Related Party” has the meaning set forth in Section 3.18.

 

“Company Related Party Transactions” has the meaning set forth in Section 3.18.

 

“Company Sale” means (a) any transaction or series of related transactions that results in any Person or “group” (within the meaning of Section 13(d)(3) of the Exchange Act) acquiring Equity Securities that represent more than 50% of the total voting power of PTIC II or (b) a sale or disposition of all or substantially all of the assets of PTIC II and its Subsidiaries on a consolidated basis, in each case other than a transaction or series of related transactions which results in at least 50% of the combined voting power of the then outstanding voting securities of PTIC II (or any successor to PTIC II) immediately following the closing of such transaction (or series of related transactions) being Beneficially Owned, directly or indirectly, by individuals and entities (or Affiliates of such individuals and entities) who were the Beneficial Owners, respectively, of at least 50% of the Equity Securities of PTIC II immediately prior to such transaction (or series of related transactions).

 

“Company Sale Price” means the price per share for one (1) PTIC II Class A Share in a Company Sale, inclusive of any escrows, holdbacks, deferred purchase price earnouts or the like and assuming the maximum of such amounts will be paid. If and to the extent the price is payable in whole or in part with consideration other than cash, the price for such non-cash consideration shall be determined as follows: (a) with respect to any securities (i) the average of the closing prices of the sales of the securities on all securities exchanges on which the securities may at the time be listed, or, if there have been no sales on any such exchange on any day, the average of the highest bid and lowest asked prices on all such exchanges at the end of such day, or, if on any day such securities are not so listed, the average of the representative bid and asked prices quoted in the Nasdaq system as of 4:00 P.M., New York time, or, if on any day such securities are not quoted in the Nasdaq system, the average of the highest bid and lowest asked prices on such day in the domestic over-the-counter market as reported by the National Quotation Bureau Incorporated, or any similar successor organization, in each such case averaged over a period of 21 days consisting of the day as of which such value is being determined and the 20 consecutive business days prior to such day or (ii) if at any time the securities are not listed on any securities exchange or quoted in the Nasdaq system or the over-the-counter market, the value of each such security shall be equal to the fair value thereof as of the date of valuation as determined by an independent, nationally recognized investment banking firm to be appointed with the mutual approval of the Company and the Sellers’ Representative on the basis of an orderly sale to a willing, unaffiliated buyer in an arm’s length transaction, taking into account all factors determinative of value as the investment banking firm determines relevant (and giving effect to any transfer Taxes payable in connection with such sale); and (b) with respect to any other non-cash assets, the fair value thereof as of the date of valuation as determined by an independent, nationally recognized investment banking firm to be appointed with the mutual approval of the Company and the Sellers’ Representative on the basis of an orderly sale to a willing, unaffiliated buyer in an arm’s-length transaction, taking into account all factors determinative of value as the investment banking firm determines relevant (and giving effect to any transfer Taxes payable in connection with such sale).

 

“Company Subsidiary” means a Subsidiary of the Company.

 

“Company Unitholder Prepared Returns” has the meaning set forth in Section 6.1(a).

 

“Company Unitholders” means the “Member” of the Company (as defined in the Company LLC Agreement) or other holder of interests or units in the Company.

 

“Company Units” means prior to the Closing, the “Common Units” of the Company (as defined in the Company LLC Agreement), Company Class B Units, the Company Class A Units, the Company Class A-1 Units and any profits interests or similar units issued by the Company.

 

9


 

“Confidentiality Agreements” means that certain letter agreement, dated as of March 5, 2022, by and between the Company and PTIC II.

 

“Consent” means any notice, authorization, qualification, registration, filing, notification, waiver, order, consent or approval to be obtained from, filed with or delivered to, a Governmental Entity or other Person.

 

“Contract” or “Contracts” means any agreement, contract, license, lease, obligation, undertaking or other commitment or arrangement that is legally binding upon a Person or any of his, her or its properties or assets.

 

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by Contract or otherwise; and the terms “Controlled” and “Controlling” have meanings correlative to the foregoing.

 

“Copyrights” has the meaning set forth in the definition of Intellectual Property Rights.

 

“COVID-19” means SARS-CoV-2 or COVID-19 (and all related strains and sequences), and any evolutions, intensification, resurgence or mutations thereof or resultant or associated epidemics, pandemic, public health emergencies or disease outbreaks.

 

“Data” means data, databases, data compilations, data sets, data repositories and collections, and technical data.

 

“DGCL” means the General Corporation Law of the State of Delaware.

 

“Disguised Sale” has the meaning set forth in the recitals to this Agreement.

 

“Earn Out Period” means the period ending on the date that is five (5) years following the Closing Date.

 

“Earn Out Shares” has the meaning set forth in Section 2.6.

 

“Earn Out Units” means a number of NewCo LLC Class B Units, equal to the number of Earn Out Shares issued.

 

“Effective Date” has the meaning set forth in the introductory paragraph to this Agreement.

 

“Effective Time” means the time at which the transactions contemplated in Sections 2.2(a) have been consummated.

 

“Employee Benefit Plan” means each “employee benefit plan” (as such term is defined in Section 3(3) of ERISA, whether or not subject to ERISA) and each equity or equity-based compensation, retirement, pension, savings, profit sharing, bonus, incentive, severance, separation, employment, individual consulting or independent contractor, change in control, retention, deferred compensation, vacation, paid time off, medical, retiree or post-employment health or welfare, salary continuation, fringe or other compensation or benefit plan, program, policy, agreement, arrangement or Contract that any Group Company maintains, sponsors or contributes to (or is required to contribute to), or under or with respect to which any Group Company has or could reasonably expect to have any Liability.

 

“Environmental Laws” means all Laws and Orders concerning pollution, protection of the environment, or human health or safety.

 

“Equity Incentive Plan Proposal” has the meaning set forth in Section 5.7.

 

“Equity Rights” means options, restricted stock, phantom stock, warrants, purchase rights, subscription rights, conversion rights, exchange rights, calls, puts, rights of first refusal or first offer or other Contracts of a similar nature.

 

10


 

“Equity Securities” means any share, share capital, capital stock, partnership, membership, joint venture or similar interest in any Person (including any stock appreciation, phantom stock, profit participation or similar equity-based rights), and any option, warrant, right or security (including debt securities) convertible, exchangeable or exercisable therefor.

 

“ERISA” means the Employee Retirement Income Security Act of 1974.

 

“Exchange Act” means the Securities Exchange Act of 1934.

 

“Existing Company LLC Interests” means as of immediately prior to the Closing, the “Company Units”, “Company Class B Units”, “Company Class A Units” and “Company Class A-1 Units” of the Company (in each case, as defined in the Company LLC Agreement) and any other equity interests in the Company, whether vested or unvested.

 

“FDD” means the franchise disclosure documents (including documents prepared as “Franchise Disclosure Documents,” “FDDs,” “Uniform Franchise Offering Circulars” or “UFOCs”) required to be prepared in accordance with the FTC Rule (or its predecessor), NASAA Commentary or any applicable Franchise Sales Law, all variations of such forms which have been approved for use or used in any state or jurisdiction of the United States of America requiring the filing of FDD.

 

“Federal Securities Laws” means the Exchange Act, the Securities Act and the other U.S. federal securities laws and the rules and regulations of the SEC promulgated thereunder or otherwise.

 

“Financial Statements” has the meaning set forth in Section 3.4(a).

 

“Flow-Thru Entity” means (a) any entity, plan or arrangement that is treated for income Tax purposes as a partnership, (b) a “controlled foreign corporation” within the meaning of Section 957 of the Code, (c) a “specified foreign corporation” within the meaning of Section 965 of the Code or (d) a “passive foreign investment company” within the meaning of Section 1297 of the Code.

 

“Franchise” means any grant by any of the Group Companies or predecessors in interest of any of the foregoing Persons, to any Person of the right to engage in or carry on a business, or to sell or offer to sell any product or service, which constitutes a “franchise,” “business opportunity,” “seller assisted marketing plan,” or the like (a) as “franchise” or “business opportunity” is defined under the FTC Rule or (b) as “franchise,” “business opportunity” or “seller-assisted marketing plan” is defined under any Law.

 

“Franchise Agreement” means any Contract (regardless of the name of the Contract and includes franchise agreements, area development agreements, master franchise agreements, subfranchise agreements, area franchise agreements, and the like and options for any of the types of Contracts enumerated above in this definition) pursuant to which a Person grants or has granted any Franchise or the right (regardless of whether subject to certain qualifications) to acquire any Franchise, including any addendum, renewal, amendment, extension or renewal thereof.

 

11


 

“Franchise Sales Laws” means the following: the FTC Rule, and predecessor Federal Trade Commission trade regulation rules governing the offer or sale of Franchises as defined under any of those rules; other Laws (including the Law of any state of the United States of America or any other country) regulating the offer or sale of Franchises, business opportunities, seller-assisted marketing plans or similar arrangements; and all other Laws governing the relationships between franchisors and Franchisees, including without limitation those Laws that address (among other things) unfair and deceptive practices related to, or the default, termination, non-renewal, or transfer of, Franchises.

 

“Franchisee” means any Person who has been authorized or licensed by any of the Group Companies, or a predecessor in interest of any of them, to develop, open, operate, or authorize any other Person to develop, open or operate, a Franchise.

 

“Franchise System” means the “Renters Warehouse” franchise system pursuant to which any of the Group Companies and third parties provide property management and tenant placement services to owners and landlords of single family residences, condominiums, townhomes and apartments throughout the United States, its territories and possessions.

 

“Fraud” means an act or omission by a Party, and requires (a) a false or incorrect representation or warranty expressly set forth in this Agreement, (b) with actual knowledge (as opposed to constructive, imputed or implied knowledge) by the Party making such representation or warranty that such representation or warranty expressly set forth in this Agreement is false or incorrect, (c) an intention to deceive another Party, to induce him, her or it to enter into this Agreement, (d) another Party, in justifiable or reasonable reliance upon such false or incorrect representation or warranty expressly set forth in this Agreement, causing such Party to enter into this Agreement and (e) another Party to suffer damage by reason of such reliance. For the avoidance of doubt, “Fraud” does not include any claim for equitable fraud, negligent fraud, promissory fraud, unfair dealings fraud or any torts (including a claim for fraud or alleged fraud) based on negligence or recklessness.

 

“FTC Rule” means the Federal Trade Commission trade regulation rules entitled “Disclosure Requirements and Prohibitions Concerning Franchising” and “Disclosure Requirements and Prohibitions Concerning Business Opportunities,” 16 C.F.R Parts 436 and 437, as in effect from time to time.

 

“GAAP” means generally accepted accounting principles in effect in the United States.

 

“Governing Documents” means the legal document(s) by which any Person (other than an individual) establishes its legal existence or which govern its internal affairs. For example, the “Governing Documents” of a U.S. corporation are its certificate or articles of incorporation and by-laws, the “Governing Documents” of a U.S. limited partnership are its limited partnership agreement and certificate of limited partnership, the “Governing Documents” of a U.S. limited liability company are its operating or limited liability company agreement and certificate of formation.

 

“Governing Documents Proposals” has the meaning set forth in Section 5.7.

 

12


 

“Governmental Entity” means any United States or non-United States (a) federal, state, local, municipal or other government, (b) governmental or quasi-governmental entity of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal) or (c) body exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature, including any arbitrator, mediator or arbitral tribunal (public or private).

 

“Group Company” and “Group Companies” means, collectively, the Company and its Subsidiaries, and any franchises of any Group Company.

 

“Hazardous Substance” means any hazardous, toxic, explosive or radioactive material, substance, waste or other pollutant that is regulated by, or may give rise to Liability pursuant to, any Environmental Law, including any petroleum products or byproducts, asbestos, lead, polychlorinated biphenyls, per- and poly-fluoroakyl substances, or radon.

 

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules and regulations promulgated thereunder.

 

“Illustrative Allocation Schedule” has the meaning set forth in Section 2.2(d).

 

“Indebtedness” means, as of any time, without duplication, with respect to any Person, the outstanding principal amount of, accrued and unpaid interest on, fees and expenses arising under or in respect of (a) indebtedness for borrowed money, (b) other obligations evidenced by any note, bond, debenture or other debt security, (c) obligations for the deferred purchase price of property or assets, including “earn-outs” and “seller notes” (but excluding any trade payables arising in the ordinary course of business), (d) reimbursement and other obligations with respect to letters of credit, bank guarantees, bankers’ acceptances or other similar instruments, in each case, solely to the extent drawn, (e) leases required to be capitalized under GAAP, (f) derivative, hedging, swap, foreign exchange or similar arrangements, including swaps, caps, collars, hedges or similar arrangements, (g) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any lien or security interest on property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (h) any other debt-like or debt-similar items or obligations and (i) any of the obligations of any other Person of the type referred to in clauses (a) through (h) above directly or indirectly guaranteed by such Person or secured by any assets of such Person, whether or not such Indebtedness has been assumed by such Person.

 

“Intellectual Property Rights” means all of the following: (a) patents and patent applications, industrial designs and design patent rights, including any continuations, divisionals, continuations-in-part and provisional applications and statutory invention registrations, and any patents issuing on any of the foregoing and any reissues, reexaminations, substitutes; supplementary protection certificates, extensions of any of the foregoing (collectively, “Patents”); (b) trademarks, service marks, trade names, service names, brand names, trade dress rights, logos, Internet domain names, corporate names and other source or business identifiers, together with the goodwill associated with any of the foregoing, and all applications, registrations, extensions and renewals of any of the foregoing (collectively, “Marks”); (c) copyrights and works of authorship, database and design rights, mask work rights and moral rights, whether or not registered or published, and all registrations, applications, renewals, extensions and reversions of any of the foregoing (collectively, “Copyrights”); (d) trade secrets, ideas, know-how, processes, methods, techniques, drawings, specifications, layouts, designs, formulae, algorithms, compositions, industrial models, architectures, plans, proposals, and other confidential and proprietary information, including invention disclosures, inventions and formulae, whether patentable or not, (collectively, “Trade Secrets”); (e) Software and other technology, and all rights therein and (f) any other intellectual or proprietary rights.

 

13


 

“Investment Company Act” means the Investment Company Act of 1940.

 

“IPO” has the meaning set forth in Section 9.19.

 

“JOBS Act” means the Jumpstart Our Business Startups Act of 2012.

 

“Latest Balance Sheet” has the meaning set forth in Section 3.4(a).

 

“Law” means any federal, state, local, foreign, national or supranational statute, law (including common law), act, statute, ordinance, treaty, rule, code, Order, regulation or other binding directive or guidance issued, promulgated or enforced by a Governmental Entity having jurisdiction over a given matter.

 

“Leased Real Property” has the meaning set forth in Section 3.17(b).

 

“Liability” or “liability” means any and all debts, liabilities and obligations, whether accrued or fixed, absolute or contingent, known or unknown, matured or unmatured or determined or determinable, including those arising under any Law (including any Environmental Law), Proceeding or Order and those arising under any Contract, agreement, arrangement, commitment or undertaking.

 

“Lien” means any mortgage, pledge, security interest, encumbrance, lien, license or sub-license, charge, or other similar encumbrance or interest (including, in the case of any Equity Securities, any voting, transfer or similar restrictions).

 

“Malicious Code” means any (a) “back door,” “drop dead device,” “time bomb,” “Trojan horse,” “virus,” “ransomware,” or “worm” or (b) other code designed for the purpose of or capable of (i) disrupting, disabling, harming, or impeding with the operation of, or providing unauthorized Processing of or to, a system (including a Company IT System) or (ii) damaging or destroying any data or file without the user’s consent.

 

“Marks” has the meaning set forth in the definition of Intellectual Property Rights.

 

“Material Contracts” has the meaning set forth in Section 3.7(a).

 

“Material Permits” has the meaning set forth in Section 3.6.

 

14


 

“Multiemployer Plan” has the meaning set forth in Section (3)37 or Section 4001(a)(3) of ERISA.

 

“Nasdaq” means The Nasdaq Capital Market.

 

“NASAA Commentary” means the North American Securities Administrators Association, Inc.’s “2008 Franchise Registration and Disclosure Guidelines,” the “Commentary on 2008 Franchise Registration and Disclosure Guidelines” and all other guidance, releases and commentary concerning the FTC Franchise Rule published by the North American Securities Administrators Association, Inc.

 

“Nasdaq Proposal” has the meaning set forth in Section 5.7.

 

“Net Outstanding PTIC II Class A Shares” means a number equal to (a) the number of PTIC II Class A Shares outstanding as of immediately prior to the Closing (and after, for the avoidance of doubt, the conversion of all of PTIC II Class B Shares outstanding prior to the Closing into PTIC II Class A Shares as contemplated hereby), minus (b) the number of PTIC II Class A Shares redeemed and cancelled in connection with the PTIC II Shareholder Redemptions.

 

“NewCo LLC” has the meaning set forth in Section 2.1(a).

 

“NewCo LLC Agreement” means the Limited Liability Company Agreement of the NewCo LLC, dated as of immediately prior to the Closing, by and among NewCo LLC and NewCo LLC Unitholders thereto..

 

“NewCo LLC Class A Units” means the “Class A Units” of NewCo LLC (as defined in the Amended and Restated NewCo LLC Agreement).

 

“NewCo LLC Class B Unitholder” means a NewCo LLC Unitholder who holds NewCo LLC Class B Units.

 

“NewCo LLC Class B Units” means the “Class B Units” of NewCo LLC (as defined in the Amended and Restated NewCo LLC Agreement).

 

“NewCo LLC Unitholder” means (a) prior to the Effective Time, any holder of NewCo LLC Class B Units or other holder of interests or units in NewCo LLC prior to the Closing and (b) from and after the Effective Time, each of PTIC and each holder of NewCo LLC Class B Units. Any reference to the NewCo LLC Unitholders in this Agreement or any Ancillary Document shall be deemed to refer to clause (a) or (b) of this definition, as the context so requires.

 

“NewCo LLC Units” means (a) prior to the Effective Time, the NewCo LLC Class B Units and any profits interests or similar units issued by NewCo LLC prior to the Closing and (b) from and after the Effective Time, the NewCo LLC Class A Units and NewCo LLC Class B Units (in each case, as defined in the Amended and Restated NewCo LLC Agreement). Any reference to the NewCo LLC Units in this Agreement or any Ancillary Document shall be deemed to refer to clause (a) or (b) of this definition, as the context so requires.

 

“New PTIC II Equity Incentive Plan” has the meaning set forth in Section 5.18.

 

15


 

“Non-Party Affiliate” has the meaning set forth in Section 9.13.

 

“Off-the-Shelf Software” means, other than Third-Party Components, any unmodified Software that is made generally and widely available to the public on a commercial basis and is licensed to any of the Group Companies on a non-exclusive basis under standard terms and conditions for a one-time license fee of less than $150,000 per license or an ongoing licensee fee of less than $150,000 per year.

 

“Officers” has the meaning set forth in Section 5.15(a).

 

“Order” means any outstanding writ, order, judgment, injunction, decision, determination, award, ruling, subpoena, verdict or decree entered, issued or rendered by any Governmental Entity.

 

“Other Company Unitholder” has the meaning set forth in Section 5.12(c).

 

“Other Company Unitholder Consent” has the meaning set forth in Section 5.12(c).

 

“Other Company Unitholder Consent Deadline” has the meaning set forth in Section 5.12(c).

 

“Ordinary Course Tax Sharing Agreement” means any written commercial agreement entered into in the ordinary course of business of which no principal subject matter is Tax but which contains customary Tax indemnification provisions.

 

“Other Class B Shareholders” means, collectively, Jack Leeney, Courtney Robinson, Gloria Fu, Margaret Whelan and Adam Blake.

 

“Other PTIC II Shareholder Approval” means the approval of each Other Transaction Proposal by the affirmative vote of the holders of the requisite number of PTIC II Shares entitled to vote thereon, whether in person or by proxy at the PTIC II Shareholders Meeting (or any adjournment thereof), in accordance with the Governing Documents of PTIC II and applicable Law.

 

“Other Transaction Proposal” means each Transaction Proposal, other than the Required Transaction Proposals.

 

“Parties” has the meaning set forth in the introductory paragraph to this Agreement.

 

“Patents” has the meaning set forth in the definition of Intellectual Property Rights.

 

“PCAOB” means the Public Company Accounting Oversight Board.

 

“PCAOB Financials” has the meaning set forth in Section 5.16(a).

 

“Permits” means any approvals, authorizations, clearances, licenses, registrations, permits, Regulatory Permits or certificates of a Governmental Entity.

 

“Permitted Liens” means (a) mechanic’s, materialmen’s, carriers’, repairers’ and other similar statutory Liens arising or incurred in the ordinary course of business for amounts that are not yet delinquent or are being contested in good faith by appropriate proceedings and for which appropriate and sufficient reserves have been established in accordance with GAAP, (b) statutory Liens for Taxes, assessments or other governmental charges not yet due and payable or which are being contested in good faith by appropriate proceedings and for which sufficient reserves have been established in accordance with GAAP, (c) encumbrances and restrictions on real property (including easements, covenants, conditions, rights of way and similar restrictions) that do not prohibit or materially interfere with any of the Group Companies’ use or occupancy of such real property, (d) zoning, building codes and other land use Laws regulating the use or occupancy of real property or the activities conducted thereon which are imposed by any Governmental Entity having jurisdiction over such real property and which are not violated by the use or occupancy of such real property or the operation of the businesses of the Group Company and do not prohibit or materially interfere with any of the Group Companies’ use or occupancy of such real property, (e) cash deposits or cash pledges to secure the payment of workers’ compensation, unemployment insurance, social security benefits or obligations arising under similar Laws or to secure the performance of public or statutory obligations, surety or appeal bonds, and other obligations of a like nature, in each case in the ordinary course of business and which are not yet due and payable, (f) grants by any Group Company of non-exclusive rights in Intellectual Property Rights to customers for the use of a Company Product or franchisees of such Group Company for the use of a Mark included in the Company Owned Intellectual Property, in each case in the ordinary course of business (“Permitted Licenses”) and (g) except with respect to Intellectual Property Rights, other Liens that do not materially and adversely affect the value, use or operation of the asset subject thereto.

 

16


 

“Person” means an individual, partnership, corporation, limited liability company, joint stock company, unincorporated organization or association, trust, joint venture or other similar entity, whether or not a legal entity.

 

“Personal Data” means any data or information that falls within the definition for “personal information,” “personal data,” “nonpublic personal information,” “personally identifiable information,” or similar terms provided by applicable Law or by any Group Company in any of its privacy policies, notices or Contracts, as well as all information that directly or indirectly can be used to identify, is related to, describes, is reasonably capable of being associated with, or could reasonably be linked with, a particular individual or household.

 

“Pre-Closing PTIC II Holders” means the holders of PTIC II Shares at any time prior to the Effective Time.

 

“Pre-Closing Tax Period” means any taxable period ending on or before the Closing Date and the portion of any Straddle Period through and including the Closing Date.

 

“Pre-Transaction Equity Value” means $312,000,000.

 

“Privacy and Data Security Policies” has the meaning set forth in Section 3.19(a).

 

“Privacy Requirements” shall mean, collectively, all of the following to the extent relating to any Personal Data, sensitive information (including credit card information) or Company Data, the Processing thereof, or otherwise relating to privacy, security, or security breach notification:

 

(a) rules, policies and procedures (whether physical or technical in nature, or otherwise) of any of the Group Companies, including the Privacy and Data Security Policies, (b) applicable Laws, (c) the Payment Card Industry (PCI) Data Security Standards and any other industry standards applicable to the industry in which any Group Company operates and (d) Contracts into which any Group Company has entered into or by which it is otherwise bound.

 

“Privileged Company Deal Communications” has the meaning set forth in Section 9.20(c).

 

“Privileged PTIC II Deal Communications” has the meaning set forth in Section 9.20(c).

 

“Proceeding” means any lawsuit, litigation, action, audit, examination, claim, complaint, charge, investigation, proceeding, suit, mediation or arbitration (in each case, whether civil, criminal or administrative and whether public or private) pending by or before or otherwise involving any Governmental Entity.

 

“Process” (or “Processing”, “Processed” or “Processes”) means the access, collection, use, maintenance, license, sale, modification, analysis, enhancement, aggregation, destruction, exfiltration, disclosure, storage, processing, recording, distribution, transfer, import, export, protection (including security measures), disposal, destruction, or disclosure or other activity regarding data (whether electronically or in any other form or medium).

 

“Prospectus” has the meaning set forth in Section 9.19.

 

“PTIC II” has the meaning set forth in the introductory paragraph to this Agreement.

 

“PTIC II Advised Parties” has the meaning set forth in Section 9.20(b).

 

“PTIC II Board” has the meaning set forth in the recitals to this Agreement.

 

“PTIC II Board Recommendation” has the meaning set forth in Section 5.7.

 

17


 

“PTIC II Class A Shares” means shares of Class A common stock, par value $0.0001 per share, of PTIC II.

 

“PTIC II Class B Shares” means, (a) prior to the Effective Time, shares of Class B common stock, par value $0.0001 per share of PTIC II having voting and economic rights and (b), following the Effective Time, shares of Class B common stock, par value $0.0001 per share of PTIC II having voting but no economic rights. Any reference to the PTIC II Class B Shares in this Agreement or any Ancillary Document shall be deemed to refer to clause (a) or clause (b) of this definition, as the context so requires.

 

“PTIC II Contribution” has the meaning set forth in Section 2.2(a).

 

“PTIC II Counsel” has the meaning set forth in Section 9.20(a).

 

“PTIC II D&O Persons” has the meaning set forth in Section 5.13(a).

 

“PTIC II Deal Communications” has the meaning set forth in Section 9.20(d).

 

“PTIC II Disclosure Schedules” means the disclosure schedules to this Agreement delivered to the Sellers’ Representative and the Company by PTIC II on the date of this Agreement.

 

“PTIC II Expenses” means, as of any determination time, without duplication, the aggregate amount of fees, costs, expenses, commissions or other amounts incurred prior to and through the Closing Date by or on behalf of, or otherwise payable by, whether or not due, PTIC II in connection with the special purpose acquisition company and the business combination process, including the negotiation, preparation or execution of this Agreement and any Ancillary Documents, the performance of its covenants or agreements in this Agreement or any Ancillary Document or the consummation of the transactions contemplated hereby or thereby, including (a) the fees, costs, expenses and disbursements of outside legal counsel, accountants, advisors, brokers, investment bankers, consultants, or other agents or service providers of PTIC II, including any deferred underwriting fees, and (b) any other fees, costs, expenses, commissions or other amounts that are expressly allocated to PTIC II pursuant to this Agreement or any Ancillary Document. Notwithstanding the foregoing or anything to the contrary herein, PTIC II Expenses shall not include (y) any such fee, cost, expense, commission or other amount actually paid in cash by PTIC II prior to the date of this Agreement from the cash paid by the Sponsor, and received by PTIC II in connection with the issue of PTIC II Warrants to the Sponsor or (z) any Company Expenses.

 

“PTIC II Financial Statements” means all of the financial statements of PTIC II included in the PTIC II SEC Reports.

 

“PTIC II Fundamental Representations” means the representations and warranties set forth in Section 4.1, Section 4.2, Section 4.4 and Section 4.6.

 

“PTIC II Liabilities” means, as of any determination time, the aggregate amount of Liabilities of PTIC II that would be accrued on a balance sheet in accordance with GAAP, whether or not such Liabilities are due and payable as of such time. Notwithstanding the foregoing or anything to the contrary herein, PTIC II Liabilities shall not include any PTIC II Expenses.

 

“PTIC II Material Adverse Effect” means any change, event, effect, development or occurrence that, individually or in the aggregate with any other change, event, effect, development or occurrence, has had or would reasonably be expected to have a material adverse effect on the ability of PTIC II to consummate the transactions contemplated by this Agreement in accordance with the terms hereof. Notwithstanding the foregoing or anything to the contrary herein (a) in no event shall (i) any change, event, effect, development or occurrence to the extent relating to any of the Group Companies or the Business or (ii) any PTIC II Shareholder Redemption constitute an PTIC II Material Adverse Effect and (b) no change, event, effect or occurrence that is generally applicable to special purpose acquisition companies shall be taken into account in determining whether a PTIC II Material Adverse Effect has occurred or would reasonably be expected to occur, except to the extent any such change, event, effect or occurrence has had or would reasonably be expected to have a disproportionate adverse effect on PTIC II relative to other similar situated special purpose acquisition companies.

 

18


 

“PTIC II Non-Party Affiliates” means, collectively, each PTIC II Related Party and each of the former, current or future Affiliates, Representatives, successors or permitted assigns of any PTIC II Related Party (other than, for the avoidance of doubt, PTIC II).

 

“PTIC II Pre-Closing Reorganization” has the meaning set forth in Section 2.1(a).

 

“PTIC II Prepared Returns” has the meaning set forth in Section 6.1(a).

 

“PTIC II Post-Closing Bylaws” has the meaning set forth in Section 2.1(a).

 

“PTIC II Post-Closing Certificate of Incorporation” has the meaning set forth in Section 2.1(a).

 

“PTIC II Related Party” means any current or former officer, director, employee, partner, member, manager, direct or indirect equityholder (including the Sponsor) or Affiliate of either PTIC II or the Sponsor.

 

“PTIC II Related Party Transaction” means where a PTIC II Related Party (a) owns any interest in any material asset used in the business of PTIC II, (b) possesses, directly or indirectly, any material financial interest in, or is a director or executive officer of, any Person which is a material client, supplier, customer, lessor or lessee of PTIC II or (c) owes any material amount to, or is owed material any amount by, PTIC II.

 

“PTIC II SEC Reports” has the meaning set forth in Section 4.7.

 

“PTIC II Shareholder” a holder of PTIC II Shares.

 

“PTIC II Shareholder Approval” means, collectively, the Required PTIC II Shareholder Approval and the Other PTIC II Shareholder Approval.

 

“PTIC II Shareholder Redemption” means the right of the Public Shareholders to redeem all or a portion of their PTIC II Class A Shares (as determined in accordance with PTIC II’s Governing Documents) to redeem all or a portion of such holder’s PTIC II Class A Shares, at the per-share price, payable in cash, equal to such holder’s pro rata share of the cash in the Trust Account (as determined in accordance with PTIC II’s Governing Documents) in connection with the transactions contemplate by this Agreement.

 

“PTIC II Shareholders Meeting” has the meaning set forth in Section 5.7.

 

“PTIC II Shares” means, collectively as of any determination time, PTIC II Class A Shares and PTIC II Class B Shares.

 

“PTIC II Warrants” means each warrant to purchase one PTIC II Class A Shares at an exercise price of $11.50 per share, subject to adjustment in accordance with the Warrant Agreement (including, for the avoidance of doubt, each such warrant held by the Sponsor).

 

“Public Shareholders” has the meaning set forth in Section 9.19.

 

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“Public Software” means any Software that contains, includes, incorporates, or has instantiated therein, or is derived in any manner (in whole or in part) from, any Software that is distributed as free software, open source software (e.g., Linux) or similar licensing or distribution models, including under any terms or conditions that impose any requirement that any Software using, linked with, incorporating, distributed with or derived from such Public Software (a) be made available or distributed in source code form, (b) be licensed for purposes of making derivative works or (c) be redistributable at no, or a nominal, charge.

 

“Real Property Leases” means all leases, sub-leases, licenses or other agreements, in each case, pursuant to which any Group Company leases or sub-leases any real property (including, without limitation, all amendments, extensions, renewals, guaranties, and other agreements with respect thereto).

 

“Registration Statement / Proxy Statement” means a registration statement on Form S-4 or a proxy statement relating to the transactions contemplated by this Agreement and the Ancillary Documents and containing a proxy statement / prospectus or a proxy statement of PTIC II, as applicable.

 

“Regulatory Permits” means all licenses, waivers, permits, enrollments, certifications, authorizations, approvals, franchises, registrations, accreditations, letters of non-reviewability, certificates of need, consents, supplier or provider numbers, qualifications, operating authority, and other such Permits granted by any such Governmental Entity to any Group Company.

 

“Representatives” means with respect to any Person, such Person’s Affiliates and such Person’s directors, managers, officers, employees, accountants, consultants, advisors, attorneys, agents and other representatives.

 

“Required PTIC II Shareholder Approval” means the approval of each Required Transaction Proposal by the affirmative vote of the holders of the requisite number of PTIC II Class A Shares entitled to vote thereon, whether in person or by proxy at the PTIC II Shareholders Meeting (or any adjournment thereof), in accordance with the Governing Documents of PTIC II and applicable Law.

 

“Required Transaction Proposals” means, collectively, the Business Combination Proposal, Nasdaq Proposal, the Charter Proposal, the Governing Documents Proposal and the Equity Incentive Plan Proposal.

 

“Requisite Company Unitholder” has the meaning set forth in Section 5.12(b).

 

“Requisite Company Unitholder Consent” has the meaning set forth in Section 5.12(b).

 

“Requisite Company Unitholder Consent Deadline” has the meaning set forth in Section 5.12(b).

 

“Rolling Company Unitholders” means the Company Unitholders who have duly executed a Requisite Company Unitholder Consent or an Other Company Unitholder Consent in accordance with the terms of this Agreement.

 

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“Sanctioned Country” has the meaning set forth in Section 3.20(a).

 

“Sanctions and Export Control Laws” means any applicable Law related to (a) import and export, reexport, and transfer controls, including the U.S. Export Administration Regulations, (b) economic sanctions, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, the European Union, any European Union Member State, the United Nations, and Her Majesty’s Treasury of the United Kingdom or (c) U.S. anti-boycott measures.

 

“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002.

 

“Schedules” means, collectively, the Company Disclosure Schedules and the PTIC II Disclosure Schedules.

 

“SEC” means the U.S. Securities and Exchange Commission.

 

“Securities Act” means the U.S. Securities Act of 1933.

 

“Securities Laws” means Federal Securities Laws and other applicable foreign and domestic securities or similar Laws.

 

“Security Incident” means any (a) breach of security, phishing incident, ransomware or malware attack, or other cyber or security incident affecting or with respect to any Company IT Systems or (b) incident in which confidential information or Company Data was or may have been Processed in an unauthorized manner (whether any of the foregoing was possessed or controlled by any Group Company or by another Person on behalf of the Group Companies).

 

“Signing Filing” has the meaning set forth in Section 5.4(b).

 

“Signing Press Release” has the meaning set forth in Section 5.4(b).

 

“Software” shall mean any and all (a) computer programs and other software, including any and all software implementations of algorithms, models and methodologies, whether in source code object code, or executable code format, (b) Data, (c) descriptions, flowcharts and other work product used to design, plan, organize and develop any of the foregoing, screens, user interfaces, report formats, firmware, development tools, templates, menus, buttons, libraries, scripts, routines, and icons and (d) all documentation, including user manuals and other training documentation, related to any of the foregoing.

 

“Sponsor” has the meaning set forth in the recitals to this Agreement.

 

“Sponsor Directors” has the meaning set forth in Section 5.15(b).

 

“Sponsor Letter Agreement” has the meaning set forth in the recitals to this Agreement.

 

“Straddle Period” means any taxable period that begins on or before (but does not end on) the Closing Date.

 

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“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership or other legal entity of which (a) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person or a combination thereof or (b) if a limited liability company, partnership, association or other business entity (other than a corporation), a majority of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more Subsidiaries of such Person or a combination thereof and for this purpose, a Person or Persons own a majority ownership interest in such a business entity (other than a corporation) if such Person or Persons shall be allocated a majority of such business entity’s gains or losses or shall be a, or control any, managing director or general partner of such business entity (other than a corporation). The term “Subsidiary” shall include all Subsidiaries of such Subsidiary.

 

“Supporting Company Unitholder” has the meaning set forth in the recitals to this Agreement.

 

“Tax” or “Taxes” means (a) all U.S. federal state, local or non-U.S. net or gross income, net or gross net or gross receipts, proceeds, payroll, employment, excise, severance, stamp, occupation, windfall or excess profits, profits, customs, capital stock, withholding, social security, unemployment, disability, real property, personal property (tangible and intangible), sales, use, transfer, value added, alternative or add-on minimum, capital gains, user, leasing, lease, natural resources, ad valorem, franchise, gaming license, capital, estimated, goods and services, fuel, interest equalization, registration, recording, premium, turnover, unclaimed or abandoned property, escheat, any imputed underpayment imposed pursuant to Section 6232 of the Code, environmental or other taxes, assessments, duties or similar charges or other tax of any kind whatsoever, including all interest, penalties and additions imposed with respect to (or in lieu of) the foregoing, imposed by (or otherwise payable to) any Governmental Entity, and, in each case, whether disputed or not, (b) any Liability for, or in respect of the payment of, any amount of a type described in clause (a) of this definition as a result of Treasury Regulations Section 1.1502-6 (or any similar provision of any Law) or being a member of an affiliated, combined, consolidated, unitary, aggregate or other group for Tax purposes and (c) any Liability for, or in respect of the payment of, any amount described in clauses (a) or (b) of this definition as a transferee or successor, by contract, by operation of Law, or otherwise.

 

“Tax Authority” means any Governmental Entity responsible for the collection or administration of Taxes or Tax Returns.

“Tax Receivable Agreement” has the meaning set forth in the recitals to this Agreement.

 

“Tax Return” means returns, declarations, reports, claims for refund, information returns, elections, disclosures, statements, or other documents (including any related or supporting schedules, attachments, statements or information, and including any amendments thereof) filed or required to be filed with a Governmental Entity in connection with, or relating to, Taxes.

 

“Tax Sharing Agreement” means any agreement or arrangement (including any provision of a Contract) pursuant to which any Group Company is or may be obligated to indemnify any Person for, or otherwise pay, any Tax of or imposed on another Person, or indemnify any Person for Taxes, or pay over to, any other Person any amount determined by reference to actual or deemed Tax benefits, Tax assets or attributes, or Tax savings.

 

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“Termination Date” has the meaning set forth in Section 8.1(d).

 

“Third-Party Components” means, with respect to any Company Product, all of the following (other than Public Software) that are not exclusively owned by a Group Company: (a) Software that is used in, incorporated into, combined, linked, distributed, or made available with, or provided to any Person as a service or application in connection with, such Company Product and (b) Intellectual Property Rights that are embodied in such Company Product.

 

“Trading Day” means any day on which the PTIC II Class A Shares are actually traded on the Nasdaq.

 

“Transaction Equity Security Amount” means a number of Company Class B Units or PTIC II Class B Shares, as applicable, equal to (a) the Pre-Transaction Equity Value, divided by (b) $10.00.

 

“Transaction Litigation” has the meaning set forth in Section 5.2(d).

 

“Transaction Proposals” has the meaning set forth in Section 5.7.

 

“Transaction Support Agreement Deadline” has the meaning set forth in Section 5.12(a).

 

“Transaction Support Agreements” has the meaning set forth in the recitals to this Agreement.

 

“Transfer Taxes” means all transfer, documentary, sales, use, value added, goods and services, stamp, registration, notarial fees and other similar Taxes and fees incurred in connection with the transactions contemplated by this Agreement.

 

“Treasury Regulations” means the United States Treasury Regulations promulgated under the Code.

 

“Triggering Event I” means if at any time following the Closing but prior to the expiry of the Earn Out Period, the Closing Price of the PTIC II Class A Shares is greater than or equal to $12.50 (which shall be adjusted equitably to reflect any dividend, split, or other noneconomic reclassification of shares of PTIC II’s capital stock) over any twenty (20) Trading Days within any thirty (30) consecutive Trading Day period.

 

“Triggering Event II” means if at any time following the Closing but prior to the expiry of the Earn Out Period, the Closing Price of the PTIC II Class A Shares is greater than or equal to $15.00 (which shall be adjusted equitably to reflect any dividend, split, or other noneconomic reclassification of shares of PTIC II’s capital stock) over any twenty (20) Trading Days within any thirty (30) consecutive Trading Day period.

 

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“Triggering Event III” means if at any time following the Closing but prior to the expiry of the Earn Out Period, the Closing Price of the PTIC II Class A Shares is greater than or equal to $17.50 (which shall be adjusted equitably to reflect any dividend, split, or other noneconomic reclassification of shares of PTIC II’s capital stock) over any twenty (20) Trading Days within any thirty (30) consecutive Trading Day period.

 

“Triggering Events” shall mean collectively, Triggering Event I, Triggering Event II and Triggering Event III, and “Triggering Event” shall mean any one such individual event.

 

“Trust Account” has the meaning set forth in Section 9.19.

 

“Trust Account Released Claims” has the meaning set forth in Section 9.19.

 

“Trust Agreement” has the meaning set forth in Section 4.8.

 

“Trustee” has the meaning set forth in Section 4.8.

 

“Unpaid Company Expenses” means the Company Expenses that are unpaid as of immediately prior to the Closing.

 

“Unpaid PTIC II Expenses” means the PTIC II Expenses that are unpaid as of immediately prior to the Closing.

 

“WARN” means the Worker Adjustment Retraining and Notification Act of 1988, as amended, as well as analogous applicable foreign, state or local Laws.

 

“Warrant Agreement” means the warrant agreement between PTIC II and Continental Stock Transfer & Trust Company dated December 3, 2020.

 

“Willful Breach” means a material breach that is a consequence of an act undertaken or a failure to act by the breaching party with the knowledge that the taking of such act or such failure to act would, or would reasonably be expected to, constitute or result in a breach of this Agreement.

 

ARTICLE 2
TRANSACTIONS

 

Section 2.1 Pre-Closing Transactions. On the terms and subject to the conditions set forth in this Agreement, the following transactions shall occur in the order set forth in this Section 2.1:

 

(a) Immediately prior to the Closing, (i) PTIC II shall form Appreciate Intermediate Holdings, LLC, a Delaware limited liability company (“NewCo LLC”), (ii) each PTIC II Class B Share that is issued and outstanding immediately prior to the Closing to be converted into one PTIC II Class A Share, (iii) the Governing Documents of PTIC II shall become the certificate of incorporation, substantially in the form attached hereto as Exhibit E (with such changes as may be agreed in writing by PTIC II and the Company, the “PTIC II Post-Closing Certificate of Incorporation”), and the bylaws, substantially in the form attached hereto as Exhibit G (with such changes as may be agreed in writing by PTIC II and the Company, the “PTIC II Post- Closing Bylaws”) and (iv) PTIC II’s name to be changed to “Appreciate Holdings, Inc.”; provided that, if such name is not available in Delaware or PTIC II is otherwise unable to change its name to “Appreciate Holdings, Inc.,” it shall cause its name to change to such other name mutually agreed to by PTIC II and the Company (such agreement not to be unreasonably withheld, conditioned or delayed by either PTIC II or the Company) (collectively, clauses (i), (ii), (iii) and (iv), the “PTIC II Pre-Closing Reorganization”).

 

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Section 2.2 Closing Transactions. On the terms and subject to the conditions set forth in this Agreement, after the consummation of the transactions set forth in Section 2.1, the following transactions shall occur in the order set forth in this Section 2.2 at the Closing.

 

(a) At the Closing (i) the Rolling Company Unitholders shall contribute all of their Existing Company LLC Interests to NewCo LLC in exchange for NewCo LLC Class B Units equal, in the aggregate, to the Transaction Equity Security Amount (the “Company Contribution”), which NewCo LLC Class B Units will be free and clear of all Liens (other than any restrictions on transfer under applicable securities Laws or under the Amended and Restated NewCo LLC Agreement), (ii) the NewCo LLC Agreement will be amended and restated to be in substantially the form as attached hereto as Exhibit D (“Amended and Restated NewCo LLC Agreement”), (iii) PTIC II shall contribute, or cause to be contributed, to NewCo LLC, the Closing Date Contribution Amount in exchange for a number of NewCo LLC Class A Units equal to the Net Outstanding PTIC II Class A Shares, free and clear of all Liens (other than any restrictions on transfer under applicable securities Laws or under the Amended and Restated NewCo LLC Agreement) (the “PTIC II Contribution”) and (iv) NewCo LLC Unitholders (other than PTIC II) shall receive from PTIC II a number of PTIC II Class B Shares equal, in the aggregate, to the Transaction Equity Security Amount, in the amounts set forth on the Allocation Schedule, free and clear of all Liens (other than any restrictions on transfer under applicable securities Law, the Investor Rights Agreement (as applicable) or under the Governing Documents of PTIC II). In connection with the transactions contemplated by the preceding sentence, PTIC II shall be the managing member of NewCo LLC as of the time of such transactions.

 

(b) At least five (5) Business Days prior to the Closing Date, the Company shall deliver to PTIC II an allocation schedule (the “Allocation Schedule”) setting forth the following:

 

(i) the Existing Company LLC Interests held by each Company Unitholder as of immediately prior to the Closing;

 

(ii) the number of NewCo LLC Class B Units that will be held by each NewCo LLC Class B Unitholder (and former Rolling Company Unitholder) and PTIC II, in each case, as of immediately after giving effect to the Company Contribution and PTIC II Contribution;

 

(iii) the number of PTIC II Class B Shares to be distributed to each of the NewCo LLC Class B Unitholders pursuant to Section 2.2(a)

 

(iv) subject to clause (ii), the number of Earn Out Shares to be issued to the NewCo LLC Class B Unitholders pursuant to Section 2.6; (v) the amount of cash payment, if any, to each holder that is expected to be received in connection with the NewCo LLC’s redemption of each NewCo LLC Class B Unit that was, prior to the Closing, Company Class A-1 Units or a Company Class A Units, if and to the extent applicable, in the event that NewCo LLC elects, at its sole discretion, to redeem such units for cash consideration; and

 

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(vi) a certification duly executed by an authorized officer of the Company, solely in such officer’s capacity as such, that the information and calculations delivered pursuant to clauses (i) through (v) are, and will be as of Effective Time, as applicable, true and complete in all respects and in accordance with the Allocation Schedule Requirements (as defined below). 

 

(c) At the Closing, NewCo LLC shall use the proceeds from the transactions contemplated in this Section 2.2, including the funds distributed from the Trust Account in accordance with the Allocation Schedule.

 

(d) The Allocation Schedule (and the calculations and determinations contained therein) will be prepared by the Company in accordance with the applicable provisions of this Agreement, the Governing Documents of the Company and NewCo LLC and applicable Law (collectively, the “Allocation Schedule Requirements”). Solely by way of example and subject to the terms set forth herein, Section 2.2(d) of the Company Disclosure Schedules contains an illustrative Allocation Schedule (the “Illustrative Allocation Schedule”) prepared by the Company as if the Closing occurred as of the date hereof and, without limiting or expanding any other covenants, agreements, representations or warranties of the Company under this Agreement or any Ancillary Document or any Company Unitholder under any Ancillary Document or the rights or remedies of PTIC II or the Sponsor with respect thereto, the Allocation Schedule will be substantially in the form of the Illustrative Allocation Schedule and will take into account any changes to the Company’s capitalization between the date hereof and the date of delivery of the Allocation Schedule to PTIC II pursuant to the first sentence of Section 2.2(b). The Company will review any comments to the Allocation Schedule provided by PTIC II or any of its Representatives and incorporate any reasonable comments proposed by PTIC II or any of its Representatives to the extent that such comments are not inconsistent with the terms of this Agreement. Notwithstanding the foregoing or anything to the contrary in this Agreement or any of the Ancillary Documents (i) the aggregate number of PTIC II Shares that each equityholder of the Company will have a right to receive under this Agreement will be rounded down to the nearest whole share, (ii) in no event shall the aggregate number of PTIC II Class B Shares set forth on the Allocation Schedule that are allocated to holders of Existing Company LLC Interests or to be received or otherwise granted in respect of any other equity securities of the Company or NewCo LLC exceed the Transaction Equity Security Amount and (iii) PTIC II and any exchange agent, if applicable will be entitled to rely upon the Allocation Schedule for purposes of allocating the transaction consideration to the Rolling Company Unitholders and NewCo LLC Unitholders under this Agreement.

 

Section 2.3 Closing of the Transactions Contemplated by this Agreement. Subject to any lawful termination of this Agreement in accordance with its terms, the closing of the transactions contemplated by this Agreement (the “Closing”) shall take place electronically by exchange of the closing deliverables no later than five (5) Business Days following the satisfaction or, to the extent permitted by applicable Law, waiver of the conditions set forth in Article 7 (other than those conditions that by their nature are to be satisfied at the Closing, but subject to satisfaction or waiver of such conditions) or at such other place, date and/or time as PTIC II, the Sellers’ Representative and the Company may agree in writing. The date on which the closing actually occurs is hereinafter referred to as the “Closing Date”.

 

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Section 2.4 Deliverables.

 

(a) At the Closing, the Company and Rolling Company Unitholders, as applicable, shall deliver or cause to be delivered, as applicable, to PTIC II:

 

(i) a counterpart to each Ancillary Document to which it is to be a party, duly executed by a duly authorized representative of such Person;

 

(ii) a certificate, executed by a duly authorized officer of the Company and dated as of the Closing, solely in his or her capacity as such and not in his or her personal capacity, stating that the conditions specified in Section 7.2(a), Section 7.2(b) and Section 7.2(c) have been satisfied or waived (other than those conditions that by their nature are to be satisfied at the Closing, but subject to satisfaction or waiver of such conditions);

 

(iii) a properly completed and duly executed IRS Form W-9 or applicable IRS Form W-8 from each Rolling Company Unitholder (if being understood that the failure to deliver IRS Form W-9 or W-8 by any individual or group of Rolling Company Unitholder(s) shall not delay Closing, but shall simply be a condition to the issuance to such holder of any proceeds, units or shares hereunder);

 

(iv) a certificate from the Company, duly executed and acknowledged, meeting the requirements of Treasury Regulation Section 1.1445-11T(d)(2)(i) certifying that fifty percent (50%) or more of the value of the gross assets of the Company does not consist of U.S. real property interests, or that ninety percent (90%) or more of the value of the gross assets of the Company does not consist of U.S. real property interests plus cash or cash equivalents;

 

(v) evidence of release of all Liens (other than Permitted Liens and those certain Liens set forth on Section 2.4(a)(v) of the Company Disclosure Schedule) in a form reasonably acceptable to PTIC II, including for purposes of recordation at intellectual property offices in all applicable jurisdictions.

 

(b) At the Closing, PTIC II or NewCo LLC, as applicable, shall issue or deliver or cause to be delivered, as applicable, to the Company or the Rolling Company Unitholders, as applicable:

 

(i) a counterpart to each Ancillary Document to which PTIC II or NewCo LLC, as applicable, is to be a party, duly executed by a duly authorized representative of PTIC II or NewCo LLC, as applicable; (ii) a certificate, executed by a duly authorized officer of PTIC II and dated as of the Closing, solely in his or her capacity as such and not in his or her personal capacity, stating that the conditions specified in Section 7.3(a) and Section 7.3(b) have been satisfied or waived (other than those conditions that by their nature are to be satisfied at the Closing, but subject to satisfaction or waiver of such conditions);

 

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(iii) such number of PTIC II Class B Shares as provided in Section 2.2(a); and

 

(iv) a certificate, signed by an officer of PTIC II and dated as of the Closing, solely in his or her capacity as such and not in his or her personal capacity, certifying (A) that the PTIC II Shareholder Approval has been obtained and remains in full force and effect, (B) the number of shares of PTIC II capital stock redeemed in connection with the PTIC II Shareholder Redemption, if any and (C) the amount of cash in the Trust Account prior to the PTIC II Shareholder Redemption, if any.

 

(c) At the Closing, NewCo LLC shall issue, or caused to be issued, to PTIC II or the Rolling Company Unitholders, as applicable, such number of NewCo LLC Class A Units and NewCo LLC Class B Units, as applicable, as provided in Section 2.2(a).

 

(d) At the Closing, PTIC II shall deliver, or cause to be delivered, to Newco LLC, the Closing Date Contribution Amount as provided in Section 2.2(a).

 

Section 2.5 Withholding. PTIC II and the Group Companies shall be entitled to deduct and withhold (or cause to be deducted and withheld) from any amount payable or distributable pursuant to this Agreement such amounts as are required to be deducted and withheld under applicable Tax Law. To the extent that amounts are so withheld and remitted to the applicable Governmental Entity, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made. The Parties shall cooperate in good faith to eliminate or reduce any such deduction or withholding (including through the provision of any statements, forms or other documents to reduce or eliminate any such deduction or withholding). Notwithstanding the foregoing, to the extent that any amount payable pursuant to this Agreement needs to be paid to any employee or similar Person of any Group Company that constitutes “wages” or other relevant compensatory amount, such amount shall be deposited in the payroll account of the applicable Group Company and the amounts due to such employee or similar Person (net of any required Tax withholding) shall be paid to such Person pursuant to the next practicable scheduled payroll of the applicable Group Company.

 

Section 2.6 Earn-Out.

 

(a) Following the Closing, within 30 Business Days after the occurrence of a Triggering Event, PTIC II shall issue or caused to be issued and distributed to each NewCo LLC Class B Unitholder as of the Closing Date entitled thereto, PTIC II Class B Shares (and NewCo LLC shall issue a corresponding number of NewCo LLC Class B Units), in each case, in the manner set forth below to each NewCo LLC Class B Unitholder in accordance with the Allocation Schedule, free and clear of all Liens (other than any restrictions on transfer under applicable securities Law or under the Governing Documents of PTIC II) (the “Earn Out Shares”):

 

(i) upon the occurrence of Triggering Event I, a one-time issuance of 1,000,000 Earn Out Shares (the “$12.50 Earn Out Shares”); (ii) upon the occurrence of Triggering Event II, in addition to the $12.50 Earn Out Shares, a one-time issuance of 2,000,000 Earn Out Shares (the “$15.00 Earn Out Shares”); and

 

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(iii) upon the occurrence of Triggering Event III, in addition to the $12.50 Earn Out Shares and $15.00 Earn Out Shares, a one-time issuance of 3,000,000 Earn Out Shares (the “$17.50 Earn Out Shares”).

 

(b) The Company and the Sellers’ Representative (on behalf of the Rolling Company Unitholders) acknowledge and agree that if any specific Triggering Event has not occurred prior to the expiry of the Earn Out Period, then no NewCo LLC Class B Unitholders shall be entitled to receive the Earn Out Shares, applicable to such Triggering Event.

 

(c) If following the Closing and prior to the expiry of the Earn Out Period, PTIC II consummates a Company Sale that results in the holders of PTIC II Class A Shares receiving a Company Sale Price equal to or in excess of the applicable price per share attributable to one or more Triggering Events (which shall be adjusted equally to reflect any individual splits or other non-economic reclassification of shares of PTIC II’s capital stock), then immediately prior to the consummation of such Company Sale, PTIC II shall issue or cause to be issued to each NewCo LLC Class B Unitholder entitled thereto (in accordance with the Allocation Schedule) the applicable number of Earn Out Shares (to the extent not previously issued pursuant to the terms of Section 2.6(a)). For avoidance of doubt:

 

(i) if the Company Sale Price for acquisition of the PTIC II Class A Shares is greater than or equal to $12.50 per PTIC II Class A Share (which shall be adjusted equitably to reflect any dividend, split, or other noneconomic reclassification of shares of PTIC II’s capital stock), PTIC II shall issue, or cause to be issued, the $12.50 Earn Out Shares (provided such shares have not previously been issued) to each NewCo LLC Class B Unitholder as of the Closing Date entitled thereto in accordance with the Allocation Schedule;

 

(ii) if the Company Sale Price for acquisition of the PTIC II Class A Shares is greater than or equal to $15.00 per PTIC II Class A Share (which shall be adjusted equitably to reflect any dividend, split, or other noneconomic reclassification of shares of PTIC II’s capital stock), PTIC II shall issue, or cause to be issued, the $12.50 Earn Out Shares and the $15.00 Earn Out Shares (provided such shares have not previously been issued) to each NewCo LLC Class B Unitholder as of the Closing Date entitled thereto in accordance with the Allocation Schedule; and Section 3.1 Organization and Qualification.

 

(iii) if the Company Sale Price for acquisition of the PTIC II Class A Shares is greater than or equal to $17.50 per PTIC II Class A Share (which shall be adjusted equitably to reflect any dividend, split, or other noneconomic reclassification of shares of PTIC II’s capital stock), PTIC II shall issue, or cause to be issued, the $12.50 Earn Out Shares, the $15.00 Earn Out Shares and the $17.50 Earn Out Shares (provided such shares have not previously been issued) to each NewCo LLC Class B Unitholder as of the Closing Date entitled thereto in accordance with the Allocation Schedule;

 

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provided that if the Company Sale Price for acquisition of the PTIC II Class A Shares is less than $12.50 per PTIC II Class A Share (which shall be adjusted equally to reflect any individual splits or other non-economic reclassification of shares of PTIC II’s capital stock), then no Earn Out Shares shall be issued pursuant to this Section 2.6(c).

  

(d) Simultaneous with the issuance of any Earn Out Shares by PTIC II to the NewCo LLC Class B Unitholders pursuant to this Section 2.6, the Company shall issue and deliver a corresponding number of Earn Out Units, free and clear of all Liens (other than any restrictions on transfer under applicable securities Law or under the Governing Documents of the Company) to the NewCo LLC Class B Unitholders as of the Closing Date in accordance with the Allocation Schedule.

 

ARTICLE 3
REPRESENTATIONS AND WARRANTIES RELATING
TO THE GROUP COMPANIES

 

Subject to Section 9.8, except as set forth in the Company Disclosure Schedules, the Company hereby represents and warrants to PTIC II, in each case, as of the date hereof and as of the Closing, as follows:

 

 

(a) Each Group Company is a corporation, limited liability company or other applicable business entity duly organized or formed, as applicable, validly existing and in good standing (or the equivalent thereof, if applicable, in each case, with respect to the jurisdictions that recognize the concept of good standing or any equivalent thereof) under the Laws of its jurisdiction of formation or organization (as applicable), except where the failure to be in good standing (or equivalent thereof) would not reasonably be expected to have a Company Material Adverse Effect. Section 3.1(a) of the Company Disclosure Schedules sets forth the jurisdiction of formation or organization (as applicable) for each Group Company. Each Group Company has the requisite corporate, limited liability company or other applicable business entity power and authority to own, lease and operate its properties and to carry on its businesses as presently conducted, except where the failure to have such power or authority would not have a Company Material Adverse Effect. Each Group Company is duly qualified or licensed to transact business in each jurisdiction in which the property and assets owned, leased or operated by it, or the nature of the business conducted by it, makes such qualification or licensing necessary, except where the failure to be so duly qualified or licensed and in good standing would not have a Company Material Adverse Effect.

 

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(b) True and complete copies of the Governing Documents of each Group Company have been made available to PTIC II, in each case, as amended and in effect as of the date of this Agreement. The Governing Documents of each Group Company and the Company LLC Agreement are in full force and effect, and none of the Group Companies are, nor to the Company’s knowledge is any other Person, in breach or violation of any provision set forth in its Governing Documents or the Company LLC Agreement.

 

Section 3.2 Capitalization of the Group Companies.

 

(a) Section 3.2(a) of the Company Disclosure Schedules (as in effect as of the date hereof and as in effect immediately prior to Closing) sets forth a true and complete statement as of (i) the number and class or series (as applicable) of all of the Equity Securities of the Company and, on an “as issued basis” that are or will be issued and outstanding, (ii) the identity of the Persons that are the record and beneficial owners thereof and (iii) with respect to each grant of Company Class B Units, (A) the “Hurdle Amount”, and (B) the underlying number of Company Class B Units underlying the grant which shall have vested as of the Closing Date. The Equity Securities listed in Section 3.2 of the Company Disclosure Schedules are the only equity interests of the Company that are issued and outstanding. All of the Equity Securities of each Group Company have been duly authorized and validly issued. All of the outstanding Company Units are fully paid and non-assessable. The Equity Securities of each Group Company (1) were not issued in violation of the Governing Documents of the applicable Group Company, any applicable state or federal securities Law or any other Contract to which any Group Company is party or bound, (2) were not issued in violation of, and are not subject to any purchase option, preemptive rights, call option, right of first refusal or first offer, subscription rights, transfer restrictions or similar rights of any Person, (3) have been offered, sold and issued in compliance with applicable Law, including Securities Laws and (4) are free and clear of all Liens (other than transfer restrictions under applicable Securities Law). None of the Group Companies have outstanding (x) equity appreciation, phantom equity or profit participation rights or (y) options, restricted stock, phantom stock, warrants, purchase rights, subscription rights, conversion rights, exchange rights, calls, puts, rights of first refusal or first offer or other Contracts that could require any of the Group Companies to issue, sell or otherwise cause to become outstanding or to acquire, repurchase or redeem any Equity Securities or securities convertible into or exchangeable for Equity Securities of the Company. Upon grant, each Company Class B Unit constituted a “profits interest” as that term is used in Revenue Procedures 93-27 and 2001-43.

 

(b) Section 3.2(b) of the Company Disclosure Schedules sets forth a true and complete statement of (i) the number and class or series (as applicable) of all of the Equity Securities of each Subsidiary of the Company issued and outstanding and (ii) the identity of the Persons that are the record and beneficial owners thereof. All of the Equity Securities of each Group Company are owned directly by the Company, free and clear of all Liens (other than transfer restrictions under applicable Securities Law or under the Company LLC Agreement). Except for the Governing Documents, there are no voting trusts, proxies or other Contracts to which a Group Company is a party with respect to the voting or transfer of their respective Equity Securities.

 

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(c) There are no Equity Rights that could require any Group Company to issue, sell or otherwise cause to become outstanding or to acquire, repurchase or redeem any Equity Securities or securities convertible into or exchangeable for Equity Securities of any Group Company. There are no voting trusts, proxies or other Contracts with respect to the voting or transfer of any Equity Securities of any Group Company.

 

(d) None of the Group Companies owns or holds (of record, beneficially, legally or otherwise), directly or indirectly, any Equity Securities in any other Person or the right to acquire any such Equity Security, and none of the Group Companies are a partner or member of any partnership, limited liability company or joint venture.

 

(e) Section 3.2(e) of the Company Disclosure Schedules sets forth a list of all Indebtedness of the Group Companies as of the date of this Agreement, including the principal amount of such Indebtedness, the outstanding balance as of the date of this Agreement, and the debtor and the creditor thereof.

 

(f) Section 3.2(f) of the Company Disclosure Schedules sets forth a list of all Change of Control Payments of the Group Companies.

 

Section 3.3 Authority. The Company has the requisite corporate, limited liability company or other similar power and authority to execute and deliver this Agreement and each Ancillary Document to which it is or will be a party, to perform its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby. Subject to the receipt of the Company Unitholder Written Consent, the execution and delivery of this Agreement, the Ancillary Documents to which the Company is a party and the consummation of the transactions contemplated hereby and thereby have been (or, in the case of any Ancillary Document entered into after the date of this Agreement, will be upon execution thereof) duly authorized by all necessary corporate (or other similar) action on the part of the Company. This Agreement and each Ancillary Document to which the Company is a party has been duly and validly executed and delivered by the Company and constitutes or will constitute, upon execution and delivery thereof, as applicable, a valid, legal and binding agreement of the Company (assuming that this Agreement and the Ancillary Documents to which the Company is a party are duly authorized, executed and delivered by the other Persons party thereto), enforceable against the Company in accordance with its terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium or other Laws affecting generally the enforcement of creditors’ rights and subject to general principles of equity).

 

Section 3.4 Financial Statements; Undisclosed Liabilities.

 

(a) The Company has made available to PTIC II a true and complete copy of (i) the audited consolidated balance sheets of the Group Companies as of December 31, 2020 and the related audited consolidated statements of income, member’s equity (deficit) and cash flows for the year then-ended (the “2020 Financial Statements”), (ii) the unaudited consolidated balance sheets of the Group Companies as of December 31, 2021 and the related unaudited consolidated statements of income, member’s equity (deficit) and cash flows for the year then-ended (the “2021 Financial Statements”) and (iii) the unaudited consolidated balance sheets of the Group Companies as of March 31, 2022 (the “Latest Balance Sheet”) and the related unaudited consolidated statements of income, member’s equity (deficit) and cash flows for each period then ended (the “Q122 Financial Statements”, and collectively with the 2020 Financial Statements and the 2021 Financial Statements, the “Financial Statements”), each of which are attached as Section 3.4(a) of the Company Disclosure Schedules.

 

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(b) The Financial Statements (including the notes thereto) (i) were prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated (except, in the case of any audited financial statements, as may be specifically indicated in the notes thereto and subject to, in the case of any unaudited financial statements, normal year-end audit adjustments (none of which would have, or would have reasonably expected to have, a Company Material Adverse Effect) and the absence of notes thereto) and (ii) fairly present, in all material respects, the financial position, results of operations, shareholders’ equity and cash flows of the Group Companies as of the date thereof and for the period indicated therein (subject to, in the case of any unaudited financial statements, normal year-end audit adjustments (none of which would have, or would be reasonably expected to have, a Company Material Adverse Effect)). The 2020 Financial Statements and 2021 Financial Statements, when the PCAOB audits are complete and such financial statements are delivered following the date of this Agreement in accordance with Section 5.16 (collectively, the “Closing Company Audited Financial Statements”), will be audited in accordance with the standards of the PCAOB and contain an unqualified report of the Company’s auditors (provided that such financial statements shall not be required to include a signed audit opinion as of the date of this Agreement, which signed audit opinion shall instead be delivered concurrently with the filing of the Registration Statement / Proxy Statement with the SEC) and will comply in all material respects with the applicable accounting requirements and with the rules and regulations of the SEC, the Exchange Act and the Securities Act (including Regulation S-X or Regulation S-K, as applicable) in effect as of the date of this Agreement, at the time of filing of the Registration Statement / Proxy Statement and at the time of effectiveness or finalization of the Registration Statement / Proxy Statement, as applicable. Each quarterly unaudited consolidated balance sheet of the Group Companies and the related unaudited consolidated statements of income, member’s equity (deficit) and cash flows for each quarterly period then-ended, when delivered following the date of this Agreement by the Company in accordance with Section 5.16 (A) will be prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated (except for normal year-end audit adjustments (none of which would have, or would be reasonably expected to have, a Company Material Adverse Effect) and the absence of notes thereto), (B) will fairly present, in all material respects, the financial position, results of operations, convertible preferred stock and stockholders’ deficit and cash flows of the Group Companies as of the date thereof and for the period indicated therein (subject to, in the case of any unaudited financial statements, normal year-end audit adjustments (none of which would have, or would reasonably be expected to have, a Company Material Adverse Effect)) and (C) will comply in all material respects with the applicable accounting requirements and with the rules and regulations of the SEC, the Exchange Act and the Securities Act (including Regulation S-X or Regulation S-K, as applicable) in effect as of their respective dates of delivery, at the time of filing of the Registration Statement / Proxy Statement (if delivered prior to such filing) and at the time of effectiveness or finalization of the Registration Statement / Proxy Statement, as applicable.

 

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(c) Except (i) as set forth in the Latest Balance Sheet (including the notes thereto), (ii) for Liabilities incurred in the ordinary course of business since the date of the Latest Balance Sheet (none of which is a Liability for breach of contract, breach of warranty, tort, infringement or violation of Law), (iii) for Liabilities incurred in connection with the negotiation, preparation or execution of this Agreement or any Ancillary Documents, the performance of their respective covenants or agreements in this Agreement or any Ancillary Document or the consummation of the transactions contemplated hereby or thereby and (iv) for Liabilities that would have, or would be reasonably expected to have, a Company Material Adverse Effect, no Group Company has any Liabilities of a type required to be set forth on a balance sheet prepared in accordance with GAAP. Except for Liabilities reflected in the Financial Statements, none of the Group Companies have any “off-balance sheet arrangement” within the meaning of Item 303 of Regulation S-K of the Securities Act or, or any off-balance sheet Liability of any nature to, or any financial interest in, any third party or entities.

 

(d) Each Group Company is in the process of establishing systems of internal accounting controls that are designed to provide, in all material respects, reasonable assurance that (i) all transactions are executed in accordance with management’s authorization and (ii) all transactions are recorded as necessary to permit preparation of proper and accurate financial statements in accordance with applicable accounting standards and to maintain accountability for the Group Companies’ assets. The Group Companies maintain and, in respect of the Group Companies, for all periods covered by the Financial Statements, have maintained books and records of the Group Companies in the ordinary course of business that are accurate and complete and reflect the revenues, expenses, assets and liabilities of the Group Companies in all material respects.

 

(e) Except as set forth in Section 3.4(e) of the Company Disclosure Schedule, since the formation of each of the Group Companies, there have been no formal internal investigations regarding financial reporting or accounting policies and practices discussed with, reviewed by or initiated at the direction of the chief executive officer, chief financial officer or general counsel of any Group Company, the board of managers of any Group Company or any committee thereof. Except as set forth in Section 3.4(e) of the Company Disclosure Schedule, since the formation of each of the Group Companies, neither any Group Company nor the Company’s independent auditors have identified (i) “significant deficiency” in the internal controls over financial reporting of the Group Companies, (ii) a “material weakness” in the internal controls over financial reporting of the Group Companies or (iii) fraud, whether or not material, that involves management or other employees of the Group Companies who have a significant role in the internal controls over financial reporting of the Group Companies.

 

Section 3.5 Consents and Requisite Governmental Approvals; No Violations.

 

(a) No consent, approval or authorization of, or designation, declaration or filing with, any Governmental Entity is required on the part of the Group Companies with respect to the Company’s execution, delivery or performance of their respective obligations under this Agreement or the Ancillary Documents, as applicable, to which the Company, is bound or the consummation of the transactions contemplated by this Agreement or by the Ancillary Documents, except for (i) compliance with and filings under the HSR Act or (ii) any other consents, approvals, authorizations, designations, declarations, waivers or filings, the absence of which would not reasonably be likely to have a Company Material Adverse Effect.

 

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(b) Neither the execution, delivery or performance by the Company of this Agreement nor the Ancillary Documents to which the Company is a party, as applicable nor the consummation of the transactions contemplated hereby or thereby will, directly or indirectly (with or without due notice or lapse of time or both) (i) conflict with or result in any breach of any provision of any Group Company’s Governing Documents, (ii) result in a violation or breach of, or constitute a default or give rise to any right of termination, Consent, cancellation, amendment, modification, suspension, revocation or acceleration under, any of the terms, conditions or provisions of, or the loss of any benefits under (A) any Contract to which any Group Company is a party or by which its or its properties or assets are bound or (B) any Material Permits, (iii) violate, or constitute a breach under, any Order or applicable Law to which any Group Company or any of their respective properties or assets are bound or any Privacy Requirements or (iv) result in the creation of any Lien upon any of the assets or properties (other than any Permitted Liens) or Equity Securities of any Group Company, except, in the case of any of clauses (ii) through (iv) above, as would not reasonably be likely to have a Company Material Adverse Effect.

 

Section 3.6 Permits. Each of the Group Companies has all Permits (the “Material Permits”) that are necessary or required for the lawful conduct of their respective businesses or necessary or required to own, lease or operate any of the properties or assets if the Group Companies are necessary or required to conduct its business as currently conducted, except where the failure to hold the same would not result in a Company Material Adverse Effect. Except as set forth in Section 3.6 of the Company Disclosure Schedules (a) each Material Permit is valid and in full force and effect in accordance with its terms or by operation of law (b) no event, circumstance, or state of facts has occurred which (with or without due notice or lapse of time or both) would reasonably be expected to result in the failure of a Group Company to be in compliance with the terms of any Material Permit and (c) no written notice of revocation, cancellation or termination of any Material Permit has been received by the Group Companies.

 

Section 3.7 Material Contracts.

 

(a) Section 3.7 of the Company Disclosure Schedules sets forth a list of the following Contracts to which a Group Company is, as of the date of this Agreement, a party or by which it or its assets or properties are bound (collectively, the “Material Contracts”):

 

(i) any Contract relating to Indebtedness of any Group Company or to the placing of a Lien (other than any Permitted Lien) on any material assets or properties of any Group Company;

 

(ii) any Contract under which any Group Company is lessee of or holds or operates, in each case, any tangible property (other than real property), owned by any other Person, except for any lease or agreement under which the aggregate annual rental payments do not exceed $250,000;

 

(iii) any Contract under which any Group Company is lessor of or permits any third party to hold or operate, in each case, any tangible property (other than real property), owned or controlled by such Group Company, except for any lease or agreement under which the aggregate annual rental payments do not exceed $250,000; (iv) any joint venture, profit-sharing, partnership, collaboration, co-promotion, commercialization or research or development or other similar Contract;

 

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(v) any Contract that (A) limits or purports to limit, in any material respect, the freedom of any Group Company to engage or compete in any line of business or with any Person or in any area or that would so limit or purport to limit, in any material respect, the operations of PTIC II or any of its Affiliates after the Closing, (B) contains any exclusivity, “most favored nation” or similar provisions, obligations or restrictions or (C) contains any other provisions restricting or purporting to restrict the ability of any Group Company to operate the Business, or to solicit any potential employee or customer in any material respect or that would so limit or purport to limit, PTIC II or any of its Affiliates after the Closing;

 

(vi) any Contract requiring future capital commitments or capital expenditure (or series of capital expenditures) by any Group Company in an amount in excess of (A) $100,000 annually or (B) $250,000 over the life of the agreement;

 

(vii) any Contract requiring any Group Company to guarantee the Liabilities of any Person (other than the Company or a Subsidiary) or pursuant to which any Person (other than the Company or a Subsidiary) has guaranteed the Liabilities of a Group Company in each case in excess of $250,000;

 

(viii) any Contract under which any Group Company has, directly or indirectly, made or agreed to make any loan, advance, or assignment of payment to any Person or made any capital contribution to, or other investment in, any Person;

 

(ix) any Contract required to be disclosed on (A) Section 3.18 of the Company Disclosure Schedules or (B) Section 3.22 of the Company Disclosure Schedules;

 

(x) any Contract with any Person (A) other than non-exclusive licenses for Off-the-Shelf Software, pursuant to which any Group Company (or PTIC II or any of its Affiliates after the Closing) may be required to pay milestones, royalties or other contingent payments based on any research, testing, development, regulatory filings or approval, sale, distribution, commercial manufacture or other similar occurrences, developments, activities or events or (B) under which any Group Company grants to any Person any right of first refusal, right of first negotiation, option to purchase, option to license or any other similar rights with respect to any Company Product or any Intellectual Property Rights; (xi) any Contract entered into by any of the Group Companies (A) under which such Person has granted or received a right or license to Intellectual Property Rights (including Company Data) (other than (1) non-exclusive licenses for Off-the-Shelf Software and (2) Permitted Licenses), (B) (1) relating to the escrow, acquisition, or divestiture of Intellectual Property Rights or (2) relating to the development of Intellectual Property Rights where amounts paid thereunder exceeded or would be reasonably be expected to exceed $25,000 (in each case), other than agreements with employees or contractors of the Group Companies entered into in the ordinary course of business on standard forms of agreement made available to PTIC II prior to the date hereof, which, together with the Contracts referenced in clauses (B)(1) or (2), shall be deemed to be Material Contracts or (C) to settle or resolve any Intellectual Property Rights-related dispute (including co-existence agreements);

 

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(xii) any Contract (A) governing the terms of, or otherwise related to, the employment, engagement or services director, manager, officer, employee, individual independent contractor or other service provider of a Group Company whose annual base salary (or, in the case of an independent contractor, annual base compensation) is in excess of $200,000 (other than any “at will” Contract that may be terminated by any Group Company upon 30 days or less advance notice without any additional Liabilities) or (B) providing for any Change of Control Payment of the type described in clause (a) of the definition thereof;

 

(xiii) any Contract for the disposition of any portion of the assets or business of any Group Company or for the acquisition by any Group Company of the assets or business of any other Person (other than acquisitions or dispositions made in the ordinary course of business, or disposition of immaterial assets that are no longer necessary for the operation of a Group Company’s Business where (A) any such acquisition or disposition is not in excess of (or require payments in excess of) $250,000 and (B) all such acquisitions and dispositions are not in excess of (and do not require payments in excess of), in the aggregate, $500,000 to any Group Company in connection with all such disposals), or under which any Group Company has any continuing obligation with respect to an “earn-out”, contingent purchase price or other contingent or deferred payment obligation;

 

(xiv) any CBA;

 

(xv) any settlement, conciliation or similar Contract (A) the performance of which would be reasonably likely to involve any payments after the date of this Agreement in excess of $250,000, (B) with a Governmental Entity or (C) that imposes or would be reasonably be expected to impose, at any time in the future, any material, non-monetary obligations on any Group Company (or PTIC II or any of its Affiliates after the Closing); and

 

(xvi) any other Contract the performance of which requires either (A) annual payments to any Group Company in excess of $250,000, (B) aggregate payments to any Group Company in excess of $500,000 over the life of the agreement, (C) annual payments from any Group Company in excess of $250,000 or (D) aggregate payments from any Group Company in excess of $500,000 over the life of the agreement, and, in each case, that is not terminable by the applicable Group Company without penalty upon less than thirty (30) days’ prior written notice.

 

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(b) Each Material Contract (which, solely for the purposes of this Section 3.7(b), shall include any contract set forth on Section 3.7 of the Company Disclosure Schedules together with each of the Contracts entered into after the date of this Agreement by a Group Company that would be required to be set forth on Section 3.7 of the Company Disclosure Schedules if entered into prior to the execution and delivery of this Agreement) is in full force and effect and is a valid, legal and binding obligation of the applicable Group Company, enforceable in accordance with its terms against such Group Company and, to the Company’s knowledge, each other party thereto (subject to applicable bankruptcy, insolvency, reorganization, moratorium or other Laws affecting generally the enforcement of creditors’ rights and subject to general principles of equity). Except in each case as would not have, or would not be reasonably expected to have, a Company Material Adverse Effect, there is no material breach or default by any Group Company or, to the Company’s knowledge, any third party under any Material Contract, and, to the Company’s knowledge, no event has occurred which (with or without notice or lapse of time or both) would constitute a material breach or default or would permit termination of, or a material modification or acceleration thereof by any party to such Material Contract. Since December 31, 2020 through the date hereof, no Group Company has received notice of (i) any material breach or default under any Material Contract or (ii) the intention of any third party under any Material Contract to cancel, terminate or materially modify the terms of any such Material Contract, or materially accelerate the obligations of any Group Company thereunder. True, correct and complete copies of all Material Contracts as in effect as of the date hereof have been made available to PTIC II.

 

Section 3.8 Absence of Changes. Except as set for the Section 3.8 of the Company Disclosure Schedules, during the period beginning on January 1, 2022 and ending on the date of this Agreement (a) no Company Material Adverse Effect has occurred and (b) except as expressly contemplated by this Agreement, any Ancillary Document or in connection with the transactions contemplated hereby and thereby, (i) each Group Company has conducted its business in the ordinary course in all material respects and (ii) no Group Company has taken any action that would require the consent of PTIC II if taken during the period from the date of this Agreement until the Closing pursuant to Section 5.1(b) of the Company Disclosure Schedules (such consent, other than in the case of Section 5.1(b)(i), Section 5.1(b)(ii), Section 5.1(b)(iii), Section 5.1(b)(iv), Section 5.1(b)(v), Section 5.1(b)(vi), Section 5.1(b)(viii), Section 5.1(b)(x), Section 5.1(b)(xi), Section 5.1(b)(xiii), Section 5.1(b)(xv), Section 5.1(b)(xvii), Section 5.1(b)(xviii), Section 5.1(b)(xix), Section 5.1(b)(xiv), and Section 5.1(b)(xxv) (to the extent related to any of the foregoing) not to be unreasonably withheld, conditioned or delayed).

 

Section 3.9 Litigation. Except as set forth on Section 3.9 of the Company Disclosure Schedules, there is (and since January 1, 2020 there has been) no Proceeding pending or, to the Company’s knowledge, threatened against or involving (a) any Group Company (b) any of their respective properties or assets (in each case of clause (a) or (b), seeking non-monetary relief or involving actual or potential Liabilities in excess of $250,000), (c) any of their respective managers, officers, directors or employees (in their capacities as such) or (d) any of the foregoing in a criminal Proceeding. Neither the Group Companies nor any of their respective properties or assets is subject to any outstanding Order that is, or would reasonably be expected to be, material to the Group Companies. There are no material Proceedings by a Group Company pending, or which a Group Company has commenced preparations to initiate, against any other Person.

 

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Section 3.10 Compliance with Applicable Law. Each Group Company is (and since December 31, 2019 has been) in compliance in all material respects with all Laws applicable to it or its business, operations or assets or properties. No Group Company has, since December 31, 2019 through the date hereof, received any notice or communication from any Governmental Entity regarding any actual, alleged, or potential violation in any material respect of, or a failure to comply with, any applicable Laws. Since December 31, 2020, no Group Company has conducted any internal investigation with respect to any actual, potential or alleged violation of applicable Law by any of its Representatives, individual independent contractors or other service providers or concerning any actual or alleged fraud.

 

Section 3.11 Employee Plans.

 

(a) Section 3.11 of the Company Disclosure Schedules sets forth a true, correct and complete list of each material Employee Benefit Plan (excluding any offer letter that does not contain severance payments or benefits, transaction or retention based bonuses or outstanding obligations for future grants of equity or equity based awards). With respect to each Employee Benefit Plan, the Group Companies have provided PTIC II with correct and complete copies of the following documents, to the extent applicable: (i) the most recent determination or opinion letter issued by the Internal Revenue Service with respect to each Employee Benefit Plan that is intended to be qualified under Section 401(a) of the Code; (ii) the plan, trust and other documents and (iii) any non-routine correspondence with any Governmental Entity.

 

(b) No Group Company maintains, sponsors, contributes to or has any obligation to contribute to or has any Liability with respect to or under: (i) a Multiemployer Plan; (ii) a “defined benefit plan” (as defined in Section 3(35) of ERISA, whether or not subject to ERISA) or a plan that is or was subject to Title IV of ERISA or Section 412 of the Code; (iii) a “multiple employer plan” within the meaning of Section of 413(c) of the Code or Section 210 of ERISA or (iv) a “multiple employer welfare arrangement” as defined in Section 3(40) of ERISA, including by reason of at any time being considered a single employer under Section 414 of the Code with any other Person other than another Group Company. No Employee Benefit Plan provides and no Group Company has any Liabilities to provide any retiree or post-termination health or life insurance or other welfare-type benefits to any Person other than health continuation coverage pursuant to COBRA or similar Law or during any period in which an employee or former employee is entitled to severance benefits following a termination of employment. Except as provided in Section 3.11(e) of the Company Disclosure Schedules, no Group Company has any Liabilities.

 

(c) Each Employee Benefit Plan that is intended to be qualified under Section 401(a) of the Code has timely received a favorable determination or opinion or advisory letter from the Internal Revenue Service and to the Company’s knowledge no events have occurred or circumstances exist that would reasonably be expected to adversely affect such qualified status. None of the Group Companies has incurred (whether or not assessed) any material penalty or Tax under Section 4980H, 4980B, 4980D, 6721 or 6722 of the Code and no circumstances exist that reasonably could result in the imposition of any such material penalty or Tax.

 

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(d) There are no pending, or to the Company’s knowledge, threatened, claims, disputes or Proceedings with respect to any Employee Benefit Plan (other than routine claims for benefits). Each Employee Benefit Plan (and each related trust, insurance Contract, or fund) has been maintained, funded and administered, in form and operation, in material compliance with its terms and in material compliance with the applicable requirements of ERISA, the Code, and other applicable Laws. There have been no “prohibited transactions” within the meaning of Section 4975 of the Code or Sections 406 or 407 of ERISA and not otherwise exempt under Section 408 of ERISA and no breaches of fiduciary duty (as determined under ERISA) with respect to any Employee Benefit Plan. With respect to each Employee Benefit Plan, all contributions (including all employer contributions and employee salary reduction contributions), distributions, reimbursements and premium payments that have become due have been timely made and, to the extent not yet due, have been properly accrued in accordance with GAAP.

 

(e) Except as provided in Section 3.11(e) of the Company Disclosure Schedules the execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement will not (alone or in combination with any other event) (i) result in any payment or benefit becoming due to or result in the forgiveness of any indebtedness of any current or former director, manager, officer, employee, individual independent contractor or other service providers of any of the Group Companies, (ii) increase the amount or value of any compensation or benefits payable to any current or former director, manager, officer, employee, individual independent contractor or other service providers of any of the Group Companies, (iii) result in the acceleration of the time of payment or vesting (other than full vesting required by the Code upon any termination of an Employee Benefit Plan that is intended to be qualified under Section 401(a) of the Code), or trigger any payment or funding of any compensation or benefits to any current or former director, manager, officer, employee, individual independent contractor or other service providers of any of the Group Companies or (iv) limit or restrict the right of any of the Group Companies to merge, amend or terminate any Employee Benefit Plan.

 

(f) No amount that could be received (whether in cash or property or the vesting of property) by any “disqualified individual” of any of the Group Companies under any Employee Benefit Plan or otherwise in connection with the consummation of the transactions contemplated by this Agreement (alone or in combination with any other event) is reasonably expected, separately or in the aggregate, to be nondeductible under Section 280G of the Code or subjected to an excise tax under Section 4999 of the Code.

 

(g) Each Employee Benefit Plan that is a “non-qualified deferred compensation plan” (as such term is defined in Section 409A(d)(1) of the Code), has been maintained, in all material respects, in both form and operation in compliance with the requirements of Section 409A of the Code and applicable guidance issued thereunder and no amount under any such Employee Benefit Plan is or has been subject to the interest and additional Tax set forth under Section 409A(a)(1)(B) of the Code.

 

(h) The Group Companies have no obligation to make a “gross-up” or similar payment in respect of any taxes that may become payable under Section 4999 or 409A of the Code.

 

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Section 3.12 Environmental Matters.

 

(a) The Group Companies are, and at all times since December 31, 2020 have been, operating in compliance in all material respects with all Environmental Laws except in each case as would not have, or would not be reasonably expected to have, a Company Material Adverse Effect.

 

(b) No Group Company has received any written notice or communication from any Governmental Entity or any other Person regarding any actual, alleged, or potential violation in any material respect of, or a failure to comply in any material respect with, or material liability arising under, any Environmental Laws except in each case as would not have, or would not be reasonably expected to have, a Company Material Adverse Effect.

 

(c) There is (and since December 31, 2020 there has been) no material Proceeding pending or, to the Company’s knowledge, threatened in writing against any Group Company pursuant to Environmental Laws except in each case as would not have, or would not be reasonably expected to have, a Company Material Adverse Effect.

 

(d) There has been no manufacture, release, treatment, storage, disposal, arrangement for disposal, transport or handling of, contamination by, or exposure of any Person to, any Hazardous Substances, in each case that has resulted or would result in Liability under Environmental Laws for any Group Company except in each case as would not have, or would not be reasonably expected to have, a Company Material Adverse Effect.

 

Section 3.13 Intellectual Property.

 

(a) Section 3.13(a) of the Company Disclosure Schedules sets forth a true, correct and complete list of (i) all Company Registered Intellectual Property and (ii) material unregistered Marks and Software included in the Company Owned Intellectual Property. The material Company Owned Intellectual Property is valid, subsisting, and to the Company’s knowledge enforceable. A Group Company exclusively owns and possesses all right, title and interest in and to the Company Owned Intellectual Property, free and clear of all Liens or obligations to others (other than Permitted Liens) and the Group Companies have a valid and sufficient right to, all Intellectual Property Rights used in or necessary for the conduct of the business of the Group Companies, free and clear of all Liens or obligations to others (other than Permitted Liens) (together with the Company Owned Intellectual Property the “Company Intellectual Property”). Immediately subsequent to the Closing, the Company Intellectual Property will be owned by, licensed to or available for use by each Group Company on the same terms and conditions as those under which such Group Company owned, licensed or used the Company Intellectual Property immediately prior to the Closing, without payment of any additional amounts or consideration.

 

(b) No present or former employee, officer or director of any Group Company holds any right, title or interest, directly or indirectly, in whole or in part, in or to any Company Owned Intellectual Property. All Persons who independently or jointly have contributed to or otherwise participated in the authorship, invention, creation, improvement, modification or development of any material Intellectual Property Rights for or on behalf of, or under the supervision of, any Group Company or in the course of their employment or engagement with any Group Company have executed and delivered to such Group Company a valid and enforceable written contract (i) that includes appropriate obligations with respect to confidentiality, non-use, and non-disclosure by such Person of all material Trade Secrets of all Group Companies and (ii) that provides for the assignment by such Person (by way of a present grant of assignment) to a Group Company, of all such material Intellectual Property Rights. Each Group Company has taken commercially reasonable steps to safeguard and maintain the secrecy of any material Trade Secrets included in the Company Owned Intellectual Property or Processed by such Group Company and the Company IT Systems and Company Data and prevent Security Incidents. To the Company’s knowledge, no Person is or has been in material breach of any contract referenced in this Section in any material respect.

 

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(c) To the Company’s knowledge, no Person is infringing, misappropriating, or violating, or since December 31, 2019, has infringed, misappropriated, or violated, any Company Owned Intellectual Property. To the Company’s knowledge, none of the Group Companies, nor the operation of the Business conducted by the Group Companies, including the design, development, manufacturing, reproduction, use, marketing, offer for sale, sale, importation, exportation, distribution or maintenance of the Company Products, infringes, misappropriates, or violates, or has infringed, misappropriated, or violated any Intellectual Property Rights of any other Person. There is not, and there has not been since December 31, 2019, any Proceeding or other claim or challenge pending or, to the Company’s knowledge, threatened, or sent or received in writing (including unsolicited offers, demands, or requests to license or cease and desist letters) by or against any Group Company with respect to any Intellectual Property Rights (including any infringement, misappropriation, dilution, violation, enforceability, use (including any assertion of misuse), ownership, scope, licensing, or validity thereof), or any Privacy Requirement, Security Incident, or Personal Data.

 

(d) The Group Companies possess all source code and other material documentation and materials necessary or useful to compile and operate the Company Products as currently being operated and no Group Company has disclosed, delivered, licensed, escrowed or otherwise made available, and no Group Company has a duty or obligation (whether present, contingent or otherwise) to disclose, deliver, license, escrow or otherwise make available to any Person, any source code for any Company Products or otherwise included in the Company Owned Intellectual Property. To the Company’s knowledge, no event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time or both) will, or could reasonably be expected to, result in the disclosure, delivery, license, escrow, or making available of any such source code to any Person, in each case, other than to employees and contractors in the ordinary course of business that have a need to know it, solely for providing services to or on behalf of the Group Companies, and pursuant to a written confidentiality agreement that includes appropriate obligations with respect to confidentiality, non-use, and non-disclosure, and no such employee or contractor has breached any such agreement in any material respect.

 

(e) Each Group Company is in compliance in all material respects with all obligations under any Contract pursuant to which such Group Company has obtained the right to use any third party Software, including Public Software, and in particular the Group Companies have purchased a sufficient number of seat licenses for the Company IT Systems. No Public Software is or has been included, incorporated or embedded in, linked to, combined or distributed with, or used in connection with the development, maintenance, or operation of, any Software included in the Company Owned Intellectual Property in a manner that (i) has required or would require (or otherwise condition any grant of rights on) (A) the disclosure, contribution, licensing, or otherwise making available to any Person of any Software for any purpose or (B) the granting of any rights or immunities under any Intellectual Property Rights or (ii) limits any ability to charge license fees or otherwise seek compensation in connection with the marketing, licensing, distribution, or making available of any Intellectual Property Rights or otherwise exploit any Intellectual Property Rights.

 

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Section 3.14 Labor Matters.

 

(a) Since December 31, 2019, (i) none of the Group Companies has or has had any material Liability for any payment to any trust or other fund governed by or maintained by or on behalf of any Governmental Entity with respect to unemployment compensation benefits, social security, social insurances or other benefits or obligations for any employees of any Group Company (other than routine payments to be made in the ordinary course of business) and (ii) the Group Companies have withheld all amounts required by applicable Law or by agreement to be withheld from wages, salaries, and other payments to employees of each Group Company.

 

(b) Since December 31, 2019, there has been no “mass layoff” or “plant closing” (or other similar workforce action under WARN) related to any Group Company, and the Group Companies have not incurred any material Liability under WARN nor will they incur any material Liability under WARN as a result of the transactions contemplated by this Agreement. Except as set forth on Section 3.14(b) of the Company Disclosure Schedules, no employee layoff, facility closure or shutdown (whether voluntary or by Order), reduction-in-force, furlough, temporary layoff, material work schedule change or reduction in hours, or reduction in salary or wages, or other workforce changes affecting employees of any Group Company has occurred since March 1, 2020 or is currently contemplated, planned or announced, as a result of COVID-19 or any Law, Order, directive, guidelines or recommendations by any Governmental Entity in connection with or in response to COVID-19.

 

(c) There are no material Proceedings pending or, to the Company’s knowledge, threatened by or on behalf of any current or former director, manager, officer, employee, individual independent contractor or other service providers, or by any Governmental Entity with respect to any Group Company’s compliance with employment or labor-related Laws, including any claims relating to actual or alleged harassment, discrimination, or retaliation, or similar tortious conduct, breach of contract, wrongful termination, defamation, intentional or negligent infliction of emotional distress, interference with contract or interference with actual or prospective economic disadvantage, salary differences, and social security contributions and taxes. No Group Company is bound by any consent decree or settlement agreement with, or citation by, any Governmental Entity relating to any employment practices.

 

(d) The Group Companies have promptly, thoroughly, and impartially investigated all allegations of sexual harassment, or other discrimination, retaliation or material and written policy violations of which any the Group Companies were made aware since December 31, 2019. With respect to each material allegation with potential merit, the Group Companies have taken prompt corrective action that is reasonably calculated to prevent further improper action. The Group Companies do not reasonably expect any material Liabilities with respect to any such allegations.

 

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(e) Since December 31, 2019, the Group Companies have been in compliance in all material respects with all applicable Laws respecting labor, employment and employment practices, including all Laws respecting terms and conditions of employment, health and safety, wages and hours (including the classification of independent contractors and exempt and non-exempt employees), immigration (including the completion of I-9s for all employees and the proper confirmation of employee visas), harassment, discrimination and retaliation, disability rights or benefits, equal opportunity (including compliance with any affirmative action plan obligations), plant closures and layoffs (including WARN), workers’ compensation, labor relations, employee leave issues, paid time off, employee training and notices, affirmative action and affirmative, COVID-19 and unemployment insurance.

 

(f) Except as would not result in a material Liability for any Group Company (i) each Group Company has fully and timely paid all wages, salaries, wage premiums, commissions, bonuses, severance and termination payments, fees, expense reimbursements, and other compensation that have come due and payable to its current or former employees and independent contractors under applicable Law, Contract or company policy and (ii) each individual who is providing or since December 31, 2019 has provided services to any Group Company and is or was classified and treated as an independent contractor, consultant, leased employee, or other non-employee service provider, or as an overtime exempt employee, is and has been properly classified and treated as such for all applicable purposes.

 

(g) No Group Company is or has been a party to or bound by any CBA or bargaining relationship with any labor union, works council, labor organization or employee representative, and there are no CBAs or any other labor-related agreements or arrangements that pertain to any of the employees of the Group Companies, nor are any employees of the Group Companies represented by any labor union, works council, labor organization or employee representative with respect to their employment with the Group Companies. Since December 31, 2019, there has been no actual or, to the Company’s knowledge, threatened unfair labor practice charges, material grievances, arbitrations, strikes, lockouts, work stoppages, slowdowns, picketing, hand billing or other material labor disputes against or affecting any Group Company. To the Company’s knowledge, since December 31, 2019, there have been no labor organizing activities with respect to any employees of any Group Company.

 

(h) To the Company’s knowledge, no current or former employee or independent contractor of any Group Company is in any material respect in violation of any term of any employment agreement, nondisclosure agreement, common law nondisclosure obligation, fiduciary duty, noncompetition agreement, restrictive covenant or other obligation (i) owed to any Group Company or (ii) owed to any third party with respect to such person’s right to be employed or engaged by the applicable Group Companies, taken as a whole.

 

Section 3.15 Tax Matters.

 

(a) All income and other material Tax Returns required to be filed by or with respect to each Group Company have been duly and timely filed and all such Tax Returns are true, complete, accurate, and correct in all material respects. All income and other material Taxes due and payable by or in respect of each Group Company (whether or not shown as due and payable on any Tax Return) have been duly and timely paid in full to the appropriate Tax Authority. Each Group Company has timely and properly withheld and paid to the appropriate Tax Authority all income and other material amounts of Taxes required to have been withheld and paid by it in connection with any amounts paid or owing to any employee, independent contractor, creditor, equityholder or other third party and has otherwise complied in all material respects with all applicable Laws relating to such withholding and payment of Taxes.

 

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(b) Each Group Company has complied in all material respects with all Laws relating to the registration, reporting and payment of sales, use, ad valorem and value added Taxes.

 

(c) No material written claim has been made by a Tax Authority in a jurisdiction where a Group Company does not file a particular type of Tax Return, or pay a particular type of Tax, that such Group Company is or may be subject to taxation of that type by, or required to file that type of Tax Return in, that jurisdiction. The income Tax Returns made available to PTIC II reflect all of the jurisdictions in which the Group Companies are required to remit material income Tax, and no Group Company is obligated, or has agreed, to pay any income Taxes of any of its owners (direct or indirect) (by means of withholding, electing to file composite returns in any jurisdiction, or otherwise). No Group Company is required to pay Taxes on its net income in any country other than its country of organization. No material claim has been made by a Tax Authority in a jurisdiction where any Group Company has not paid any Tax or filed Tax Returns, asserting that the Group Company is or may be subject to Tax or required to file Tax Returns in such jurisdiction. No Group Company currently has or had a permanent establishment (as defined in any applicable tax treaty) or other fixed place of business or other connection or nexus in a country other than the country in which it is organized. No Group Company currently or has been a party to or the beneficiary of any Tax exemption, Tax holiday, or other Tax reduction Contract or order.

 

(d) In the six (6) years prior to the Effective Date, no Group Company has been audited by any Tax Authority. There is no Tax audit or examination or any Proceeding in respect of Taxes now being conducted or that is otherwise ongoing, pending, proposed or threatened in writing (or, to the knowledge of the Company, otherwise threatened) with respect to any Taxes or Tax Returns of or with respect to any Group Company. No Group Company has commenced a voluntary disclosure proceeding in jurisdiction that has not been fully resolved or settled. All material deficiencies for Taxes asserted or assessed in writing against any Group Company have been fully and timely (taking into account applicable extensions) paid, settled or withdrawn, and, to the knowledge of the Company, no such deficiency has been threatened or proposed against any Group Company.

 

(e) No Group Company has agreed to (or has had agreed to on its behalf) any extension or waiver of the statute of limitations applicable to any Tax or Tax Return, or any extension of time with respect to a period of Tax collection, assessment or deficiency, which period (after giving effect to such extension or waiver) has not yet expired, and no request for any such waiver or extension is currently pending. No Group Company is the beneficiary of any extension of time (other than an automatic extension of time not requiring the consent of the applicable Tax Authority obtained in the ordinary course of business) within which to file any Tax Return not previously filed. No private letter ruling, administrative relief, technical advice, request for a change of any method of accounting, closing agreement, or other similar ruling, agreement or request has been granted or issued by, or is pending with, any Tax Authority that relates to the Taxes or Tax Returns of any Group Company. No power of attorney granted by any Group Company with respect to any Taxes is currently in force.

 

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(f) No Group Company has been a party to any “listed transaction” within the meaning of Treasury Regulations Section 1.6011-4(b)(2) (or any similar provision of U.S. state or local or non-U.S. Tax Law).

 

(g) The Company is (and has been for its entire existence) properly treated as a partnership (and not as a “publicly traded partnership” within the meaning of Section 7704(b) of the Code) for U.S. federal and all applicable state and local income Tax purposes. Each Group Company is (and has been for its entire existence) properly treated for U.S. federal and all applicable state and local income Tax purposes as the type of entity set forth opposite its name on Section 3.15(g) of the Company Disclosure Schedule. No election has been made (or is pending) to change any of the foregoing.

 

(h) No Group Company will be required to include an item of income, or exclude an item of deduction, for any period after the Closing Date (determined with and without regard to the transactions contemplated hereby) as a result of: (i) an installment sale transaction occurring on or before the Closing Date governed by Section 453 of the Code (or any similar provision of state, local or non-U.S. Laws); (ii) a transaction occurring on or before the Closing Date reported as an open transaction for U.S. federal income Tax purposes (or any similar doctrine under state, local, or non-U.S. Laws); (iii) any prepaid amounts received or paid on or prior to the Closing Date or deferred revenue realized, accrued or received on or prior to the Closing Date; (iv) a change in method of accounting with respect to a Pre-Closing Tax Period that occurs or was requested on or prior to the Closing Date (or as a result of an impermissible method used in a Pre-Closing Tax Period); (v) an agreement entered into with any Governmental Entity (including a “closing agreement” under Section 7121 of the Code) on or prior to the Closing Date; (vi) the application of Section 263A of the Code (or any similar provision of state, local, or non-U.S. Laws); (vii) gain recognition agreement to which any Group Company is a party under Section 367 of the Code (or any corresponding or similar provision of state, local or non-U.S. Law); (viii) intercompany transaction occurring or any excess loss account existing on or prior to the Closing Date, in each case described in Treasury Regulations under Section 1502 of the Code (or any similar provision of state, local, or non-U.S. Laws) or (ix) transactions effected or investments made prior to the Closing Date that result in taxable income pursuant to Sections 951(a) or 951A of the Code (or any corresponding or similar provision of state, local or non-U.S. Law). No Group Company uses the cash method of accounting for income Tax purposes or will be required to make any payment after the date of the Latest Balance Sheet as a result of an election under Section 965 of the Code (or any similar provision of state, local, or non-U.S. Laws). No Group Company owns or has owned in the last three (3) years an interest in any Flow-Thru Entity other than a Subsidiary of the Company. No Group Company is party to or bound by any closing agreement or similar agreement with any Tax Authority the terms of which would have an effect on any Group Company after the date of the Latest Balance Sheet.

 

(i) There is no Lien for Taxes on any of the assets of any Group Company, other than Permitted Liens.

 

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(j) No Group Company has ever been a member of any Affiliated Group. No Group Company has any actual or potential liability for Taxes of any other Person as a result of Treasury Regulations Section 1.1502-6 (or any similar provision of state, local, or non-U.S. Laws), successor liability, transferee liability, joint or several liability, by Contract, by operation of Law, or otherwise (other than pursuant to an Ordinary Course Tax Sharing Agreement). No Group Company is party to or bound by any Tax Sharing Agreement, except for any Ordinary Course Tax Sharing Agreement. All amounts payable with respect to (or reference to) Taxes pursuant to any Ordinary Course Tax Sharing Agreement have been timely paid in accordance with the terms of such contracts.

 

(k) The unpaid Taxes of the Group Companies (i) did not, as of the date of the Latest Balance Sheet, materially exceed the reserves for Tax liabilities (excluding any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Latest Balance Sheet (rather than in any notes thereto) and (ii) will not materially exceed such reserves as adjusted for the passage of time through and including the Closing Date in accordance with the past practices of the Group Companies in filing their Tax Returns. Since the date of the Latest Balance Sheet, no member of the Company Group has incurred any material Tax liability with respect to any transaction outside the ordinary course of business for the period beginning on the date following the date of such balance sheet and ending immediately prior to the Closing.

 

(l) No Group Company is organized in any jurisdiction outside of the United States. No Group Company (i) has or has had in the last six (6) years an office, permanent establishment, branch, agency or taxable presence outside the United States or (ii) is or has been in the last six (6) years a resident for Tax purposes in any jurisdiction outside the United States.

 

(m) No holder of Company Units is a “foreign person” within the meaning of Section 1445 or Section 1446(f) of the Code.

 

(n) No Group Company has been, in the past three (3) years, a party to a transaction reported or intended to qualify as a reorganization under Section 368 of the Code. No Group Company has distributed stock of another Person, or has had its stock distributed by another Person, in a transaction that was governed, or intended or reported to be governed, in whole or in part, by Section 355 or Section 361 of the Code in the past three (3) years or that could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) that includes the transactions contemplated by this Agreement.

 

(o) No election has been made under Treasury Regulation Section 301.9100-22 (or any similar provision of state, local, or non-U.S. Laws) with respect to any Group Company.

 

(p) Each Group Company that is treated as a partnership for U.S. federal income Tax purposes has a valid election under Section 754 of the Code (and any similar provision of state, local or non-U.S. Law) in effect, and each such election will remain in effect for any taxable period that includes the Closing Date.

 

(q) No Group Company has (i) elected to defer the payment of any “applicable employment taxes” (as defined in Section 2302(d)(1) of the CARES Act) pursuant to Section 2302 of the CARES Act, (ii) deferred payment of any Taxes (including withholding Taxes) pursuant to Internal Revenue Service Notice 2020-65 or any related or similar order or declaration from any Governmental Entity (including without limitation the Presidential Memorandum, dated August 8, 2020, issued by the President of the United States) or (iii) claimed any “employee retention credit” pursuant to Section 2301 of the CARES Act.

 

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(r) No Company Unitholder is, and immediately after the completion of the transactions contemplated by this Agreement no Company Unitholder will be, “related” to PTIC II within the meaning of Treasury Regulations Section 1.197-2(h)(6). No Section 197 intangible (within the meaning of Section 197 of the Code) of any Group Company will be subject to the anti-churning rules of Section 197(f)(9) of the Code or Treasury Regulations Section 1.197-2(h) as a result of the transactions contemplated by this Agreement.

 

(s) There will be no material “subpart F” income pursuant to Section 951(a) of the Code (or any similar provision of Law) or “global intangible low-taxed income” within the meaning of Section 951A of the Code (or any similar provision of Law) in respect of any Group Company with respect to any Straddle Period of such Group Company that is a “controlled foreign corporation” within the meaning of Section 957 of the Code.

 

(t) No Group Company that is organized outside the United States holds material assets that constitute “United States property” within the meaning of Section 956 of the Code and that give rise to a material gross income inclusion under Section 951(a)(1)(B) of the Code (taking into account Section 959 of the Code).

 

(u) The Group Companies have materially complied with all transfer pricing and contemporaneous documentation requirements of each applicable Law in respect of Taxes.

 

(v) If the Company were a corporation for U.S. federal income tax purposes, an interest in the Company would not constitute a “United States real property interest” (as defined in Section 897(c)(1) of the Code).

 

Section 3.16 Brokers. Except for fees (including the amounts due and payable assuming the Closing occurs) set forth on Section 3.16 of the Company Disclosure Schedules, (except as otherwise provided in Section 9.6), no broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company or any of its Affiliates for which any of the Group Companies has any obligation.

 

Section 3.17 Real and Personal Property.

 

(a) Owned Real Property. No Group Company owns or has ever owned any real property.

 

(b) Leased Real Property. Section 3.17(b) of the Company Disclosure Schedules sets forth a true and complete list (including street addresses) of all real property leased, licensed, subleased, or otherwise used or occupied, or permitted to be used or occupied by any of the Group Companies (the “Leased Real Property”) and all Real Property Leases (and the name and date of the parties to each of the parties to the Real Property Leases) pursuant to which any Group Company is a tenant, licensee, subtenant, sublicensee, or other occupant as of the date of this Agreement. True and complete copies of all such Real Property Leases have been made available to PTIC II. Except in each case as would not have, or would not be reasonably expected to have a Company Material Adverse Effect, each Real Property Lease is in full force and effect and is a valid, legal and binding obligation of the applicable Group Company party thereto, enforceable in accordance with its terms against such Group Company and, to the Company’s knowledge, each other party thereto (subject to applicable bankruptcy, insolvency, reorganization, moratorium or other Laws affecting generally the enforcement of creditors’ rights and subject to general principles of equity). Except in each case as would not have, or would not be reasonably expected to have a Company Material Adverse Effect or as set forth in Section 3.17(b) of the Company Disclosure Schedules (i) the transactions contemplated by this Agreement will not require the consent of any party to any Real Property Leases, will not result in a breach of or default under any Real Property Leases or otherwise cause the Real Property Leases to (A) no longer be in full force and effect or (B) cease to be the valid, legal and binding obligation of each of the applicable Group Company party thereto and each other party thereto, enforceable in accordance with its terms against such Group Company and each other party thereto (subject to applicable bankruptcy, insolvency, reorganization, moratorium or other Laws affecting generally the enforcement of creditors’ rights and subject to general principles of equity), (ii) the quiet possession and enjoyment of each applicable Group Company to its respective Leased Real Property has not been disturbed, (iii) there is no dispute, breach or default by any Group Company or, to the Company’s knowledge, any third party under any Real Property Lease, and, to the Company’s knowledge, no event has occurred which (with or without notice or lapse of time or both) would constitute a dispute, breach or default or would permit termination of, or a modification or acceleration thereof by any party to such Real Property Leases, and (iv) no Group Company has leased, subleased, licensed, or otherwise granted any Person the right to use or occupy any material Leased Real Property or any portion thereof and (v) the Leased Real Property comprise all of the property used or intended to be used in, or otherwise related to, the Business.

 

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(c) Personal Property. Each Group Company has good, marketable and indefeasible title to, or a valid leasehold interest in or license or right to use, all of the material assets and properties of the Group Companies reflected in the Latest Balance Sheet or thereafter acquired by the Group Companies, except for assets disposed of in the ordinary course of business.

 

Section 3.18 Transactions with Affiliates. Section 3.18 of the Company Disclosure Schedules sets forth all Contracts which are currently in force and effect between (a) any Group Company, on the one hand and (b) any current or former officer, director, employee, partner, member, manager, direct or indirect equityholder or Affiliate of any Group Company (other than, for the avoidance of doubt, any other Group Company) or any immediate family member of the foregoing Persons (as defined by Nasdaq), on the other hand (each Person identified in this clause (b), a “Company Related Party”), other than (i) Contracts with respect to a Company Related Party’s employment with (including benefit plans and other ordinary course compensation from) any of the Group Companies entered into in the ordinary course of business, (ii) Contracts with respect to a Company Unitholder’s status as a holder of Equity Securities of the Company and (iii) Contracts entered into after the date of this Agreement that are either permitted pursuant to Section 5.1(b) or entered into in accordance with Section 5.1(b). Other than with respect to its holdings of Equity Securities as set forth in Section 3.2(a) of the Company Disclosure Schedules, no Company Related Party (A) owns any interest in any material asset used in any Group Company’s business or (B) owes any material amount to, or is owed any material amount by, any Group Company (other than ordinary course accrued compensation, employee benefits, employee or director expense reimbursement or other transactions entered into after the date of this Agreement that are either permitted pursuant to Section 5.1(b) or entered into in accordance with Section 5.1(b)). All Contracts, arrangements, understandings, interests and other matters that are required to be disclosed pursuant to this Section 3.18 are referred to herein as “Company Related Party Transactions”.

 

Section 3.19 Data Privacy and Security.

 

(a) Each Group Company has implemented written policies relating to the Processing of Personal Data as and to the extent required by applicable Law (“Privacy and Data Security Policies”). No Group Company has violated any applicable Privacy Requirements in any material respect, and each Group Company and the operation of the Business (including the Processing of Personal Data) complies, and has completed, in all material respects with all Privacy Requirements. The transactions contemplated by this Agreement and the consummation thereof will not violate any applicable Privacy Requirement.

 

(b) There have not been any material Proceedings against any Group Company initiated by (i) any Person, (ii) the United States Federal Trade Commission, any state attorney general or similar state official or (iii) any other Governmental Entity, in each case, alleging that any Processing of Personal Data by or on behalf of a Group Company is in violation of any applicable Privacy Requirements or with respect to any Security Incident, and no Group Company has received written notice of any pending or threatened Proceedings, or provided (or been required to provide) notice to any Person, with respect to any of the foregoing or any Processing of Personal Data. Each Group Company has, with respect to all third party Company Data and all other material Company Data, all rights necessary to operate the business of such Group Company as currently conducted. All Company Data will continue to be available for Processing by and on behalf of the Group Companies following the Closing on terms and conditions identical to those under which the Company Data was available for Processing by and on behalf of the Group Companies immediately prior to the Closing, without payment of any additional amounts or consideration. No Group Company has received any written communication from any Person from whom it acquires, purchases, is provided, or engages in any other business relationship with respect to, Company Data to the effect that, and no Group Company has any reason to believe that, any such Person will stop or decrease the rate of, or materially alter the terms of, the business it conducts with (or the Company Data it provides for) the Group Companies. There are no suppliers of Company Data that are subjected to any Processing in connection with the Business or any Company IT System with respect to which practical alternative sources of supply are not generally available on comparable terms (including price) and conditions in the marketplace.

 

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(c) Each Group Company owns or has a license to use the Company IT Systems as necessary to operate the business of each Group Company as currently conducted in all material respects. The Company IT Systems are, in all material respects, sufficient and in good working condition (subject to ordinary course maintenance and upgrades) for the operation of the Business as currently operated. The Group Companies maintain commercially reasonable security, disaster recovery and business continuity plans, procedures and facilities, and act in compliance therewith. To the knowledge of the Company, the Company IT Systems are free from Malicious Code. The Group Company at all times (x) when such encryption would be reasonably required to meet industry security standards encrypts Personal Data in transit and at rest on all Company IT Systems, and (y) encrypts sensitive Personal Data (e.g., bank account information and social security numbers) in transit and at rest on all Company IT Systems. Since December 31, 2019, (i) no Group Company has been subject to or experienced a Security Incident, and (ii) none of the Company IT Systems has had any material failures, breakdowns, continued substandard performance, or other adverse events that has not been remedied or replaced in all material respects.

 

Section 3.20 Compliance with International Trade & Anti-Corruption Laws.

 

(a) No member of the Group Companies nor any of their Representatives, nor to the Company’s knowledge, any other Persons acting for or on behalf of any of the foregoing, is or has been, in the past five (5) years (i) a Person named on any Sanctions and Export Control Laws-related list of designated Persons maintained by a Governmental Entity, (ii) located, organized or resident in or a national of a country or territory (or government thereof) which is or has, in the past (5) years, itself been, the subject of or target of any Sanctions and Export Control Laws (including, the Crimea, Donetsk, and Luhansk regions of Ukraine, Cuba, Iran, North Korea, Venezuela, and Syria) (a “Sanctioned Country”), (iii) an entity, in the aggregate, 50 percent or more owned, directly or indirectly, or otherwise controlled by one or more Persons described in clause (i) or (ii), (iv) otherwise engaging in dealings with or for the benefit of any Person described in clauses (i) through (iii) or in any Sanctioned Country or (v) otherwise in violation of Sanctions and Export Control Laws.

 

(b) No member of the Group Companies nor any of their Representatives, nor to the Company’s knowledge, any other Persons acting for or on behalf of any of the foregoing has (i) made, offered, promised, paid, authorized or received any unlawful bribes, kickbacks or other similar payments, including money, advantage or thing of value, directly or indirectly, to or from any Person, (ii) made or paid any contributions, directly or indirectly, to a domestic or foreign political party or candidate or (iii) otherwise made, offered, received, authorized, promised or paid any improper payment under or otherwise violated any Anti-Corruption Laws.

 

(c) No member of the Group Companies has received from any Governmental Entity or any Person any notice, inquiry, or internal or external allegation; made any voluntary or involuntary disclosure to a Governmental Entity; or conducted any internal investigation or audit concerning any actual or potential violation or wrongdoing in each case, related to Sanctions and Export Control Laws or Anti-Corruption Laws.

 

Section 3.21 Information Supplied. None of the information supplied or to be supplied by or on behalf of the Group Companies expressly for inclusion or incorporation by reference prior to the Closing in the Registration Statement / Proxy Statement will, when the Registration Statement / Proxy Statement is declared effective or final, as applicable, or when the Registration Statement / Proxy Statement is first disseminated or mailed to the Pre-Closing PTIC II Holders or at the time of the PTIC II Shareholders Meeting, and in the case of any amendment thereto, at the time of such amendment will contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

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Section 3.22 Franchises.

 

(a) Section 3.22(a) of the Company Disclosure Schedules lists each Franchise Agreement currently in effect between any of the Group Companies and any Franchisee. The Group Companies have made available to PTIC II all Franchise Agreements that are in effect as of the date of this Agreement. All such copies are true, correct, complete and authentic reproductions of the original Franchise Agreements they purport to represent. Any and all amendments, waivers, addenda and agreements related to Franchise Agreements are in writing and identified in Section 3.22(a) of the Company Disclosure Schedule, and no verbal agreements or waivers relating thereto exist and there has been no course of dealing, forbearance or other action or omissions on the part of any of the Group Companies which would result in any impairment of the enforceability or change in the terms of any such Franchise Agreement.

 

(b) Other than the Franchise System, none of the Group Companies owns or operates any franchise system. None of the Group Companies is obligated or subject to the terms of any Franchise Agreement other than Franchise Agreements for the Franchise System.

 

(c) All FDDs that the Group Companies have used to offer or sell franchises at any time since December 31, 2019 (i) materially complies with and has materially complied with all applicable Franchise Sale Laws, (ii) accurately states all material information set forth therein, (iii) does not omit any information that would render the statements therein to be materially misleading, (iv) includes all material documents (including audited and unaudited financial statements, as applicable) required by any Franchise Sale Laws to be provided to a prospective franchisee, (v) have been timely amended if required under any applicable Franchise Sales Laws and (vi) have been delivered to prospective franchisees in compliance with Franchise Sales Laws.

 

(d) Except as set forth on Section 3.22(d) of the Company Disclosure Schedules, the Group Companies (i) are, and have at all times since December 31, 2019, been: (A) registered and/or were otherwise exempt, and properly effected, perfected and/or claimed such exemption, under all applicable Franchise Sales Laws before engaging in making any offer or sale of Franchise Agreements and (B) in compliance with all applicable Franchise Sales Laws in all material respects, and have not offered or sold any Franchise in violation of any Franchise Sales Law and (ii) have not offered or sold Franchises or any form of agreement for franchised, licensed or other operations outside the United States of America.

 

(e) There are no stop orders or other proceedings in effect or, to the Company’s knowledge threatened, or that would prohibit any of the Group Companies from offering or selling Franchises immediately or any time following the Closing Date.

 

(f) All FDDs that any of the Group Companies have used to offer or sell franchises since December 31, 2019 have contained in all material respects and to the extent applicable, all information required by the FTC Rule, and other Franchise Sales Laws, and have otherwise been prepared and delivered to existing Franchisees in compliance in all material respects with the applicable Franchise Sales Laws.

 

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(g) No Franchise Agreement includes any provision that would prevent or otherwise impair the ability of any of the Group Companies to (i) undergo a change in ownership or control or require any consent or approval of any third party (including any Franchisee) or (ii) engage in or consummate the transactions contemplated by this Agreement. Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby will result in a violation of or a default under, or give rise to a right of termination, modification, cancellation, rescission or acceleration of any obligation or loss of material benefits under, any Franchise Agreement.

 

(h) Except as set forth on Section 3.22(h) of the Company Disclosure Schedules, each currently effective Franchise Agreement (i) is a legal, valid and binding obligation of one or more of the Group Companies, as applicable, and, to the knowledge of the Group Companies, of each counterparty thereto, (ii) is in full force and effect and is valid, binding and enforceable against each Franchisee in all material respects and not subject to any valid claim of, or right to, termination or rescission by any Franchisee or to the knowledge of the Group Companies, any third party thereto, in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally, franchise relationship laws affecting a franchisor’s right to default, terminate or refuse to renew or consent to the transfer of Franchises and by general principles of equity (regardless of whether considered in a proceeding in equity or at law) or (iii) is substantially identical to the form of Franchise Agreement contained in the FDD that was delivered to the applicable Franchisee. None of the Group Companies, is in breach of, or in default under, any currently effective Franchise Agreement, and to the Company’s knowledge, no event has occurred that with notice or lapse of time or both would constitute such a breach or default thereunder by any of the Group Companies.

 

(i) Except as set out in Section 3.22(i) of the Company Disclosure Schedules, at no time since December 31, 2019 has any Franchisee (or former Franchisee) asserted in writing to any of the Group Companies that it has the right to terminate or rescind or claimed any breach by any of the Group Companies under its Franchise Agreement based on a claim that its rights were violated under any applicable Law or terms of the Franchise Agreement.

 

(j) With respect to the relations of the Group Companies with existing and former Franchisees and all terminations, non-renewals, and transfers of Franchises, since December 31, 2019, the Group Companies complied in all material respects with all Franchise Sales Laws and the proper cause for default, default notice, time to cure, and actual termination requirements of any Franchise Agreement, except as otherwise required by any applicable Franchise Sales Law.

 

(k) Neither the terms of any Franchise Agreement, nor the exercise of any rights thereunder, will render such Franchise Agreement unenforceable, in whole or in part, or give to the Franchisee any right of rescission, set-off, counterclaim or defense, and no such right of rescission, set-off, counterclaim or defense has been asserted by a Franchisee with respect thereto.

 

(l) None of the Group Companies has granted any Franchisee any protected or exclusive territory rights, a designated area, or an option, right of first refusal or other arrangement regarding additional territory rights, except as set forth in the Franchise Agreements provided as set forth in Section 3.22(a) of the Company Disclosure Schedules.

 

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Section 3.23 Investigation; No Other Representations.

 

(a) The Company on its own behalf and on behalf of its Representatives, acknowledges, represents, warrants and agrees that (i) it has conducted its own independent review and analysis of, and, based thereon, has formed an independent judgment concerning, the business, assets, condition, operations and prospects of, PTIC II and (ii) it has been furnished with or given access to such documents and information about PTIC II and its businesses and operations as it and its Representatives have deemed necessary to enable it to make an informed decision with respect to the execution, delivery and performance of this Agreement, the Ancillary Documents and the transactions contemplated hereby and thereby.

 

(b) In entering into this Agreement and the Ancillary Documents to which it is or will be a party, the Company has relied solely on its own investigation and analysis and the representations and warranties expressly set forth in Article 4 and in the Ancillary Documents to which it is or will be a party and no other representations or warranties of PTIC II, any PTIC II Non-Party Affiliate or any other Person, either express or implied, and the Company, on its own behalf and on behalf of its Representatives, acknowledges, represents, warrants and agrees that, except for the representations and warranties expressly set forth in Article 4 and in the Ancillary Documents to which it is or will be a party, none of PTIC II, any PTIC II Non-Party Affiliate or any other Person makes or has made any representation or warranty, either express or implied, in connection with or related to this Agreement, the Ancillary Documents or the transactions contemplated hereby or thereby.

 

SECTION 3.24 EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES. NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO PTIC II OR ANY OF ITS RESPECTIVE REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION (INCLUDING ANY FINANCIAL PROJECTIONS OR OTHER SUPPLEMENTAL DATA), EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS ARTICLE 3, SECTION 9.8, OR THE ANCILLARY DOCUMENTS, NONE OF THE COMPANY OR ANY COMPANY NON-PARTY AFFILIATE OR ANY OTHER PERSON MAKES, AND THE COMPANY EXPRESSLY DISCLAIMS ON ITS OWN BEHALF AND ON BEHALF OF ITS REPRESENTATIVES, ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, IN CONNECTION WITH THIS AGREEMENT, THE ANCILLARY DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, INCLUDING AS TO THE MATERIALS RELATING TO THE BUSINESS, ASSETS, LIABILITIES AND AFFAIRS OR HOLDINGS OF THE GROUP COMPANIES THAT HAVE BEEN MADE AVAILABLE TO PTIC II OR ANY OF THEIR REPRESENTATIVES OR IN ANY PRESENTATION OF THE BUSINESS, ASSETS, LIABILITIES AND AFFAIRS OF THE GROUP COMPANIES BY THE MANAGEMENT OF THE COMPANY OR OTHERS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY OR BY THE ANCILLARY DOCUMENTS OR OTHERWISE, AND NO STATEMENT CONTAINED IN ANY OF SUCH MATERIALS OR MADE IN ANY SUCH PRESENTATION SHALL BE DEEMED A REPRESENTATION OR WARRANTY HEREUNDER OR OTHERWISE OR DEEMED TO BE RELIED UPON BY PTIC II OR ANY PTIC II NON-PARTY AFFILIATE IN EXECUTING, DELIVERING AND PERFORMING THIS AGREEMENT, THE ANCILLARY DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. THE COMPANY SPECIFICALLY DISCLAIMS (ON HIS, HER OR ITS OWN BEHALF, AND ON BEHALF OF HIS, HER OR ITS RESPECTIVE REPRESENTATIVES) ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO THEIR ASSETS, ANY PART THEREOF, THE WORKMANSHIP THEREOF, AND THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT, IT BEING UNDERSTOOD THAT SUCH SUBJECT ASSETS ARE BEING ACQUIRED “AS IS, WHERE IS” ON THE CLOSING DATE, AND IN THEIR PRESENT CONDITION, AND EACH OF THE PTIC II PARTIES SHALL RELY SOLELY ON ITS OWN EXAMINATION AND INVESTIGATION THEREOF AND EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN ARTICLE 3, SECTION 9.8, OR THE ANCILLARY DOCUMENTS, IT IS UNDERSTOOD THAT ANY COST ESTIMATES, PROJECTIONS OR OTHER PREDICTIONS, ANY DATA, ANY FINANCIAL INFORMATION OR ANY MEMORANDA OR OFFERING MATERIALS OR PRESENTATIONS, INCLUDING ANY OFFERING MEMORANDUM OR SIMILAR MATERIALS MADE AVAILABLE BY ANY GROUP COMPANY ARE NOT AND SHALL NOT BE DEEMED TO BE OR TO INCLUDE REPRESENTATIONS OR WARRANTIES OF THE COMPANY, ANY COMPANY NON-PARTY AFFILIATE OR ANY OTHER PERSON, AND ARE NOT AND SHALL NOT BE DEEMED TO BE RELIED UPON BY PTIC II OR ANY PTIC II NON-PARTY AFFILIATE IN EXECUTING, DELIVERING OR PERFORMING THIS AGREEMENT, THE ANCILLARY DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

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ARTICLE 4

REPRESENTATIONS AND WARRANTIES RELATING TO PTIC II

 

Subject to Section 9.8, except (a) as set forth on the PTIC II Disclosure Schedules or (b) as set forth in any PTIC II SEC Reports (excluding any disclosures in any “risk factors” section that do not constitute statements of fact, disclosures in any forward-looking statements disclaimers and other disclosures that are generally cautionary, predictive or forward-looking in nature), PTIC II hereby represents and warrants to the Company as of the date hereof and as of the Closing Date, as follows:

 

Section 4.1 Organization and Qualification. PTIC II is a corporation, limited liability company or other business entity duly organized or formed, as applicable, validly existing and in good standing (or the equivalent thereof, if applicable, in each case, with respect to the jurisdictions that recognize the concept of good standing or any equivalent thereof) under the Laws of its jurisdiction of formation or organization (as applicable), except where the failure to be in good standing (or the equivalent thereof) would not have, or be reasonably expected to have, a PTIC II Material Adverse Effect.

 

Section 4.2 Authority. PTIC II has the requisite corporate, limited liability company or other similar power and authority to execute and deliver this Agreement, each of the Ancillary Documents to which PTIC II is or will be a party and to consummate the transactions contemplated hereby and thereby. Subject to the receipt of the PTIC II Shareholder Approval, the execution and delivery of this Agreement, the Ancillary Documents to which PTIC II is or will be a party and the consummation of the transactions contemplated hereby and thereby have been (or, in the case of any Ancillary Document entered into after the date of this Agreement, will be upon execution thereof) duly authorized by all necessary corporate action on the part of PTIC II. This Agreement has been and each Ancillary Document to which PTIC II is or will be a party has been or will be upon execution thereof, duly and validly executed and delivered by PTIC II and constitutes or will constitute, upon execution thereof, as applicable, a valid, legal and binding agreement of PTIC II (assuming this Agreement has been and the Ancillary Documents to which PTIC II is or will be a party are or will be upon execution thereof, as applicable, duly authorized, executed and delivered by the other Persons party hereto or thereto, as applicable), enforceable against PTIC II in accordance with their terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium or other Laws affecting generally the enforcement of creditors’ rights and subject to general principles of equity).

 

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Section 4.3 Consents and Requisite Government Approvals; No Violations. Assuming the truth and accuracy of the representations and warranties set forth in Section 3.5 (and assuming all Consents referred to in such Sections (or required to be disclosed in the corresponding sections of the Company Disclosure Schedules) are made or obtained), no Consent of any Governmental Entity is necessary for the execution, delivery or performance of this Agreement or the Ancillary Documents to which PTIC II is or will be a party or bound, or the consummation by PTIC II of the transactions contemplated hereby and thereby, except for (a) compliance with and filings under the HSR Act, (b) compliance with and filings under any applicable Securities Laws, including the Registration Statement / Proxy Statement, (c) the PTIC II Shareholder Approval, (d) the filings, notices or other actions contemplated by Section 5.11 or (e) those the failure of which to obtain or make would not have, or be reasonably expected to have, a PTIC II Material Adverse Effect. Neither the execution, delivery and performance by PTIC II of this Agreement nor the Ancillary Documents to which PTIC II is or will be a party nor the consummation by PTIC II of the transactions contemplated hereby and thereby will (i) conflict with or result in any breach of any provision of the Governing Documents of PTIC II, (ii) result in a violation or breach of, or constitute a default or give rise to any right of termination, cancellation, amendment, modification, suspension, revocation or acceleration under, any of the terms, conditions or provisions of, or the loss of any benefits under, any Contract to which PTIC II is a party or by which any PTIC II or any of its properties or assets are bound, (iii) violate, or constitute a breach under, any Order or applicable Law to which any PTIC II or any of its properties or assets are bound or (iv) result in the creation of any Lien upon any of the assets or properties (other than any Permitted Liens) of PTIC II, except in the case of clauses (ii) though (iv) above, as would not have, or be reasonably expected to have, a PTIC II Material Adverse Effect.

 

Section 4.4 Brokers. Section 4.4 of the PTIC II Disclosure Schedules sets forth a true, correct and complete list of (a) all broker’s, finder’s, financial advisors, investment banker’s fees or commissions or similar payments payable to any broker, finder, financial advisor or investment banker in connection with the transactions contemplated by this Agreement or any Ancillary Document based upon arrangements made by or on behalf of PTIC II or any of its Affiliates for which any Group Company may become liable, (b) all amounts due and payable to any Persons described in clause (a) in connection with, or as a result of, directly or indirectly, the execution, negotiation or delivery of this Agreement or any Ancillary Document, the performance of the covenants or obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby and (c) each Contract pursuant to which such amounts are due and payable.

 

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Section 4.5 Information Supplied. None of the information supplied or to be supplied by or on behalf of PTIC II expressly for inclusion or incorporation by reference: (a) in the Registration Statement / Proxy Statement will, when the Registration Statement / Proxy Statement is declared effective or final, as applicable, or when the Registration Statement / Proxy Statement is mailed to the Pre-Closing PTIC II Holders or at the time of the meeting of such shareholders to be held in connection with the transactions contemplated by this Agreement, and in the case of any amendment thereto, at the time of such amendment, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading or (b) in the current report on Form 8-K filed after the Closing will contain any false or misleading statement in light of the circumstances under which they were made.

 

Section 4.6 Capitalization of PTIC II.

 

(a) Section 4.6(a) of the PTIC II Disclosure Schedules sets forth a true, correct and complete statement of the number and class or series (as applicable) of the issued and outstanding PTIC II Class A Shares and PTIC II Warrants. All outstanding PTIC II Class A Shares and PTIC II Warrants have been duly authorized and validly issued and are fully paid and non-assessable. Such Equity Securities (i) were not issued in violation of the Governing Documents of PTIC II or any applicable state or federal securities Law and (ii) are not subject to any preemptive rights, call option, right of first refusal, subscription rights, transfer restrictions or similar rights of any Person (other than transfer restrictions under applicable Securities Law or under the Governing Documents of PTIC II) and were not issued in violation of any preemptive rights, call option, right of first refusal, subscription rights, transfer restrictions or similar rights of any Person. Except for this Agreement, the Ancillary Documents, as set forth in PTIC II’s Governing Documents (including the PTIC II Shareholder Redemption) and the transactions contemplated hereby and thereby, there are no outstanding (A) equity appreciation, phantom equity, profit participation rights, or (B) options, restricted stock, phantom stock, warrants, purchase rights, subscription rights, conversion rights, exchange rights, calls, puts, rights of first refusal or first offer or other Contracts that could require PTIC II to issue, sell or otherwise cause to become outstanding or to acquire, repurchase or redeem any PTIC II Class A Shares or PTIC II Warrants or securities convertible into or exchangeable for PTIC II Class A Shares or PTIC II Warrants, and, except as expressly contemplated by this Agreement the Ancillary Documents, and PTIC II’s Governing Documents there is no obligation of PTIC II, to issue, sell or otherwise cause to become outstanding or to acquire, repurchase or redeem any PTIC II Class A Shares or PTIC II Warrants or securities convertible into or exchangeable for PTIC II Class A Shares or PTIC II Warrants.

 

(b) As of the date hereof, PTIC II has no Subsidiaries and does not own, directly or indirectly, any Equity Securities in any Person.

 

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Section 4.7 SEC Filings. PTIC II has timely filed (except as disclosed in a Notification of Late Filing filed by PTIC II with the SEC) or furnished all statements, prospectuses, registration statements, forms, reports and documents required to be filed or furnished by it prior to the date of this Agreement with the SEC pursuant to Federal Securities Laws since its incorporation (collectively, and together with any exhibits and schedules thereto and other information incorporated therein, and as they have been supplemented, modified or amended since the time of their filing through the date hereof, including all exhibits and schedules and documents incorporated by reference therein, the “PTIC II SEC Reports”), and, as of the Closing, will have filed or furnished all other statements, prospectuses, registration statements, forms, reports and other documents required to be filed or furnished by it subsequent to the date of this Agreement with the SEC pursuant to Federal Securities Laws through the Closing (collectively, and together with any exhibits and schedules thereto and other information incorporated therein, and as they have been supplemented, modified or amended since the time of filing through the Closing, but excluding the Registration Statement / Proxy Statement, the “Additional PTIC II SEC Reports”). Each of the PTIC II SEC Reports, as of their respective dates of filing, or if amended or superseded by a filing prior to the date of this Agreement as of the date of any such amendment or filing that superseded the initial filing, complied, and each of the Additional PTIC II SEC Reports, as of their respective dates of filing, or if amended or superseded by a filing prior to the date of Closing as of the date of any such amendment or filing that superseded the initial filing, will comply, in all material respects with the applicable requirements of the Federal Securities Laws (including the Sarbanes-Oxley Act and any rules and regulations promulgated thereunder) applicable to the PTIC II SEC Reports or the Additional PTIC II SEC Reports. As of the date of this Agreement, there are no outstanding or unresolved comments in comment letters received from the SEC with respect to the PTIC II SEC Reports. The PTIC II SEC Reports did not at the time they were filed with the SEC (except to the extent that information contained in any PTIC II SEC Report has been superseded by a later timely filed PTIC II SEC Report) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading; provided, however, that PTIC II makes no representation with respect to any forward-looking statements contained in the PTIC II SEC Reports.

 

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Section 4.8 Trust Account. As of the date of this Agreement, PTIC II has an amount in cash in the Trust Account equal to at least $230,003,947.00. The funds held in the Trust Account are (a) invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act, having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations and (b) held in trust pursuant to that certain Investment Management Trust Account Agreement, dated December 3, 2020, by and between PTIC II and Continental Stock Transfer & Trust Company, as trustee (the “Trustee”), (the “Trust Agreement”). There are no separate agreements, side letters or other agreements or understandings (whether written or unwritten, express or implied) that would cause the description of the Trust Agreement in the PTIC II SEC Reports to be inaccurate in any material respect or, to PTIC II’s knowledge, that would entitle any Person to any portion of the funds in the Trust Account (other than (i) in respect of deferred underwriting commissions or Taxes, (ii) the holders of PTIC II Class A Shares who shall have elected to redeem their PTIC II Class A Shares pursuant to the Governing Documents of PTIC II or (iii) if PTIC II fails to complete a business combination within the allotted time period set forth in the Governing Documents of PTIC II and liquidates the Trust Account, subject to the terms of the Trust Agreement, PTIC II (in limited amounts to permit PTIC II to pay the expenses of the Trust Account’s liquidation, dissolution and winding up of PTIC II and then PTIC II’s public shareholders)). Prior to the Closing, none of the funds held in the Trust Account are permitted to be released, except in the circumstances described in the Governing Documents of PTIC II and the Trust Agreement. As of the date hereof, the Trust Agreement is valid, binding and in full force and effect and enforceable in accordance with its terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium or other Laws affecting generally the enforcement of creditors’ rights and subject to general principles of equity), and has not been amended or modified. As of the date of this Agreement, PTIC II has performed all material obligations required to be performed by it to date under, and is not in material default, under the Trust Agreement, and, to PTIC II’s knowledge, no event has occurred which (with due notice or lapse of time or both) would constitute a material default under the Trust Agreement.

 

Section 4.9 Litigation. There is (and since its incorporation there has been) no Proceeding pending or, to PTIC II’s knowledge, threatened against or involving (a) PTIC II, (b) any of its respective properties or assets, or (c) any of its respective managers, officers, directors or employees (in their capacities as such), except as would not have, or be reasonably expected to have, a PTIC II Material Adverse Effect. PTIC II is not subject to any outstanding Order that is, or would reasonably be expected to be, material to PTIC II.

 

Section 4.10 Compliance with Applicable Law. PTIC II is (and since its incorporation or organization, as applicable, has been) in compliance with all applicable Laws, except as would not have a PTIC II Material Adverse Effect.

 

Section 4.11 Internal Controls; Listing; Financial Statements.

 

(a) Except as not required in reliance on exemptions from various reporting requirements by virtue of PTIC II’s status as an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, or “smaller reporting company” within the meaning of the Exchange Act, since its incorporation, except as otherwise disclosed in PTIC II SEC Reports (i) PTIC II has established and maintained a system of internal controls over financial reporting (as defined in Rule 13a-15 and Rule 15d-15 under the Exchange Act) sufficient to provide reasonable assurance regarding the reliability of PTIC II’s financial reporting and the preparation of PTIC II’s financial statements for external purposes in accordance with GAAP and (ii) PTIC II has established and maintained disclosure controls and procedures (as defined in Rule 13a-15 and Rule 15d-15 under the Exchange Act) designed to ensure that material information relating to PTIC II is made known to PTIC II’s principal executive officer and principal financial officer by others within PTIC II.

 

(b) PTIC II has not taken any action prohibited by Section 402 of the Sarbanes-Oxley Act.

 

(c) As of the date hereof, PTIC II is in compliance in all material respects with all applicable listing and corporate governance rules and regulations of Nasdaq. The classes of securities representing issued and outstanding PTIC II Class A Shares are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on Nasdaq. As of the date of this Agreement, there is no material Proceeding pending or, to the knowledge of PTIC II, threatened against PTIC II by Nasdaq or the SEC with respect to any intention by such entity to deregister PTIC II Class A Shares or prohibit or terminate the listing of PTIC II Class A Shares on Nasdaq. PTIC II has not taken any action that is designed to terminate the registration of PTIC II Class A Shares under the Exchange Act.

 

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(d) The PTIC II SEC Reports contain true, correct and complete copies of the applicable PTIC II Financial Statements. The PTIC II Financial Statements, including all notes and schedules thereto (i) fairly present in all material respects the financial position of PTIC II as at the respective dates thereof, and the results of its operations, shareholders’ equity and cash flows for the respective periods then ended (subject, in the case of any unaudited interim financial statements, to normal year-end audit adjustments (none of which is expected to be material) and the absence of footnotes), (ii) were prepared in conformity with GAAP applied on a consistent basis during the periods involved (except, in the case of any audited financial statements, as may be indicated in the notes thereto and subject, in the case of any unaudited financial statements, to normal year-end audit adjustments (none of which is expected to be material) and the absence of footnotes), (iii) in the case of the audited PTIC II Financial Statements, were audited in accordance with the standards of the PCAOB and (iv) comply in all material respects with the applicable accounting requirements and with the rules and regulations of the SEC, the Exchange Act and the Securities Act in effect as of the respective dates thereof (including Regulation S-X or Regulation S-K, as applicable).

 

(e) Since its incorporation, PTIC II has no knowledge of and has not received any written notification of any (i) “significant deficiency” in the internal controls over financial reporting of PTIC II, (ii) “material weakness” in the internal controls over financial reporting of PTIC II or (iii) fraud, whether or not material, that involves management or other employees of PTIC II who have a significant role in the internal controls over financial reporting of PTIC II.

 

Section 4.12 No Undisclosed Liabilities. Except for Liabilities (a) set forth in Section 4.12 of the PTIC II Disclosure Schedules, (b) incurred in connection with the negotiation, preparation or execution of this Agreement or any Ancillary Documents, the performance of its covenants and agreements in this Agreement or any Ancillary Document or the consummation of the transactions contemplated hereby or thereby, (c) set forth or disclosed in the PTIC II Financial Statements included in the PTIC II SEC Reports, (d) that have arisen since the date of the most recent balance sheet included in the PTIC II SEC Reports in the ordinary course of business (none of which is a Liability for breach of contract, breach of warranty, tort, infringement, misappropriation or violation of Law), (e) either permitted to be incurred pursuant to Section 5.10 or incurred in accordance with Section 5.10 or (f) that are not and would not reasonably be expected to be, individually or in the aggregate, material to PTIC II, PTIC II has no Liabilities.

 

Section 4.13 Tax Matters.

 

(a) All income and other material Tax Returns required to be filed by or with respect to PTIC II have been duly and timely filed and all such Tax Returns are true, complete, accurate, and correct in all material respects. All income and other material Taxes due and payable by or in respect of PTIC II (whether or not shown as due and payable on any Tax Return) have been duly and timely paid in full to the appropriate Tax Authority. PTIC II has timely and properly withheld and paid to the appropriate Tax Authority all income and other material amounts of Taxes required to have been withheld and paid by it in connection with any amounts paid or owing to any employee, independent contractor, creditor, equityholder or other third party and has otherwise complied in all material respects with all applicable Laws relating to such withholding and payment of Taxes.

 

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(b) PTIC II has complied in all material respects with all Laws relating to the registration, reporting, and payment of sales, use, ad valorem and value added Taxes.

 

(c) No material written claim has been made by a Tax Authority in a jurisdiction where PTIC II does not file a particular type of Tax Return, or pay a particular type of Tax, that PTIC II is or may be subject to taxation of that type by, or required to file that type of Tax Return in, that jurisdiction. The income Tax Returns made available to the Company reflect all of the jurisdictions in which PTIC II is required to remit material income Tax, and PTIC II is not obligated, nor has agreed, to pay any income Taxes of any of its owners (direct or indirect) (by means of withholding, electing to file composite returns in any jurisdiction, or otherwise). PTIC II is not required to pay Taxes on its net income in any country other than its country of organization. No material claim has been made by a Tax Authority in a jurisdiction where PTIC II has not paid any Tax or filed Tax Returns, asserting that PTIC II is or may be subject to Tax or required to file Tax Returns in such jurisdiction. PTIC II currently does not have and has not had a permanent establishment (as defined in any applicable tax treaty) or other fixed place of business or other connection or nexus in a country other than the country in which it is organized. PTIC II has not been a party to or the beneficiary of any Tax exemption, Tax holiday, or other Tax reduction Contract or order.

 

(d) In the six (6) years prior to the Effective Date, PTIC II has not been audited by any Tax Authority. There is no Tax audit or examination or any Proceeding in respect of Taxes now being conducted or that is otherwise ongoing, pending, proposed or threatened in writing (or, to the knowledge of PTIC II, otherwise threatened) with respect to any Taxes or Tax Returns of or with respect to PTIC II. PTIC II has not commenced a voluntary disclosure proceeding in jurisdiction that has not been fully resolved or settled. All material deficiencies for Taxes asserted or assessed in writing against PTIC II have been fully and timely (taking into account applicable extensions) paid, settled or withdrawn, and, to the knowledge of PTIC II, no such deficiency has been threatened or proposed against PTIC II.

 

(e) PTIC II has not agreed to (or has had agreed to on its behalf) any extension or waiver of the statute of limitations applicable to any Tax or Tax Return, or any extension of time with respect to a period of Tax collection, assessment or deficiency, which period (after giving effect to such extension or waiver) has not yet expired, and no request for any such waiver or extension is currently pending. PTIC II is not the beneficiary of any extension of time (other than an automatic extension of time not requiring the consent of the applicable Tax Authority obtained in the ordinary course of business) within which to file any Tax Return not previously filed. No private letter ruling, administrative relief, technical advice, request for a change of any method of accounting, closing agreement, or other similar ruling, agreement or request has been granted or issued by, or is pending with, any Tax Authority that relates to the Taxes or Tax Returns of PTIC II. No power of attorney granted by PTIC II with respect to any Taxes is currently in force.

 

(f) PTIC II has not been a party to any “listed transaction” within the meaning of Treasury Regulations Section 1.6011-4(b)(2) (or any similar provision of U.S. state or local or non-U.S. Tax Law).

 

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(g) PTIC II will not be required to include an item of income, or exclude an item of deduction, for any period after the Closing Date (determined with and without regard to the transactions contemplated hereby) as a result of (i) an installment sale transaction occurring on or before the Closing Date governed by Section 453 of the Code (or any similar provision of state, local or non-U.S. Laws), (ii) a transaction occurring on or before the Closing Date reported as an open transaction for U.S. federal income Tax purposes (or any similar doctrine under state, local, or non-U.S. Laws), (iii) any prepaid amounts received or paid on or prior to the Closing Date or deferred revenue realized, accrued or received on or prior to the Closing Date, (iv) a change in method of accounting with respect to a Pre-Closing Tax Period that occurs or was requested on or prior to the Closing Date (or as a result of an impermissible method used in a Pre-Closing Tax Period), (v) an agreement entered into with any Governmental Entity (including a “closing agreement” under Section 7121 of the Code) on or prior to the Closing Date, (vi) the application of Section 263A of the Code (or any similar provision of state, local, or non-U.S. Laws), (vii) gain recognition agreement to which PTIC II is a party under Section 367 of the Code (or any corresponding or similar provision of state, local or non U.S. Law), (viii) intercompany transaction occurring or any excess loss account existing on or prior to the Closing Date, in each case described in Treasury Regulations under Section 1502 of the Code (or any similar provision of state, local, or non-U.S. Laws) or (ix) transactions effected or investments made prior to the Closing Date that result in taxable income pursuant to Sections 951(a) or 951A of the Code (or any corresponding or similar provision of state, local or non-U.S. Law). PTIC II does not own and has not owned in the last three (3) years an interest in any Flow-Thru Entity. PTIC II is not party to or bound by any closing agreement or similar agreement with any Tax Authority the terms of which would have an effect on PTIC II after the date of the Latest Balance Sheet.

 

(h) There is no Lien for Taxes on any of the assets of PTIC II, other than Permitted Liens.

 

(i) PTIC II has never been a member of any Affiliated Group. PTIC II does not have any actual or potential liability for Taxes of any other Person as a result of Treasury Regulations Section 1.1502-6 (or any similar provision of state, local, or non-U.S. Laws), successor liability, transferee liability, joint or several liability, by Contract, by operation of Law, or otherwise (other than pursuant to an Ordinary Course Tax Sharing Agreement). PTIC II is not party to or bound by any Tax Sharing Agreement, except for any Ordinary Course Tax Sharing Agreement. All amounts payable with respect to (or reference to) Taxes pursuant to any Ordinary Course Tax Sharing Agreement have been timely paid in accordance with the terms of such contracts.

 

(j) PTIC II is not organized in any jurisdiction outside of the United States. PTIC II (i) has not or has not had in the last six (6) years an office, permanent establishment, branch, agency or taxable presence outside the United States or (ii) is not or has not been in the last six (6) years a resident for Tax purposes in any jurisdiction outside the United States.

 

(k) PTIC II has not been, in the past three (3) years, a party to a transaction reported or intended to qualify as a reorganization under Section 368 of the Code. PTIC II has not distributed stock of another Person, or has had its stock distributed by another Person, in a transaction that was governed, or intended or reported to be governed, in whole or in part by Section 355 or Section 361 of the Code in the past three (3) years or that could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) that includes the transactions contemplated by this Agreement.

 

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(l) PTIC II has not (i) elected to defer the payment of any “applicable employment taxes” (as defined in Section 2302(d)(1) of the CARES Act) pursuant to Section 2302 of the CARES Act, (ii) deferred payment of any Taxes (including withholding Taxes) pursuant to Internal Revenue Service Notice 2020-65 or any related or similar order or declaration from any Governmental Entity (including without limitation the Presidential Memorandum, dated August 8, 2020, issued by the President of the United States) or (iii) claimed any “employee retention credit” pursuant to Section 2301 of the CARES Act.

 

(m) PTIC II has materially complied with all transfer pricing and contemporaneous documentation requirements of each applicable Law in respect of Taxes.

 

Section 4.14 No PTIC II Material Adverse Effect. Since December 31, 2021, there has not been any event, action or occurrence that has resulted in a PTIC II Material Adverse Effect.

 

Section 4.15 Investigation; No Other Representations.

 

(a) PTIC II, on its own behalf and on behalf of its Representatives, acknowledges, represents, warrants and agrees that (i) it has conducted its own independent review and analysis of, and, based thereon, has formed an independent judgment concerning, the business, assets, condition, operations and prospects of the Group Companies (including the Business) and (ii) it has been provided with certain documents and certain information about the Group Companies and their respective businesses and operations to enable it to make an informed decision with respect to the execution, delivery and performance of this Agreement, the Ancillary Documents and the transactions contemplated hereby and thereby.

 

(b) In entering into this Agreement and the Ancillary Documents to which it is a party, PTIC II has relied solely on its own investigation and analysis and the representations and warranties expressly set forth in Article 3, Section 9.18 and the Ancillary Documents to which it is a party or a beneficiary of any representations and warranties and no other representations or warranties of the Company or any other Person, either express or implied, and PTIC II, on its own behalf and on behalf of its Representatives, acknowledges, represents, warrants and agrees that, except for the representations and warranties expressly set forth in Article 3, Article 4, and in the Ancillary Documents to which it is a party or a beneficiary of any representations and warranties, none of the Company or any other Person makes or has made any representation or warranty, either express or implied, in connection with or related to this Agreement, the Ancillary Documents or the transactions contemplated hereby or thereby.

 

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SECTION 4.16 EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES. NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE COMPANY, THE SELLERS’ REPRESENTATIVE OR ANY OF THEIR RESPECTIVE REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION (INCLUDING ANY FINANCIAL PROJECTIONS OR OTHER SUPPLEMENTAL DATA), EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS ARTICLE 4, SECTION 9.8 OR THE ANCILLARY DOCUMENTS, NEITHER PTIC II OR ANY OTHER PERSON MAKES, AND PTIC II EXPRESSLY DISCLAIMS (ON ITS OWN BEHALF AND ON BEHALF OF ITS REPRESENTATIVES) ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, IN CONNECTION WITH THIS AGREEMENT, THE ANCILLARY DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, INCLUDING AS TO THE CONDITION, VALUE OR QUALITY OF THE EQUITY SECURITIES, BUSINESSES, ASSETS, LIABILITIES AND AFFAIRS OR HOLDINGS OF PTIC II THAT HAVE BEEN MADE AVAILABLE TO THE COMPANY, THE SELLERS’ REPRESENTATIVE OR ANY OF THEIR RESPECTIVE REPRESENTATIVES OR IN ANY PRESENTATION OF EQUITY SECURITIES, BUSINESS, ASSETS, LIABILITIES AND AFFAIRS OF PTIC II BY THE MANAGEMENT OR OTHERS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY OR BY THE ANCILLARY DOCUMENTS OR OTHERWISE, AND NO STATEMENT CONTAINED IN ANY OF SUCH MATERIALS OR MADE IN ANY SUCH PRESENTATION SHALL BE DEEMED A REPRESENTATION OR WARRANTY HEREUNDER OR OTHERWISE OR DEEMED TO BE RELIED UPON BY THE COMPANY OR THE SELLERS’ REPRESENTATIVE IN EXECUTING, DELIVERING AND PERFORMING THIS AGREEMENT, THE ANCILLARY DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY. PTIC II SPECIFICALLY DISCLAIMS (ON ITS OWN BEHALF AND ON BEHALF OF ITS REPRESENTATIVES) ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO THEIR ASSETS, ANY PART THEREOF, THE WORKMANSHIP THEREOF, AND THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT, IT BEING UNDERSTOOD THAT SUCH SUBJECT ASSETS ARE BEING ACQUIRED “AS IS, WHERE IS” ON THE CLOSING DATE, AND IN THEIR PRESENT CONDITION, AND EACH OF THE COMPANY AND THE SELLERS’ REPRESENTATIVE SHALL RELY SOLELY ON ITS OWN EXAMINATION AND INVESTIGATION THEREOF AND EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS ARTICLE 4, SECTION 9.8 OR THE ANCILLARY DOCUMENTS, IT IS UNDERSTOOD THAT ANY COST ESTIMATES, PROJECTIONS OR OTHER PREDICTIONS, ANY DATA, ANY FINANCIAL INFORMATION OR ANY MEMORANDA OR OFFERING MATERIALS OR PRESENTATIONS, INCLUDING ANY OFFERING MEMORANDUM OR SIMILAR MATERIALS MADE AVAILABLE BY PTIC II ARE NOT AND SHALL NOT BE DEEMED TO BE OR TO INCLUDE REPRESENTATIONS OR WARRANTIES OF PTIC II OR ANY OTHER PERSON, AND ARE NOT AND SHALL NOT BE DEEMED TO BE RELIED UPON BY THE COMPANY OR THE SELLERS’ REPRESENTATIVE IN EXECUTING, DELIVERING OR PERFORMING THIS AGREEMENT, THE ANCILLARY DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

ARTICLE 5

COVENANTS

Section 5.1 Conduct of Business of the Company.

 

(a) From and after the date of this Agreement until the earlier of the Closing or the termination of this Agreement in accordance with its terms, the Company shall, and the Company shall cause its Subsidiaries to, except (i) as expressly contemplated by this Agreement or any Ancillary Document, (ii) as required by applicable Law, (iii) as set forth on Section 5.1(a) of the Company Disclosure Schedules or (iv) as consented to in writing by PTIC II, to operate the business of the Group Companies in the ordinary course, and subject to compliance with the specific matters set forth in Section 5.1(b) below, in a manner which, taken as a whole, is reasonably likely to maintain and preserve substantially intact the business organization, assets, properties, goodwill and relationships with the officers, employees, customers and other material business relations of the Group Companies.

 

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(b) Without limiting the generality of the foregoing, from and after the date of this Agreement until the earlier of the Closing or the termination of this Agreement in accordance with its terms, the Company shall, and the Company shall cause its Subsidiaries to, except as expressly contemplated by this Agreement or any Ancillary Document, as required by applicable Law, as set forth on Section 5.1(b) of the Company Disclosure Schedules or as consented to in writing by PTIC II (such consent, other than in the case of Section 5.1(b)(i), Section 5.1(b)(ii), Section 5.1(b)(iii), Section 5.1(b)(iv), Section 5.1(b)(v), Section 5.1(b)(vi), Section 5.1(b)(viii), Section 5.1(b)(x), Section 5.1(b)(xi), Section 5.1(b)(xiii), Section 5.1(b)(xv), Section 5.1(b)(xvii), Section 5.1(b)(xviii), Section 5.1(b)(xix), Section 5.1(b)(xiv), and Section 5.1(b)(xxv) (to the extent related to any of the foregoing) not to be unreasonably withheld, conditioned or delayed), not do any of the following:

 

(i) declare, set aside, make or pay a dividend on, or make any other distribution or payment in respect of, or repurchase, redeem, or otherwise acquire, any Equity Securities of any Group Company, other than any redemptions of outstanding Equity Securities of any Group Company held by an employee thereof in connection with his or her termination of employment, but solely to the extent such redemption is contemplated pursuant to the terms of such individual’s employment agreement or award agreement(s) issued under an Employee Benefit Plan; provided that in the event of any such permitted redemption of any Company Units, the Company shall notify PTIC II in writing of such redemption and the Parties shall mutually agree to any update of the Allocation Schedule to reflect a pro rata allocation of any such redeemed Company Units among any applicable, remaining Company Unitholders;

 

(ii) (A) merge, consolidate, combine or amalgamate any Group Company with any Person or (B) purchase or otherwise acquire (whether by merging or consolidating with, purchasing any Equity Security in or a substantial portion of the assets of, or by any other manner) any business or any corporation, partnership, association or other business entity or organization or division thereof, except for the proposed acquisitions set forth in, and on the terms set forth in, Section 5.1(b)(ii) of the Company Disclosure Schedules;

 

(iii) adopt any amendments, supplements, restatements or modifications to or otherwise terminate any Group Company’s Governing Documents or the Company LLC Agreement;

 

(iv) transfer, sell, assign, abandon, lease, permit to lapse or expire, license or otherwise dispose of any material assets or properties (including Company Owned Intellectual Property) of any of the Group Companies, other than Permitted Licenses, or inventory or obsolete equipment in the ordinary course of business, or create, subject or incur any Lien on any material assets or properties of any of the Group Companies (other than any Permitted Liens); (v) (A) transfer, issue, sell, grant or otherwise directly or indirectly dispose of, or subject to a Lien, (1) any Equity Securities or Equity Rights of any Group Company or (2) any options, warrants, rights of conversion or other rights, agreements, arrangements or commitments obligating any Group Company to issue, deliver or sell any Equity Securities or Equity Rights of any Group Company, or (B) adjust, split, combine or reclassify any Equity Securities or Equity Rights of any Group Company or other rights exercisable therefor or convertible into;

 

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(vi) incur, create or assume any Indebtedness (other than capital leases in amounts not in excess of $500,000, in the aggregate);

 

(vii) (A) disclose (or permit to disclose) any Trade Secret to any Person or (B) disclose, deliver, license, escrow, or make available (or permit any Person to do any of the foregoing) to any Person any source code included in the Company Owned Intellectual Property, in each case, other than to employees and contractors in the ordinary course of business that have a need to know it, solely for providing services to or on behalf of the Group Companies, and pursuant to a written confidentiality agreement that includes appropriate obligations with respect to confidentiality, non-use, and non-disclosure;

 

(viii) cancel or forgive any Indebtedness owed to the Company or any of the Subsidiaries of the Company;

 

(ix) (A) amend, modify, extend or renew or cause the termination of any Material Contract or the Real Property Lease with the Company’s primary corporate office, other than amendments, modifications, extensions or renewals in the ordinary course of business or required by Law; (B) enter into any contract that would otherwise constitute a Material Contract or the Real Property Lease with the Company’s primary corporate office of the type described in Section 3.7 of the Company Disclosure Schedules (except for the contracts described in Sections 3.7(xi)(B), (xvi)(A) or (xvi)(B) if entered into prior to the date of this Agreement), other than in the ordinary course of business; (C) terminate or waive any material benefit or right under any Material Contract or the Real Property Lease with the Company’s primary corporate office, or a Contract that would be a Material Contract if in existence as of the date hereof, other than in the ordinary course of business; or (D) consummate any other transaction or make (or agree to make) any other payments that, if reflected in a contract and existing on the date hereof, would be required to be disclosed on Section 5.1(b)(ix) of the Company Disclosure Schedules other than in the ordinary course of business;

 

(x) make any Change of Control Payment that is not set forth on Section 5.1(b)(xi) of the Company Disclosure Schedules;

 

(xi) make any loans, advances or capital contributions to, or guarantees for the benefit of, or any equity or other investments in, any Person, other than (A) intercompany loans or capital contributions between the Company and any of its wholly owned Subsidiaries in the ordinary course of business and (B) the reimbursement of expenses of employees in the ordinary course of business; (xii) except (A) as required by applicable Law or under the terms of any Employee Benefit Plan of any Group Company that is set forth on the Section 5.1(b)(xiii) of the Company Disclosure Schedules or (B) changes made in connection with annual plan renewals in the ordinary course of business (it being understood and agreed, for the avoidance of doubt, that in no event shall the exception in this clause (A) be deemed or construed as permitting any Group Company to take any action that is not permitted by any other provision of this Section 5.1(b)), (1) establish, amend, modify, adopt, enter into or terminate any Employee Benefit Plan of any Group Company or any material benefit or compensation plan, policy, program or Contract that would be an Employee Benefit Plan if in effect as of the date of this Agreement, (2) increase or decrease the compensation or benefits payable to any current or former director, manager, officer, employee, individual independent contractor or other service provider of any Group Company (other than routine changes in the ordinary course of business and consistent with prior practices to the compensation or benefits of such persons (other than in respect of any current or former director, manager, officer, or senior employees)), (3) take any action to accelerate any payment, right to payment, or benefit, or the funding of any payment, right to payment or benefit, payable or to become payable to any current or former director, manager, officer, employee, individual independent contractor or other service provider of any Group Company or (4) grant bonus, severance, change in control, retention or termination pay or benefits to, or adopt, enter into or amend any severance, retention, termination, employment, consulting, bonus, change in control or severance agreement with any current or former director, manager, officer, employee, individual independent contractor or other service provider of any Group Company that is not set forth on Section 3.2(f);

 

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(xiii) make, change or revoke any material election relating to Taxes, enter into any agreement, settlement or compromise with any Tax Authority relating to any material Tax matter, abandon or fail to diligently conduct any material audit, examination or other Proceeding in respect of a material Tax or material Tax Return, make any request for a private letter ruling, administrative relief, technical advice, change any method of accounting or other similar request with a Tax Authority, file any amended Tax Return, fail to timely file (taking into account valid extensions) any material Tax Return required to be filed, file any Tax Return in a manner inconsistent with the past practices of the Group Companies, fail to pay any material amount of Tax as it becomes due, consent to any extension or waiver of the statutory period of limitations applicable to any Tax or Tax Return, enter into, amend, modify or supplement any Tax Sharing Agreement (other than an Ordinary Course Tax Sharing Agreement), adopt or change a method of accounting with respect to Taxes, change an accounting period with respect to Taxes, surrender any right to claim any refund of material Taxes, take any action, or fail to take any action, which action or failure to act prevents, impairs or impedes, or could reasonably be expected to prevent, impair or impede, the Intended Tax Treatment or the representations and warranties in Section 3.15, as applicable, from being true, correct, and complete, defer payment of any Taxes (including withholding Taxes) pursuant to Internal Revenue Service Notice 2020-65 or any subsequent, related or similar order or declaration from any Governmental Entity, or take any other action relating to Taxes that would reasonably be expected to have an adverse effect on PTIC II taking into account the transactions contemplated by this Agreement;

 

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(xiv) subject to Section 5.2(d), enter into any settlement, conciliation or similar Contract, in each case, in respect of a Proceeding, (A) the performance of which involves or could reasonably involve at any point in the future the payment by the Group Companies (or PTIC II or any of its Affiliates after the Closing) in excess of $250,000 individually, or $500,000 in the aggregate (in each case with respect to any Proceeding, determined net of any insurance coverage in respect of such Proceeding), (B) that imposes, or could reasonably impose at any point in the future, any non-monetary obligations (including injunctive relief) on any Group Company (or PTIC II or any of its Affiliates after the Closing), (C) that involves any criminal misconduct or any admission or wrongdoing or other misconduct or (D) commence any Proceeding;

 

(xv) authorize, recommend, propose or announce an intention to adopt, or otherwise effect, a plan of complete or partial liquidation, dissolution, restructuring, recapitalization, reorganization or similar transaction involving any Group Company;

 

(xvi) with respect to a Group Company, commit or authorize any capital commitment or capital expenditure (or series of capital commitments or capital expenditures in excess of $250,000), other than those capital expenditures contemplated by the Group Companies’ capital expenditure budget set forth on Section 5.1(b)(xvii) of the Company Disclosure Schedules;

 

(xvii) with respect to any Group Company, enter into, conduct, engage in or otherwise operate any new line of business in any material respect or discontinue or make any material change to the business of the Group Companies;

 

(xviii) change any Group Company’s methods of accounting in any material respect, other than changes that are made in accordance with GAAP or PCAOB standards;

 

(xix) enter into any Contract with any broker, finder, investment banker or other Person under which such Person is or will be entitled to any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by this Agreement; (xx) (A) modify, extend, or enter into any CBA or (B) recognize or certify any labor union, labor organization, works council, or group of employees of the Group Companies as the bargaining representative for any employees of the Group Companies.

 

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(xxi) implement any employee layoffs, plant closings, reductions in force, furloughs, temporary layoffs, salary or wage reductions, work schedule changes or other such actions that could implicate WARN;

 

(xxii) hire, engage, terminate (without cause), furlough, or temporarily layoff any employee or independent contractor with annual salary in excess of $200,000;

 

(xxiii) waive or release any noncompetition, nonsolicitation, nondisclosure, noninterference, nondisparagement, or other restrictive covenant obligation of any executive officer of any Group Company or employee or independent contractor whose total annual compensation is greater than $200,000 or any nonsolicitation, noncompetition or nondisclosure restrictive covenant obligation of any current or former employee or independent contractor;

 

(xxiv) enter into, amend, modify, or waive any material benefit or right under, any Company Related Party Transaction; or

 

(xxv) enter into any Contract to take, or cause to be taken, any of the actions set forth in this Section 5.1.

 

(c) Notwithstanding anything in this Section 5.1 or this Agreement to the contrary, (i) nothing set forth in this Agreement shall give PTIC II, directly or indirectly, the right to control or direct the operations of the Group Companies prior to the Closing, (ii) any action taken, or omitted to be taken, by any Group Company to the extent such act or omission is reasonably determined by the Company, based on the advice of outside legal counsel, to be necessary to comply with any Law, Order, directive, pronouncement or guideline issued by a Governmental Entity providing for business closures, “sheltering-in-place” or other restrictions that relates to, or arises out of, COVID-19 shall in no event be deemed to constitute a breach of Section 5.1 and (iii) any action taken, or omitted to be taken, by any Group Company to the extent that the board of managers of the Company reasonably determines that such act or omission is necessary in response to COVID-19 to maintain and preserve in all material respects the business organization, assets, properties and material business relations of the Group Companies, taken as a whole, shall not be deemed to constitute a breach of Section 5.1; provided, however, in the case of each of clause (ii) and (iii), (A) the Company shall give PTIC II prior written notice of any such act or omission to the extent reasonably practicable, which notice shall describe in reasonable detail the act or omission and the reason(s) that such act or omission is being taken, or omitted to be taken, pursuant to clause (ii) or (iii) and, in the event that it is not reasonably practicable for the Company to give the prior written notice described in this clause (iii), the Company shall instead give such written notice to PTIC II promptly after such act or omission and (B) in no event shall clause (ii) or (iii) be applicable to any act or omission of the type described in Section 5.1(b)(i), Section 5.1(b)(ii), Section 5.1(b)(iii), Section 5.1(b)(iv), Section 5.1(b)(v), Section 5.1(b)(vi), Section 5.1(b)(viii), Section 5.1(b)(x), Section 5.1(b)(xi), Section 5.1(b)(xiii), Section 5.1(b)(xv), Section 5.1(b)(xvii), Section 5.1(b)(xviii), Section 5.1(b)(xix), Section 5.1(b)(xiv) and Section 5.1(b)(xxv) (to the extent related to any of the foregoing).

 

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Section 5.2 Efforts to Consummate; Litigation.

 

(a) Subject to the terms and conditions herein provided, each of the Parties shall use reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary or advisable to consummate and make effective as promptly as reasonably practicable the transactions contemplated by this Agreement (including (y) the satisfaction, but not waiver, of the closing conditions set forth in Article 7 and, in the case of any Ancillary Document to which such Party will be a party after the date of this Agreement, to execute and delivery such Ancillary Document when required pursuant to this Agreement, and (z) the Company taking, or causing to be taken, all actions necessary or advisable to cause the agreements set forth on Section 3.18 of the Company Disclosure Schedules to be terminated effective as of the Closing without any further obligations or liabilities to the Company or any of its Affiliates (including the other Group Companies and, from and after the Effective Time, PTIC II)). Without limiting the generality of the foregoing, each of the Parties shall use reasonable best efforts to obtain, file with or deliver to, as applicable, any Consents of any Governmental Entities or other Persons necessary, proper or advisable to consummate the transactions contemplated by this Agreement or the Ancillary Documents. The Company shall bear the costs incurred in connection with obtaining such Consents; provided, further, that the Company shall pay all required HSR Act filing fees; provided however, that each Party shall bear it’s out of pocket costs and expenses in connection with the preparation of such Consents. Each Party shall (i) make any appropriate filing or take, or cause to be taken, any reasonably required actions, as applicable pursuant to the HSR Act with respect to the transactions contemplated by this Agreement promptly (and in any event within ten (10) days) following the date of this Agreement, provided, however, that PTIC or the Company may agree to waive the obligation to make any such filing if such filing is not reasonably required, and (ii) if applicable, request for early termination of the waiting period thereunder and respond as promptly as reasonably practicable to any requests by any Governmental Entity for additional information and documentary material that may be requested pursuant to the HSR Act. PTIC II shall promptly inform the Company of any communication between PTIC II, on the one hand, and any Governmental Entity, on the other hand, and the Company shall promptly inform PTIC II of any communication between the Company, on the one hand, and any Governmental Entity, on the other hand, in either case, regarding any of the transactions contemplated by this Agreement or any Ancillary Document. Without limiting the foregoing, each Party and their respective Affiliates shall not extend any waiting period, review period or comparable period under the HSR Act or enter into any agreement with any Governmental Entity not to consummate the transactions contemplated hereby or by the Ancillary Documents, except with the prior written consent of PTIC II, the Company and the Sellers’ Representative. PTIC II agrees to take all reasonable actions that are required by any Governmental Entity in connection with the filing pursuant to the HSR Act to expeditiously consummate the transactions contemplated by this Agreement. Nothing in this Section 5.2 obligates any Party or any of its Affiliates to agree to (A) sell, license or otherwise dispose of, or hold separate and agree to sell, license or otherwise dispose of, any entities, assets or facilities of any Group Company or any entity, facility or asset of such Party or any of its Affiliates, (B) terminate, amend or assign existing relationships and contractual rights or obligations, (C) amend, assign or terminate existing licenses or other agreements or (D) enter into new licenses or other agreements. No Party shall agree to any of the foregoing measures with respect to any other Party or any of its Affiliates, except with PTIC II’s, the Company’s and the Sellers’ Representative’s prior written consent.

 

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(b) From and after the date of this Agreement until the earlier of the Closing or termination of this Agreement in accordance with its terms, PTIC II, on the one hand, and the Company, on the other hand, shall give counsel for the Company (in the case of PTIC II) or PTIC II (in the case of the Company), a reasonable opportunity to review in advance, and consider in good faith the views of the other in connection with, any proposed written communication to any Governmental Entity relating to the transactions contemplated by this Agreement or the Ancillary Documents. Each of the Parties agrees not to participate in any substantive meeting or discussion, either in person or by telephone with any Governmental Entity in connection with the transactions contemplated by this Agreement unless it consults with, in the case of PTIC II, the Company, or, in the case of the Company, PTIC II in advance and, to the extent not prohibited by such Governmental Entity, gives, in the case of PTIC II, the Company, or, in the case of the Company, PTIC II, the opportunity to attend and participate in such meeting or discussion.

 

(c) Notwithstanding anything to the contrary in the Agreement, in the event that this Section 5.2 conflicts with any other covenant or agreement in this Article 5 that is intended to specifically address any subject matter, then such other covenant or agreement shall govern and control solely to the extent of such conflict.

 

(d) From and after the date of this Agreement until the earlier of the Closing or termination of this Agreement in accordance with its terms, PTIC II, on the one hand, and the Company, on the other hand, shall each notify the other in writing promptly after learning of any shareholder demands or other shareholder Proceedings (including derivative claims) relating to this Agreement, any Ancillary Document or any matters relating thereto (collectively, the “Transaction Litigation”) commenced against, in the case of PTIC II, PTIC II or any of its Representatives (in their capacity as a representative of PTIC II) or, in the case of the Company, any Group Company or any of their respective Representatives (in their capacity as a representative of PTIC II). PTIC II and the Company shall each (i) keep the other reasonably informed regarding any Transaction Litigation, (ii) give the other the opportunity to, at its own cost and expense, reasonably participate in the defense, settlement and compromise of any such Transaction Litigation and reasonably cooperate with the other in connection with the defense, settlement and compromise of any such Transaction Litigation, (iii) consider in good faith the other’s advice with respect to any such Transaction Litigation and (iv) reasonably cooperate with each other with respect to any such Transaction Litigation. Notwithstanding the foregoing, the Company shall, subject to and without limiting the covenants and agreements, and the rights of PTIC II, set forth in the immediately preceding sentence, control the negotiation, defense and settlement of any such Transaction Litigation; provided, however, that in no event shall the Company, any other Group Company or any of their respective Representatives settle or compromise any Transaction Litigation without the prior written consent of PTIC II (not to be unreasonably withheld, conditioned or delayed), provided that it shall be deemed to be reasonable for PTIC II to withhold, condition or delay its consent if any such settlement or compromise (A) does not provide for a legally binding, full, unconditional and irrevocable release of PTIC II and its Representatives that are the subject of such Transaction Litigation, (B) provides for (1) the payment of cash any portion of which is payable by PTIC II or its Representatives thereof or would otherwise constitute a liability of PTIC II or (2) any non-monetary, injunctive, equitable or similar relief against PTIC II or (C) contains an admission of wrongdoing or liability by PTIC II or any of its Representatives. Without limiting the generality of the foregoing, in no event shall PTIC II or any of its Representatives settle or compromise any Transaction Litigation without the Company’s and the Sellers’ Representative’s prior written consent (such consent not to be unreasonably withheld, delayed or conditioned).

 

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Section 5.3 Confidentiality and Access to Information.

 

(a) The Parties hereby acknowledge and agree that the information being provided in connection with this Agreement and the consummation of the transactions contemplated hereby is subject to the terms of the Confidentiality Agreements, the terms of which are incorporated herein by reference. Notwithstanding the foregoing or anything to the contrary in this Agreement, in the event that this Section 5.3(a) or the Confidentiality Agreement conflicts with any other covenant or agreement contained herein or any Ancillary Document that contemplates the disclosure, use or provision of information or otherwise, then such other covenant or agreement contained herein shall govern and control to the extent of such conflict.

 

(b) From and after the date of this Agreement until the earlier of the Closing Date or the termination of this Agreement in accordance with its terms, upon reasonable advance written notice, the Company shall provide, or cause to be provided, to PTIC II and its Representatives during normal business hours reasonable access to the managers, officers, books and records of the Group Companies (in a manner so as to not interfere with the normal business operations of the Group Companies). Notwithstanding the foregoing, the Company shall not be required to provide, or cause to be provided, to PTIC II or any of its Representatives any information (i) if and to the extent doing so would (A) violate any Law to which any Group Company is subject, (B) violate any legally-binding obligation of any Group Company with respect to confidentiality, non-disclosure or privacy or (C) jeopardize protections afforded to any Group Company under the attorney-client privilege or the attorney work product doctrine (provided that, in case of each of clauses (B) and (C), the Company shall, and shall cause the other Group Companies to, use commercially reasonable efforts to (1) provide such access as can be provided (or otherwise convey such information regarding the applicable matter as can be conveyed) without violating such privilege, doctrine, Contract, obligation or Law and (2) provide such information in a manner without violating such privilege, doctrine, Contract, obligation or Law), or (ii) if any Group Company, on the one hand, and PTIC II, the Sponsor or any of their respective Representatives, on the other hand, are adverse parties in a litigation or other Proceeding and such information is reasonably pertinent thereto; provided that the Company shall, in the case of clause (i) or (ii), provide prompt written notice of the withholding of access or information on any such basis unless such written notice is prohibited by applicable Law or Order.

 

(c) From and after the date of this Agreement until the earlier of the Closing Date or the termination of this Agreement in accordance with its terms, upon reasonable advance written notice, PTIC II shall provide, or cause to be provided, to the Company and its Representatives during normal business hours reasonable access to the directors, officers, books and records of PTIC II (in a manner so as to not interfere with the normal business operations of PTIC II and only where such information shall not include non-public information relating to the Sponsor). Notwithstanding the foregoing, PTIC II shall not be required to provide, or cause to be provided, to the Company or any of its Representatives any information (i) if and to the extent doing so would (A) violate any Law to which PTIC II is subject, (B) result in the disclosure of any Trade Secrets of third parties in breach of any Contract with such third party, including the Sponsor, (C) violate any legally-binding obligation of PTIC II with respect to confidentiality, non-disclosure or privacy or (D) jeopardize protections afforded to PTIC II under the attorney-client privilege or the attorney work product doctrine (provided that, in case of each of clauses (C) and (D), PTIC II shall use commercially reasonable efforts to (1) provide such access as can be provided (or otherwise convey such information regarding the applicable matter as can be conveyed) without violating such privilege, doctrine, Contract, obligation or Law and (2) provide such information in a manner without violating such privilege, doctrine, Contract, obligation or Law), or (ii) if PTIC II, the Sponsor or any of their respective Representatives, on the one hand, and any Group Company or any of their respective Representatives, on the other hand, are adverse parties in a litigation or other Proceeding and such information is reasonably pertinent thereto; provided that PTIC II shall, in the case of clause (i) or (ii), provide prompt written notice of the withholding of access or information on any such basis unless such written notice is prohibited by applicable Law or Order.

 

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Section 5.4 Public Announcements.

 

(a) Subject to Section 5.4(b), Section 5.6 and Section 5.7, none of the Parties or any of their respective Representatives shall issue any press releases or make any public announcements with respect to this Agreement or the transactions contemplated hereby without the prior written consent of, prior to the Effective Time, the Company and PTIC II, and, following the Effective Time, the Company and the Sponsor, to the extent such press releases or public announcements pertain to, reference or otherwise relate to the Sponsor or the management or operations of PTIC II prior to the Closing; provided, however, that each Party, the Sponsor and their respective Representatives may issue or make, as applicable, any such press release, public announcement or other communication (i) if such press release, public announcement or other communication is required by applicable Law, in which case (A) prior to the Closing, the disclosing Party or its applicable Representatives shall, unless and to the extent prohibited by such applicable Law or rules of Nasdaq, (1) if the disclosing Person is PTIC II or a Representative of PTIC II, reasonably consult with the Company in connection therewith and provide the Company with an opportunity to review and comment on such press release, public announcement or communication and shall consider any such comments in good faith or (2) if the disclosing Party is the Company, the Sellers’ Representative or a Representative of the Company or the Sellers’ Representative, reasonably consult with PTIC II in connection therewith and provide PTIC II with an opportunity to review and comment on such press release, public announcement or communication and shall consider any such comments in good faith, or (B) after the Closing, the disclosing Party or its applicable Representatives shall, unless and to the extent prohibited by such applicable Law, (1) if the disclosing Person is the Sponsor or a Representative of the Sponsor, reasonably consult with the Company in connection therewith and provide the Company with an opportunity to review and comment on such press release, public announcement or communication and consider any such comments in good faith, (2) if the disclosing Person is the Company, the Sellers’ Representative or a Representative of the Company of the Sellers’ Representative, reasonably consult with the Sponsor in connection therewith and provide the Sponsor with an opportunity to review and comment on such press release, public announcement or communication and consider any such comments in good faith and (3) if the disclosing Person is PTIC II or a Representative of PTIC II, reasonably consult with the Sponsor in connection therewith and provide the Sponsor with an opportunity to review and comment on such press release, public announcement or communication and consider any such comments in good faith, (ii) to the extent such press release, public announcements or other communications contain only information previously disclosed in a press release, public announcement or other communication previously made in accordance with this Section 5.4 and (iii) to Governmental Entities in connection with any Consents required to be made under this Agreement, the Ancillary Documents or in connection with the transactions contemplated hereby or thereby. Notwithstanding anything to the contrary in this Section 5.4 or otherwise in this Agreement, the Parties agree that the Sponsor, the Company Unitholders and their respective Representatives may provide general information about the subject matter of this Agreement and the transactions contemplated hereby to any direct or indirect former, current or prospective investor or in connection with normal fund-raising or related marketing or informational or reporting activities. Notwithstanding anything to the contrary herein, prior to the Closing, the Company, the Company Unitholders and its and their respective Representatives may not make statements to business partners, customers, suppliers, employees or other stakeholders in respect of the transactions contemplated by this Agreement without the prior written consent of PTIC (such consent not to be unreasonably withheld, conditioned or delayed).

 

(b) The initial press release concerning this Agreement and the transactions contemplated hereby shall be a joint press release in the form agreed by the Company and PTIC II prior to the execution of this Agreement and such initial press release (the “Signing Press Release”) shall be released as promptly as reasonably practicable after the execution of this Agreement on the day thereof (or, if the date of execution of this Agreement is a not a Business Day, on the first Business Day following execution of this Agreement). Promptly after the execution of this Agreement, PTIC II shall file a current report on Form 8-K (the “Signing Filing”) with the Signing Press Release and a description of this Agreement as required by, and in compliance with, the Securities Laws, which the Company shall have the opportunity to review and comment upon prior to filing and PTIC II shall consider such comments in good faith. The Company, on the one hand, and PTIC II, on the other hand, shall mutually agree upon (such agreement not to be unreasonably withheld, conditioned or delayed by either the Company or PTIC II, as applicable) a press release announcing the consummation of the transactions contemplated by this Agreement (the “Closing Press Release”) prior to the Closing, and, on the Closing Date (or such other date as may be mutually agreed to in writing by PTIC II and the Company prior to the Closing), the Parties shall cause the Closing Press Release to be released. Promptly after the Closing (but in any event within four Business Days after the Closing), PTIC II shall file a current report on Form 8-K (the “Closing Filing”) with the Closing Press Release and a description of the Closing as required by Securities Laws, which Closing Filing shall be mutually agreed upon by the Company and PTIC II prior to the Closing (such agreement not to be unreasonably withheld, conditioned or delayed by either the Company or PTIC II, as applicable). In connection with the preparation of each of the Signing Press Release, the Signing Filing, the Closing Press Release and the Closing Filing, each Party shall, upon written request by any other Party, furnish such other Party with all information concerning itself, its directors, managers, officers and, in the case of the Company, its equityholders and such other matters as may be reasonably necessary for such press release or filing.

 

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Section 5.5 Exclusive Dealing.

 

(a) From the date of this Agreement until the earlier of the Closing or the termination of this Agreement in accordance with its terms, the Company shall not, and shall cause the other Group Companies and its and their respective Representatives not to, directly or indirectly (i) accept, initiate, respond to, encourage, entertain, solicit, negotiate, provide information or discuss other offers for the direct or indirect sale, merger, transfer, IPO, business combination, debt or equity refinancing or recapitalization of the Company or any or all of its Subsidiaries, or of any material portion of the securities, business, properties or assets (other than sales of assets in the ordinary course of business) of the Company or any or all of its Subsidiaries or any holding company or successor thereof (irrespective of how structured, organized or consummated), or enter into any agreement in principle, letter of intent or definitive agreement with respect to any of the foregoing (each such transaction prohibited by this sentence, an “Acquisition Proposal”), provided, that no financing transaction specifically described on Section 5.1(b)(v) of the Company Disclosure Schedules shall constitute an “Acquisition Proposal” for the purposes of this Section 5.5(a) or otherwise, and for the avoidance of doubt, neither this Agreement, nor any of the Ancillary Documents or any of the transactions contemplated hereby or thereby shall constitute an “Acquisition Proposal” for the purposes of this Section 5.5(a) or otherwise, (ii) furnish or disclose any non-public information to any Person in connection with, or that could reasonably be expected to lead to, an Acquisition Proposal, (iii) enter into any Contract regarding an Acquisition Proposal, (iv) prepare or take any steps in connection with a public offering of any Equity Securities of any Group Company (or any successor to or parent company of any Group Company) or (v) otherwise cooperate in any way with, or assist or participate in, or facilitate or encourage any effort or attempt by any Person to do or seek to do any of the foregoing or seek to circumvent this Section 5.5(a) or further an Acquisition Proposal. The Company and the Sellers’ Representative agrees to (A) notify PTIC II promptly upon receipt (and in any event within forty-eight (48) hours after receipt) of any Acquisition Proposal of it, any other Group Company or any other Person of which they are aware, and to describe the terms and conditions of any such Acquisition Proposal in reasonable detail (including the identity of the Persons making such Acquisition Proposal), (B) keep PTIC II fully informed on a current basis of any modifications to such offer or information and (C) not (and shall cause its Subsidiaries and their respective Representatives not to) conduct any further discussions with, provide any information to, or enter into negotiations with such Persons. The Company shall immediately cease and cause to be terminated any discussions or negotiations with any Persons (other than PTIC II and its Representatives) that may be ongoing with respect to an Acquisition Proposal and terminate any such Person’s and such Person’s Representative’s access to any electronic data room. The Company shall not release any third party from, or waive, amend or modify any standstill or confidentiality provision with respect to an Acquisition Proposal in any agreement to which it or any Company Unitholder is a party, and shall promptly following the date hereof send a written request (email being sufficient) to any Person to whom the Company or any of its Representatives provided confidential information of a Group Company in connection with an Acquisition Proposal, which written request shall instruct such Person to return or confirm (in writing) destruction of all such confidential information.

 

(b) From the date of this Agreement until the earlier of the Closing or the termination of this Agreement in accordance with its terms, PTIC II shall not, and shall cause its Representatives not to, directly or indirectly (i) issue or execute an indication of interest, memorandum of understanding, a letter of intent, or any other similar agreement with respect to a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination other than with respect to the transactions with the Company contemplated by this Agreement and the Ancillary Documents (each such transaction prohibited by this sentence, an “PTIC II Acquisition Proposal”), (ii) enter into any Contract regarding a PTIC II Acquisition Proposal or (iii) otherwise cooperate in any way with, or assist or participate in, or facilitate or encourage any effort or attempt by any Person to do or seek to do any of the foregoing or seek to circumvent this Section 5.5(b) or further a PTIC II Acquisition Proposal; no financing transaction described on Section 5.1(b)(v) of the Company Disclosure Schedules shall constitute an “Acquisition Proposal” for the purposes of this Section 5.5(b) or otherwise, and, for the avoidance of doubt, neither this Agreement, nor any of the Ancillary Documents nor any of the transactions contemplated hereby or thereby shall constitute a “PTIC II Acquisition Proposal” for the purposes of this Section 5.5(b) or otherwise.

 

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Section 5.6 Preparation of Registration Statement / Proxy Statement. As promptly as reasonably practicable following the date of this Agreement, PTIC II and the Company shall jointly prepare and mutually agree upon (such agreement not to be unreasonably withheld, conditioned or delayed by any of the Parties) and, following the delivery of the PCAOB Financials in accordance with Section 5.16, PTIC II, or if applicable the Company, shall file with the SEC, the Registration Statement / Proxy Statement (it being understood that the Registration Statement / Proxy Statement shall include a proxy statement / prospectus of PTIC II which will be included therein as a prospectus and which will be used for the PTIC II Shareholders Meeting to adopt and approve the Transaction Proposals and other matters reasonably related to the Transaction Proposals, all in accordance with and as required by PTIC II’s Governing Documents, applicable Law, and any applicable rules and regulations of the SEC and Nasdaq). Each of PTIC II and the Company shall use its reasonable best efforts to (a) cause the Registration Statement / Proxy Statement to comply in all material respects with the applicable rules and regulations promulgated by the SEC (including, with respect to the Sellers’ Representative and the Group Companies, the provision of financial statements of, and any other information with respect to, the Group Companies for all periods, and in the form, required to be included in the Registration Statement / Proxy Statement under Securities Laws or in response to any comments from the SEC), (b) promptly notify the others of, reasonably cooperate in good faith with each other with respect to and respond promptly to any comments or communications of the SEC or its staff, (c) have the Registration Statement / Proxy Statement declared effective under the Securities Act as promptly as reasonably practicable after it is filed with the SEC and (d) keep the Registration Statement / Proxy Statement effective through the Closing in order to permit the consummation of the transactions contemplated by this Agreement. PTIC II, on the one hand, and the Company, the Rolling Company Unitholders and the Sellers’ Representative, on the other hand, shall promptly furnish, or cause to be furnished, to the other all information concerning such Party, its Non-Party Affiliates and their respective Representatives that may be required or reasonably requested in connection with any action contemplated by this Section 5.6 or for including in any other statement, filing, notice or application made by or on behalf of PTIC II to the SEC or Nasdaq in connection with the transactions contemplated by this Agreement or the Ancillary Documents including delivering customary tax representation letters to counsel to enable counsel to deliver any tax opinions required by the SEC to be submitted in connection therewith as described in Section 6.1(f)(ii). If any Party becomes aware of any information that should be disclosed in an amendment or supplement to the Registration Statement / Proxy Statement, then (i) such Party shall promptly inform, in the case of PTIC II, the Sellers’ Representative, or, in the case of the Sellers’ Representative, PTIC II, thereof, (ii) such Party shall prepare and mutually agree upon with, in the case of PTIC II, the Sellers’ Representative, or, in the case of the Sellers’ Representative, PTIC II (in either case, such agreement not to be unreasonably withheld, conditioned or delayed), an amendment or supplement to the Registration Statement / Proxy Statement, (iii) PTIC II shall file such mutually agreed upon amendment or supplement with the SEC and (iv) the Parties shall reasonably cooperate, if appropriate, in mailing such amendment or supplement to the Pre-Closing PTIC II Holders. PTIC II shall as promptly as reasonably practicable advise the Sellers’ Representative (on behalf of the Rolling Company Unitholders) of the time of effectiveness of the Registration Statement / Proxy Statement, the issuance of any stop order relating thereto or the suspension of the qualification of PTIC II Class A Shares for offering or sale in any jurisdiction, and PTIC II, the Sellers’ Representative and the Company shall each use its reasonable best efforts to have any such stop order or suspension lifted, reversed or otherwise terminated. Each of the Parties shall use reasonable best efforts to ensure that none of the information related to him, her or it or any of his, her or its Non-Party Affiliates or its or their respective Representatives, supplied by or on his, her or its behalf for inclusion or incorporation by reference in the Registration Statement / Proxy Statement will, at the time the Registration Statement / Proxy Statement is initially filed with the SEC, at each time at which it is amended, or at the time it becomes effective under the Securities Act contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading.

 

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Section 5.7 PTIC II Shareholder Approval. As promptly as reasonably practicable following the time at which the Registration Statement / Proxy Statement is declared effective under the Securities Act, PTIC II shall (a) duly give notice of a meeting of its shareholders (the “PTIC II Shareholders Meeting”), (b) cause the Registration Statement / Proxy Statement to be mailed to the PTIC II Shareholders, and (c) use reasonable endeavors to duly convene and hold the PTIC II Shareholders Meeting, in each case in accordance with the Governing Documents of PTIC II and applicable Law, for the purposes of obtaining the PTIC II Shareholder Approval and, if applicable, any approvals related thereto and providing its applicable shareholders with the opportunity to elect to effect an PTIC II Shareholder Redemption. Except as otherwise required by applicable Law (including, as applicable, fiduciary duties), PTIC II shall, through the PTIC II Board, recommend to its shareholders (the “PTIC II Board Recommendation”), (i) the adoption and approval of this Agreement and the transactions contemplated hereby and include such recommendation in the Registration Statement / Proxy Statement (the “Business Combination Proposal”), (ii) in connection with the transactions contemplated by this Agreement, the approval of the issuance of the Closing Date Contribution Amount, the PTIC II Class B Shares and the Earn Out Shares, (iii) the adoption and approval of the New PTIC II Equity Incentive Plan, (iv) the adoption and approval of the issuance of the PTIC II Shares in connection with the transactions contemplated by this Agreement as required by, and pursuant to, the Nasdaq listing requirements (the “Nasdaq Proposal”), (v) the adoption and approval of the PTIC II Post-Closing Certificate of Incorporation (the “Charter Proposal”), (vi) the adoption and approval of certain differences between the Governing Documents of PTIC II prior to the Closing and the proposed PTIC II Post-Closing Certificate of Incorporation and PTIC II Post-Closing Bylaws (the “Governing Documents Proposal”), (vii) the adoption and approval of each other proposal that either the SEC or Nasdaq (or the respective staff members thereof) indicates is necessary in its comments to the Registration Statement / Proxy Statement or in correspondence related thereto, (viii) the adoption and approval of each other proposal reasonably agreed to by PTIC II and the Company as necessary or appropriate in connection with the consummation of the transactions contemplated by this

Agreement or the Ancillary Documents and (ix) the adoption and approval of a proposal for the adjournment of the PTIC II Shareholders Meeting, if necessary, to permit further solicitation of proxies because there are not sufficient votes to approve and adopt any of the foregoing (such proposals in clauses (i) through (ix), collectively, the “Transaction Proposals”) and PTIC II shall include the PTIC II Board Recommendation in the Registration Statement / Proxy Statement. Except as otherwise required by applicable Law (including the applicable fiduciary duties), the PTIC II Board shall not (and no committee or subgroup thereof shall) change, withdraw, withhold, qualify or modify, or publicly propose to change, withdraw, withhold, qualify or modify, the PTIC II Board Recommendation. Notwithstanding the foregoing or anything to the contrary herein, PTIC II may adjourn the PTIC II Shareholders Meeting (1) to solicit additional proxies for the purpose of obtaining the PTIC II Shareholder Approval, (2) for the absence of a quorum (but only for the purpose of obtaining a quorum) or (3) to allow reasonable additional time for the filing or mailing of any supplemental or amended disclosures that PTIC II has determined, based on the advice of outside legal counsel, would be reasonably be expected to be required under applicable Law and for such supplemental or amended disclosure to be disseminated and reviewed by the PTIC II Shareholders prior to the PTIC II Shareholders Meeting.

 

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Section 5.8 Company Related Party Transactions. The Company shall (and shall cause the Group Companies to) take all necessary actions to terminate (in form and substance reasonably satisfactory to PTIC II) at or prior to the Closing all Company Related Party Transactions other than those set forth on Section 3.18 of the Company Disclosure Schedules, with no further Liability or other obligations to the Group Companies or any of their respective Affiliates (including, after the Closing, PTIC II) with respect thereto.

 

Section 5.9 No Trading. Each of the Company and the Sellers’ Representative acknowledges and agrees that it is aware, and that such Person’s Representatives and equityholders are aware or, upon receipt of any material nonpublic information will be advised, of the restrictions imposed by Securities Laws on a Person possessing material nonpublic information about a publicly traded company. Each of the Sellers’ Representative and the Company hereby agrees that, while it is in possession of such material nonpublic information, it shall not purchase or sell any securities of PTIC II (other than engaging in the transactions described herein), communicate such information to any third party, take any other action with respect to PTIC II in violation of such Laws, or cause or encourage any third party to do any of the foregoing.

 

Section 5.10 Conduct of Business of PTIC II.

 

(a) From and after the date of this Agreement until the earlier of the Closing or the termination of this Agreement in accordance with its terms, PTIC II (x) shall keep current and timely file all of its public filings with the SEC and otherwise comply in all material respects with applicable Securities Laws and shall use its commercially reasonable efforts to maintain the listing of the PTIC II Class A Shares and the PTIC II Warrants on Nasdaq and (y) shall not, and shall cause its Subsidiaries not to, as applicable, except as contemplated by this Agreement or any Ancillary Document (including, for the avoidance of doubt, in connection with any recapitalization or contribution as contemplated herein), as required by applicable Law, as set forth on Section 5.10 of the PTIC II Disclosure Schedules or as consented to in writing by the Sellers’ Representative (such consent, other than in the case of Section 5.10(a)(i), Section 5.10(a)(ii), Section 5.10(a)(iii), Section 5.10(a)(iv), Section 5.10(a)(v) and Section 5.10(a)(viii) not to be unreasonably withheld, conditioned or delayed), do any of the following:

 

(i) adopt any amendments, supplements, restatements or modifications to the Trust Agreement, Warrant Agreement or the Governing Documents of PTIC II or any of its Subsidiaries;

 

(ii) declare, set aside, make or pay a dividend on, or make any other distribution or payment in respect of, any Equity Securities of PTIC II or any of its Subsidiaries, or repurchase, redeem or otherwise acquire, or offer to repurchase, redeem or otherwise acquire, any outstanding Equity Securities of PTIC II or any of its Affiliates, as applicable, other than for the avoidance of doubt, for the PTIC II Shareholder Redemption; (iii) split, combine or reclassify any of its capital stock or other Equity Securities or issue any other security in respect of, in lieu of or in substitution for shares of its capital stock;

 

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(iv) incur, create or assume any Indebtedness or other Liability, except for Indebtedness for borrowed money in an amount not to exceed $250,000 or any Additional Capital Financing;

 

(v) make any loans or advances to, or capital contributions in, any other Person, other than to, or in, PTIC II or any of its Subsidiaries;

 

(vi) other than pursuant to any Additional Capital Financing, issue any Equity Securities of PTIC II or any of its Subsidiaries or grant any additional options, warrants or stock appreciation rights with respect to Equity Securities of the foregoing of PTIC II or any of its Subsidiaries;

 

(vii)   enter into, renew, modify or revise any PTIC II Related Party Transaction (or any Contract or agreement that if entered into prior to the execution and delivery of this Agreement would be a PTIC II Related Party Transaction);

 

(viii) authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation or dissolution; amend, modify or waive the Trust Agreement; or Section 5.11 Trust Account.

 

(ix) enter into any Contract to take, or cause to be taken, any of the actions set forth in this Section 5.10.

 

(b) Notwithstanding anything in this Section 5.11 or this Agreement to the contrary, (i) nothing set forth in this Agreement shall give the Company, directly or indirectly, the right to control or direct the operations of PTIC II and (ii) nothing set forth in this Agreement shall prohibit, or otherwise restrict the ability of, PTIC II from using the funds held by PTIC II outside the Trust Account to pay any PTIC II Expenses or PTIC II Liabilities or from otherwise distributing or paying over any funds held by PTIC II outside the Trust Account to the Sponsor or any of its Affiliates, in each case, prior to the Closing.

 

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Between the date hereof and the Effective Time, without the prior written consent of the Seller’s Representative, PTIC II shall not amend, modify, waive or terminate the Trust Agreement. Upon satisfaction or, to the extent permitted by applicable Law, waiver of the conditions set forth in Article 7 and provision of notice thereof to the Trustee, (a) at the Closing, PTIC II shall (i) cause the documents, certificates and notices required to be delivered to the Trustee pursuant to the Trust Agreement to be so delivered and (ii) make all appropriate arrangements to cause the Trustee to (A) pay as and when due all amounts, if any, payable to the Public Shareholders of PTIC II pursuant to the PTIC II Shareholder Redemption, (B) pay the amounts due to the underwriters of PTIC II’s initial public offering for their deferred underwriting commissions as set forth in the Trust Agreement and (C) immediately thereafter, pay all remaining amounts then available in the Trust Account to PTIC II in accordance with the Trust Agreement, and (b) thereafter, the Trust Account shall terminate, except as otherwise provided therein.

 

Section 5.12 Transaction Support Agreements; Company Unitholder Approval.

 

(a) As promptly as reasonably practicable (and in any event within one Business Day) following the date of this Agreement (the “Transaction Support Agreement Deadline”), the Company shall deliver, or cause to be delivered, to PTIC II the Transaction Support Agreements duly executed by each Supporting Company Unitholder.

 

(b) As promptly as reasonably practicable (and in any event within one Business Day) following the date of this Agreement (the “Requisite Company Unitholder Consent Deadline”), the Company shall obtain and deliver to PTIC II a true and correct copy of a Reclassification, Contribution and Joinder Agreement (in form and substance reasonably satisfactory to PTIC II) approving this Agreement, the Ancillary Documents to which the Company is or will be a party and the transactions contemplated hereby and thereby that is duly executed by at a minimum, the Company Unitholders that hold at least the requisite number of issued and outstanding Company Units required to approve and adopt such matters in accordance with the DGCL, the Company’s Governing Documents and the Company LLC Agreement (“Requisite Company Unitholders”), (the “Requisite Company Unitholder Consent”).

 

(c) As promptly as reasonable practicable (and in any event within 45 Business Days) following the date of this Agreement (the “Other Company Unitholder Consent Deadline”), the Company shall use best efforts to obtain and deliver to PTIC II a true and correct copy of a Reclassification, Contribution and Joinder Agreement (in form and substance reasonably satisfactory to PTIC II) approving this Agreement, the Ancillary Documents to which the Company is or will be a party and the transactions contemplated hereby and thereby that is duly executed by all Company Unitholders (excluding the Requisite Company Unitholders) that were not otherwise obtained and delivered by the Company to PTIC II at the Requisite Company Unitholder Consent Deadline (“Other Company Unitholders”), (“Other Company Unitholder Consent”). In the event that the Company does not obtain the Other Company Unitholder Consents from all Other Company Unitholders by the Other Company Unitholder Consent Deadline, the Company shall utilize, to the extent available, the Drag-Along Rights (as that term is defined in the Company LLC Agreement) under, and in accordance with the terms and conditions, of the Company LLC Agreement in order to satisfy its obligations under this Agreement, the Ancillary Documents to which the Company is or will be a party and the transactions contemplated hereby and thereby.

 

(d) The Company, through its board of managers, shall recommend to the holders of Company Units the approval and adoption of this Agreement and the transactions contemplated by this Agreement, the Ancillary Documents to which the Company is or will be a party and the transactions contemplated hereby and thereby.

 

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Section 5.13 PTIC II Indemnification; Directors’ and Officers’ Insurance.

 

(a) Each Party agrees that (i) all rights to indemnification or exculpation now existing in favor of the directors and officers of PTIC II, as provided in PTIC II’s Governing Documents or otherwise in effect as of immediately prior to the Effective Time, in either case, solely with respect to any matters occurring on or prior to the Effective Time shall survive the transactions contemplated by this Agreement and shall continue in full force and effect from and after the Effective Time for a period of six (6) years and (ii) PTIC II will perform and discharge, or cause to be performed and discharged, all obligations to provide such indemnity and exculpation during such six (6)-year period. To the maximum extent permitted by applicable Law, during such six (6)-year period, PTIC II shall advance, or caused to be advanced, expenses in connection with such indemnification as provided in PTIC II’s Governing Documents or other applicable agreements as in effect immediately prior to the Effective Time. The indemnification and liability limitation or exculpation provisions of PTIC II’s Governing Documents shall not, during such six (6)-year period, be amended, repealed or otherwise modified after the Effective Time in any manner that would materially and adversely affect the rights thereunder of individuals who, as of immediately prior to the Effective Time, or at any time prior to such time, were directors or officers of PTIC II (the “PTIC II D&O Persons”) entitled to be so indemnified, have their liability limited or be exculpated with respect to any matters occurring on or prior to the Effective Time and relating to the fact that such PTIC II D&O Person was a director or officer of PTIC II immediately prior to the Effective Time, unless such amendment, repeal or other modification is required by applicable Law.

 

(b) PTIC II shall not have any obligation under this Section 5.13 to any PTIC II D&O Person when and if a court of competent jurisdiction shall ultimately determine (and such determination shall have become final and non-appealable) that the indemnification of such PTIC II D&O Person in the manner contemplated hereby is prohibited by applicable Law.

 

(c) For a period of six (6) years after the Effective Time, PTIC II shall maintain, without any lapses in coverage, directors’ and officers’ liability insurance for the benefit of those Persons who are currently covered by any comparable insurance policies of PTIC II as of the date of this Agreement with respect to matters occurring on or prior to the Effective Time. Such insurance policies shall provide coverage on terms (with respect to coverage and amount) that are substantially the same as (and no less favorable in the aggregate to the insured than) the coverage provided under PTIC II’s directors’ and officers’ liability insurance policies as of the date of this Agreement.

 

(d) If PTIC II or any of its successors or assigns (i) shall merge or consolidate with or merge into any other corporation or entity and shall not be the surviving or continuing corporation or entity of such consolidation or merger or (ii) shall transfer all or substantially all of their respective properties and assets as an entity in one or a series of related transactions to any Person, then in each such case, proper provisions shall be made so that the successors or assigns of PTIC II shall assume all of the obligations set forth in this Section 5.13.

 

(e) The PTIC II Persons entitled to the indemnification, liability limitation, expense reimbursement, exculpation or insurance coverage set forth in this Section 5.13 are intended to be third-party beneficiaries of this Section 5.13. This Section 5.13 shall survive the consummation of the transactions contemplated by this Agreement and shall be binding on all successors and assigns of the Company.

 

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Section 5.14 Company Indemnification; Directors’ and Officers’ Insurance.

 

(a) Each Party agrees that (i) all rights to indemnification or exculpation now existing in favor of the directors, managers and officers of the Group Companies, as provided in the Group Companies’ Governing Documents or otherwise in effect as of immediately prior to the Effective Time shall survive the transactions contemplated by this Agreement and shall continue in full force and effect from and after the Effective Time for a period of six (6) years and (ii) PTIC II will cause the applicable Group Companies to perform and discharge all obligations to provide such indemnity and exculpation during such six (6)-year period. To the maximum extent permitted by applicable Law, during such six (6)-year period, PTIC II shall cause the applicable Group Companies to advance expenses in connection with such indemnification as provided in the Group Companies’ Governing Documents or other applicable agreements in effect as of immediately prior to the Effective Time. The indemnification and liability limitation or exculpation provisions of the Group Companies’ Governing Documents shall not, during such six (6)-year period, be amended, repealed or otherwise modified after the Effective Time in any manner that would materially and adversely affect the rights thereunder of individuals who, as of the Effective Time or at any time prior to the Effective Time, were directors, managers or officers of the Group Companies (the “Company D&O Persons”) entitled to be so indemnified, have their liability limited or be exculpated with respect to any matters occurring prior to Closing and relating to the fact that such Company D&O Person was a director or officer of any Group Company prior to the Effective Time, unless such amendment, repeal or other modification is required by applicable Law.

 

(b) None of PTIC II or the Group Companies shall have any obligation under this Section 5.14 to any Company D&O Person when and if a court of competent jurisdiction shall ultimately determine (and such determination shall have become final and non-appealable) that the indemnification of such Company D&O Person in the manner contemplated hereby is prohibited by applicable Law.

 

(c) The Company shall purchase, at or prior to the Closing, and PTIC II shall maintain, or cause to be maintained, in effect for a period of six (6) years after the Effective Time, without lapses in coverage, a “tail” policy providing directors’ and officers’ liability insurance coverage for the benefit of those Persons who are currently covered by any comparable insurance policies of the Group Companies as of the date of this Agreement with respect to matters occurring on or prior to the Effective Time (the “Company D&O Tail Policy”). Such “tail” policy shall provide coverage on terms (with respect to coverage and amount) that are substantially the same as (and no less favorable in the aggregate to the insured than) the coverage provided under the Group Companies’ directors’ and officers’ liability insurance policies as of the date of this Agreement.

 

(d) If PTIC II or any of its successors or assigns (i) shall merge or consolidate with or merge into any other corporation or entity and shall not be the surviving or continuing corporation or entity of such consolidation or merger or (ii) shall transfer all or substantially all of their respective properties and assets as an entity in one or a series of related transactions to any Person, then in each such case, proper provisions shall be made so that the successors or assigns of PTIC II shall assume all of the obligations set forth in this Section 5.14.

 

(e) The Company D&O Persons entitled to the indemnification, liability limitation, exculpation and insurance set forth in this Section 5.14 are intended to be third-party beneficiaries of this Section 5.14. This Section 5.14 shall survive the consummation of the transactions contemplated by this Agreement and shall be binding on all successors and assigns of PTIC II.

 

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Section 5.15 Post-Closing Directors and Officers.

 

(a) The Parties shall take all such action within their power as may be necessary or appropriate such that effective as of the Closing (i) the PTIC II Board shall consist of seven (7) directors, which shall be divided into three (3) classes, designated Class I, II and III, with Class I consisting of two (2) directors, Class II consisting of two (2) directors and Class III consisting of three (3) directors, (ii) the Governing Documents of PTIC II are substantially in the form attached as Exhibit E, (iii) the initial members of the PTIC II Board are the individuals determined in accordance with Section 5.15(b) and Section 5.15(c), as applicable, (iv) the initial members of the compensation committee, audit committee and nominating committee of the PTIC II Board are the individuals determined in accordance with Section 5.15(d), Section 5.15(e) or Section 5.15(f), as applicable and (v) the officers of PTIC II are the individuals determined in accordance with Section 5.15(g).

 

(b) PTIC II shall designate two (2) Persons to be Class I directors on the PTIC II Board effective as of the Closing (the “Sponsor Directors”), subject to the prior written consent of the Company and the Sellers’ Representative (such consent not to be unreasonably withheld, conditioned or delayed). PTIC II may prior to the PTIC II Shareholders Meeting, with the prior written consent of the Company and the Sellers’ Representative (such consent not to be unreasonably withheld, conditioned or delayed), replace any designated individual with any individual prior to the filing of the Registration Statement / Proxy Statement with the SEC by notifying the Seller’s Representative of such replacement individual. Notwithstanding the foregoing, (i) each of the two (2) individuals designated to the PTIC II Board pursuant to this Section 5.15(b) must qualify as independent under the requirements set forth in the applicable Nasdaq rules, and must be a member of management or the PTIC II Board as at the date of this Agreement and (ii) one (1) of the individuals designated to the PTIC II Board pursuant to this Section 5.15(b) will satisfy the diversity requirements set forth in the applicable Nasdaq rules.

 

(c) The Company shall designate two (2) Persons to be Class II directors and three (3) Persons to be Class III directors on the PTIC II Board effective as of the Closing, subject to the prior written consent of PTIC II (such consent not to be unreasonably withheld, conditioned or delayed). The Company shall designate two (2) Persons to be Class II directors and three (3) Persons to be Class III directors on the PTIC II Board effective as of the Closing, subject to the prior written consent of PTIC II (such consent not to be unreasonably withheld, conditioned or delayed). Sellers’ Representative may, with the prior written consent of PTIC II (such consent not to be unreasonably withheld, conditioned or delayed), replace any designated individual with any individual prior to the filing of the Registration Statement / Proxy Statement with the SEC by notifying PTIC II and the Sponsor of such replacement individual. Notwithstanding the foregoing, at least one (1) of the individuals designated to the PTIC II Board pursuant to this Section 5.15(c) must qualify as independent under the requirements set forth in the applicable Nasdaq rules..

 

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(d) PTIC II and the Sellers’ Representative shall mutually agree (such agreement not to be unreasonably withheld, conditioned or delayed by either the Sellers’ Representative or PTIC II) the certain Persons designated under Section 5.15(b) and Section 5.15(c) to be the directors on the compensation committee of the PTIC II Board immediately after the Closing, and such designation shall include at least one of the Directors nominated by the Sponsor. PTIC II and the Sellers’ Representative may mutually agree (such agreement not to be unreasonably withheld, conditioned or delayed by either the Sellers’ Representative or PTIC II) to replace any designated individual such replacement individual selected by PTIC II and the Sellers’ Representative.

 

(e) PTIC II and the Sellers’ Representative shall mutually agree (such agreement not to be unreasonably withheld, conditioned or delayed by either the Sellers’ Representative or PTIC II) the certain Persons designated under Section 5.15(b) and Section 5.15(c) to be the directors on the audit committee of the PTIC II Board immediately after the Closing. PTIC II and the Sellers’ Representative may mutually agree (such agreement not to be unreasonably withheld, conditioned or delayed by either the Sellers’ Representative or PTIC II) to replace any individual with any such replacement individual selected by PTIC II and the Sellers’ Representative.

 

(f)   PTIC II and the Sellers’ Representative shall mutually agree (such agreement not to be unreasonably withheld, conditioned or delayed by either the Sellers’ Representative or PTIC II) the certain Persons designated under Section 5.15(b) and Section 5.15(c) to be the directors on the nominating committee of the PTIC II Board immediately after the Closing. PTIC II and the Sellers’ Representative may mutually agree (such agreement not to be unreasonably withheld, conditioned or delayed by either the Sellers’ Representative or PTIC II) to replace any individual with such replacement individual selected by PTIC II and the Sellers’ Representative.

 

(g) The Persons identified on Section 5.15(g) of the Company Disclosure Schedules shall be the officers of PTIC II immediately after the Closing, with each such individual holding the title set forth opposite his or her name. PTIC II and the Sellers’ Representative may mutually agree (such agreement not to be unreasonably withheld, conditioned or delayed by either the Sellers’ Representative or PTIC II) to replace any individual set forth on Section 5.15(g) of the Company Disclosure Schedules with any individual prior to the filing of the Registration Statement / Proxy Statement with the SEC by amending such Schedule to include such replacement individual.

 

(h) The Parties hereby acknowledge and agree that after the Closing, unless otherwise expressly set forth in this Agreement, the Sponsor Directors are authorized and shall have the sole right to act and make or provide any determinations, consents, agreements, settlements or notices on behalf of PTIC II under this Agreement and to enforce PTIC II’s rights and remedies under this Agreement.

 

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Section 5.16 PCAOB Financials.

 

(a) As promptly as reasonably practicable, the Company shall deliver to PTIC II (i) in no event later than June 15, 2022, the Closing Company Audited Financial Statements, audited in accordance with the standards of PCAOB and containing an unqualified report of the Company’s auditors, and the related pro forma financial information required to be filed in connection with the Registration Statement / Proxy Statement and (ii) following any “staleness” date (as determined in accordance with the applicable rules and regulations of the SEC) applicable to the financial statements that are required by the applicable accounting requirements and other rules and regulations of the SEC to be included in the Registration Statement / Proxy Statement (including pro forma financial information) that occurs prior to the Closing Date, any financial statements of the Company that are required by the applicable accounting requirements and other rules and regulations of the SEC to be included in the Registration Statement / Proxy Statement (including pro forma financial information) and any other filings to be made by PTIC II with the SEC (as determined in accordance with the applicable rules and regulations of the SEC) in connection with the transactions contemplated hereby and in the Ancillary Documents (together with the Closing Company Audited Financial Statements, the “PCAOB Financials”). All such PCAOB Financials that are required to be included in the Registration Statement / Proxy Statement and any other filings to be made by PTIC II with the SEC (as determined in accordance with the applicable rules and regulations of the SEC) in connection with the transactions contemplated by this Agreement and the Ancillary Documents (A) will be prepared from, and reflect in all material respects, the books and records of the Group Companies, (B) will be prepared in conformity with GAAP applied on a consistent basis during the periods involved, (C) will fairly present in all material respects the consolidated financial position of the Group Companies as at the date thereof, and the results of its operations, shareholders’ equity and cash flows for the respective periods then ended and (D) in the case of the Closing Company Audited Financial Statements or any other audited financial statements that are required by the applicable accounting requirements and other rules and regulations of the SEC to be included in the Registration Statement / Proxy Statement and any other filings to be made by PTIC II with the SEC (as determined in accordance with the applicable rules and regulations of the SEC) will be audited in accordance with the standards of PCAOB. All costs incurred in connection with preparing and obtaining the PCAOB Financials shall be borne by the Company.

 

(b) The Company shall (and shall cause each Group Company to) use its reasonable best efforts (i) to assist, upon advance written notice, during normal business hours and in a manner such as to not unreasonably interfere with the normal operation of any member of such Group Company, PTIC II and its Representatives in causing to be prepared in a timely manner any other financial information or statements (including customary pro forma financial statements) that are required to be included in the Registration Statement / Proxy Statement and any other filings to be made by PTIC II with the SEC in connection with the transactions contemplated by this Agreement or any Ancillary Document and (ii) to obtain the consents of its auditors with respect thereto as may be required by applicable Law or requested by the SEC.

 

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(c) From and after the date of this Agreement until the earlier of the Closing or the termination of this Agreement in accordance with its terms, the Company shall deliver to PTIC II unaudited consolidated balance sheets and related statements of income and cash flows of the Company and its Subsidiaries for the fiscal month following the date hereof and for each fiscal month and quarter thereafter, with respect to monthly financial statements, within fifteen (15) days following the end of each such month and with respect to quarterly financial statements, within thirty (30) days following the end of each such fiscal quarter (as applicable).

 

Section 5.17 Additional Capital Financing. From the date of this Agreement until the earlier of the Closing or the termination of this Agreement in accordance with its terms, PTIC II agrees to work in good faith to obtain additional financing for PTIC II (such financing, the “Additional Capital Financing”), including but not limited to the financing described on Section 5.1(b)(v) of the Company Disclosure Schedules, and the Company agrees to work in good faith to obtain Additional Capital Financing, on terms to be mutually agreed between PTIC II and the Company, provided that the Parties expressly agree and acknowledge that no condition set forth in Article 7 shall be deemed not to be satisfied as a result of the failure to obtain any such Additional Capital Financing or in respect of any actions taken or omitted to be taken hereunder.

 

Section 5.18 New PTIC II Equity Incentive Plan. Prior to the effectiveness of the Registration Statement / Proxy Statement, the PTIC II Board shall approve and adopt an equity incentive plan as mutually agreed upon between the Company and PTIC II) (the “New PTIC II Equity Incentive Plan”), substantially in the form attached hereto as Exhibit G, subject to any amendments or modifications as mutually agreed by the Company and PTIC II between the date of this Agreement and the effectiveness of the Registration Statement / Proxy Statement and in the manner prescribed under applicable Laws, effective as of one day prior to the Closing Date.

 

Section 5.19 Conduct of Business of NewCo LLC. From and after the date of the formation of NewCo LLC until the earlier of the Closing or the termination of this Agreement in accordance with its terms, NewCo LLC shall not take any action, engage in any activities or business or incur any Liabilities or obligations, other than activities or business or the incurrence of any Liabilities or obligations (a) in connection with or that are otherwise incidental or related to its organization, incorporation or formation, as applicable, or continuing corporate (or similar) existence, (b) related to the ownership of its Equity Securities by PTIC II, (c) contemplated by, or incidental or related to, this Agreement, any Ancillary Document, the performance of covenants or agreements hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby (d) those that are administrative or ministerial, in each case for purposes of this clause (d), which are immaterial in nature or (e) those that are consented to in writing by the Company.

 

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ARTICLE 6
TAX MATTERS

 

Section 6.1 Certain Tax Matters.

 

(a) The Sellers’ Representative shall prepare and file, or cause to be prepared and filed, at the Company’s sole cost and expense, all Tax Returns of the Company and each Company Subsidiary that are due on or prior to the Closing Date (taking into account applicable extensions) and all Tax Returns of the Company and each Company Subsidiary for any taxable period ending on or prior to the Closing Date (collectively, the “Company Unitholder Prepared Returns”). Each Company Unitholder Prepared Return shall be prepared in a manner consistent with the Company’s and each Company Subsidiary’s past practices to the extent supportable at an at least a “more likely than not” or higher level of confidence except as otherwise required by applicable Law. Each Company Unitholder Prepared Return due after the Closing Date shall be submitted to PTIC II for review and approval no later than thirty (30) days prior to the due date for filing such Tax Return (taking into account applicable extensions). The Sellers’ Representative shall incorporate, or cause to be incorporated, all reasonable comments received from PTIC II no later than five (5) days prior to the due date for filing any such Tax Return (taking into account applicable extensions). No Company Unitholder Prepared Return may be amended after the Closing without the prior written consent of PTIC II. PTIC II shall prepare and file, or cause to be prepared and filed, all Tax Returns of NewCo LLC, Company and each Company Subsidiary (other than Company Unitholder Prepared Returns) for any Straddle Period that are due after the Closing Date (taking into account applicable extensions) (the “PTIC II Prepared Returns”). Each PTIC II Prepared Return shall be prepared in a manner consistent with the Company’s and each Subsidiary’s past practice at an at least a “more likely than not” or higher level of confidence except as otherwise required by applicable Law. Each PTIC II Prepared Return shall be submitted to the Sellers’ Representative for review no later than thirty (30) days prior to the due date for filing such Tax Return (taking into account applicable extensions). PTIC II shall incorporate, or cause to be incorporated, all reasonable comments received from the Sellers’ Representative no later than five (5) days prior to the due date for filing any such Tax Return (taking into account applicable extensions). Notwithstanding the foregoing, each Tax Return described in this Section 6.1(a) for a taxable period that includes the Closing Date (i) for which the “interim closing method” under Section 706 of the Code (or any similar provision of state, local or non-U.S. Law) is available shall be prepared in accordance with such method, (ii) for which an election under Section 754 of the Code (or any similar provision of state, local or non-U.S. Law) may be made shall make such election, and (iii) shall be prepared in a manner such that any and all deductions, losses, or credits of any of the Company and each Subsidiary resulting from, attributable to or accelerated by the payment of Indebtedness and Company Expenses in connection with the transactions contemplated by this Agreement are allocated to the portion of the taxable period beginning after the Closing Date to the extent permitted by applicable Law. Notwithstanding anything herein to the contrary, the Company Unitholders at their sole cost and expense, shall be solely responsible for filing all of the Tax Returns required to be filed by the Company Unitholders and paying all of the Taxes due and owing by the Company Unitholders (including to the extent attributable to income of any Group Company that flows up to Company Unitholders) in respect of their direct or indirect ownership of any member of the Company Group that is a Flow-Thru Entity. In addition, Company Unitholders shall timely pay, or cause to be timely paid (i) to the appropriate Tax Authority all Taxes shown as due on any Company Unitholder Prepared Return, (ii) to PTIC II at least five (5) days before each PTIC II Prepared Return is due all Taxes attributable to the Pre-Closing Tax Period that are shown to be due on the applicable PTIC II Prepared Returns and (iii) after the Closing, to PTIC II the amount of any Taxes (plus additional amounts equal to any Taxes imposed on such payment to PTIC II) described in Section 6.1(b)(ii) that are imposed on PTIC II in respect of its direct or indirect ownership of any Group Company that is a Flow-Thru Entity for a Straddle Period and that are treated as Taxes of Company Unitholders for a Pre-Closing Tax Period pursuant to Section 6.1(b)(ii).

 

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(b) For purposes of determining whether the following Taxes are attributable to a Pre-Closing Tax Period:

 

(i) in the case of property Taxes and other similar periodic Taxes imposed for a Straddle Period, the amounts that are allocable to the Pre-Closing Tax Period shall be deemed to be the amount of such Tax for the entire taxable period multiplied by a fraction, the numerator of which is the number of days in the portion of the taxable period ending on and including the Closing Date and the denominator of which is the number of days in the entire Straddle Period;

 

(ii)   in the case of Taxes imposed on any Group Company (or PTIC II or any of its Affiliates as a result of its direct or indirect ownership of any Group Company) as a result of income of any Flow-Thru Entity realized on or prior to the Closing Date (such income being computed assuming the Flow-Thru Entity had a year that ends as of the end of the day on the Closing Date and closed its books), such Taxes shall be treated as Taxes of a Group Company for a Pre-Closing Tax Period;

 

(iii)   in the case of all other Taxes for a Straddle Period (including Taxes based on or measured by income, receipts, payments, or payroll (to the extent not covered by clauses (i) and (ii) above)), the amount allocable to the Pre-Closing Tax Period shall be determined based on an interim closing of the books as of the end of the day on the Closing Date using a “closing of the books” methodology; provided that for purposes of this clause (iii), any item determined on an annual or periodic basis (including amortization and depreciation deductions and the effects of graduated rates) shall be allocated to the portion of the Straddle Period ending on the Closing Date based on the mechanics set forth in clause (i) for periodic Taxes; and

 

(iv) in the case of Taxes in the form of interest, penalties or additions, all such Taxes shall be treated as attributable to a Pre-Closing Tax Period to the extent relating to a Tax for a Pre-Closing Tax Period (determined in accordance with clauses (i) through (iii) above) whether such items are incurred, accrued, assessed or similarly charged on, before or after the Closing Date.

 

(c) Each Party shall reasonably cooperate (and cause its Affiliates to reasonably cooperate), as and to the extent reasonably requested by each other Party, in connection with the preparation and filing of Tax Returns pursuant to Section 6.1(a) and any examination or other Proceeding with respect to Taxes or Tax Returns of any Group Company for any Pre-Closing Tax Period or Straddle Period. Such cooperation shall include the provision of records and information which are reasonably relevant to any such audit or other Proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. Following the Closing, the Company, the Subsidiaries of the Company and the Company Unitholders shall (and the Company Unitholders shall cause their respective Affiliates to) retain all books and records with respect to Tax matters pertinent to the Company and each Subsidiary relating to any taxable period (or portion thereof) beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by the Company Unitholders, any extensions thereof) of the respective taxable periods, and to abide by all record retention agreements entered into with any Tax Authority. The Company Unitholders shall (and shall cause their respective Affiliates to) provide any information reasonably requested to allow PTIC II or the Company and each Subsidiary thereof to comply with any information reporting or withholding requirements contained in the Code or other applicable Laws or to compute the amount of payroll or other employment Taxes due with respect to any payment made in connection with this Agreement.

 

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(d) All Transfer Taxes incurred in connection with the transactions contemplated by this Agreement shall be borne equally by PTIC II, on the one hand, and the Company Unitholders, on the other hand. All necessary Tax Returns and other documentation with respect to all such Transfer Taxes shall be timely filed by the party primarily responsible for such filing under applicable Law and such party shall promptly provide a copy of such Tax Return to PTIC II or the Company Unitholders, as applicable, and PTIC II or the Company Unitholders, as applicable, shall provide, in immediately available funds, one-half (1/2) of the amount of any such Transfer Tax in a timely manner to the primarily responsible party to allow such party to pay timely such Transfer Tax, which such party shall do and shall provide promptly proof of such payment to PTIC II or the Company Unitholders, as applicable. The Parties shall reasonably cooperate to establish any available exemption from (or reduction in) any Transfer Taxes.

 

(e) Without the prior written consent of PTIC II, the Company Unitholders and each Group Company shall not, and shall cause their respective Affiliates not to, make or cause to be made any election under Treasury Regulation Section 301.9100-22 (or any similar provision of state, local, or non-U.S. Laws) with respect to any Group Company. With respect to any audit, examination or other Proceeding of any Group Company for any Pre-Closing Tax Period and for which the election provided for in Section 6226 of the Code (or any similar provision of state, local, or non-U.S. Laws) is available, unless otherwise determined by PTIC II, the Company Unitholders and each Group Company shall, or shall cause their respective applicable Affiliates to, timely make, and to the extent required, fully cooperate with PTIC II and each Group Company to make, all such available elections in accordance with applicable Laws. The Company Unitholders and each Group Company shall, and shall cause their respective applicable Affiliates to, comply with all applicable Laws with respect to the making and implementation of any such election. From and after the Closing, the Sellers’ Representative shall control any Proceeding in respect of Taxes of any Group Company that is a Flow-Thru Entity for any Pre-Closing Tax Period (or Straddle Period); provided, that, (i) PTIC II shall have the right to fully participate (at the Company’s cost and expense) in any such Proceeding and (ii) no such Proceeding shall be settled or compromised without the prior written consent of PTIC II (not to be unreasonably withheld, conditioned, or delayed).

 

(f) Tax Treatment.

 

(i) The Parties acknowledge, and agree with and to the Intended Tax Treatment. The Parties shall, and shall cause each of their respective applicable Affiliates to (1) prepare and file all Tax Returns consistent with the Intended Tax Treatment, unless otherwise required by a determination by a Tax Authority that is final, (2) take no position in any communication (whether written or unwritten) with any Governmental Entity or any other action inconsistent with the Intended Tax Treatment, unless otherwise required by a determination by a Tax Authority that is final, (3) promptly inform each other of any challenge by any Governmental Entity to any portion of the Intended Tax Treatment and (4) consult with and keep one another informed with respect to the status of, and any discussion, proposal or submission with respect to, any such challenge to any portion of the Intended Tax Treatment.

 

(ii) If, in connection with the preparation and filing of the Registration Statement / Proxy Statement, the SEC requests or requires that tax opinions be prepared and submitted addressing tax consequences to the Company Unitholders, the Company Unitholders shall seek such opinion from counsel for the Company and shall deliver to such counsel customary Tax representation letters satisfactory to its counsel, dated and executed as of the date that the Registration Statement / Proxy Statement shall have been declared effective by the SEC and such other date(s) as determined reasonably necessary by such counsel in connection with the preparation and filing of the Registration Statement / Proxy Statement.

 

(g) The Company and each relevant Group Company shall have an effective election under Section 754 of the Code in effect for the taxable year that includes the Closing Date.

 

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ARTICLE 7
CONDITIONS TO CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED

BY THIS AGREEMENT

 

Section 7.1 Conditions to the Obligations of the Parties.

 

(a) The obligations of the Parties to consummate the transactions contemplated by this Agreement are subject to the satisfaction or, if permitted by applicable Law, waiver by the Party in accordance with Section 7.1(b), of the following conditions:

 

(i) the applicable waiting period under the HSR Act relating to the transactions contemplated hereby shall have expired or been terminated;

 

(ii)   no Order or Law issued by any court of competent jurisdiction or other Governmental Entity or other legal restraint or prohibition preventing the consummation of the transactions contemplated by this Agreement and the Ancillary Documents shall be in effect;

 

(iii)   the Registration Statement / Proxy Statement shall have become effective or final, in accordance with the provisions of the Securities Act, no stop order shall have been issued by the SEC and shall remain in effect with respect to the Registration Statement / Proxy Statement, as applicable, and no proceeding seeking such a stop order shall have been threatened or initiated by the SEC and remain pending; and

 

(iv) the Required PTIC II Shareholder Approval shall have been obtained; and

 

(v) the listing of the PTIC II Class A Shares shall have been approved by Nasdaq;

 

(vi) after giving effect to the transactions contemplated hereby, PTIC II shall have at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51 - 1(g)(1) of the Exchange Act) immediately after the Effective Time.

 

(b) Any of the conditions to the obligations of the Parties set out in Section 7.1(a) may be waived by the Party, or Parties, for whose benefit such condition exists. For the avoidance of doubt, the condition to the obligations of the Parties set out in Section 7.1(a)(i) may be waived by PTIC or the Company.

 

Section 7.2 Other Conditions to the Obligations of PTIC II. The obligations of PTIC II to consummate the transactions contemplated by this Agreement are subject to the satisfaction or, if permitted by applicable Law, waiver by PTIC II of the following further conditions:

 

(a) (i) the Company Fundamental Representations (other than the Company Fundamental Representations in respect of Section 3.2(a) and Section 3.8(b)(ii)) shall be true and correct (without giving effect to any limitation as to “materiality” or “Company Material Adverse Effect” or any similar limitation set forth herein) in all material respects as of the Closing Date, as though made on and as of the Closing Date (except to the extent that any such representation and warranty is made as of an earlier date, in which case such representation and warranty shall be true and correct in all material respects as of such earlier date), (ii) the Company Fundamental Representations in respect of Section 3.2(a) and Section 3.8(b)(ii) shall be true and correct in all respects (except for de minimis inaccuracies) as of the Closing Date, as though made on and as of the Closing Date (except to the extent that any such representation and warranty is made as of an earlier date, in which case such representation and warranty shall be true and correct in all respects (except for de minimis inaccuracies) as of such earlier date), (iii) the representations and warranties set forth in Section 3.8(a) shall be true and correct in all respects as of the Closing Date, as though made on and as of the Closing Date (except to the extent that any such representation and warranty is made as of an earlier date, in which case such representation and warranty shall be true and correct in all respects as of such earlier date) and (iv) the representations and warranties of the of the Company set forth in Article 3 (other than the Company Fundamental Representations) shall be true and correct (without giving effect to any limitation as to “materiality” or “Company Material Adverse Effect” or any similar limitation set forth herein) in all respects as of the Closing Date, as though made on and as of the Closing Date (except to the extent that any such representation and warranty is made as of an earlier date, in which case such representation and warranty shall be true and correct in all respects as of such earlier date), except where the failure of such representations and warranties to be true and correct, have not had, and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect; (b) the Sellers’ Representative and the Company shall have performed and complied in all material respects with the covenants and agreements required to be performed or complied with by the Company under this Agreement at or prior to the Closing;

 

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(c) since the date of this Agreement, no Company Material Adverse Effect shall have occurred;

 

(d) at or prior to the Closing, the Sellers’ Representative or the Company shall have delivered, or caused to be delivered, to PTIC II the following documents:

 

(i) a certificate duly executed by each of the Sellers’ Representative and an authorized officer of the Company, dated as of the Closing Date, to the effect that the conditions specified in Section 7.2(a), Section 7.2(b) and Section 7.2(c) are satisfied, in a form and substance reasonably satisfactory to PTIC II;

 

(ii) the Tax Receivable Agreement duly executed by the Company Unitholders signatories thereto;

 

(iii) the Investor Rights Agreement duly executed by the Company Unitholders signatories thereto;

 

(iv) the Transaction Support Agreements duly executed by each Supporting Company Unitholder;

 

(e) at or within one (1) Business Day following the date hereof, the Company shall have delivered or caused to be delivered, each of the Requisite Company Unitholder Consents and the Transaction Support Agreements to PTIC II.

 

Section 7.3 Other Conditions to the Obligations of the Company. The obligations of the Company to consummate the transactions contemplated by this Agreement are subject to the satisfaction or, if permitted by applicable Law, waiver by the Company of the following further conditions:

 

(a) (i) the PTIC II Fundamental Representations (other than the representations and warranties set forth in Section 4.6(a)) shall be true and correct in all material respects as of the Closing Date, as though made on and as of the Closing Date (except to the extent that any such representation and warranty is made as of an earlier date, in which case such representation and warranty shall be true and correct in all material respects as of such earlier date), (ii) the representations and warranties set forth in Section 4.6(a) shall be true and correct in all respects (except for de minimis inaccuracies) as of the Closing Date, as though made on and as of the Closing Date (except to the extent that any such representation and warranty is made as of an earlier date, in which case such representation and warranty shall be true and correct in all respects (except for de minimis inaccuracies) as of such earlier date) and (iii) the representations and warranties of PTIC II (other than the PTIC II Fundamental Representations) contained in Article 4 of this Agreement shall be true and correct (without giving effect to any limitation as to “materiality” or “PTIC II Material Adverse Effect” or any similar limitation set forth herein) in all respects as of the Closing Date, as though made on and as of the Closing Date (except to the extent that any such representation and warranty is made as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date), except where the failure of such representations and warranties to be true and correct, have not had, and would not reasonably be expected to have, individually or in the aggregate, a PTIC II Material Adverse Effect; (b) PTIC II shall have performed and complied in all material respects with the covenants and agreements required to be performed or complied with by them under this Agreement at or prior to the Closing;

 

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(c) at or prior to the Closing, PTIC II shall have delivered, or caused to be delivered, the following documents to the Sellers’ Representative:

 

(i) a certificate duly executed by an authorized officer of PTIC II, dated as of the Closing Date, to the effect that the conditions specified in Section 7.3(a) and Section 7.3(b) are satisfied, in a form and substance reasonably satisfactory to the Sellers’ Representative; and

 

(ii) the Tax Receivables Agreement duly executed by PTIC II and the Sponsor; and

 

(d) the PTIC II Pre-Closing Reorganization shall have been consummated in accordance with the applicable terms of this Agreement.

 

Section 7.4 Frustration of Closing Conditions. The Company may not rely on the failure of any condition set forth in this Article 7 to be satisfied if such failure was proximately caused by the Company’s failure to use reasonable best efforts to cause the Closing to occur, as required by Section 5.2. PTIC II may not rely on the failure of any condition set forth in this Article 6 to be satisfied if such failure was proximately caused by PTIC II’s failure to use reasonable best efforts to cause the Closing to occur, as required by Section 5.2.

 

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ARTICLE 8
TERMINATION

 

Section 8.1 Termination. This Agreement may be terminated and the transactions contemplated by this Agreement may be abandoned at any time prior to the Closing:

 

(a) by mutual written consent of PTIC II and the Sellers’ Representative;

 

(b) by PTIC II, if any of the representations or warranties set forth in Article 3 or Article 4 shall not be true and correct or if the Sellers’ Representative has failed to perform any covenant or agreement on the part of the Sellers’ Representative set forth in this Agreement (including an obligation to consummate the Closing) such that the condition to Closing set forth in either Section 7.2(a) or Section 7.2(b) could not be satisfied and the breach or breaches causing such representations or warranties not to be true and correct, or the failures to perform any covenant or agreement, as applicable, is (or are) not cured or cannot be cured within the earlier of (i) thirty (30) days after written notice thereof is delivered to the Sellers’ Representative by PTIC II, and (ii) the Termination Date; provided, however, that PTIC II may not terminate this Agreement pursuant to this Section 8.1(b) if PTIC II is then in breach of this Agreement so as to prevent the condition to Closing set forth in either Section 7.3(a) or Section 7.3(b) from being satisfied;

 

(c) by the Company, if any of the representations or warranties set forth in Article 4 shall not be true and correct or if PTIC II has failed to perform any covenant or agreement on the part of PTIC II set forth in this Agreement (including an obligation to consummate the Closing) such that the condition to Closing set forth in either Section 7.3(a) or Section 7.3(b) could not be satisfied and the breach or breaches causing such representations or warranties not to be true and correct, or the failures to perform any covenant or agreement, as applicable, is (or are) not cured or cannot be cured within the earlier of (i) thirty (30) days after written notice thereof is delivered to PTIC II by the Company and (ii) the Termination Date; provided, however, that the Company may not terminate this Agreement pursuant to this Section 8.1(c) if (x) any Group Company is then in breach of its covenants or obligations under this Agreement or any Ancillary Documents, or (y) any equityholder of the Company is in breach of its covenants or obligations under the applicable Transaction Support Agreement so as to prevent the condition to Closing set forth in Section 7.2(a) or Section 7.2(b) from being satisfied;

 

(d) by either PTIC II or the Company, if the transactions contemplated by this Agreement shall not have been consummated on or prior to the date that is six months after the date of this Agreement (the “Termination Date”); provided, that (i) the right to terminate this Agreement pursuant to this Section 8.1(d) shall not be available to PTIC II if PTIC II’s breach of any of its covenants or obligations under this Agreement or any Ancillary Documents shall have proximately caused the failure to consummate the transactions contemplated by this Agreement on or before the Termination Date and (ii) the right to terminate this Agreement pursuant to this Section 8.1(d) shall not be available to the Company if any Group Company’s breach of its covenants or obligations under this Agreement or any Ancillary Documents, or any equityholder of the Company’s breach of its covenants and obligations under the applicable Transaction Support Agreement shall have proximately caused the failure to consummate the transactions contemplated by this Agreement on or before the Termination Date;

 

(e) by either PTIC II or the Company, if any Governmental Entity shall have issued an Order or taken any other action permanently enjoining, restraining or otherwise prohibiting the transactions contemplated by this Agreement and such Order or other action shall have become final and nonappealable;

 

(f)   by either PTIC II or the Company, if the PTIC II Shareholders Meeting has been held (including any adjournment thereof), has concluded, PTIC II’s shareholders have duly voted and the Required PTIC II Shareholder Approval was not obtained; or

 

(g) by PTIC II, if the Company does not deliver, or cause to be delivered to PTIC II (i) a Transaction Support Agreement duly executed by each Supporting Company Unitholder in accordance with Section 5.12(a) on or prior to the Transaction Support Agreement Deadline or (ii) the Requisite Company Unitholder Consents in accordance with Section 5.12(b) on or prior to the Requisite Company Unitholder Consent Deadline.

 

Section 8.2 Effect of Termination. In the event of the termination of this Agreement pursuant to Section 8.1, this entire Agreement shall forthwith become void (and there shall be no Liability or obligation on the part of the Parties and their respective Non-Party Affiliates) with the exception of (a) Section 5.3(a), this Section 8.2, Article 9 and Article 1 (to the extent related to the foregoing), each of which shall survive such termination and remain valid and binding obligations of the Parties and (b) the Confidentiality Agreements, which shall survive such termination and remain valid and binding obligations of the parties thereto in accordance with their respective terms. Without limiting the foregoing, and except as provided in this Section 8.2 (including clauses (a) and (b) of the immediately preceding sentence, but subject to Section 9.19), and subject to the right to seek injunctions, specific performance or other equitable relief in accordance with Section 9.17, the Parties’ sole right prior to the Closing with respect to any breach of any representation, warranty, covenant or other agreement contained in this Agreement by another Party or with respect to transactions contemplated by this Agreement shall be the right, if applicable, to terminate this Agreement pursuant to this Article 8. Notwithstanding the foregoing or anything to the contrary herein, the termination of this Agreement pursuant to Section 8.1 shall not affect (i) any Liability on the part of any Party for any Willful Breach of any covenant or agreement set forth in this Agreement prior to such termination or Fraud or (ii) any Person’s Liability under any Confidentiality Agreement, any Transaction Support Agreement or the Sponsor Letter Agreement to which he, she or it is a party to the extent arising from a claim against such Person by another Person party to such agreement on the terms and subject to the conditions thereunder.

 

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ARTICLE 9
MISCELLANEOUS

 

Section 9.1 Survival. None of the representations, warranties, covenants and agreements set forth in this Agreement shall survive the Closing, except for those covenants and agreements set forth in this Agreement that by their respective terms contemplate performance after the Closing.

 

Section 9.2 Entire Agreement; Assignment. The Agreement (together with the Ancillary Documents) constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, among the Parties with respect to the subject matter hereof. This Agreement may not be assigned by any Party (whether by operation of Law or otherwise) without the prior written consent of PTIC II (prior to the Closing) or the Sponsor (after the Closing), on the one hand, and the Sellers’ Representative, on the other hand. Any attempted assignment of this Agreement not in accordance with the terms of this Section 9.2 shall be void, ab initio.

 

Section 9.3 Amendment. The Agreement may be amended or modified only by a written agreement executed and delivered by duly authorized officers of PTIC II (prior to the Closing) or the Sponsor (after the Closing), on the one hand, and the Sellers’ Representative, on the other hand. This Agreement may not be modified or amended except as provided in the immediately preceding sentence and any purported amendment by any Party or Parties effected in a manner which does not comply with this Section 9.3 shall be void, ab initio.

 

Section 9.4 Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given) by delivery in person, by e-mail (having obtained electronic delivery confirmation thereof (i.e., an electronic record of the sender that the e-mail was sent to the intended recipient thereof without an “error” or similar message that such e-mail was not received by such intended recipient)), or by registered or certified mail (postage prepaid, return receipt requested) (upon receipt thereof) to the other Parties as follows:

 

(a) If to PTIC II, prior to Closing, or to the Sponsor, or to NewCo LLC, to:

 

PropTech Investment Corporation II

3415 North Pines Way

Suite 204

Wilson, WY 83014

 

Attention: Joseph Beck

E-mail: jbeck@hennessycapitalgroup.com

 

with a copy (which shall not constitute notice) to:

 

Kirkland & Ellis LLP

601 Lexington Avenue

New York, NY 10022

Attention: Douglas Ryder, P.C.; Patrick Salvo

E-mail: douglas.ryder@kirkland.com; patrick.salvo@kirkland.com

 

(b) If to the Sellers’ Representative, or to the Company, or to PTIC II, following the Closing, to:

 

RW National Holdings, LLC

6101 Baker Road, Suite 200

Minnetonka, Minnesota 55345

Attention: Chris Laurence

Email: claurence@renterswarehouse.com

 

with a copy (which shall not constitute notice) to:

 

Winthrop & Weinstine

Capella Tower, Suite 3500

225 South Sixth Street

Minneapolis, MN 55402

Attention: Dean D. Willer; Philip T. Colton

E-mail: dwiller@winthrop.com; pcolton@winthrop.com

 

or to such other address as the Party to whom notice is given may have previously furnished to the others in writing in the manner set forth above.

 

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Section 9.5 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the law of any jurisdiction other than the State of Delaware.

 

Section 9.6 Fees and Expenses. Except as otherwise set forth in this Agreement, all fees and expenses incurred in connection with this Agreement, the Ancillary Documents and the transactions contemplated hereby and thereby, including the fees and disbursements of counsel, financial advisors and accountants, shall be paid by the Party incurring such fees or expenses; provided that, for the avoidance of doubt, (a) if this Agreement is terminated in accordance with its terms, the Company shall pay, or cause to be paid, all Unpaid Company Expenses and PTIC II shall pay, or cause to be paid, all Unpaid PTIC II Expenses and (b) if the Closing occurs, then PTIC II shall pay, or cause to be paid, all Unpaid Company Expenses and all Unpaid PTIC II Expenses.

 

Section 9.7 Construction; Interpretation. The term “this Agreement” means this Business Combination Agreement together with the Schedules and Exhibits hereto, as the same may from time to time be amended, modified, supplemented or restated in accordance with the terms hereof. The headings set forth in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. No Party, nor its respective counsel, shall be deemed the drafter of this Agreement for purposes of construing the provisions hereof, and all provisions of this Agreement shall be construed according to their fair meaning and not strictly for or against any Party. Unless otherwise indicated to the contrary herein by the context or use thereof: (a) the words, “herein,” “hereto,” “hereof” and words of similar import refer to this Agreement as a whole, including the Schedules and Exhibits, and not to any particular section, subsection, paragraph, subparagraph or clause set forth in this Agreement; (b) masculine gender shall also include the feminine and neutral genders, and vice versa; (c) words importing the singular shall also include the plural, and vice versa; (d) the words “include,” “includes” or “including” shall be deemed to be followed by the words “without limitation”; (e) references to “$” or “dollar” or “US$” shall be references to United States dollars; (f) the word “or” is disjunctive but not necessarily exclusive; (g) the words “writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form; (h) the word “day” means calendar day unless Business Day is expressly specified; (i) the word “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”; (j) all references to Articles, Sections, Exhibits or Schedules are to Articles, Sections, Exhibits and Schedules of this Agreement; (k) the words “provided” or “made available” or words of similar import (regardless of whether capitalized or not) shall mean, when used with reference to documents or other materials required to be provided or made available to PTIC II, any documents or other materials posted to the electronic data room located at www.dfsvenue.com under the project name “Project Astor” as of 5:00 p.m., Eastern Time, at least one (1) day prior to the date of this Agreement; (l) all references to any Law will be to such Law as amended, supplemented or otherwise modified or re-enacted from time to time; (m) all references to any Contract are to that Contract as amended or modified from time to time in accordance with the terms thereof (subject to any restrictions on amendments or modifications set forth in this Agreement); (n) whenever the words “in the ordinary course of business”, “in the ordinary course” or words of similar import are used in this Agreement, they shall be deemed to be followed by the words “consistent with its past practice” and shall be construed to mean in the ordinary and usual course of normal day to day operations of the business of such Person consistent with its past practice and (o) the words “in the ordinary course of business” shall be deemed to be followed by the words “consistent with past practice”. If any action under this Agreement is required to be done or taken on a day that is not a Business Day, then such action shall be required to be done or taken not on such day but on the first succeeding Business Day thereafter.

 

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Section 9.8 Exhibits and Schedules. All Exhibits and Schedules, or documents expressly incorporated into this Agreement, are hereby incorporated into this Agreement and are hereby made a part hereof as if set out in full in this Agreement. The Schedules shall be arranged in sections and subsections corresponding to the numbered and lettered Sections and subsections set forth in this Agreement. Any item disclosed in the Company Disclosure Schedules or in the PTIC II Disclosure Schedules corresponding to any Section or subsection of Article 3 (in the case of the Company Disclosure Schedules) or Article 4 (in the case of the PTIC II Disclosure Schedules) shall be deemed to have been disclosed with respect to every other section and subsection of Article 3 (in the case of the Company Disclosure Schedules) other than the Company Fundamental Representations or Article 4 (in the case of the PTIC II Disclosure Schedules) other than the PTIC II Fundamental Representations, as applicable, where the relevance of such disclosure to such other Section or subsection is reasonably apparent on the face of the disclosure. The information and disclosures set forth in the Schedules that correspond to the section or subsections of Article 3 or Article 4 may not be limited to matters required to be disclosed in the Schedules, and any such additional information or disclosure is for informational purposes only and does not necessarily include other matters of a similar nature. The specification of any dollar amount in the representations, warranties or covenants set forth in this Agreement or the inclusion of any specific item in any Schedule is not intended to imply that such amounts, or higher or lower amounts or the items so included or other items, are or are not material, and no Party shall use the fact of the setting of such amounts or the inclusion of any such item in any dispute or controversy as to whether any obligation, items or matter not described herein or included in a Schedule is or is not material for purposes of this Agreement. Any description of any agreement, document, instrument, plan, arrangement or other item set forth on the Company Disclosure Schedules or the PTIC II Disclosure Schedules is a summary only and is qualified in its entirety by the terms of such agreement, document, instrument, plan, arrangement or item. The information contained in this Agreement, in the Company Disclosure Schedules or PTIC II Disclosure Schedules and exhibits hereto is disclosed solely for purposes of this Agreement, and no information contained herein or therein will be deemed to be an admission by any party hereto to any third party of any matter whatsoever, including any violation of Law or breach of contract.

 

Section 9.9 Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each Party and its successors and permitted assigns and, except as provided in Section 5.13, the last sentence of this Section 9.9, Section 9.13 and Section 9.19, nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement. The Sponsor shall be an express third-party beneficiary of Section 5.2, Section 5.4, Section 5.13, Section 5.15, Section 5.17, Section 9.2, Section 9.3, this Section 9.9, Section 9.14 and Section 9.17 (to the extent related to the foregoing).

 

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Section 9.10 Severability. Whenever possible, each provision of this Agreement will be interpreted in such a manner as to be effective and valid under applicable Law, but if any term or other provision of this Agreement is held to be invalid, illegal or unenforceable under applicable Law, all other provisions of this Agreement shall remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision of this Agreement is invalid, illegal or unenforceable under applicable Law, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

 

Section 9.11 Counterparts; Electronic Signatures. This Agreement and each Ancillary Document (including any of the closing deliverables contemplated hereby) may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement or any Ancillary Document (including any of the closing deliverables contemplated hereby) by e-mail, or scanned pages shall be effective as delivery of a manually executed counterpart to this Agreement or any such Ancillary Document.

 

Section 9.12 Knowledge of Company; Knowledge of PTIC II. For all purposes of this Agreement, the phrase “to the Company’s knowledge” and “known by the Company” and any derivations thereof shall mean as of the applicable date, the actual knowledge of the individuals set forth on Section 9.12 of the Company Disclosure Schedules, assuming reasonable due inquiry and investigation. For all purposes of this Agreement, the phrase “to PTIC II’s knowledge” and “to the knowledge of PTIC II” and any derivations thereof shall mean as of the applicable date, the actual knowledge of the individuals set forth on Section 9.12 of the PTIC II Disclosure Schedules, assuming reasonable due inquiry and investigation. For the avoidance of doubt, none of the individuals set forth on Section 9.12 of the Company Disclosure Schedules or Section 9.12 of the PTIC II Disclosure Schedules shall have any personal Liability or obligations regarding such knowledge.

 

Section 9.13 No Recourse. All Proceedings, Liabilities and causes of action (whether in contract or in tort, in Law or in equity or granted by statute) that may be based upon, be in respect of, arise under, out or by reason of, be connected with or relate in any manner to this Agreement, or the negotiation, execution or performance of this Agreement (including any representation or warranty made in this Agreement), may be made against only (and such representations and warranties are those solely of) the Persons that are expressly identified herein as Parties and their respective successors and permitted assigns. No Person who is not a Party, including any current, former or future director, officer, founder, employee, consultant, incorporator, member, partner, manager, shareholder, Affiliate, agent, attorney, representative, successor or assignee of, and any financial advisor to, any Party, or any current, former or future director, officer, employee, consultant, incorporator, member, partner, manager, shareholder, Affiliate, agent, attorney, representative, successor or assignee of, and any financial advisor to, any of the foregoing, and in the case of PTIC II, the Sponsor (or any successor or assignee thereof) (each in their capacity as such, a “Nonparty Affiliate”), shall have any Liability (whether in contract or in tort, in Law or in equity, or granted by statute) for any Proceedings, Liabilities or causes of action arising under, out or by reason of, in connection with, or related in any manner to this Agreement or based on, in respect of, or by reason of this Agreement or its negotiation, execution, performance or breach, and, to the maximum extent permitted by Law, each Party hereby waives and releases all such Proceedings, Liabilities and causes of action against any such Nonparty Affiliates. This Agreement may only be enforced against, and any action for breach of this Agreement may only be made against, the Parties, and without limiting the generality of the foregoing, none of the Representatives of PTIC II or the Company or any other Person shall have any Liability arising out of or relating to this Agreement or the transactions contemplated hereby, including 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, except as expressly provided herein or, for the avoidance of doubt, for claims pursuant to any Ancillary Document by any party(ies) thereto against any other party(ies) thereto on the terms and subject to the conditions therein.

 

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Section 9.14 Extension; Waiver. The Sellers’ Representative (on behalf of itself, the Rolling Company Unitholders and the Company) prior to the Closing and the Company (prior to Closing) and the Sponsor (after the Closing) may (a) extend the time for the performance of any of the obligations or other acts of PTIC II set forth herein, (b) waive any inaccuracies in the representations and warranties of PTIC II set forth herein or (c) waive compliance by PTIC II with any of the agreements or conditions set forth herein. PTIC II may (prior to Closing) and the Sponsor may (after the Closing) (i) extend the time for the performance of any of the obligations or other acts of the Sellers’ Representative or the Company, set forth herein, (ii) waive any inaccuracies in the representations and warranties of the Company set forth herein or (iii) waive compliance by the Sellers’ Representative or the Company with any of the agreements or conditions set forth herein. Any agreement on the part of any such Party to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such Party. Any waiver of any term or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any other term or condition of this Agreement. The failure of any Party to assert any of its rights hereunder shall not constitute a waiver of such rights.

 

Section 9.15 Waiver of Jury Trial. THE PARTIES EACH HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT OR UNDER ANY ANCILLARY DOCUMENT OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES IN RESPECT OF THIS AGREEMENT OR ANY ANCILLARY DOCUMENT OR ANY OF THE TRANSACTIONS RELATED HERETO OR THERETO OR ANY FINANCING IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING IN RESPECT OF ANY ACTION AGAINST ANY FINANCING SOURCE (IF ANY), IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY, OR OTHERWISE. THE PARTIES EACH HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

Section 9.16 Submission to Jurisdiction. Each of the Parties irrevocably and unconditionally submits to the exclusive jurisdiction of the Chancery Court of the State of Delaware (or, if the Chancery Court of the State of Delaware declines to accept jurisdiction, any state or federal court within the State of New York, New York County), for the purposes of any Proceeding, claim, demand, action or cause of action (a) arising under this Agreement or under any Ancillary Document or (b) in any way connected with or related or incidental to the dealings of the Parties in respect of this Agreement or any Ancillary Document or any of the transactions contemplated hereby or any of the transactions contemplated thereby, and irrevocably and unconditionally waives any objection to the laying of venue of any such Proceeding in any such court, and further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such Proceeding has been brought in an inconvenient forum. Each Party hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any Proceeding claim, demand, action or cause of action against such Party (i) arising under this Agreement or under any Ancillary Document or (ii) in any way connected with or related or incidental to the dealings of the Parties in respect of this Agreement or any Ancillary Document or any of the transactions contemplated hereby or any of the transactions contemplated thereby, (A) any claim that such Party is not personally subject to the jurisdiction of the courts as described in this Section 9.16 for any reason, (B) that such Party or such Party’s property is exempt or immune from the jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (C) that (x) the Proceeding, claim, demand, action or cause of action in any such court is brought against such Party in an inconvenient forum, (y) the venue of such Proceeding, claim, demand, action or cause of action against such Party is improper or (z) this Agreement, or the subject matter hereof, may not be enforced against such Party in or by such courts. Each Party agrees that service of any process, summons, notice or document by registered mail to such party’s respective address set forth in Section 9.4 shall be effective service of process for any such Proceeding, claim, demand, action or cause of action.

 

Section 9.17 Remedies. Except as otherwise expressly provided herein, any and all remedies provided herein will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such Party, and the exercise by a Party of any one remedy will not preclude the exercise of any other remedy. The failure on the part of any Party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such Party preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The Parties agree that irreparable damage for which monetary damages, even if available, would not be an adequate remedy, would occur in the event that the Parties do not perform their respective obligations under the provisions of this Agreement (including failing to take such actions as are required of them hereunder to consummate the transactions contemplated by this Agreement) in accordance with their specific terms or otherwise breach such provisions. It is accordingly agreed that the Parties shall be entitled to seek an injunction or injunctions, specific performance and other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, in each case, without posting a bond or undertaking and without proof of damages and this being in addition to any other remedy to which they are entitled at law or in equity. Each of the Parties agrees that it will not oppose the granting of an injunction, specific performance and other equitable relief when expressly available pursuant to the terms of this Agreement on the basis that the other parties have an adequate remedy at law or an award of specific performance is not an appropriate remedy for any reason at law or equity.

 

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Section 9.18 Sellers’ Representative.

 

(a) By consenting to this Agreement, or accepting any consideration as contemplated by Article 2, each Rolling Company Unitholder appoints, authorizes and empowers Lake Street to act as a representative for the benefit of the Rolling Company Unitholders, as the sole and exclusive agent and attorney-in-fact to act on behalf of each Rolling Company Unitholder for all purposes under this Agreement and the Ancillary Documents, and whether prior to or following the Closing. Without limiting the generality of the foregoing, the Sellers’ Representative shall have the full power and authority and shall be required to take any and all actions on behalf of the Rolling Company Unitholders that is necessary, appropriate or desirable to carry out all of the duties, responsibilities and obligations of the Sellers’ Representative under this Agreement and the Ancillary Documents, including the power and authority to: (i) interpret the terms and provisions of this Agreement and the documents to be executed and delivered in connection therewith, including to execute and deliver any Ancillary Documents to which Sellers’ Representative is a party (with such modifications or changes therein as to which the Sellers’ Representative, in his sole and absolute, discretion, shall have consented); (ii) execute and deliver, and receive deliveries of, all agreements, certificates, statements, notices, approvals, extension, waivers, undertakings, amendments and other documents required or permitted to be given in connection with the consummation of the transactions contemplated by this Agreement and the Ancillary Documents to which Sellers’ Representative is a party; (iii) execute and deliver such amendments, modifications, waivers and consents in connection with this Agreement and any Ancillary Documents to which Sellers’ Representative is a party and the consummation of the transactions contemplated hereby and thereby; (iv) receive service of process in connection with any claims under this Agreement and the Ancillary Documents to which Sellers’ Representative is party; (v) make any calculations and determinations and settle any matters on behalf of all Rolling Company Unitholders in connection with this Agreement (including the issuance of Earn Out Shares contemplated by Section 2.6), (vi) assert or pursue on behalf of the Rolling Company Unitholders any Proceeding or investigation against any of the other Parties, consenting to, compromising or settling any such Proceedings or investigations, conducting negotiations with any of the other Parties and their respective Representatives regarding such Proceeding or investigations, and, in connection therewith, to: (A) assert or institute any Proceeding or investigation; (B) investigate, defend, contest or litigate any Proceeding or investigation initiated by PTIC II or any other Person, or by any Governmental Entity against any Rolling Company Unitholders and receive process on behalf of any or all Rolling Company Unitholders in any such Proceeding or investigation and compromise or settle on such terms as the Sellers’ Representative shall determine to be appropriate, and give receipts, releases and discharges with respect to, any such Proceeding or investigation; (C) file any proofs of debt, claims and petitions as the Sellers’ Representative may deem advisable or necessary and (D) file and prosecute appeals from any decision, judgment or award rendered in any such Proceeding or investigation; (vii) to refrain from enforcing any right of any Rolling Company Unitholder arising out of or under or in any manner relating to this Agreement or any Ancillary Document to which the Sellers’ Representative is a party, including by providing waivers or extensions of time to perform any covenant or obligation; provided, however, that no such failure to act on the part of the Sellers’ Representative, except as otherwise provided in this Agreement or in any Ancillary Document to which Sellers’ Representative is a party, shall be deemed a waiver of any such right or interest by any such Rolling Company Unitholder unless such waiver is in writing signed by the waiving party or by the Sellers’ Representative, as applicable and (viii) to make, execute, acknowledge and deliver all such other statements, agreements, guarantees, orders, receipts, endorsements, notices, requests, instructions, certificates, stock powers, letters and other writings, and, in general, to do any and all things and to take any and all action that the Sellers’ Representative, in his sole and absolute discretion, may consider necessary or proper or convenient in connection with or to carry out the transactions contemplated by this Agreement and all Ancillary Documents to which Sellers’ Representative is party (including, for the avoidance of doubt, in connection with Article 2).

 

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(b) By consenting to this Agreement, or accepting any consideration as contemplated by Article 2, each Rolling Company Unitholder agrees and acknowledges that other than the Sellers’ Representative, no other Person has any agreement or option, or any right or privilege (whether by law, pre-emptive or contractual) capable of becoming an agreement or option, for the right and power to act with respect to any matter the Rolling Company Unitholder is authorized to act as contemplated in this Section 9.18. Lake Street hereby (i) accepts its appointment as the Sellers’ Representative and authorization to act as attorney-in-fact and agent on behalf of each Rolling Company Unitholder in accordance with the terms of this Agreement and any Ancillary Document to which Sellers’ Representative is a party and (ii) agrees to perform his obligations hereunder and thereunder and otherwise comply with this Agreement and any Ancillary Document to which Sellers’ Representative is party.

 

(c) PTIC II, Sponsor and any other Person may conclusively and absolutely rely, without inquiry, upon any action or decision of the Sellers’ Representative in all matters referred to herein. PTIC II and Sponsor are entitled to deal exclusively with the Sellers’ Representative on all matters arising under or in connection with this Agreement or any Ancillary Document to which Sellers’ Representative is a party. Any action taken or not taken or decisions, communications or writings made, given or executed by the Sellers’ Representative with respect to all such matters, for or on behalf of any Rolling Company Unitholder, shall be deemed an action taken or not taken or decisions, communications or writings made, given or executed by such Company Unitholder. Any notice or communication delivered to the Sellers’ Representative shall be deemed to have been delivered to all the Rolling Company Unitholders. PTIC II and Sponsor shall be entitled to disregard any decisions, communications or writings made, given or executed by any Company Unitholder in connection with any matter arising under or in connection with this Agreement or any Ancillary Document to which the Sellers’ Representative is a party, unless the same is made, given or executed by the Sellers’ Representative.

 

(d) The appointment of the Sellers’ Representative as each Rolling Company Unitholder’s attorney-in-fact revokes any power of attorney heretofore granted that authorized any other Person or Persons to act as agent and to represent such Rolling Company Unitholder with regard to this Agreement and the Ancillary Documents to which Sellers’ Representative is a party. The grant of authority provided for herein (i) is coupled with an interest and shall be irrevocable and survive the death, incompetency, bankruptcy or liquidation of any Rolling Company Unitholder and (ii) shall survive the consummation of transactions contemplated by this Agreement. Notwithstanding the foregoing, the Sellers’ Representative may resign as the Sellers’ Representative at any time by providing written notice to PTIC II (prior to the Closing) or the Sponsor (after the Closing), which resignation shall become effective upon appointment of a successor Sellers’ Representative (who is reasonably acceptable to PTIC II (prior to the Closing) or the Sponsor (after the Closing)) by the Rolling Company Unitholders constituting a majority of the Company Units immediately prior to the Effective Time. All power, authority, rights, privileges and obligations conferred in this Agreement to the Sellers’ Representative shall apply to any such successor Sellers’ Representative.

 

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(e) Sellers’ Representative hereby represents and warrants on behalf of itself to PTIC II as of the date hereof and as of the Closing Date, as follows:

 

(i) Sellers’ Representative has the requisite capacity, power and authority to execute and deliver this Agreement and each of the Ancillary Documents to which he is or will be a party, to perform his obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby.

 

(ii) The execution and delivery of this Agreement, the Ancillary Documents to which Sellers’ Representative is or will be a party and the consummation of the transactions contemplated hereby and thereby have been (or, in the case of any Ancillary Document entered into after the date of this Agreement, will be upon execution thereof) duly authorized by all necessary action on the part of Sellers’ Representative. This Agreement and each Ancillary Document to which Sellers’ Representative is or will be a party has been or will be upon execution thereof, duly and validly executed and delivered by Sellers’ Representative and constitutes or will constitute, upon execution and delivery thereof, as applicable, a valid, legal and binding agreement of Sellers’ Representative, enforceable against Sellers’ Representative in accordance with their terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium or other Laws affecting generally the enforcement of creditors’ rights and subject to general principles of equity).

 

(iii) Sellers’ Representative has the sole power, authority and control of the Rolling Company Unitholders with respect to the matters relating to this Agreement and the Ancillary Documents, including as contemplated in Section 9.18(a), and in general to do all other things and to perform all other acts, including executing and delivering all agreements, certificates, receipts, instructions, and other instruments, contemplated by, or deemed advisable in connection with, this Agreement or any Ancillary Document, in each case on behalf of a Rolling Company Unitholder.

 

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Section 9.19 Trust Account Waiver. Reference is made to the final prospectus of PTIC II, filed with the SEC (File Nos. 333-249477) on November 30, 2020 (the “Prospectus”). Each of the Company and the Sellers’ Representative acknowledges and agrees and understands that PTIC II has established a trust account (the “Trust Account”) containing the proceeds of its initial public offering (the “IPO”) and from certain private placements occurring simultaneously with the IPO (including interest accrued from time to time thereon) for the benefit of PTIC II’s public shareholders (including overallotment shares acquired by PTIC II’s underwriters), and PTIC II may disburse monies from the Trust Account only in the express circumstances described in the Prospectus. For and in consideration of PTIC II entering into this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each of the Company and the Sellers’ Representative hereby agrees on behalf of itself and its respective Representatives that, notwithstanding the foregoing or anything to the contrary in this Agreement, neither the Company or the Sellers’ Representative or any of their respective Representatives does now or shall at any time hereafter have any right, title, interest or claim of any kind in or to any monies in the Trust Account or distributions therefrom, or make any claim against the Trust Account (including any distributions therefrom), regardless of whether such claim arises as a result of, in connection with or relating in any way to, this Agreement, or any other matter, and regardless of whether such claim arises based on contract, tort, equity or any other theory of legal liability (any and all such claims are collectively referred to hereafter as the “Trust Account Released Claims”). Each of the Company and the Sellers’ Representative, on its own behalf and on behalf of its respective Representatives, hereby irrevocably waives any Trust Account Released Claims that it or any of its respective Representatives may have against the Trust Account (including any distributions therefrom) now or in the future as a result of, or arising out of, any negotiations, or Contracts with PTIC II or its Representatives and will not seek recourse against the Trust Account (including any distributions therefrom) for any reason whatsoever (including for an alleged breach of any agreement with PTIC II or its Affiliates).

 

Section 9.20 Acknowledgement; Waiver of Conflicts; Retention of Privilege.

 

(a) Each of the Parties hereto acknowledges and agrees that (i) Winthrop & Weinstine, P.A. (“Company Counsel”) has acted as counsel to the Company in various matters involving a range of issues and as counsel to the Company in connection with the negotiation of this Agreement and the Ancillary Documents, and the transactions contemplated hereby and thereby and (ii) Kirkland & Ellis LLP (“PTIC II Counsel”) has acted as counsel to PTIC II in various matters involving a range of issues and as counsel to PTIC II in connection with the negotiation of this Agreement and the Ancillary Documents, and the transactions contemplated hereby and thereby.

 

(b) In connection with any matter or dispute under this Agreement, PTIC II hereby irrevocably waives and agrees not to assert, and agree to cause the Company to irrevocably waive and not to assert, any conflict of interest arising from or in connection with (i) Company Counsel’s prior representation of the Company, (ii) Company Counsel’s representation of the Seller Representative and/or any of the Group Companies (collectively, the “Company Advised Parties”) prior to and after the Closing, (iii) PTIC II Counsel’s prior representation of PTIC and (iv) PTIC II Counsel’s representation of the Sponsor, any subsidiary of PTIC II and/or any PTIC II stockholders (collectively, the “PTIC II Advised Parties”).

 

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(c) PTIC II further agrees, on behalf of itself and, after the Closing, on behalf of each Group Company, that all communications in any form or format whatsoever between or among any of Company Counsel, the Company, any of the Company Advised Parties, or any of their respective Representatives that relate in any way to the negotiation, documentation and consummation of the transactions contemplated by this Agreement or, beginning on the date of this Agreement, any dispute arising under this Agreement (collectively, the “Company Deal Communications”) shall be deemed to be retained and owned collectively by the Company Advised Parties, shall be controlled by the Sellers’ Representative on behalf of the Company and shall not pass to or be claimed by PTIC II or any Group Company. All Company Deal Communications that are attorney client privileged (the “Privileged Company Deal Communications”) shall remain privileged after the Closing and the privilege and the expectation of client confidence relating thereto shall belong solely to the Sellers’ Representative and the Company, shall be controlled by the Sellers’ Representative on behalf of the Company and shall not pass to or be claimed by PTIC II or any Group Company; provided, however, that nothing contained herein shall be deemed to be a waiver by PTIC II or any of its Affiliates (including, after the Effective Time, the Company and its Affiliates) of any applicable privileges or protections that can or may be asserted to prevent disclosure of any such communications to any third party.

 

(d) The Company and each of the Rolling Company Unitholders further agrees, on behalf of itself and, after the Closing, on behalf of each Group Company, that all communications in any form or format whatsoever between or among any of PTIC II Counsel, PTIC II, any of the PTIC II Advised Parties, or any of their respective Representatives that relate in any way to the negotiation, documentation and consummation of the transactions contemplated by this Agreement or, beginning on the date of this Agreement, any dispute arising under this Agreement (collectively, the “PTIC II Deal Communications”) shall be deemed to be retained and owned collectively by the PTIC II Advised Parties, shall be controlled by the Sponsor and shall not pass to or be claimed by PTIC II or any Group Company. All PTIC II Deal Communications that are attorney-client privileged (the “Privileged PTIC II Deal Communications”) shall remain privileged after the Closing and the privilege and the expectation of client confidence relating thereto shall belong solely to the Sponsor, shall be controlled by the Sponsor and shall not pass to or be claimed by PTIC II or any Group Company; provided, further, that nothing contained herein shall be deemed to be a waiver by PTIC II or any of its Affiliates (including, after the Effective Time, the Company and its Affiliates) of any applicable privileges or protections that can or may be asserted to prevent disclosure of any such communications to any third party.

 

(e) Notwithstanding the foregoing, in the event that a dispute arises between PTIC II or any Group Company, on the one hand, and a third party other than the Sellers’ Representative or the Sponsor on the other hand, PTIC II or the Company may assert the attorney client privilege to prevent the disclosure of the Privileged Company Deal Communications and Privileged PTIC II Deal Communications to such third party; provided, however, that neither PTIC II nor the Company may waive such privilege with respect to (i) Privileged Company Deal Communications without the prior written consent of the Sellers’ Representative, or (ii) Privileged PTIC II Deal Communications without the prior written consent of the Sponsor. In the event that PTIC II or the Company is legally required by governmental order or otherwise to access or obtain a copy of all or a portion of (y) the Privileged Company Deal Communications, PTIC II shall immediately (and, in any event, within two (2) Business Days) notify the Sellers’ Representative in writing (including by making specific reference to this Section 9.20) so that the Sellers’ Representative can seek a protective order and (z) the Privileged PTIC II Deal Communications, PTIC II shall immediately (and, in any event, within two (2) Business Days) notify the Sponsor in writing (including by making specific reference to this Section 9.20) so that the Sponsor can seek a protective order and, in either case, PTIC II agrees to use all commercially reasonable efforts to assist therewith.

 

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(f) To the extent that files or other materials maintained by Company Counsel constitute property of its clients, only the Sellers’ Representative and the Company Advised Parties shall hold such property rights and Company Counsel shall have no duty to reveal or disclose any such files or other materials or any Privileged Company Deal Communications by reason of any attorney client relationship between Company Counsel, on the one hand, and the Company, on the other hand so long as such files or other materials would be subject to a privilege or protection if they were being requested in a proceeding by an unrelated third party. To the extent that files or other materials maintained by PTIC II Counsel constitute property of its clients, only the Sponsor and the PTIC II Advised Parties shall hold such property rights and PTIC II Counsel shall have no duty to reveal or disclose any such files or other materials or any Privileged PTIC II Deal Communications by reason of any attorney-client relationship between PTIC II Counsel, on the one hand, and PTIC II, on the other hand so long as such files or other materials would be subject to a privilege or protection if they were being requested in a proceeding by an unrelated third party.

 

(g) PTIC II agrees on behalf of itself and the Company, (i) to the extent that PTIC II or the Company receives or takes physical possession of any Company Deal Communications or PTIC II Deal Communications, (a) such physical possession or receipt shall not, in any way, be deemed a waiver by any of the Company Advised Parties, PTIC II Advised Parties or any other Person, of the privileges or protections described in this Section 9.20, and (b) neither PTIC II nor the Company shall assert any claim that any of the Company Advised Parties, PTIC II Advised Parties or any other Person waived the attorney client privilege, attorney work product protection or any other right or expectation of client confidence applicable to any such materials or communications, (ii) not to access or use the Company Deal Communications or PTIC II Deal Communications, including by way of review of any electronic data, communications or other information, or by seeking to have the Sellers’ Representative or the Sponsor, as applicable, waive the attorney client or other privilege, or by otherwise asserting that PTIC II or the Company has the right to waive the attorney client or other privilege, (iii) not to seek to obtain the Company Deal Communications from Company Counsel so long as such Company Deal Communications would be subject to a privilege or protection if they were being requested in a proceeding by an unrelated third party and (iv) not to seek to obtain the PTIC II Deal Communications from PTIC II Counsel so long as such PTIC II Deal Communications would be subject to a privilege or protection if they were being requested in a proceeding by an unrelated third party.

 

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, each of the Parties has caused this Business Combination Agreement to be duly executed on its behalf as of the day and year first above written.

 

  PROPTECH INVESTMENT
  CORPORATION II
     
  By: /s/ Thomas D. Hennessy
  Name: Thomas D. Hennessy
  Title: Chairman, Co-Chief Executive Officer and President
     
  By: /s/ Joseph Beck
  Name: Joseph Beck
  Title: Co-Chief Executive Officer and Chief Financial Officer

 

[Signature Page to Business Combination Agreement]

 

 


 

IN WITNESS WHEREOF, each of the Parties has caused this Business Combination Agreement to be duly executed on its behalf as of the day and year first above written.

 

  RW NATIONAL HOLDINGS, LLC
     
  By: /s/ Christopher Laurence
  Name: Christopher Laurence
  Title: Chief Executive Officer

 

[Signature Page to Business Combination Agreement]

 

 


 

IN WITNESS WHEREOF, each of the Parties has caused this Business Combination Agreement to be duly executed on its behalf as of the day and year first above written.

 

  SELLERS’ REPRESENTATIVE:
   
  Lake Street Landlords, LLC
   
  By:  /s/ Scott Honour
  Name: Scott Honour
  Title: Chairman

 

[Signature Page to Business Combination Agreement]

 

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EXHIBIT D

 

FORM OF

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

OF

APPRECIATE INTERMEDIATE HOLDINGS, LLC

DATED AS OF [●], 2022

 

THE LIMITED LIABILITY COMPANY INTERESTS IN APPRECIATE INTERMEDIATE HOLDINGS, LLC HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) THE SECURITIES LAWS OF ANY STATE, OR ANY OTHER APPLICABLE SECURITIES LAWS, AND HAVE BEEN OR ARE BEING ISSUED IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. SUCH INTERESTS MUST BE ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE WITH (I) THE SECURITIES ACT, ANY APPLICABLE SECURITIES LAWS OF ANY STATE AND ANY OTHER APPLICABLE SECURITIES LAWS; (II) THE TERMS AND CONDITIONS OF THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT; AND (III) ANY OTHER TERMS AND CONDITIONS AGREED TO IN WRITING BETWEEN THE MANAGING MEMBER AND THE APPLICABLE MEMBER. THEREFORE, PURCHASERS AND OTHER TRANSFEREES OF SUCH LIMITED LIABILITY COMPANY INTERESTS WILL BE REQUIRED TO BEAR THE RISK OF THEIR INVESTMENT OR ACQUISITION FOR AN INDEFINITE PERIOD OF TIME.

 

 


 

TABLE OF CONTENTS

 

  Page
ARTICLE I DEFINITIONS   2
     
1.1   Definitions   2
1.2   Interpretive Provisions   14
     
ARTICLE II ORGANIZATION OF THE LIMITED LIABILITY COMPANY   15
     
2.1   Formation   15
2.2   Filing   15
2.3   Name   15
2.4   Registered Office: Registered Agent   15
2.5   Principal Place of Business   15
2.6   Purpose; Powers   15
2.7   Term   15
2.8   Intent   15
     
ARTICLE III RESERVED   16
     
ARTICLE IV OWNERSHIP AND CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS   16
     
4.1   Capital Contributions; Authorized Units; General Provisions with Respect to Units   16
4.2   Capital Contributions   20
4.3   Issuance of Additional Units; Redemption of Certain Class B Units.   20
4.4   Capital Accounts   21
4.5   Other Matters Regarding Capital Contributions   21
4.6   Exchange of Class B Units   22
4.7   Representations and Warranties of the Members   25
     
ARTICLE V ALLOCATIONS OF PROFITS AND LOSSES   27
     
5.1   Profits and Losses   27
5.2   Special Allocations   27
5.3   Allocations for Tax Purposes in General   29
5.4   Other Allocation Rules   30
5.5   Earn Out Units   30
     
ARTICLE VI DISTRIBUTIONS   31
     
6.1   Distributions   31
6.2   Tax-Related Distributions   32
6.3   Distribution Upon Withdrawal   32
     
ARTICLE VII MANAGEMENT   32
     
7.1   Managing Member Rights; Member and Officer Duties   32
7.2   Role of Officers   33
7.3   Warranted Reliance by Officers on Others   34
7.4   Indemnification   34
7.5   Resignation or Termination of Managing Member   36
7.6   Reclassification Events of PubCo   36
7.7   Certain Costs and Expenses   36

 

i


 

ARTICLE VIII ROLE OF MEMBERS   37
     
8.1   Rights or Powers   37
8.2   Various Capacities   37
8.3   Investment Opportunities   37
     
ARTICLE IX TRANSFERS OF UNITS   38
     
9.1   Restrictions on Transfer   38
9.2   Notice of Transfer   39
9.3   Transferee Members   39
9.4   Legend   39
     
ARTICLE X ACCOUNTING AND CERTAIN TAX MATTERS   39
     
10.1   Books of Account   39
10.2   Tax Elections   39
10.3   Tax Returns; Information   40
10.4   Company Representative   40
10.5   Withholding Tax Payments and Obligations   42
10.6   Tax Treatment   43
     
ARTICLE XI DISSOLUTION   43
     
11.1   Liquidating Events   43
11.2   Bankruptcy   43
11.3   Procedure   43
11.4   Rights of Members   44
11.5   Notices of Dissolution   44
11.6   Reasonable Time for Winding Up   44
11.7   No Deficit Restoration   44
     
ARTICLE XII GENERAL   45
     
12.1   Amendments; Waivers   45
12.2   Further Assurances   45
12.3   Successors and Assigns   45
12.4   Entire Agreement   45
12.5   Rights of Members Independent   46
12.6   Governing Law: Waiver of Jury Trial: Jurisdiction   46
12.7   Headings   46
12.8   Counterparts: Electronic Delivery   46
12.9   Notices   47
12.10  Representation by Counsel; Interpretation   47
12.11   Severability   47
12.12  Expenses   47
12.13  No Third Party Beneficiaries   47
12.14  Confidentiality   48
12.15  No Recourse   48

 

Exhibits

Exhibit A-1: Capitalization

Exhibit A-2: Contribution Securities

Exhibit B: Exchange Notice

Exhibit C: Officers

Exhibit D: Form of Joinder THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (as amended, supplemented or restated from time to time in accordance with the terms hereof, this “LLC Agreement”) of Appreciate Intermediate Holdings, LLC, a Delaware limited liability company (the “Company”), is entered into as of [●], 2022, by and among Appreciate Holdings, Inc., a Delaware corporation (“PubCo” or “PTIC II”, as applicable), as a Member and the Managing Member as of the date hereof, the Members set forth on Exhibit A-1 hereto (the “Continuing Members”) and each other Person who is or at any time becomes a Member in accordance with the terms of this LLC Agreement and the Act.

 

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AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

OF

APPRECIATE INTERMEDIATE HOLDINGS, LLC

 

Capitalized terms used in this LLC Agreement shall have the respective meanings set forth in Section 1.1.

 

RECITALS

 

A. The Company was formed pursuant to a Certificate of Formation filed in the office of the Secretary of State of the State of Delaware on [●], 2022;

 

B. On May 17, 2022, (a) PTIC II, (b) RW National Holdings, LLC, a Delaware limited liability company (the “Existing Company”), and (c) Lake Street Landlords, LLC, a Delaware limited liability company, in its capacity as the representative of all Continuing Members, entered into that certain Business Combination Agreement (as amended, modified or supplemented from time to time in accordance with the terms thereof, the “Business Combination Agreement”).

 

C. At the Closing, (i) all of the Continuing Members will contribute all of their Existing Company LLC Interests to the Company in exchange for a number of non-voting Class B Units in the Company equal, in the aggregate, to the Transaction Equity Security Amount, free and clear of all liens and encumbrances (other than any restrictions on transfer under applicable Securities Law or as contemplated herein), (ii) PTIC II shall contribute, or cause to be contributed, the Closing Date Contribution Amount to the Company, in exchange for a number of voting Class A Units in the Company equal to the number of Net Outstanding PTIC II Class A Shares, which Class A Units will be free and clear of, in the aggregate, to all liens and encumbrances (other than any restrictions on transfer under applicable Securities Laws or as contemplated herein), and (iii) Members (other than PTIC II) shall receive from PTIC II a number of shares of Class B Common Stock in PTIC II equal, in the aggregate, to the Transaction Equity Security Amount, free and clear of all liens and encumbrances (other than any restrictions on transfer under applicable Securities Law, the Investor Rights Agreement (as applicable) or under the governing documents of PTIC II), in the case of each of clauses (i), (ii) and (iii), on the terms and subject to the conditions set forth in the Business Combination Agreement.

 

D. The Members desire to enter into this LLC Agreement to reflect: (i) the consummation of the transactions contemplated by the Business Combination Agreement and the Ancillary Documents, including the contribution and exchange of the Existing Company LLC Interests pursuant to Section 2.2(a) of the Business Combination Agreement and the admission of PubCo as a Member, (ii) PubCo’s designation as the sole Managing Member of the Company, and (iii) the rights and obligations of the Members and other terms and provisions, in each case as set forth in this LLC Agreement.

 

NOW THEREFORE, in consideration of the mutual covenants and agreements contained in this LLC Agreement, and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the Parties hereby agree as follows:

 

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ARTICLE I

DEFINITIONS

 

1.1 Definitions. As used in this LLC Agreement and the Schedules and Exhibits attached to this Agreement, the following definitions shall apply:

 

“Act” means the Delaware Limited Liability Company Act, 6 Del. C. § 18-101, et seq.

 

“Action” means any action, suit, charge, litigation, arbitration, notice of violation or citation received, or other proceeding at law or in equity (whether civil, criminal or administrative) by or before any Governmental Entity.

 

“Adjusted Basis” has the meaning given to such term in Section 1011 of the Code.

 

“Adjusted Capital Account Deficit” means the deficit balance, if any, in such Member’s Capital Account at the end of any Taxable Year or other taxable period, with the following adjustments:

 

(a) credit to such Capital Account any amount that such Member is obligated to restore under Treasury Regulations Section 1.704-1(b)(2)(ii)(c), as well as any addition thereto pursuant to the next to last sentences of Treasury Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5) after taking into account thereunder any changes during such year in Company Minimum Gain and Member Minimum Gain; and

 

(b) debit to such Capital Account the items described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).

 

This definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

 

“Advancement of Expenses” is defined in Section 7.4(b).

 

“Affiliate” of any particular Person means any other Person controlling, controlled by or under common control with such Person, where “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, its capacity as a sole or managing member or otherwise. For purposes of this LLC Agreement, no Member shall be deemed to be an Affiliate of any other Member solely as a result of membership in the Company.

 

“Allocation Schedule” has the meaning given to such term in the Business Combination Agreement.

 

“Ancillary Documents” has the meaning given to such term in the Business Combination Agreement.

 

“Appraiser FMV” means the fair market value of any Equity Security as determined by an independent appraiser mutually agreed upon by the Managing Member and the relevant Transferor, whose determination shall be final and binding for those purposes for which Appraiser FMV is used in this LLC Agreement. If the Managing Member and the relevant Transferor cannot reach agreement on an independent appraiser, each of the Managing Member and the relevant Transferor shall designate a nationally recognized accounting firm and those two firms shall jointly select a third national recognized accounting firm to serve as the appraiser. Appraiser FMV shall be the fair market value determined without regard to any discounts for minority interest, illiquidity or other discounts. The cost of any independent appraisal in connection with the determination of Appraiser FMV in accordance with this LLC Agreement shall be borne by the Company.

 

“Assumed Rate” means the highest marginal combined effective U.S. federal, state and local income tax rate (including, if applicable, under Section 1411 of the Code) applicable to the item of income based on the character of income and applicable to an individual resident in or, if higher, a corporation doing business exclusively in New York, NY in each case taking into account all jurisdictions in which the Company and its Subsidiaries are required to file income tax returns and the relevant apportionment information, in effect for the applicable Taxable Year, taking into account the character of any income, gains, deductions, losses or credits, and the deductibility of state and local income taxes (to the extent deductible for purposes of the U.S. federal, state, or local income tax), and the deductibility of state and local income taxes for purposes of other state and local income taxes. The Assumed Rate shall be the same for all Members regardless of the actual combined income tax rate of the Member or its direct or indirect owners. The Managing Member may adjust the Assumed Rate as it reasonably determines is necessary to take into account the effect of any changes in applicable tax law.

 

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“Audit” is defined in Section 10.4(b).

 

“BBA Rules” means Subchapter C of Chapter 63 of the Code (Sections 6221 et seq.) as amended by the Bipartisan Budget Act of 2015 and the Consolidated Appropriations Act of 2016, and any Treasury Regulations and other guidance promulgated thereunder, and any similar state, local, or non-U.S. legislation, regulations or guidance.

 

“beneficially own” and “beneficial owner” shall be as defined in Rule 13d-3 of the rules promulgated under the Exchange Act.

 

“Board” means the board of directors of PubCo, as constituted at any given time.

 

“Business Combination Agreement” is defined in the recitals to this LLC Agreement.

 

“Business Day” means any day except a Saturday, a Sunday or any other day on which commercial banks are required or authorized to close in the State of Delaware.

 

“Business Opportunities Exempt Party” is defined in Section 8.3(a).

 

“Capital Account” means, with respect to any Member, the capital account maintained for such Member in accordance with Section 4.4. The initial Capital Account of each Member as of the Effective Time (the “Closing Date Capital Account Balance”) is set forth next to such Member’s name on Exhibit A-1 hereto.

 

“Capital Contribution” means, with respect to any Member, the amount of cash and the Fair Market Value of any property (other than cash) contributed to the Company by such Member, net of any liabilities assumed by the Company for such Member in connection with such contribution, as set forth from time to time in the books and records of the Company. Any reference to the Capital Contribution of a Member will include any Capital Contributions made by a predecessor holder of such Member’s Units to the extent that such Capital Contribution was made in respect of Units Transferred to such Member.

 

“Cash Available For Tax Distribution” is defined in Section 6.2(a).

 

“Cash Exchange Class A 5-Day VWAP” means the arithmetic average of the VWAP for each of the five (5) consecutive Trading Days ending on the Trading Day immediately prior to the Exchange Notice Date.

 

“Cash Exchange Notice” has the meaning set forth in Section 4.6(a)(ii).

 

“Cash Exchange Payment” means with respect to a particular Exchange for which the Managing Member has elected on behalf of the Company to make a Cash Exchange Payment in accordance with Section 4.6(a)(ii):

 

(i) if the Class A Common Stock trades on a National Securities Exchange or automated or electronic quotation system, an amount of cash equal to the product of (x) the number of shares of Class A Common Stock that would have been received by the Exchanging Member in the Exchange for that portion of the Class B Units subject to the Exchange set forth in the Cash Exchange Notice if PubCo had paid the Stock Exchange Payment with respect to such number of Class B Units, and (y) the Cash Exchange Class A 5-Day VWAP; or (ii) if the Class A Common Stock is not then traded on a National Securities Exchange or automated or electronic quotation system, as applicable, an amount of cash equal to the product of (x) the number of shares of Class A Common Stock that would have been received by the Exchanging Member in the Exchange for that portion of the Class B Units subject to the Exchange set forth in the Cash Exchange Notice if PubCo had paid the Stock Exchange Payment with respect to such number of Class B Units, for which PubCo has elected to make a Cash Exchange Payment and (y) the Appraiser FMV of one (1) share of Class A Common Stock that would be obtained in an arms-length transaction between an informed and willing buyer and an informed and willing seller, neither of whom is under any compulsion to buy or sell, respectively, and without regard to the particular circumstances of the buyer or seller.

 

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“Certificate Delivery” means, in the case of any shares of Class B Common Stock to be transferred and surrendered by an Exchanging Member in connection with an Exchange which are represented by a certificate or certificates, the process by which the Exchanging Member shall also present and surrender such certificate or certificates representing such shares of Class B Common Stock during normal business hours at the principal executive offices of PubCo, or if any agent for the registration or transfer of shares of Class B Common Stock is then duly appointed and acting, at the office of such transfer agent, along with any instruments of transfer reasonably required by the Managing Member or such transfer agent, as applicable, duly executed by the Exchanging Member or the Exchanging Member’s duly authorized representative.

 

“Change of Control” means the occurrence of any transaction or series of related transactions in which: (a) any Person or any group of Persons (other than PubCo) acting together that would constitute a “group” for purposes of Sections 13(d) and 14(d) of the Exchange Act, is or becomes the beneficial owner (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of securities of PubCo or the Company representing in aggregate more than 50% of the voting power of PubCo’s or the Company’s, as applicable, then outstanding voting securities, (b) a merger or consolidation of PubCo or the Company is consummated with any other Person, and, immediately after the consummation of such merger or consolidation, the outstanding voting securities of PubCo or the Company, as applicable, immediately prior to such merger or consolidation do not continue to represent or are not converted into, directly or indirectly, more than 50% of the combined voting power of, or economic interest in, the then outstanding voting securities of the Person resulting from such merger or consolidation or, if PubCo or the Company, as applicable (or if its successor is a Subsidiary of such Person, the ultimate parent thereof), or (c) the stockholders of PubCo approve a plan of complete liquidation or dissolution of PubCo or there is consummated an agreement or series of related agreements for the sale, transfer or other disposition, directly or indirectly, by PubCo or the Company of all or substantially all of its and its Subsidiaries’ assets (including, with respect to PubCo, the Company) is consummated. Notwithstanding the foregoing, a “Change of Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of related transactions immediately following which the record holders of the shares of PubCo immediately prior to such transaction or series of related transactions continue to have substantially the same proportionate ownership in, and voting control over, and own substantially all of the shares of, an entity which owns, directly or indirectly, all or substantially all of the assets of PubCo immediately following such transaction or series of related transactions.

 

“Change of Control Transaction” means any Change of Control that was approved by the Board prior to such Change of Control.

 

“Class A Common Stock” means, as applicable, (a) the Class A Common Stock, par value $0.0001 per share, of PubCo or (b) following any consolidation, merger, reclassification or other similar event involving PubCo, any shares or other securities of PubCo or any other Person that become payable in consideration for the Class A Common Stock or into which the Class A Common Stock is exchanged or converted as a result of such consolidation, merger, reclassification or other similar event.

 

“Class A Units” means the Class A common units of limited liability company interests issued under this LLC Agreement, including by way of dividend or other distribution, split, recapitalization, merger, rollup transaction, consolidation, conversion or reorganization.

 

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“Class B Common Stock” means, as applicable, (a) the Class B Common Stock, par value $0.0001 per share, of PubCo or (b) following any consolidation, merger, reclassification or other similar event involving PubCo, any shares or other securities of PubCo or any other Person that become payable in consideration for the Class B Common Stock or into which the Class B Common Stock is exchanged or converted as a result of such consolidation, merger, reclassification or other similar event.

 

“Class B Units” means the Class B common units of limited liability company interests issued under this LLC Agreement, including by way of dividend or other distribution, split, recapitalization, merger, rollup transaction, consolidation, conversion or reorganization, and any Earn Out Units.

 

“Closing” has the meaning given to such term in the Business Combination Agreement.

 

“Closing Date” has the meaning given to such term in the Business Combination Agreement.

 

“Closing Date Capital Account Balance” has the meaning set forth in the definition of “Capital Account”.

 

“Closing Date Contribution Amount” has the meaning given to such term in the Business Combination Agreement.

 

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

 

“Commission” means the U.S. Securities and Exchange Commission, including any Governmental Entity succeeding to the functions thereof.

 

“Common Units” means the common units of limited liability company interests issued under this LLC Agreement, including by way of dividend or other distribution, split, recapitalization, merger, rollup transaction, consolidation, conversion or reorganization, including any Class A Units and Class B Units (and, for the avoidance of doubt, any Earn Out Units, which are Class B Units as shown by the definition of “Class B Units” in this LLC Agreement).

 

“Company” is defined in the preamble to this LLC Agreement.

 

“Company Minimum Gain” has the meaning of “partnership minimum gain” set forth in Treasury Regulations Sections 1.704-2(b)(2) and 1.704-2(d).

 

“Company Representative” shall mean the Person designated under this LLC Agreement in its capacity as the “partnership representative” (as such term is defined under the BBA Rules and any analogous provision of state, local, or non-U.S. Law) of the Company and as the “tax matters partner” (to the extent applicable for state and local tax purposes and for U.S. federal income tax purposes for Taxable Years beginning on or before December 31, 2017) of the Company, including, as the context requires, any “designated individual” through whom the Company Representative is permitted by applicable Law to act in accordance with the terms hereof, which Person shall be, as of the Effective Time, PubCo.

 

“Company Unitholder Written Consent” has the meaning given in the Business Combination Agreement.

 

“Confidential Information” means any and all confidential or proprietary information of the Company, PubCo or any of their respective Subsidiaries, which information includes ideas, financial information, products, services, business strategies, innovations, recipes and materials, all aspects of the Company’s business plan, proposed operation and products, corporate structure, board minutes and materials, financial and organizational information, analyses, proposed partners, software code and system and product designs, employees and their identities, equity ownership, the methods and means by which the Company plans to conduct its business, all trade secrets, trademarks, tradenames and all intellectual property associated with the Company’s business. With respect to any Member, Confidential Information does not include information that: (a) such Member can demonstrate with reasonable evidence is in the possession of such Member on a non-confidential basis at the time of disclosure by or on behalf of the Company or any of its Affiliates; (b) before or after it has been disclosed to such Member by or on behalf of the Company or any of its Affiliates, becomes part of public knowledge, not as a result of any action or inaction of such Member (other than PubCo) in violation of this LLC Agreement or applicable Law; (c) is approved for release by written authorization of the Board; (d) is disclosed to such Member or its representatives by a third party not, to the knowledge of such Member or such representative (after reasonable inquiry under the circumstances), respectively, in violation of any obligation of confidentiality owed to the Company or any of its Affiliates with respect to such information; or (e) such Member can demonstrate with reasonable evidence was independently developed by such Member or its representatives without use or reference to the Confidential Information.

 

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“Continuing Member Representative” means Lake Street Landlords or any Affiliate of Lake Street Landlords designated in writing by Lake Street Landlords to PubCo, the Company and each of the Continuing Members after the date hereof.

 

“Continuing Members” is defined in the preamble to this LLC Agreement.

 

“Covered Persons” is defined in Section 8.3(b).

 

“Debt Securities” means, with respect to PubCo, any and all debt instruments or debt securities that are not convertible or exchangeable into Equity Securities of PubCo.

 

“Depreciation” means, for each Taxable Year or other taxable period, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable for U.S. federal income tax purposes with respect to an asset for such Taxable Year or other taxable period, except that (a) with respect to any such property the Gross Asset Value of which differs from its Adjusted Basis for U.S. federal income tax purposes and which difference is being eliminated by use of the “remedial method” pursuant to Treasury Regulations Section 1.704-3(d), Depreciation for such Taxable Year or other taxable period shall be the amount of book basis recovered for such Taxable Year or other taxable period under the rules prescribed by Treasury Regulations Section 1.704-3(d)(2), and (b) with respect to any other such property the Gross Asset Value of which differs from its Adjusted Basis for U.S. federal income tax purposes at the beginning of such Taxable Year or other taxable period, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the U.S. federal income tax depreciation, amortization, or other cost recovery deduction for such Taxable Year or other taxable period bears to such beginning Adjusted Basis; provided, however, for purposes of clause (b) of this definition, that if the Adjusted Basis for U.S. federal income tax purposes of an asset at the beginning of such Taxable Year or other taxable period is zero, Depreciation with respect to such asset shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Managing Member.

 

“DGCL” means the General Corporation Law of the State of Delaware.

 

“Distributable Cash” means, as of any relevant date on which a determination is being made by the Managing Member regarding a potential distribution pursuant to Section 6.1(a), the amount of cash and other funds available for any such distribution.

 

“DTC” is defined in Exhibit B.

 

“Earn Out Units” has the meaning given to such term in the Business Combination Agreement.

 

“Effective Time” has the meaning given to such term in the Business Combination Agreement.

 

“Equity Securities” means, with respect to any Person, all of the shares of capital stock or equity of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock or preferred interests or equity of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock or equity of (or other ownership or profit interests in) such Person, including convertible debt securities, or warrants, rights or options for the purchase or acquisition from such Person of such shares or equity (or such other interests), restricted stock awards, restricted stock units, equity appreciation rights, phantom equity rights, profit participation and all of the other ownership or profit interests of such Person (including partnership or member interests therein), whether voting or nonvoting.

 

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“ERISA” means the Employee Retirement Security Act of 1974.

 

“Exchange” means the exchange by the Company of Class B Units held by a Member (together with the surrender and cancellation of the same number of outstanding shares of Class B Common Stock held by such Member) for either (a) a Stock Exchange Payment or (b) a Cash Exchange Payment.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Exchange Date” means the latest of (a) the date that is ten (10) Business Days after the Exchange Notice Date; (b) another date specified in the Exchange Notice; or (c) the date on which a contingency described in Section 4.6(a)(i) that is specified in the Exchange Notice is satisfied or the contingency specified in Section 4.1(h)(ii) is satisfied, as applicable; provided, that if the Exchange Date for any Exchange with respect to which PubCo elects to make a Stock Exchange Payment would otherwise fall within a blackout period, as determined by PubCo and communicated to its stockholders from time to time, then the Exchange Date shall occur on the next Business Day following the end of such blackout period; provided, further, that to the extent an Exchange is made in connection with an Exchanging Member’s proper exercise of its rights to participate in a Piggyback Registration pursuant to Section 2.2 of the Investor Rights Agreement, the Exchange Date shall be the date on which the offering with respect to such Piggyback Registration is completed.

 

“Exchange Notice” means a written election of Exchange in the form of Exhibit B, duly executed by the Exchanging Member.

 

“Exchange Notice Date” means, with respect to any Exchange Notice, the date such Exchange Notice is given to the Company in accordance with Section 12.9.

 

“Exchanged Units” means, with respect to any Exchange, the Class B Units being exchanged pursuant to a relevant Exchange Notice, and an equal number of shares of Class B Common Stock held by the relevant Exchanging Member; provided, that, such amount of Class B Units shall in no event be less than the Minimum Exchange Amount.

 

“Exchanging Member” means any Member holding Class B Units (other than PubCo and its wholly-owned Subsidiaries) whose Class B Units are subject to an Exchange.

 

“Existing Company” is defined in the recitals to this LLC Agreement.

 

“Existing Company LLC Interests” has the meaning given to such term in the Business Combination Agreement.

 

“Fair Market Value” means the fair market value of any property as reasonably determined by the Managing Member in good faith consultation with the Continuing Member Representative after taking into account such factors as the Managing Member and the Continuing Member Representative shall reasonably deem appropriate.

 

“Family Member” means with respect to any Person, a sibling, a spouse, lineal descendant (whether natural or adopted) or spouse of a lineal descendant of such Person or any trust created for the benefit of such Person or of which any of the foregoing is a beneficiary.

 

“Federal Securities Laws” means the Exchange Act, the Securities Act and the other U.S. federal securities Laws and the rules and regulations of the SEC promulgated thereunder or otherwise.

 

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“Final Adjudication” is defined in Section 7.4(b).

 

“GAAP” means United States generally accepted accounting principles at the time.

 

“Governmental Entity” means any nation or government, any state, province or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any court, arbitrator (public or private) or other body or administrative, regulatory or quasi-judicial authority, agency, department, board, commission or instrumentality of any federal, state, local or foreign jurisdiction.

 

“Gross Asset Value” means, with respect to any asset, the asset’s Adjusted Basis for U.S. federal income tax purposes, except as follows:

 

(a) the initial Gross Asset Value of any asset contributed by a Member to the Company shall be the gross Fair Market Value of such asset as of the date of such contribution;

 

(b) the Gross Asset Values of all Company assets may, in the discretion of the Managing Member, be adjusted to equal their respective gross Fair Market Values (taking into account Section 7701(g) of the Code) in accordance with the rules set forth in Treasury Regulations Section 1.704-1(b)(2)(iv)(f), except as otherwise provided in this LLC Agreement, as of the following times: (i) the acquisition of a Unit (or additional Units) by any new or existing Member in exchange for more than a de minimis Capital Contribution to the Company; (ii) the grant of a Unit (other than a de minimis interest in the Company) as consideration for the provision of services to or for the benefit of the Company by an existing Member acting in a member capacity, or by a new Member acting in a member capacity or in anticipation of becoming a Member of the Company (within the meaning of Treasury Regulations Section 1.704-1(b)(2)(iv)(d)); (iii) the distribution by the Company to a Member of more than a de minimis amount of Company assets; (iv) the liquidation of the Company (within the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g)(1)); or (v) any other event to the extent determined by the Managing Member with the approval of the Continuing Member Representative to be permitted and necessary or appropriate to properly reflect Gross Asset Values in accordance with the standards set forth in Treasury Regulations Section 1.704-1(b)(2)(iv)(g); provided, however, that adjustments pursuant to clauses (i), (ii), (iii) and (v) above shall be made only if the Managing Member reasonably determines that such adjustments are necessary or appropriate to reflect the relative economic interests of the Members in the Company;

 

(c) the Gross Asset Value of any Company asset distributed to any Member shall be adjusted to equal the gross Fair Market Value of such asset on the date of such distribution;

 

(d) the Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the Adjusted Basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m) and clause (f) in the definition of “Profits” or “Losses” below or Section 5.2(h); provided, however, that the Gross Asset Value of a Company asset shall not be adjusted pursuant to this clause to the extent the Managing Member determines that an adjustment pursuant to clause (b) of this definition is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this clause (d); and

 

(e) if the Gross Asset Value of a Company asset has been determined or adjusted pursuant to clauses (a), (b) or (d) of this definition of Gross Asset Value, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Profits, Losses and other items allocated pursuant to Article V.

 

“HSR Act” is defined in Section 4.6(a)(iv).

 

“Imputed Tax Underpayments” is defined in Section 10.4(c).

 

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“Indemnifiable Losses” is defined in Section 7.4(a).

 

“Indemnitee” is defined in Section 7.4(a).

 

“Investor Rights Agreement” means the Investor Rights Agreement, dated as of the date hereof, by and among PubCo, certain of the Continuing Members and the other parties thereto (together with any other parties that become a party thereto from time to time upon execution of a joinder in accordance with the terms thereof by any successor or assign to any party to such Investor Rights Agreement).

 

“IRS” means the U.S. Internal Revenue Service.

 

“Lake Street Landlords” means Lake Street Landlords, LLC, a Delaware limited liability company.

 

“Law” means all laws, acts, statutes, constitutions, treaties, ordinances, codes, rules, regulations, orders and rulings of a Governmental Entity, including common law. All references to “Laws” shall be deemed to include any amendments thereto, and any successor Law, unless the context otherwise requires.

 

“Liability” means any debt, liability or obligation, whether accrued or fixed, asserted or unasserted, due or to become due, known or unknown, absolute or contingent, matured or unmatured or determined or determinable.

 

“Liquidating Event” is defined in Section 11.1.

 

“Liquidity Limitations” is defined in Section 6.2.

 

“LLC Agreement” is defined in the preamble to this LLC Agreement.

 

“Lock-Up Period” shall have the meaning ascribed in the Investor Rights Agreement.

 

“Managing Member” means PubCo, in its capacity as the sole managing Member of the Company.

 

“Member” means any Person that executes this LLC Agreement as a Member (including the Managing Member), and any other Person admitted to the Company as an additional or substituted Member, that has not made a disposition of all of such Person’s Units.

 

“Member Minimum Gain” has the meaning ascribed to “partner nonrecourse debt minimum gain” set forth in Treasury Regulations Section 1.704-2(i). It is further understood that the determination of Member Minimum Gain and the net increase or decrease in Member Minimum Gain shall be made in the same manner as required for such determination of Company Minimum Gain under Treasury Regulations Sections 1.704-2(d) and 1.704-2(g)(3), as set forth in Treasury Regulations Section 1.704-2(i)(3).

 

“Member Nonrecourse Debt” has the meaning of “partner nonrecourse debt” set forth in Treasury Regulations Section 1.704-2(b)(4). “Member Nonrecourse Deductions” has the meaning of “partner nonrecourse deductions” set forth in Treasury Regulations Sections 1.704-2(i)(1) and 1.704-2(i)(2).

 

“Minimum Exchange Amount” means Class B Units held by an Exchanging Member equal to the lesser of (a) fifty percent (50%) of the Class B Units and (b) all of the Class B Units then held by the applicable Exchanging Member.

 

“National Securities Exchange” means a securities exchange registered with the Commission under Section 6 of the Exchange Act.

 

“Net Outstanding PTIC II Class A Shares” has the meaning given to such term in the Business Combination Agreement.

 

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“Non-Party Affiliate” is defined in Section 12.15.

 

“Nonrecourse Deductions” has the meaning assigned that term in Treasury Regulations Sections 1.704-2(b) and 1.704-2(c).

 

“Nonrecourse Liability” is defined in Treasury Regulations Section 1.704-2(b)(3).

 

“Officer” means each Person appointed as an officer of the Company pursuant to and in accordance with the provisions of Section 7.2. The initial Officers are listed on Exhibit C attached hereto.

 

“Party” and “Parties” means, individually or collectively, each Member and the Company.

 

“Permitted Transfer” is defined in Section 9.1(b).

 

“Permitted Transferee” means, with respect to any Member, (a) any Family Member of such Member; (b) any of such Member’s equity holders (if such Member is an entity); and (c) any Affiliate of such Member (including any partner, shareholder or member controlling or under common control with such Member and Affiliated investment fund or vehicle of such Member), but excluding any Affiliate under this clause (c) who operates or engages in a business which competes with the business of PubCo or the Company; provided that, neither Lake Street Landlord’s, nor its Affiliate’s portfolio companies, nor any Affiliated investment fund or vehicle of Lake Street Landlords shall be deemed to operate or engage in any such competing business.

 

“Person” means any natural person, sole proprietorship, partnership, joint venture, trust, unincorporated association, corporation, limited liability company, Governmental Entity or other entity.

 

“Piggyback Registration” is defined in the Investor Rights Agreement.

 

“Plan Asset Regulations” means the regulations issued by the U.S. Department of Labor at Section 2510.3-101 of Part 2510 of Chapter XXV, Title 29 of the Code of Federal Regulations.

 

“Profits” or “Losses” means, for each Taxable Year or other taxable period, an amount equal to the Company’s taxable income or loss for such year or period, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments (without duplication):

 

(a) any income or gain of the Company that is exempt from U.S. federal income tax and not otherwise taken into account in computing Profits or Losses shall be added to such taxable income or loss;

 

(b) any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Profits or Losses, shall be subtracted from such taxable income or loss;

 

(c) in the event the Gross Asset Value of any Company asset is adjusted pursuant to clause (b) or (c) of the definition of Gross Asset Value above, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the Gross Asset Value of the Company asset) or an item of loss (if the adjustment decreases the Gross Asset Value of the Company asset) from the disposition of such asset and shall, except to the extent allocated pursuant to Section 5.2, be taken into account for purposes of computing Profits or Losses;

 

(d) gain or loss resulting from any disposition of Company assets with respect to which gain or loss is recognized for U.S. federal income tax purposes shall be computed with reference to the Gross Asset Value of the asset disposed of notwithstanding that the adjusted tax basis of such asset differs from its Gross Asset Value; (e) in lieu of the depreciation, amortization and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such period;

 

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(f) to the extent an adjustment to the adjusted tax basis of any asset pursuant to Code Section 734(b) is required, pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital Account balances as a result of a distribution other than in liquidation of a Member’s interest in the Company, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or an item of loss (if the adjustment decreases such basis) from the disposition of such asset and shall be taken into account for purposes of computing Profits or Losses; and

 

(g) any items of income, gain, loss or deduction which are specifically allocated pursuant to the provisions of Section 5.2 shall not be taken into account in computing Profits or Losses for any Taxable Year, but such items available to be specially allocated pursuant to Section 5.2 shall be determined by applying rules analogous to those set forth in clauses (a) through (f) above.

 

“PTIC II” is defined in the recitals to this LLC Agreement.

 

“PTIC II Warrants” has the meaning given in the Business Combination Agreement.

 

“PubCo” is defined in the preamble to this LLC Agreement.

 

“PubCo Call Notice” is defined in Section 4.6(f).

 

“PubCo Call Right” means PubCo’s election, in accordance with Section 4.6(f), to directly purchase Exchanged Units described in an Exchange Notice given by an Exchanging Member.

 

“PubCo Common Stock” means all classes of common stock of PubCo, including the Class A Common Stock and the Class B Common Stock.

 

“PubCo Offer” means any tender offer, share exchange offer, issuer bid, take-over bid, recapitalization, or similar transaction with respect to Class A Common Stock, whether proposed by the Managing Member or proposed to the Managing Member or its stockholders.

 

“Push-Out Election” is defined in Section 10.4(e).

 

“Reclassification Event” means any of the following: (a) any reclassification or recapitalization of PubCo Common Stock, a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination or any transaction subject to Section 4.1(i), (b) any merger, consolidation or other combination involving PubCo or (c) any sale, conveyance, lease, or other disposal of all or substantially all the properties and assets of PubCo to any other Person, in each of clauses (a), (b) or (c), as a result of which holders of PubCo Common Stock shall be entitled to receive cash, securities or other property for their shares of PubCo Common Stock.

 

“Redemption Election Committee” means the Redemption Election Committee of the Board, as established by the Board in accordance with the bylaws of the Managing Member, which committee shall be comprised solely of directors not nominated under any contractual right by, or otherwise affiliated with, holders of Class B Common Stock.

 

“Registration Statement” means any registration statement that PubCo files pursuant to the Investor Rights Agreement.

 

“Regulatory Allocations” is defined in Section 5.2(i).

 

“SEC” means the U.S. Securities and Exchange Commission.

 

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“Securities Law” means Federal Securities Laws and other applicable foreign and domestic securities or similar Laws.

 

“Stock Exchange Payment” means, with respect to any Exchange of Class B Units for which a Stock Exchange Payment is elected by the Managing Member on behalf of the Company, a number of shares of Class A Common Stock equal to the number of Class B Units so exchanged.

 

“Subsidiary” means, with respect to any Person, any corporation, association, partnership, limited liability company, joint venture or other business entity of which more than fifty percent (50%) of the voting power or equity is owned or controlled directly or indirectly by such Person, or one (1) or more of the Subsidiaries of such Person, or a combination thereof.

 

“Tax Amount” means, with respect to a Taxable Year commencing after the Effective Time (or, in the case of a Taxable Year that includes the Effective Time, the portion thereof after the Effective Time), (1) the excess, if any, of (a) the product of (i) an amount, if positive, equal to the product of (A) the taxable income of the Company allocable to a Member pursuant to this LLC Agreement (taking into account corrective allocations made pursuant to Section 5.3(e)) with respect to the relevant Taxable Year (or portion thereof) (determined based upon a good faith estimate by the Managing Member and updated to reflect the final Company tax returns filed for such Taxable Year, and, for purposes of this definition, (w) including adjustments to taxable income in respect of Section 704(c) of the Code, (x) excluding adjustments to taxable income in respect of Section 743(b), 734(b) or 754 of the Code, (y) calculated as if allocations of such taxable income were, for such Taxable Year (or portion thereof), the sole source of income and loss for such Member, (or, as appropriate, of its direct or indirect partners or members), and (z) taking into account the carryover of items of loss, deduction and expense, including the utilization of any excess business interest expense under Code Section 163(j), previously allocated to such Member for a Taxable Year (or portion thereof) that begins after the Effective Time to the extent not previously taken into account for purposes of determining the Tax Amount for a Taxable Year (or portion thereof)) times (B) one-fourth (1/4) in the case of the first quarter, one-half (1/2) in the case of the second quarter, three-fourths (3/4) in the case of the third quarter, and one (1) in the case of the fourth quarter (in each case subject to adjustment by the Managing Member if the Taxable Year is less than a full year) times (ii) the Assumed Rate with respect to such Taxable Year (or portion thereof), over (b) the amount of distributions previously made to such Member pursuant to Section 6.2 with respect to such Taxable Year (or portion thereof) after the Effective Time plus (2) solely with respect to PubCo, to the extent the amounts described in clause (1) are not sufficient to permit PubCo to timely pay its actual U.S. federal, state, local, and foreign tax liabilities related to tax items of the Company and its Subsidiaries and timely meet its obligations pursuant to the Tax Receivable Agreement, any incremental amount required to permit PubCo to timely pay such actual tax liabilities and timely meet its obligations pursuant to the Tax Receivable Agreement; provided, that (i) any amount described in the preceding clause (2) shall be used solely for the purposes described in such clause (2) and (ii) to the extent that any amount described in such clause (2) and which is distributed to PubCo may not be so used by PubCo for such purposes (e.g., as a result of the Senior Obligations (as defined in the Tax Receivable Agreement)), then PubCo shall return such amount to the Company within ten (10) Business Days after PubCo’s reasonable determination that such amount cannot be so used, except to the extent of the aggregate amount of any Cash Exchange Payments then-owed to any Exchanging Members or then-contemplated by the Redemption Election Committee to be paid to any Exchanging Members.

 

“Tax Distribution” is defined in Section 6.2.

 

“Tax Distribution Date” means April 10, June 10, September 10, and December 10 of each calendar year, which shall be adjusted by the Managing Member as reasonably necessary to take into account changes in estimated tax payment due dates for U.S. federal income taxes under applicable Law (but in no event shall the Managing Member make adjustments such that there are more than four (4) Tax Distribution Dates in any calendar year); provided, however, that if a Tax Distribution Date in a given calendar year is not a Business Day, such Tax Distribution Date shall be the Business Day immediately prior to such date.

 

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“Tax Receivable Agreement” means that certain tax receivable agreement, dated as of the date hereof, by and among PubCo, the Company, certain of the Continuing Members and the other parties thereto.

 

“Tax Withholding/Payment Amounts” is defined in Section 10.5(a).

 

“Taxable Year” means the Company’s taxable year for U.S. federal income tax purposes, which shall end on December 31 of each calendar year unless otherwise required by applicable Law.

 

“Trading Day” means a day on which Nasdaq or such other principal United States securities exchange on which the Class A Common Stock is listed, quoted or admitted to trading and is open for the transaction of business (unless such trading shall have been suspended for the entire day).

 

“Transaction Equity Security Amount” has the meaning given to such term in the Business Combination Agreement.

 

“Transfer” means, when used as a noun, any voluntary or involuntary, direct or indirect, transfer, sale, pledge, hedge, encumbrance, or hypothecation or other disposition, or legally binding agreement to undertake any of the foregoing, by the Transferor (whether through a change of control of the Transferor or any Person that controls the Transferor, the issuance or transfer of Equity securities of the Transferor, or by operation of law or otherwise) and, when used as a verb, the Transferor voluntarily or involuntarily, directly or indirectly, transfers, sells, pledges, hedges, encumbers or hypothecates or otherwise disposes of (whether through a change of control of the Transferor or any Person that controls the Transferor, the issuance or transfer of Equity securities of the Transferor, or by operation of law or otherwise), or agrees (in a legally binding manner) to do any of the foregoing, including, in each case, (a) the establishment or increase of a put equivalent position or liquidation with respect to, or decrease of a call equivalent position within the meaning of Section 16 of the Exchange Act with respect to, any security or (b) entry into any swap or other arrangement that transfers to another Person, in whole or in part, any of the economic consequences of ownership of any security, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise; provided that any such indirect pledge, encumbrance or hypothecation that does not provide the counterparty thereto the right to (i) take direct possession, as the holder of record, of any Units shall not, (ii) direct the disposition of any such Units, or (iii) exercise any rights of a holder of such Units hereunder or under applicable Law, shall not, in any such case, be considered a “Transfer” for purposes of this LLC Agreement. The terms “Transferee,” “Transferor,” “Transferred,” and other forms of the word “Transfer” shall have the correlative meanings.

 

“Transferee” is defined in Exhibit D.

 

“Transferor” is defined in Exhibit D.

 

“Treasury Regulations” means pronouncements, as amended from time to time, or their successor pronouncements, which clarify, interpret and apply the provisions of the Code, and which are designated as “Treasury Regulations” by the United States Department of the Treasury.

 

“Triggering Event” has the meaning given to such term in the Business Combination Agreement; provided that a Triggering Event with respect to any Earn Out Shares (as defined in the Business Combination Agreement) shall be deemed to be a Triggering Event with respect to the Earn Out Units held by PubCo corresponding to such Earn Out Shares.

 

“Undertaking” is defined in Section 7.4(b).

 

“Unissued Earn Out Units” means Earn Out Units that have not yet been issued in accordance with the terms of the Business Combination Agreement.

 

“Unitholders” is defined in Exhibit B.

 

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“Units” means the Class B Units, the Earn Out Units, and any other Equity Securities of the Company, and any rights to payments as a holder of any of the foregoing, but excluding any rights under any court authorized charging order.

 

“VWAP” means the daily per share volume-weighted average price of the Class A Common Stock, on Nasdaq or such other principal United States securities exchange on which the shares of Class A Common Stock are listed, quoted or admitted to trading, as displayed under the heading Bloomberg VWAP on the Bloomberg page designated for the Class A Common Stock (or the equivalent successor if such page is not available) in respect of the period from the open of trading on such Trading Day until the close of trading on such Trading Day (or if such volume-weighted average price is unavailable, (a) the per share volume-weighted average price of a share of Class A Common Stock, as applicable, on such Trading Day (determined without regard to afterhours trading or any other trading outside the regular trading session or trading hours), or (b) if such determination is not feasible, the market price per share of Class A Common Stock, in either case as determined by a nationally recognized independent investment banking firm retained in good faith for this purpose by PubCo); provided, however, that if at any time for purposes of the Cash Exchange Class A 5-Day VWAP, shares of Class A Common Stock are not then listed, quoted or traded on a principal United States securities exchange or automated or electronic quotation system, then the VWAP shall mean the per share Appraiser FMV of one (1) share of Class A Common Stock (or such other Equity Security into which the Class A Common Stock was converted or exchanged).

 

1.2 Interpretive Provisions. For all purposes of this LLC Agreement, except as otherwise provided in this LLC Agreement or unless the context otherwise requires:

 

(a) the terms defined in Section 1.1 are applicable to the singular as well as the plural forms of such terms;

 

(b) an accounting term not otherwise defined in this LLC Agreement has the meaning assigned to it under GAAP;

 

(c) all references to currency, monetary values and dollars set forth in this LLC Agreement shall mean United States (U.S.) dollars and all payments under this LLC Agreement shall be made in United States dollars;

 

(d) when a reference is made in this LLC Agreement to an Article, Section, clause, Exhibit or Schedule, such reference is to an Article, Section or clause of, or an Exhibit or Schedule to, this LLC Agreement unless otherwise indicated;

 

(e) whenever the words “include”, “includes” or “including” are used in this LLC Agreement, they shall be deemed to be followed by the words “without limitation”;

 

(f) “or” is not exclusive;

 

(g) pronouns of any gender or neuter shall include, as appropriate, the other pronoun forms;

 

(h) references in this LLC Agreement to any Law shall be deemed also to refer to such Law, any amendments thereto, any successor provisions thereof, and all rules and regulations promulgated thereunder;

 

(i) the words “hereof,” “herein” and “hereunder” and words of similar import, when used in this LLC Agreement, refer to this LLC Agreement as a whole and not to any particular provision of this LLC Agreement;

 

(j) whenever this LLC Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified, and when counting days, the date of commencement will not be included as a full day for purposes of computing any applicable time periods (except as otherwise may be required under any applicable Law);

 

(k) if any action is to be taken or given on or by a particular calendar day, and such calendar ay is not a Business Day, then such action may be deferred until the next Business Day; and

 

(l) the words “income tax” and words of similar import, when used in this LLC Agreement, shall be deemed also to refer to franchise tax or any similar tax, assessment or charge that is based on, or measured by, income, profits or receipts of a Person, whether on an exclusive or on an alternative basis.

 

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ARTICLE II
ORGANIZATION OF THE LIMITED LIABILITY COMPANY

 

2.1 Formation. The Company has heretofore been formed and shall continue its existence as a limited liability company subject to the provisions of the Act upon the terms, provisions and conditions set forth in this LLC Agreement.

 

2.2 Filing. The Company’s Certificate of Formation was filed with the Secretary of State of the State of Delaware in accordance with the Act. The Members shall execute such further documents (including amendments to such Certificate of Formation) and take such further action as is appropriate to comply with the requirements of Law for the operation of a limited liability company in all states and counties in which the Company may conduct business.

 

2.3 Name. The name of the Company is “Appreciate Intermediate Holdings, LLC” and all business of the Company shall be conducted in such name or, in the discretion of the Managing Member, under any other name.

 

2.4 Registered Office: Registered Agent. The address of the registered office of the Company in the State of Delaware shall be the office of the initial registered agent named in the Certificate of Formation or such other office (which need not be a place of business of the Company) as the Managing Member may designate from time to time in the manner provided by applicable law, and the registered agent for service of process on the Company in the State of Delaware at such registered office shall be the registered agent named in the Company’s Certificate of Formation or such Person or Persons as the Board may designate from time to time in the manner provided by applicable law.

 

2.5 Principal Place of Business. The principal office of the Company shall be located at such place as the Managing Member may from time to time designate. The Company may maintain offices at such other place or places as the Managing Member deems advisable.

 

2.6 Purpose; Powers. The nature of the business or purposes to be conducted by the Company is to engage in any lawful act or activity for which limited liability companies may be formed under the Act. The Company shall have the power and authority to take any and all actions and engage in any and all activities necessary, appropriate, desirable, advisable, ancillary or incidental to the accomplishment of the foregoing purpose.

 

2.7 Term. The term of the Company commenced on the date of filing of the Certificate of Formation of the Company with the office of the Secretary of State of the State of Delaware in accordance with the Act and shall continue indefinitely. The Company may be dissolved and its affairs wound up only in accordance with Article XI.

 

2.8 Intent. It is the intent of the Members that (i) the Company be operated in a manner consistent with its treatment as a “partnership” for U.S. federal and applicable state and local income tax purposes and (ii) assuming all Company Unitholders are Rolling Company Unitholders (each as defined in the Business Combination Agreement) (A) consistent with Section 6.1(f) of the Business Combination Agreement, for U.S. federal and applicable state and local income tax purposes, the Company shall be treated as a continuation of the Existing Company for purposes of Section 708 of the Code (see, e.g., Rev. Rul. 66-264, 1966-2 C.B. 248; Legal Advice Issued by Field Attorneys 20132101F; Private Letter Ruling 201605004), and (B) as a continuation of the Existing Company, the Company shall take any necessary, tax-related administrative actions (including with respect to the filing of tax returns) consistent therewith (clause (i) and clause (ii), collectively, the “Company Intended Tax Treatment”). The Company and each Member shall file all tax returns and shall otherwise take all tax, financial and other reporting positions in a manner consistent with the Company Intended Tax Treatment. Neither the Company nor any Member shall take any action inconsistent with the Company Intended Tax Treatment. No election (including an entity classification election for the Company) contrary to the Company Intended Tax Treatment shall be made by the Company or any Member, and the Company shall not convert into or merge into (with the Company not being the surviving entity in such merger) an entity treated as a corporation for U.S. federal or applicable state and local income tax purposes. Notwithstanding anything to the contrary set forth in this Section 2.8, this Section 2.8 shall not prevent the Company from entering into or consummating any transaction which constitutes a Change of Control to the extent such transaction is duly authorized by the Managing Member in accordance with this LLC Agreement, subject to the rights set forth in the Tax Receivable Agreement, if any, applicable to such transaction.

 

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ARTICLE III

RESERVED

 

ARTICLE IV

OWNERSHIP AND CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS

 

4.1 Capital Contributions; Authorized Units; General Provisions with Respect to Units.

 

(a) Initial Capital Contribution; Business Combination Agreement Transactions. The Members, on or prior to the date hereof, contributed that number of limited liability company interests in the Existing Company specified on Exhibit A-2 in exchange for the Class B Units set forth on Exhibit A-1. PTIC II, on or prior to the date hereof, contributed the Closing Date Contribution Amount to the Company in exchange for Class A Units set forth on Exhibit A-1. Immediately, following the consummation of the transactions contemplated by the Business Combination Agreement, the total number of Class B Units (including Earn Out Units, if any) and Class A Units held by the Continuing Members and PubCo, as applicable, as of the Effective Time is set forth next to each such Member’s name on Exhibit A-1 hereto. The number of shares of Class B Common Stock held by each Continuing Member shall equal the number of Class B Units held by such Continuing Member. Notwithstanding anything in this LLC Agreement to the contrary, as of the date hereof, (i) unless prohibited by applicable law, the Gross Asset Values of all Company assets shall be adjusted to equal their respective gross Fair Market Values (taking into account Section 7701(g) of the Code) in accordance with the rules set forth in Treasury Regulations Section 1.704-1(b)(2)(iv)(f) in connection with the acquisition of Class A Units by PubCo in exchange for PubCo’s Capital Contribution to the Company and (ii) each Member shall be deemed to have made Capital Contributions equal to the Closing Date Capital Account Balance of such Member set forth next to such Member’s name on Exhibit A-1 hereto.

 

(b) Units. Subject to the provisions of this LLC Agreement, the Company shall be authorized to issue from time to time such number of Class A Units, Class B Units and such other Equity Securities of the Company as the Managing Member shall determine in accordance with and subject to the restrictions in this Section 4.1 and Section 4.3. Subject to this Section 4.1 and Section 4.3, each authorized Unit may be issued pursuant to such agreements as the Managing Member shall approve, including pursuant to warrants, options, or other rights or property to acquire Units or that may be converted into Units. The Company may reissue any Units that have been repurchased or acquired by the Company; provided that any such issuance, and the admission of any Person as a Member in connection therewith, is otherwise made in accordance with and subject to the restrictions in this LLC Agreement. The Units shall be uncertificated. The Company shall not, and the Managing Member shall not cause the Company to, issue any Units if such issuance would result in the Company having more than 100 partners, within the meaning of Treasury Regulations Section 1.7704-1(h) (determined taking into account the rules of Treasury Regulations Section 1.7704-1(h)(3)); provided that, for such purposes, the Company and the Managing Member shall be entitled to assume that each Continuing Member is treated as a single partner within the meaning of Treasury Regulations Section 1.7704-1(h) (determined taking into account the rules of Treasury Regulations Section 1.7704-1(h)(3)), unless otherwise required by applicable Law.

 

(c) Schedule of Members. The Company shall maintain a schedule, appended hereto as Exhibit A-1 (as updated and amended from time to time in accordance with the terms of this LLC Agreement and current as of the date set forth therein), which shall include: (i) the name and address of each Member; (ii) the aggregate number of and type of Units issued and outstanding and held by each Member; and (iii) each Member’s Capital Contributions following the Effective Time.

 

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(d) New PubCo Issuances.

 

(i) Subject to Section 4.6 and Section 4.1(d)(ii), if, at any time after the Effective Time, PubCo issues shares of its Class A Common Stock or any other Equity Security of PubCo (other than shares of Class B Common Stock), (x) the Company shall concurrently issue to PubCo an equal number of Class A Units (if PubCo issues shares of Class A Common Stock), or an equal number of such other Equity Security of the Company corresponding to the Equity Securities issued by PubCo (if PubCo issues Equity Securities other than Class A Common Stock), and with the same rights to dividends and distributions (including distributions upon liquidation) and other economic rights as those of such Equity Securities of PubCo so issued and (y) PubCo shall concurrently contribute to the Company the net proceeds or other property received by PubCo, if any, for such share of Class A Common Stock or other Equity Security, subject to the second proviso in Section 7.7.

 

(ii) Notwithstanding anything to the contrary contained in Section 4.1(d)(i) or Section 4.1(d)(iii), this Section 4.1(d) shall not apply to (x) the issuance and distribution to holders of shares of PubCo Common Stock of rights to purchase Equity Securities of PubCo under a “poison pill” or similar shareholder rights plan (and upon exchange of Class B Units for Class A Common Stock, such Class A Common Stock shall be issued together with a corresponding right under such plan) or (y) the issuance under PubCo’s employee benefit plans of any warrants, options, stock appreciation right, restricted stock, restricted stock units, performance based award or other rights to acquire Equity Securities of PubCo or rights or property that may be converted into or settled in Equity Securities of PubCo, but shall in each of the foregoing cases apply to the issuance of Equity Securities of PubCo in connection with the exercise or settlement of such warrants, options, stock appreciation right, restricted stock units, performance based awards or the vesting of restricted stock (including as set forth in Section 4.1(d)(iii) below, as applicable).

 

(iii) In the event any outstanding Equity Security of PubCo is exercised or otherwise converted and, as a result, any shares of Class A Common Stock or other Equity Securities of PubCo are issued (including as a result of the exercise of PTIC II Warrants), (x) the corresponding Equity Security outstanding at the Company and held by PubCo, if any, shall be similarly exercised or otherwise converted, if applicable, (y) an equivalent number of Class A Units or equivalent Equity Securities of the Company shall be issued to PubCo as required by the first sentence of Section 4.1(d)(i), and (z) PubCo shall concurrently contribute to the Company the net proceeds received by PubCo from any such exercise or conversion, subject to the second proviso in Section 7.7.

 

(e) PubCo Debt Issuance. If at any time PubCo or any of its Subsidiaries (other than the Company and its Subsidiaries) issues Debt Securities, PubCo or such Subsidiary shall transfer to the Company the net proceeds received by PubCo or such Subsidiary, as applicable, in exchange for such Debt Securities in a manner that directly or indirectly burdens the Company with the repayment of the Debt Securities, subject to the second proviso in Section 7.7.

 

(f) New Company Issuances. Except pursuant to Section 4.6, (x) the Company may not issue any additional Units to PubCo or any of its Subsidiaries (other than the Company and its Subsidiaries) unless (i) substantially simultaneously therewith PubCo or such Subsidiary issues or transfers an equal number of newly-issued shares of Class A Common Stock (or relevant Equity Security of such Subsidiary) to another Person or Persons, and (ii) such issuance is in accordance with Section 4.1(d), and (y) the Company may not issue any other Equity Securities of the Company to PubCo or any of its Subsidiaries (other than the Company’s Subsidiaries) unless (i) substantially simultaneously therewith PubCo or such Subsidiary issues or transfers, to another Person, an equal number of newly-issued shares of Equity Securities of PubCo or such Subsidiary with substantially the same rights to dividends and distributions (including distributions upon liquidation) and other economic rights as those of such Equity Securities of the Company, and (ii) such issuance is in accordance with Section 4.1(d).

 

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(g) PubCo Redemptions.

 

(i) PubCo or any of its Subsidiaries (other than the Company and its Subsidiaries) may redeem, repurchase or otherwise acquire (A) shares of Class A Common Stock pursuant to a Board approved repurchase plan or program (or otherwise in connection with a transaction approved by the Board) and, substantially simultaneously therewith, the Company shall redeem, repurchase or otherwise acquire from PubCo or such Subsidiary an equal number of Class A Units for the same price per security, if any, or (B) any other Equity Securities of PubCo or any of its Subsidiaries (other than the Company and its Subsidiaries) pursuant to a Board approved repurchase plan or program (or otherwise in connection with a transaction approved by the Board) and, substantially simultaneously therewith, the Company shall redeem, repurchase or otherwise acquire from PubCo or such Subsidiary an equal number of the corresponding class or series of Equity Securities of the Company with the same rights to dividends and distributions (including distributions upon liquidation) and other economic rights as those of such Equity Securities of PubCo or such Subsidiary for the same price per security, if any.

 

(ii) The Company may not redeem, repurchase or otherwise acquire (x) any Class A Units from PubCo or any of its Subsidiaries (other than the Company’s Subsidiaries) unless substantially simultaneously PubCo or such Subsidiary redeems, repurchases or otherwise acquires pursuant to a Board approved repurchase plan or program (or otherwise in connection with a transaction approved by the Board) an equal number of shares of Class A Common Stock for the same price per security from holders thereof or (y) any other Equity Securities of the Company from PubCo or any of its Subsidiaries (other than the Company’s Subsidiaries) unless substantially simultaneously PubCo or such Subsidiary redeems, repurchases or otherwise acquires pursuant to a Board approved repurchase plan or program (or otherwise in connection with a transaction approved by the Board) for the same price per security an equal number of Equity Securities of PubCo (or such Subsidiary) of a corresponding class or series with substantially the same rights to dividends and distributions (including distributions upon liquidation) and other economic rights as those of such Equity Securities of PubCo or such Subsidiary.

 

(h) PubCo Sale Transactions.

 

(i) In connection with a Change of Control Transaction (including in respect of PubCo), each Member shall, and the Managing Member shall have the right, in its sole discretion, to require, each Member to effect a sale, redemption, tender, transfer or other disposal (together, “Sale”) of some or all of the issued and outstanding Common Units held by each Member (including, for the avoidance of doubt, any Unissued Earn Out Units, which Unissued Earn Out Units shall be issued by virtue of the applicable Triggering Event(s)) from the holders of Class B Units (on a pro-rata basis), pursuant to which such Common Units will be exchanged for shares of Class A Common Stock (or economically equivalent cash or securities of a successor entity), mutatis mutandis, in accordance with the redemption provisions of this Agreement. Any such Sale pursuant to this Section 4.1(h)(i) shall be effective immediately prior to the consummation of such Change of Control Transaction (and, for the avoidance of doubt, shall be contingent upon the consummation of such Change of Control Transaction and shall not be effective if such Change of Control Transaction is not consummated) (the date of such Sale pursuant to this Section 4.1(h)(i), the “Change of Control Date”). From and after the Change of Control Date, (i) the Common Units subject to such Sale shall be deemed to be transferred to the Managing Member on the Change of Control Date and (ii) each such Member shall cease to have any rights with respect to the Common Units subject to such Sale (other than the right to receive shares of Class A Common Stock (or economically equivalent cash or equity securities in a successor entity) pursuant to such Sale). In the event of an expected Change of Control Transaction, the Managing Member shall provide written notice of an expected Change of Control Transaction to all Members within the earlier of (x) five (5) Business Days following the execution of a definitive agreement providing for such Change of Control Transaction and (y) ten (10) Business Days before the proposed date upon which the contemplated Change of Control Transaction is to be effected, including in such notice such information as may reasonably describe the Change of Control Transaction, subject to applicable law or regulation, including the date of execution of such agreement or such proposed effective date, as applicable, the amount and types of consideration to be paid for shares of Class A Common Stock in the Change of Control Transaction and any election with respect to types of consideration that a holder of shares of Class A Common Stock, as applicable, shall be entitled to make in connection with a Change of Control Transaction (which election shall be available to each Member on the same terms as holders of shares of Class A Common Stock). Following delivery of such notice and on or prior to the Change of Control Date, the Members shall take all actions reasonably requested by the Managing Member to effect such Sale, including taking any action and delivering any document required pursuant to this Section 4.1(h)(i) to effect such Sale, including executing any agreements, certificates, instruments or other documents as the PubCo shall require in connection with such Change of Control Transaction including, without limitation, any agreement to indemnify and/or pay any party, provided, however, that such indemnity and payment obligation is capped at the proceeds received by such Member holding Common Units.

 

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(ii) In the event that a tender offer, share exchange offer, issuer bid, take-over bid, recapitalization, or similar transaction with respect to Class A Common Stock (a “Pubco Offer”) is proposed by the Managing Member or is proposed to the Managing Member or its stockholders and approved by the Board or is otherwise effected or to be effected with the consent or approval of the Board, the Managing Member shall provide written notice of the Pubco Offer to all Members within the earlier of (i) five (5) Business Days following the execution of an agreement (if applicable) with respect to, or the commencement of (if applicable), such Pubco Offer and (ii) ten (10) Business Days before the proposed date upon which the Pubco Offer is to be effected, including in such notice such information as may reasonably describe the Pubco Offer, subject to applicable law or regulation, including the date of execution of such agreement (if applicable) or of such commencement (if applicable), the material terms of such Pubco Offer, including the amount and types of consideration to be received by holders of shares of Class A Common Stock in the Pubco Offer, any election with respect to types of consideration that a holder of shares of Class A Common Stock, as applicable, shall be entitled to make in connection with such Pubco Offer, and the number of Common Units held by such Member that is applicable to such Pubco Offer. The Members shall be permitted to participate in such Pubco Offer by delivering a written notice of participation that is effective immediately prior to the consummation of such Pubco Offer (and that is contingent upon consummation of such offer), and shall include such information necessary for consummation of such offer as requested by the Managing Member. In the case of any Pubco Offer that was initially proposed by the Managing Member, the Managing Member shall use reasonable best efforts to enable and permit the Members to participate in such transaction to the same extent or on an economically equivalent basis as the holders of shares of Class A Common Stock, and to enable such Members to participate in such transaction without being required to exchange Common Units prior to the consummation of such transaction.

 

(iii) In the event that a transaction or proposed transaction constitutes both a Change of Control Transaction and a Pubco Offer, the provisions of Section 4.1(h)(i) shall take precedence over the provisions of (g)(ii) with respect to such transaction, and the provisions of Section 4.1(h)(ii) shall be subordinate to provisions of (g)(i), and may only be triggered if the Managing Member elects to waive the provisions of (g)(i).

 

(i) Equity Subdivisions and Combinations.

 

(i) The Company shall not in any manner effect any subdivision (by any equity split, equity distribution, reclassification, recapitalization or otherwise) or combination (by reverse equity split, reclassification, recapitalization or otherwise) of the outstanding Units unless concurrently accompanied by an identical subdivision or combination, as applicable, of the outstanding PubCo Common Stock or other related class or series of Equity Security of PubCo, with corresponding changes made with respect to any other exchangeable or convertible Equity Securities of the Company and Equity Securities of PubCo.

 

(ii) Except in accordance with Section 4.6(c), PubCo shall not in any manner effect any subdivision (by any equity split, equity distribution, reclassification, recapitalization or otherwise) or combination (by reverse equity split, reclassification, recapitalization or otherwise) of the outstanding PubCo Common Stock or any other class or series of Equity Security of PubCo, unless concurrently accompanied by an identical subdivision or combination, as applicable, of the outstanding Units or other related class or series of Equity Security of the Company, with corresponding changes made with respect to any applicable exchangeable or convertible Equity Securities of the Company and Equity Securities of PubCo.

 

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(j) General Authority. For the avoidance of doubt, but subject to Sections 4.1(a), (d), (g), (h) and Section 4.3, the Company and PubCo (including in its capacity as the Managing Member of the Company) shall be permitted to undertake all actions, including an issuance, redemption, reclassification, distribution, division or recapitalization, with respect to the Class A Units or the Class B Units to maintain at all times a one-to-one ratio between (i) the number of Class A Units owned by PubCo, directly or indirectly, and the number of outstanding shares of Class A Common Stock, and (ii) the number of outstanding shares of Class B Common Stock held by any Person (other than PubCo) and the number of Class B Units held by such Person disregarding, for purposes of maintaining the one-to-one ratios in clause (i) (A) options, rights or securities of PubCo issued under any plan involving the issuance of any Equity Securities of PubCo that are convertible into or exercisable or exchangeable for Class A Common Stock, (B) treasury stock, or (C) preferred stock or other debt or equity securities (including warrants, options or rights) issued by PubCo that are convertible or into or exercisable or exchangeable for Class A Common Stock (but in each case prior to such conversion or exchange).

 

4.2 Capital Contributions. Except as otherwise expressly set forth in this LLC Agreement, no Member shall be required to make additional Capital Contributions to the Company.

 

4.3 Issuance of Additional Units; Redemption of Certain Class B Units.

 

(a) Issuance of Additional Units. Subject to the terms and conditions of this LLC Agreement (including Section 4.1 and this Section 4.3), the Managing Member shall have the right to authorize and cause the Company to issue on such terms (including price) as may be determined by the Managing Member (a) additional Common Units or Equity Securities in the Company having such rights, preferences and privileges as determined by the Managing Member, which rights, preferences and privileges may be senior to the Common Units, and (b) obligations, evidences of indebtedness or other securities or interests convertible or exchangeable for Units or other Equity Securities in the Company; provided that at any time following the date hereof, in each case the Company shall not issue Equity Securities in the Company to any Person other than PubCo or then-existing Members unless such Person shall have executed a counterpart to this LLC Agreement and all other documents, agreements or instruments deemed necessary or desirable in the reasonable discretion of the Managing Member. Upon any such issuance and execution, (a) such Person shall be admitted as a Member of the Company, and (b) the Managing Member shall update the Company’s books and records and amend Exhibit A-1 to reflect such issuance. Subject to Section 4.1, this Section 4.3 and Section 12.1, the Managing Member is hereby authorized to amend this LLC Agreement to set forth the designations, preferences, rights, powers and duties of such additional Common Units or other Equity Securities in the Company authorized or issued pursuant to this Section 4.3.

 

(b) Issuance of Earn Out Units. Earn Out Units to be issued in connection with any Triggering Event shall be issued in accordance with Section 2.6 of the Business Combination Agreement and will be issued to each Member holding Class B Units in accordance with the Allocation Schedule.

 

(c) Redemption of Certain Class B Units. Within 180 days after the Closing Date, the Company shall redeem Class B Units issued in connection with a Continuing Member’s contribution of Company Class A-1 Units or Company Class A Units (in each case, as defined in the Business Combination Agreement) to the Company if there are any Net Redemption Proceeds available to the Company or PubCo after the Closing Date, provided that any such redemption will be completed in accordance with the Business Combination Agreement, the Allocation Schedule and the applicable Company Unitholder Written Consent. For purposes of this Section 4.3(c) only, the term “Net Redemption Proceeds” shall mean all net cash proceeds received by the Company or PubCo (or any successors of either) in connection with the transactions contemplated by the Business Combination Agreement, after the payment of any indebtedness or transaction expenses required to be paid under the Business Combination Agreement, consisting of availability under any facility or committed financing available to the Company or PubCo expressly for redemptions of equity as a contemplated use of proceeds or any amounts received in any “PIPE” financing or other similar financing, but expressly excluding any lines of credit or credit facilities to be used solely for general working capital or general operating purposes.

 

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4.4 Capital Accounts. A Capital Account shall be maintained by the Managing Member for each Member in accordance with the provisions of Treasury Regulations Section 1.704-1(b)(2)(iv) and, to the extent consistent with such regulations, the other provisions of this LLC Agreement. Each Member’s Capital Account balance as of the Effective Time shall be equal to the amount of its respective Closing Date Capital Account Balance set forth opposite such Member’s name on Exhibit A-1. Thereafter, each Member’s Capital Account shall be (a) increased by (i) allocations to such Member of Profits pursuant to Section 5.1 and any other items of income or gain allocated to such Member pursuant to Section 5.2, (ii) the amount of cash or the initial Gross Asset Value of any asset (net of any Liabilities assumed by the Company and any Liabilities to which the asset is subject) contributed to the Company by such Member, and (iii) any other increases required or, at the Managing Member’s discretion, allowed by Treasury Regulations Section 1.704-1(b)(2)(iv), and (b) decreased by (i) allocations to such Member of Losses pursuant to Section 5.1 and any other items of deduction or loss allocated to such Member pursuant to the provisions of Section 5.2, (ii) the amount of any cash or the Gross Asset Value of any asset (net of any Liabilities assumed by the Member and any Liabilities to which the asset is subject) distributed to such Member, and (iii) any other decreases required or, at the Managing Member’s discretion, allowed by Treasury Regulations Section 1.704-1(b)(2)(iv). In the event of a Transfer of Units made in accordance with this LLC Agreement (including a deemed Transfer for U.S. federal income tax purposes as described in Section 4.6(i)), the Capital Account of the Transferor that is attributable to the Transferred Units shall carry over to the Transferee Member in accordance with the provisions of Treasury Regulations Section 1.704-1(b)(2)(iv)(l). This Section 4.4 and other provisions of this LLC Agreement relating to the maintenance of Capital Accounts are intended to comply with the Treasury Regulations promulgated under Code Section 704(b), including Treasury Regulations Section 1.704-1(b)(2)(iv), and shall be interpreted and applied in a manner consistent with such Treasury Regulations. In determining the amount of any Liability for purposes of calculating Capital Accounts, there shall be taken into account Section 752(c) of the Code and any other applicable provisions of the Code and Treasury Regulations. The Members’ Capital Accounts will normally be adjusted on an annual or other periodic basis as determined by the Managing Member, but the Capital Accounts may be adjusted more often if a new Member is admitted to the Company or if circumstances otherwise make it advisable in the judgment of the Managing Member.

 

4.5 Other Matters Regarding Capital Contributions.

 

(a) The Company shall not be obligated to repay any Capital Contributions of any Member. Under circumstances requiring a return of any Capital Contributions, no Member has the right to receive property other than cash.

 

(b) No Member shall receive any interest, salary, compensation or reimbursement with respect to its Capital Contributions or its Capital Account, or for services rendered or expenses incurred on behalf of the Company or otherwise in its capacity as a Member, except as otherwise provided in Section 7.7 or other provisions of this LLC Agreement.

 

(c) A Member shall not be required to restore a deficit balance in such Member’s Capital Account, to lend any funds to the Company or to make any additional contributions or payments to the Company.

 

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4.6 Exchange of Class B Units.

 

(a) Exchange Procedures.

 

(i) Upon the terms and subject to the conditions set forth in this Section 4.6, after the expiration of the applicable Lock-Up Period, an Exchanging Member (together with its Affiliates, including other Continuing Members, and Permitted Transferees) shall be entitled to cause the Company to effect an Exchange up to two (2) times per calendar quarter collectively (and no more frequently) plus, if necessary, any additional number of times as may be necessary to allow such Exchanging Member to participate in a transaction described in the penultimate sentence of this Section 4.6(a)(i) or in Section 4.6(h), in each case with respect to a number of Class B Units (including, for the avoidance of doubt, any Earn Out Units which are treated as Class B Units) at least equal to or exceeding the Minimum Exchange Amount, by delivering an Exchange Notice to the Company, with a copy to PubCo. Each Exchange Notice shall be in the form set forth on Exhibit B and shall include all information required to be included therein. An Exchange Notice may specify that the Exchange is to be contingent (including as to timing) upon the consummation of a purchase by another Person (whether in a tender offer or exchange offer, an underwritten offering or otherwise) of the shares of Class A Common Stock into which the Class B Units are exchangeable, or contingent (including as to timing) upon the closing of an announced merger, consolidation or other transaction or event in which shares of Class A Common Stock would be exchanged or converted or become exchangeable for or convertible into cash or other securities or property. In the event that an Exchange is being exercised in order to participate in a Piggyback Registration, the Exchange Notice Date shall be prior to the expiration of the time period in which a holder of securities is required to notify PubCo that it wishes to participate in such Piggyback Registration in accordance with Section 2.2 of the Investor Rights Agreement.

 

(ii) Within five (5) Business Days of the giving of an Exchange Notice, the Managing Member on behalf of the Company acting through the Redemption Election Committee may, but shall not be required to, elect to settle all or a portion of the Exchange in cash in an amount equal to the Cash Exchange Payment (in lieu of shares of Class A Common Stock) (the “Cash Settlement”), exercisable by giving written notice of such election to the Exchanging Member within such five (5) Business Day period (such notice, the “Cash Exchange Notice”). The Cash Exchange Notice shall set forth the portion of the Class B Units subject to the Exchange which shall be exchanged for cash in lieu of Class A Common Stock. To the extent such Exchange relates to the exercise of the Exchanging Member’s registration rights under the Investor Rights Agreement, PubCo and the Company shall cooperate in good faith with such Exchanging Member to exercise such Exchange in a manner which preserves such Exchanging Member’s rights thereunder. At any time following the giving of a Cash Exchange Notice and prior to the Exchange Date, the Managing Member may elect (exercisable by giving written notice of such election to the Exchanging Member) to revoke the Cash Exchange Notice with respect to all or any portion of the Exchanged Units and make the Stock Exchange Payment with respect to any such Exchanged Units on the Exchange Date. Notwithstanding anything to the contrary in this Agreement, the Managing Member (acting through the Redemption Election Committee) may only elect a Cash Settlement if such Cash Settlement is limited to the net proceeds from any issuance of shares of Class A Common Stock issued for the purpose of satisfying such Cash Settlement plus the amount of any Tax Distributions received by PubCo to the extent such amount (if any) is in excess of the amount required for PubCo to timely pay its actual U.S. federal, state, local, and foreign tax liabilities related to tax items of the Company and its Subsidiaries and timely meet its obligations pursuant to the Tax Receivable Agreement.

 

(iii) The Exchanging Member may elect to retract its Exchange Notice by giving written notice of such election to the Exchanging Member no later than ten (10) Business Days prior to the Exchange Date. The giving of any notice pursuant to this Section 4.6 shall terminate all of the Exchanging Member’s and the Company’s rights and obligations under this Section 4.6 arising from such retracted Exchange Notice (but not, for the avoidance of doubt, from any Exchange Notice not retracted or that may be delivered in the future).

 

(iv) Notwithstanding anything to the contrary contained in this LLC Agreement, if, in connection with an Exchange in accordance with this Section 4.6, a filing is required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”), then the Exchange Date with respect to all Exchanged Units which would be exchanged into an equal number of shares of Class A Common Stock resulting from such Exchange shall be delayed until the earlier of (i) such time as the required filing under the HSR Act has been made and the waiting period applicable to such Exchange under the HSR Act shall have expired or been terminated or (ii) such filing is no longer required, at which time such Exchange shall automatically occur without any further action by the holders of any such Exchanged Units. Each of the Members and PubCo agree to promptly take all actions required to make such filing under the HSR Act and the filing fee for such filing shall be paid by the Company.

 

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(v) Unissued Earn Out Units (until such time as the applicable Triggering Event occurs) are not permitted to be treated as Exchanged Units under this LLC Agreement, and in no event shall the Company or PubCo effect an Exchange of an Unissued Earn Out Unit unless and until a Triggering Event has occurred with respect to such Unissued Earn Out Unit such that an Earn Out Unit issued in accordance with the terms of the Business Combination Agreement (other than in connection with a Change of Control Transaction).

 

(b) Exchange Payment. The Exchange shall be consummated on the Exchange Date. Unless PubCo (through the Redemption Election Committee) has exercised its PubCo Call Right pursuant to Section 4.6(f), on the Exchange Date (to be effective immediately prior to the close of business on the Exchange Date) (i) PubCo shall contribute to the Company for delivery to the Exchanging Member (x) the Stock Exchange Payment with respect to any Exchanged Units not subject to a Cash Exchange Notice and (y) the Cash Exchange Payment (subject to the Redemption Election Committee’s election) with respect to any Exchanged Units subject to a Cash Exchange Notice, (ii) the Exchanging Member shall transfer and surrender the Exchanged Units to the Company, free and clear of all liens and encumbrances, (iii) the Company shall issue to PubCo a number of Class A Units equal to the number of Exchanged Units surrendered pursuant to clause (ii), (iv) solely to the extent necessary in connection with an Exchange, PubCo shall undertake all actions, including an issuance, reclassification, distribution, division or recapitalization, with respect to the Class A Common Stock to maintain a one-to-one ratio between the number of Class A Units owned by PubCo, directly or indirectly, and the number of outstanding shares of Class A Common Stock, taking into account the issuance in clause (iii), any Stock Exchange Payment, and any other action taken in connection with this Section 4.6, (v) the Company shall (x) cancel the redeemed Class B Units which were Exchanged Units held by the Exchanging Member and (y) transfer to the Exchanging Member the Cash Exchange Payment and/or the Stock Exchange Payment, as applicable, and (vi) PubCo shall cancel the surrendered shares of Class B Common Stock. On or prior to the Exchange Date, and as a condition to the Exchange, the Exchanging Member shall make any applicable Certificate Delivery. Upon the Exchange of all of a Member’s Units, such Member shall cease to be a Member of the Company.

 

(c) Splits, Distributions and Reclassifications. If there is any reclassification, reorganization, recapitalization or other similar transaction in which the shares of Class A Common Stock are converted or changed into another security, securities or other property, this Section 4.6 shall continue to be applicable, mutatis mutandis, with respect to such security or other property. This Section 4.6(c) is intended to preserve the intended economic effect of Section 4.1 and this Section 4.6 and to put each Member in the same relative economic position, to the greatest extent possible, with respect to Exchanges as if such reclassification, reorganization, recapitalization or other similar transaction had not occurred and shall be interpreted in a manner consistent with such intent, including requiring a similar reclassification, reorganization, recapitalization or other similar transaction to preserve the relative economic position of each Member with respect to the allocation of, and between, Class B Units and Class A Units.

 

(d) PubCo Covenants. PubCo shall at all times keep available, solely for the purpose of issuance upon an Exchange, out of its authorized but unissued shares of Class A Common Stock, such number of shares of Class A Common Stock that shall be issuable upon the Exchange of all outstanding Class B Units (including Earn Out Units, and other than those Class A Units held by PubCo or any Subsidiary of PubCo); provided that nothing contained in this LLC Agreement shall be construed to preclude PubCo from satisfying its obligations with respect to an Exchange by delivery of a Cash Exchange Payment or shares of Class A Common Stock that are held in treasury of PubCo. PubCo covenants that all shares of Class A Common Stock that shall be issued upon an Exchange shall, upon issuance thereof, be validly issued, fully paid and non-assessable (except as such non-assessability may be limited by Sections 18-607 and 18-804 of the Act), free and clear of all liens and encumbrances (other than any transfer restrictions under applicable Securities Law). In addition, for so long as the shares of Class A Common Stock are listed on a stock exchange or automated or electronic quotation system, PubCo shall cause all shares of Class A Common Stock issued upon an Exchange to be listed on such stock exchange or automated or electronic quotation system at the time of such issuance. For purposes of this Section 4.6(d), references to the “Class A Common Stock” shall be deemed to include any Equity Securities issued or issuable as a result of any reclassification, combination, subdivision or similar transaction of the Class A Common Stock that any Member would be entitled to receive pursuant to Section 4.6(c).

 

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(e) Exchange Taxes. The issuance of shares of Class A Common Stock upon an Exchange shall be made without charge to the Exchanging Member for any stamp or other similar tax in respect of such issuance; provided, however, that if any such shares of Class A Common Stock are to be issued in a name other than that of the Exchanging Member (subject to the restrictions in Article IX), then the Person or Persons in whose name(s) the shares are to be issued shall pay to PubCo the amount of any additional tax that may be payable in respect of any Transfer involved in such issuance in excess of the amount otherwise due if such shares were issued in the name of the Exchanging Member or shall establish to the satisfaction of PubCo that such additional tax has been paid or is not payable.

 

(f) PubCo Call Rights. Notwithstanding anything to the contrary contained in this Section 4.6, with respect to any Exchange Notice, an Exchanging Member shall be deemed to have offered to sell its Exchanged Units as described in any Exchange Notice directly to PubCo (rather than to the Company), and PubCo may (through the Redemption Election Committee), by delivery of a written notice to the Exchanging Member no later than five (5) Business Days following the giving of an Exchange Notice, in accordance with, and subject to the terms of, this Section 4.6(f) (such notice, a “PubCo Call Notice”), elect to purchase directly and acquire such Exchanged Units on the Exchange Date by paying to the Exchanging Member (or such other Person specified in the Exchange Notice) the Stock Exchange Payment and/or the Cash Exchange Payment (if permitted pursuant to Section 4.6(a)(i) and Section 4.6(a)(ii)), whereupon PubCo shall acquire the Exchanged Units on the Exchange Date and be treated for all purposes of this LLC Agreement as the owner of such Class B Units, which shall either (A) automatically convert into Class A Units upon being acquired by PubCo or (B) be redeemed in connection with a corresponding issuance of Class A Units to PubCo by the Company. Except as otherwise provided in this Section 4.6(f), an exercise of the PubCo Call Right shall be consummated pursuant to substantially the same timeframe and in substantially the same manner as the relevant Exchange would have been consummated if PubCo had not given a PubCo Call Notice, in each case as relevant, including that Section 4.6(a)(ii) and Section 4.6(a)(iii) shall apply mutatis mutandis and that clauses (iv) and (vi) of Section 4.6(b) shall apply (notwithstanding that the other clauses thereof do not apply).

 

(g) Distribution Rights. No Exchange shall impair the right of the Exchanging Member to receive any distributions payable on the Common Units redeemed pursuant to such Exchange in respect of a record date that occurs prior to the Exchange Date for such Exchange. No Exchanging Member, or a Person designated by an Exchanging Member to receive shares of Class A Common Stock, shall be entitled to receive, with respect to such record date, distributions or dividends both on Class B Units redeemed by the Company from such Exchanging Member and on shares of Class A Common Stock received by such Exchanging Member, or other Person so designated, if applicable, in such Exchange.

 

(h) Exchange Restrictions. The Managing Member may impose additional limitations and restrictions on Exchanges or exercise of the PubCo Call Right (including limiting Exchanges or creating priority procedures for Exchanges) to the extent it reasonably determines in good faith that such limitations and restrictions are necessary to avoid the Company being classified as a “publicly traded partnership” within the meaning of Section 7704 of the Code or ensure equity treatment of the Common Units; provided that, for such purposes, the Company and the Managing Member shall assume that each Continuing Member is treated as a single partner within the meaning of Treasury Regulations Section 1.7704-1(h) (determined taking into account the rules of Treasury Regulations Section 1.7704-1(h)(3)), unless otherwise required by applicable Law.

 

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(i) Tax Matters. In connection with any Exchange, the Exchanging Member shall deliver to PubCo or the Company, as applicable, a certificate, dated as of the Exchange Date and sworn under penalties of perjury, in a form reasonably acceptable to PubCo or the Company, as applicable, certifying as to such Exchanging Member’s taxpayer identification number and, if applicable, that such Exchanging Member is a not a foreign person for purposes of Section 1445 and Section 1446(f) of the Code (which certificate may be an IRS Form W-9 if then sufficient for such purposes under applicable Law). For U.S. federal and applicable state and local income tax purposes, each of the Exchanging Member, the Company and PubCo agree to treat each Exchange as a sale by the Exchanging Member of the Exchanging Member’s Class B Units (together with an equal number of shares of Class B Common Stock, which shares shall not be allocated any economic value) to PubCo in exchange for the payment by PubCo of the Stock Exchange Payment, the Cash Exchange Payment, or other applicable consideration to the Exchanging Member.

 

(j) Tax Treatment. Unless otherwise required by applicable law including a determination of an applicable taxing authority that is final, the parties hereto agree to treat any Exchange or any exercise of the PubCo Call Right as a direct sale or exchange between PubCo and the Exchanging Member for U.S. federal and applicable state and local income tax purposes and each of the Company, PubCo, and the applicable Exchanging Members and their respective Affiliates shall report any such Exchange or exercise of the PubCo Call Right consistent therewith for all U.S. federal and applicable state and local and non-U.S. income tax purposes unless otherwise required by applicable law including a determination of an applicable taxing authority that is final.

 

(k) Representations and Warranties. In connection with any Exchange or exercise of a PubCo Call Right, (i) upon the acceptance of the Class A Common Stock or an amount of cash equal to the Cash Exchange Payment, the Exchanging Member shall represent and warrant that the Exchanging Member is the owner of the number of Class B Units that the Exchanging Member is electing to Exchange and that such Class B Units are not subject to any liens or restrictions on transfer (other than restrictions imposed by this LLC Agreement, the charter and governing documents of PubCo and applicable Law), and (ii) if the Managing Member elects a Stock Exchange Payment, the Managing Member shall represent that (A) the shares of Class A Common Stock issued to the Exchanging Member in settlement of the Stock Exchange Payment are duly authorized, validly issued, fully paid and non-assessable (except as such non-assessability may be limited by Sections 18-607 and 18-804 of the Act) and were issued in compliance in all material respects with applicable Securities Law, and (B) the issuance of such shares of Class A Common Stock issued to the Exchanging Member in settlement of the Stock Exchange Payment does not conflict with or result in any breach of the organizational documents of PubCo.

 

4.7 Representations and Warranties of the Members. Each Member who acquires Units after the Effective Time severally (and not jointly) represents and warrants to the Company and each other Member as of the date of such Member’s admittance to the Company and as of each subsequent date that such Member acquires any additional Units (other than, in the case of acquisition of additional Units, Section 4.7(b) to the extent any conflict under Section 4.7(b) is related to the occurrence of a Change of Control resulting from such acquisition) that:

 

(a) Organization; Authority.

 

(i) To the extent such Member is not a natural person, (x) it is duly formed, validly existing and in good standing (if applicable) under the Laws of the jurisdiction of such Member’s formation, and if required by Law is duly qualified to conduct business and is in good standing in the jurisdiction of such Member’s principal place of business (if not formed in such jurisdiction), and (y) has full corporate, limited liability company, partnership, trust or other applicable power and authority to execute and deliver this LLC Agreement and to perform such Member’s obligations under this LLC Agreement and all necessary actions by the board of directors, shareholders, managers, members, partners, trustees, beneficiaries or other Persons necessary for the due authorization, execution, delivery and performance of this LLC Agreement by that Member have been duly taken.

 

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(ii) Such Member has duly executed and delivered this LLC Agreement, and this LLC Agreement is enforceable against such Member in accordance with such Member’s terms, subject to bankruptcy, moratorium, insolvency and other Laws generally affecting creditors’ rights and general principles of equity (whether applied in a proceeding in a court of law or equity).

 

(b) Non-Contravention.

 

(i) Such Member’s authorization, execution, delivery, and performance of this LLC Agreement does not breach or conflict with or constitute a default under (x) such Member’s charter or other governing documents to the extent such Member is not a natural person, (y) any material obligation under any other material agreement to which that Member is a party or by which such Member is bound or (z) applicable Law.

 

(ii) No governmental, administrative or other material third party consents or approvals are required or necessary on the part of such Member in connection with such Member’s admittance as a Member or such Member’s ownership of such Member’s Units.

 

(c) Due Inquiry.

 

(i) Such Member has had, prior to the execution and delivery of this LLC Agreement, the opportunity to ask questions of and receive answers from representatives of the Company concerning an investment in the Company, as well as the finances, operations, business and prospects of the Company, and the opportunity to obtain additional information to verify the accuracy of all information so obtained, and received all such information about the Company and the Units as such Member has requested.

 

(ii) In determining whether to enter into this LLC Agreement in respect of such Member’s Units, such Member has relied solely on such Member’s own knowledge and understanding of the Company and such Member’s business based upon such Member’s own due diligence investigation and the information furnished pursuant to this clause (c) and such Member has not relied on any other representations or information in making such Member’s investment decision, whether written or oral, relating to the Company, such Member’s operations and/or prospects; 5.1 Profits and Losses.

 

(d) Purpose of Investment. Such Member is acquiring and holding such Member’s Units solely for investment purposes, for such Member’s own account and not for the account or benefit of any other Person and not with a view towards the distribution or dissemination thereof in violation of applicable Securities Law, did not decide to enter into this LLC Agreement as a result of any general solicitation or general advertising within the meaning of Rule 502 of Regulation D under the Securities Act, and acknowledges and understands that no United States federal or state agency has passed upon or made any recommendation or endorsement of the offering of any Units;

 

(e) Transfer Restrictions. Such Member understands the Units are being Transferred in a transaction not involving a public offering within the meaning of the Securities Act and the Units will comprise “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act which shall not be sold, pledged, hypothecated or otherwise Transferred except in accordance with the terms of this LLC Agreement and applicable Law. Such Member agrees that, if in the future such Member decides to offer, resell, pledge or otherwise Transfer any portion of such Member’s Units, such Units may be offered, resold, pledged or otherwise Transferred only pursuant to an effective Registration Statement under the Securities Act or an applicable exemption from registration and/or qualification under the Securities Act and applicable state Securities Law, and as a condition precedent to any such Transfer, such Member may be required to deliver to the Company an opinion of counsel satisfactory to the Company, and agrees, absent registration or an exemption with respect to such Member’s Units, not to resell any such Units.

 

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(f) Investor Status. Such Member (i) has adequate means of providing for such Member’s current needs and possible contingencies, is able to bear the economic risks of such Member’s investment for an indefinite period of time and has a sufficient net worth to sustain a loss of such Member’s entire investment in the Company in the event such loss should occur, (ii) is sophisticated in financial matters 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 Company, (iii) is, or is controlled by, an “accredited investor,” as that term is defined in Rule 501(a) of Regulation D, promulgated under the Securities Act, and acknowledges the issuance of Units under this LLC Agreement is being made in reliance on a private placement exemption to “accredited investors” within the meaning of Section 501(a) of Regulation D under the Securities Act or similar exemptions under federal and state Law, and (iv) is treated as a single partner within the meaning of Treasury Regulations Section 1.7704-1(h) (determined taking into account the rules of Treasury Regulations Section 1.7704-1(h)(3)).

 

ARTICLE V
ALLOCATIONS OF PROFITS AND LOSSES

 

After giving effect to the allocations under Section 5.2 and subject to Section 5.2 and Section 5.4, Profits and Losses (and, to the extent reasonably determined by the Managing Member to be necessary and appropriate to achieve the resulting Capital Account balances described below, any allocable items of income, gain, loss, deduction or credit includable in the computation of Profits and Losses) for each Taxable Year or other taxable period shall be allocated among the Members during such Taxable Year or other taxable period in a manner such that, after giving effect to all distributions through the end of such Taxable Year or other taxable period, the Capital Account balance of each Member, immediately after making such allocation, is, as nearly as possible, equal to (a) the amount such Member would receive pursuant to Section 11.3(b)(iii) if all assets of the Company on hand at the end of such Taxable Year or other taxable period were sold for cash equal to their Gross Asset Values, all liabilities of the Company were satisfied in cash in accordance with their terms (limited with respect to each nonrecourse liability to the Gross Asset Value of the assets securing such liability), and all remaining or resulting cash was distributed, in accordance with Section 11.3(b)(iii), to the Members immediately after making such allocation, minus (b) such Member’s share of Company Minimum Gain and Member Minimum Gain, computed immediately prior to the hypothetical sale of assets, and (without duplication) the amount any such Member is treated as obligated to contribute to the Company, computed immediately after the hypothetical sale of assets.

 

5.2 Special Allocations.

 

(a) Nonrecourse Deductions for any Taxable Year or other taxable period shall be specially allocated to the Members on a pro rata basis in accordance with the number of Common Units owned by each Member. The amount of Nonrecourse Deductions for a Taxable Year or other taxable period shall equal the excess, if any, of the net increase, if any, in the amount of Company Minimum Gain during that Taxable Year or other taxable period over the aggregate amount of any distributions during that Taxable Year or other taxable period of proceeds of a Nonrecourse Liability that are allocable to an increase in Company Minimum Gain, determined in accordance with the provisions of Treasury Regulations Section 1.704-2(d).

 

(b) Any Member Nonrecourse Deductions for any Taxable Year or other taxable period shall be specially allocated to the Member who bears economic risk of loss with respect to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable in accordance with Treasury Regulations Section 1.704-2(i). If more than one (1) Member bears the economic risk of loss for such Member Nonrecourse Debt, the Member Nonrecourse Deductions attributable to such Member Nonrecourse Debt shall be allocated among the Members according to the ratio in which they bear the economic risk of loss. This Section 5.2(b) is intended to comply with the provisions of Treasury Regulations Section 1.704-2(i) and shall be interpreted consistently therewith.

 

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(c) Notwithstanding any other provision of this LLC Agreement to the contrary, if there is a net decrease in Company Minimum Gain during any Taxable Year or other taxable period (or if there was a net decrease in Company Minimum Gain for a prior Taxable Year or other taxable period and the Company did not have sufficient amounts of income and gain during prior periods to allocate among the Members under this Section 5.2(c)), each Member shall be specially allocated items of Company income and gain for such Taxable Year or other taxable period in an amount equal to such Member’s share of the net decrease in Company Minimum Gain during such taxable period (as determined pursuant to Treasury Regulations Section 1.704-2(g)(2)). This Section 5.2(c) is intended to constitute a minimum gain chargeback under Treasury Regulations Section 1.704-2(f) and shall be interpreted consistently therewith.

 

(d) Notwithstanding any other provision of this LLC Agreement except Section 5.2(c), if there is a net decrease in Member Minimum Gain during any Taxable Year or other taxable period (or if there was a net decrease in Member Minimum Gain for a prior Taxable Year or other taxable period and the Company did not have sufficient amounts of income and gain during prior periods to allocate among the Members under this Section 5.2(d)), each Member shall be specially allocated items of Company income and gain for such taxable period in an amount equal to such Member’s share of the net decrease in Member Minimum Gain (as determined pursuant to Treasury Regulations Section 1.704-2(i)(4)). This Section 5.2(d) is intended to constitute a partner nonrecourse debt minimum gain chargeback under Treasury Regulations Section 1.704-2(i)(4) and shall be interpreted consistently therewith.

 

(e) Notwithstanding any provision hereof to the contrary except Section 5.2(a) and Section 5.2(b), no Losses or other items of loss or expense shall be allocated to any Member to the extent that such allocation would cause such Member to have an Adjusted Capital Account Deficit (or increase any existing Adjusted Capital Account Deficit) at the end of such Taxable Year or other taxable period. All Losses and other items of loss and expense in excess of the limitation set forth in this Section 5.2(e) shall be allocated to the Members who do not have an Adjusted Capital Account Deficit in proportion to their relative positive Capital Accounts but only to the extent that such Losses and other items of loss and expense do not cause any such Member to have an Adjusted Capital Account Deficit.

 

(f) Notwithstanding any provision hereof to the contrary except Section 5.2(c) and Section 5.2(d), in the event any Member unexpectedly receives any adjustment, allocation or distribution described in paragraph (4), (5) or (6) of Treasury Regulations Section 1.704-1(b)(2) (ii)(d), items of income and gain (consisting of a pro rata portion of each item of income, including gross income, and gain for the Taxable Year or other taxable period) shall be specially allocated to such Member in an amount and manner sufficient to eliminate any Adjusted Capital Account Deficit of that Member as quickly as possible; provided that an allocation pursuant to this Section 5.2(f) shall be made only if and to the extent that such Member would have an Adjusted Capital Account Deficit after all other allocations provided for in Section 5.1 and Section 5.2 have been tentatively made as if this Section 5.2(f) were not in this LLC Agreement. This Section 5.2(f) is intended to constitute a qualified income offset under Treasury Regulations Section 1.704-1(b)(2)(ii) and shall be interpreted consistently therewith.

 

(g) If any Member has a deficit balance in its Capital Account at the end of any Taxable Year or other taxable period that is in excess of the amount that the Member is deemed to be obligated to restore pursuant to the penultimate sentence of Treasury Regulations Sections 1.704-2(g)(1) and (i)(5), that Member shall be specially allocated items of Company income and gain in the amount of such excess as quickly as possible; provided that an allocation pursuant to this Section 5.2(g) shall be made only if and to the extent that such Member would have a deficit balance in its Capital Account in excess of such sum after all other allocations provided for in Section 5.1 and Section 5.2 have been made as if Section 5.2(f) and this Section 5.2(g) were not in this LLC Agreement.

 

(h) To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Sections 734(b) or 743(b) is required, pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(2) or 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts as a result of a distribution to any Member in complete or partial liquidation of such Member’s Units in the Company, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such item of gain or loss shall be allocated to the Members in accordance with Treasury Regulations Section 1.704-1(b) (2)(iv)(m)(2) if such Section applies or to the Member to whom such distribution was made if Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.

 

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(i) The allocations set forth in Sections 5.2(a) through (h) (the “Regulatory Allocations”) are intended to comply with certain requirements of Treasury Regulations Sections 1.704-1(b) and 1.704-2. Notwithstanding any other provision of this Article V (other than the Regulatory Allocations), the Regulatory Allocations (and anticipated future Regulatory Allocations) shall be taken into account in allocating other items of income, gain, loss and deduction among the Members so that, to the extent possible, the net amount of such allocation of other items and the Regulatory Allocations to each Member should be equal to the net amount that would have been allocated to each such Member if the Regulatory Allocations had not occurred. In general, the Members anticipate that this shall be accomplished by specially allocating other Profits and Loss among the Members so that the net amount of Regulatory Allocations and such special allocations to each such Member is zero. This Section 5.2(i) is intended to minimize to the extent possible and to the extent necessary any economic distortions that may result from application of the Regulatory Allocations and shall be interpreted in a manner consistent therewith.

 

5.3 Allocations for Tax Purposes in General.

 

(a) Except as otherwise provided in this Section 5.3, each item of income, gain, loss and deduction of the Company for U.S. federal and applicable state and local income tax purposes shall be allocated among the Members in the same manner as such item is allocated under Sections 5.1 and 5.2.

 

(b) In accordance with Code Section 704(c) and the Treasury Regulations thereunder (including the Treasury Regulations applying the principles of Code Section 704(c) to changes in Gross Asset Values), items of income, gain, loss and deduction with respect to any Company property having a Gross Asset Value that differs from such property’s adjusted U.S. federal income tax basis shall, solely for U.S. federal income tax purposes, be allocated among the Members to account for any such difference using any permissible method or methods determined by the Managing Member to be appropriate and in accordance with the applicable Treasury Regulations.

 

(c) Any (i) recapture of depreciation or any other item of deduction shall be allocated, in accordance with Treasury Regulations Sections 1.1245-1(e) and 1.1254-5, to the Members who received the benefit of such deductions and (ii) tax credits, tax credit recapture, and any items related thereto shall be allocated to the Members according to their interests in such items as reasonably determined by the Managing Member taking into account the principles of Treasury Regulations Section 1.704-1(b)(4)(ii), 1.704-1(b)(3)(iv), and 1.704-1(b)(4)(viii).

 

(d) Allocations pursuant to this Section 5.3 are solely for purposes of U.S. federal, state and local income taxes and shall not affect or in any way be taken into account in computing any Member’s Capital Account or share of Profits, Losses, other items or distributions pursuant to any provision of this LLC Agreement.

 

(e) If, as a result of an exercise of a non-compensatory option to acquire an interest in the Company, a Capital Account reallocation is required under Treasury Regulations Section 1.704-1(b)(2)(iv)(s)(3), the Company shall make corrective allocations pursuant to Treasury Regulations Section 1.704-1(b)(4)(x). If, pursuant to Section 5.2(i), the Managing Member causes a Capital Account reallocation in accordance with principles similar to those set forth in Treasury Regulations Section 1.704-1(b)(2)(iv)(s)(3), the Managing Member shall make corrective allocations in accordance with principles similar to those set forth in Treasury Regulations Section 1.704-1(b)(4)(x).

 

(f) Any adjustment to the adjusted tax basis of Company property pursuant to Code Section 743(b) resulting from a transfer of Units shall be handled in accordance with Treasury Regulations Section 1.743-1(j).

 

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5.4 Other Allocation Rules.

 

(a) The Members are aware of the income tax consequences of the allocations made by this Article V and the economic impact of the allocations on the amounts receivable by them under this LLC Agreement. The Members hereby agree to be bound by the provisions of this Article V in reporting their share of Company income and loss for U.S. federal and applicable state and local income tax purposes.

 

(b) The provisions regarding the establishment and maintenance for each Member of a Capital Account as provided by Section 4.4 and the allocations set forth in Sections 5.1, 5.2 and 5.3 are intended to comply with the Treasury Regulations and to reflect the intended economic entitlement of the Members. If the Managing Member reasonably determines that the application of the provisions in Sections 4.4, 5.1, 5.2 or 5.3 would result in non-compliance with the Treasury Regulations or would be inconsistent with the intended economic entitlement of the Members, the Managing Member is authorized to make any appropriate adjustments to such provisions to the extent permitted by applicable Law, including to allocate properly items of income, gain, loss, deduction and credit to those Members who bear the economic burden or benefit associated therewith, or to otherwise cause the Members to achieve the economic objectives underlying this LLC Agreement and the Business Combination Agreement. The Managing Member also shall (i) make any adjustments that it reasonably determines are necessary or appropriate to maintain equality between the Capital Accounts of the Members and the amount of Company capital reflected on the Company’s balance sheet, as computed for book purposes, in accordance with Treasury Regulations Section 1.704-1(b)(iv)(g) and (ii) make any reasonable and appropriate modifications in the event unanticipated events would reasonably be expected to otherwise cause this LLC Agreement not to comply with Treasury Regulations Section 1.704-1(b). Notwithstanding the foregoing, no adjustment to the allocations shall be made under this Section 5.4(b) without the prior written consent of each Continuing Member that would be materially adversely affected thereby, which consent shall not be unreasonably withheld, conditioned or delayed.

 

(c) Subject to the Business Combination Agreement, with regard to PubCo’s acquisition of Common Units, Profits or Losses shall be allocated to the Members of the Company so as to take into account the varying interests of the Members in the Company using an “interim closing of the books” method in a manner that complies with the provisions of Section 706 of the Code and the Treasury Regulations thereunder. Subject to the Business Combination Agreement, if during any Taxable Year there is any other change in any Member’s Units in the Company, the Managing Member shall consult in good faith with the Continuing Member Representative and the tax advisors to the Company and allocate the Profits or Losses to the Members of the Company so as to take into account the varying interests of the Members in the Company using an “interim closing of the books” method in a manner that complies with the provisions of Section 706 of the Code and the Treasury Regulations thereunder; provided, however, that such allocations may instead be made in another manner that complies with the provisions of Section 706 of the Code and the Treasury Regulations thereunder and that is selected by the Managing Member (with the prior written consent of the Continuing Member Representative, not to be unreasonably withheld, conditioned or delayed).

 

(d) Solely for purposes of determining a Member’s proportionate share of the “excess nonrecourse liabilities” of the Company, within the meaning of Treasury Regulations Section 1.752-3(a)(3), the Managing Member shall allocate such liabilities in such manner that complies with the Code and the Treasury Regulations thereunder and that the Managing Member reasonably determines, in a manner intended to minimize any gain of the Members to the greatest extent possible under Section 731 of the Code.

 

5.5 Earn Out Units. The Parties intend that, for U.S. federal and applicable state and local income tax purposes, (a) the Earn Out Units, if any, received by the Continuing Members in connection with the Business Combination Agreement not be treated as being received in connection with the performance of services, (b) the Earn Out Units, if any, received by the Continuing Members in connection with the Business Combination Agreement reflect an adjustment by the Members to the agreed-upon sharing of unrealized appreciation in the Company’s assets, (c) no such Member be treated as having taxable income or gain as a result of such receipt of any such Earn Out Units or as a result of holding any such Earn Out Units at the time of any Triggering Event (other than as a result of corrective allocations made pursuant to Section 5.2(i)), and (d) for the avoidance of doubt, for purposes of the allocations described in this Article V and the determination and maintenance of Capital Accounts and distributions described in Article VI, each Earn Out Unit is a Class B Unit. The Company shall prepare and file all tax returns consistent with such intended treatment unless otherwise required by a “determination” within the meaning of Section 1313 of the Code.

 

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ARTICLE VI
DISTRIBUTIONS

 

6.1 Distributions.

 

(a) General.

 

(i) To the extent permitted by applicable Law, distributions to Members may be declared by the Managing Member out of Distributable Cash in such amounts, at such time and on such terms (including the payment dates of such distributions) as the Managing Member shall determine using such record date as the Managing Member may designate. All distributions made under this Section 6.1(a) shall be made to the Members as of the close of business on such record date on a pro rata basis (except that, for the avoidance of doubt, repurchases or redemptions made in accordance with Section 4.1(g) or payments made in accordance with Section 7.4 or Section 7.7 need not be on a pro rata basis, as long as such payments are otherwise made in accordance with the terms of this LLC Agreement) based on the number of Common Units held by each such Member as of the close of business on such record date; provided, that the Managing Member shall have the obligation to make distributions as set forth in Section 6.2 and Section 11.3(b)(iii); provided, further, that notwithstanding any other provision herein to the contrary, no distributions shall be made to any Member to the extent such distribution would violate the Act.

 

(ii) Promptly following the designation of a record date and the declaration of a distribution pursuant to this Section 6.1(a), the Managing Member shall give notice to each Member of the record date, the amount and the terms of the distribution and the payment date thereof.

 

(b) Successors. For purposes of determining the amount of distributions (including Tax Distributions), each Member shall be treated as having made the Capital Contributions made by, been allocated the net taxable income of the Company (in accordance with the definition of Tax Amount) allocated to, and received the distributions made to or received by its predecessors in respect of any of such Member’s Units.

 

(c) Distributions In-Kind. Except as otherwise provided in this LLC Agreement, any distributions may be made in cash or in kind, or partly in cash and partly in kind, as reasonably determined by the Managing Member. In the event of any distribution of (i) property in kind or (ii) both cash and property in kind, each Member shall be distributed its proportionate share of any such cash so distributed and its proportionate share of any such property so distributed in kind (based on the Fair Market Value of such property). To the extent that the Company distributes property in-kind to the Members, the Company shall be treated as making a distribution equal to the Fair Market Value of such property for purposes of Section 6.1(a) and such property shall be treated as if it were sold for an amount equal to its Fair Market Value; provided that none of the following shall be a distribution for purposes of this LLC Agreement: (a) any recapitalization that does not result in the distribution of cash or property to Members or any exchange of securities of the Company, and any subdivision (by Unit split or otherwise) or any combination (by reverse Unit split or otherwise) of any outstanding Units or (b) any other payment made by the Company to a Member that is not properly treated as a “distribution” for purposes of Sections 731, 732, or 733 or other applicable provisions of the Code. Any resulting gain or loss shall be allocated to the Member’s Capital Accounts in accordance with Section 5.1 and Section 5.2.

 

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6.2 Tax-Related Distributions.

 

(a) Effective upon the Effective Time, prior to making any other distributions under this LLC Agreement, on each Tax Distribution Date, unless prohibited by applicable Law, the Managing Member shall cause the Company, from available cash, available borrowings and other funds legally available therefor, including legally made distributions from available cash of the Company’s Subsidiaries (taking into account any restrictions applicable to tax distributions contained in the Company’s or its Subsidiaries’ then applicable bank financing agreements by which the Company or its Subsidiaries are bound) (collectively, “Cash Available For Tax Distributions”) to make distributions of cash (each, a “Tax Distribution”) to the Members holding Common Units, pro rata in proportion to their respective number of Common Units in an amount such that the Member with the highest Tax Amount per Common Unit receives an amount equal to such Member’s Tax Amount (for purposes of this pro rata clause, disregarding any amount that is included in PubCo’s Tax Amount pursuant to clause (2) of the definition of “Tax Amount”); provided, that if the amount of Tax Distributions actually made with respect to a quarter or a Taxable Year is greater than or less than the Tax Distributions that would have been made under this Section 6.2 for such period based on subsequent tax information (e.g., if upon filing the Company’s final tax return for the applicable taxable year taxable income or gain of the Company is higher or lower than estimated) and assuming no limitations based on prohibitions under applicable Law, Cash Available For Tax Distributions (such limitations, the “Liquidity Limitations”) (e.g., because the estimated Tax Distributions for a Taxable Year were greater than or less than the amount calculated based on actual taxable income for such Taxable Year), then, on subsequent Tax Distribution Dates, starting with the next Tax Distribution Date, and prior to any additional distributions pursuant to Section 6.1(a) (including under Section 11.3(b)(iii) and its reference to Section 6.1(a)), the Managing Member shall, subject to the Liquidity Limitations, cause the Company to adjust the next Tax Distribution and subsequent Tax Distributions downward (but not below zero) or upward (but in any event pro rata in proportion to the Members’ respective number of Common Units) to reflect such excess or shortfall; and provided, further, that notwithstanding any other provision in this LLC Agreement to the contrary, the Managing Member shall not be required to cause the Company to make any Tax Distributions on any date other than a Tax Distribution Date. Notwithstanding anything to the contrary contained in this LLC Agreement, (a) the Managing Member shall make, in its reasonable discretion, equitable adjustments (downward (but not below zero) or upward) to the Members’ Tax Distributions (but in any event pro rata in proportion to the Members’ respective number of Common Units) to take into account increases or decreases in the number of Common Units held by each Member during the relevant period; provided that no such adjustments shall be made that would have a material adverse effect on the Continuing Members without the Continuing Member Representative’s prior written consent (which consent shall not be unreasonably withheld, conditioned, or delayed), and (b) no Tax Distributions (or downward (but not below zero) or upward adjustment to any Tax Distributions) shall be made other than on a pro rata basis in proportion to the Members’ respective number of Common Units. All Tax Distributions shall be treated for all purposes under this Agreement as advances against, and shall offset and reduce dollar-for-dollar, subsequent distributions under Section 6.1. Notwithstanding the foregoing, final Tax Distributions in respect of the applicable quarterly period (or portion thereof) shall be made immediately prior to and in connection with any distributions made pursuant to Section 11.3(b)(iii) below.

 

6.3 Distribution Upon Withdrawal. No withdrawing Member shall be entitled to receive any distribution or the value of such Member’s Units in the Company as a result of withdrawal from the Company prior to the liquidation of the Company, except as provided in this LLC Agreement.

 

ARTICLE VII
MANAGEMENT

 

7.1 Managing Member Rights; Member and Officer Duties.

 

(a) PubCo shall be the sole Managing Member of the Company and, pursuant to the governing documents of PubCo, the business and affairs of PubCo shall be managed by or under the direction of the Board. Except as otherwise required by Law or provided in this LLC Agreement, (i) the Managing Member shall have full and complete charge of all affairs of the Company, (ii) the management and control of the Company’s business activities and operations shall rest exclusively with the Managing Member, and (iii) the Members, other than the Managing Member (in its capacity as such), shall not participate in the control, management, direction or operation of the activities or affairs of the Company and shall have no power to act for or bind the Company. Nothing set forth in this LLC Agreement shall reduce or restrict the rights set forth in the Tax Receivable Agreement, subject to the terms and conditions thereof.

 

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(b) Except as otherwise required by the Act, no current or former Member (including a current or former Managing Member) or any current or former Officer shall be obligated personally for any Liability of the Company solely by reason of being a Member or, with respect to the Managing Member, acting as Managing Member of the Company, or, with respect to an Officer, acting in his or her capacity as an Officer. Notwithstanding anything to the contrary contained in this LLC Agreement, the failure of the Company to observe any formalities or requirements relating to the exercise of its powers or management of its business and affairs under this LLC Agreement or the Act shall not be grounds for imposing personal liability on the Managing Member for liabilities of the Company.

 

(c) To the extent that, at Law or in equity, the Company or any Subsidiary or any manager, director (or equivalent), officer, employee or agent of the Company or any Subsidiary (including PubCo) has duties (including fiduciary duties) to the Company, to a Member (other than the Managing Member) or to any Person who acquires Units, all such duties (including fiduciary duties) are hereby limited solely to those expressly set forth in this LLC Agreement (if any), to the fullest extent permitted by Law (it being understood that this (c) shall not itself limit or waive any of the duties of any officers or members of the Board to the stockholders of PubCo in their capacity as such, which obligations will be governed by the applicable governing documents of PubCo). The limitation of duties (including fiduciary duties) to the Company, each Member (other than to the Managing Member) and any Person who acquires Units set forth in the preceding sentence is approved by the Company, each Member and any Person who acquires Units.

 

7.2 Role of Officers.

 

(a) The Managing Member may appoint, employ or otherwise contract with any Person for the transaction of the business of the Company or the performance of services for or on behalf of the Company, and the Managing Member may delegate to any such Persons such authority to act on behalf of the Company as the Managing Member may from time to time deem appropriate.

 

(b) The Officers of the Company as of the Effective Time are set forth on Exhibit C attached hereto.

 

(c) The Managing Member may appoint a Chief Executive Officer who will be responsible for the general and active management of the business of the Company and its Subsidiaries. The Chief Executive Officer will report to the Managing Member and have the general powers and duties of management usually vested in the office of chief executive officer of a corporation organized under the DGCL, subject to the terms of this LLC Agreement and as may be prescribed by the Managing Member, and will have such other powers and duties as may be reasonably prescribed by the Managing Member or set forth in this LLC Agreement.

 

(d) Except as set forth in this LLC Agreement, the Managing Member may appoint Officers at any time, and the Officers may include, in addition to the Chief Executive Officer, a president, one or more vice presidents, a secretary, one or more assistant secretaries, a chief financial officer, a general counsel, a treasurer, one or more assistant treasurers, a chief operating officer, an executive chairman, and any other officers that the Managing Member deems appropriate. Except as set forth in this LLC Agreement, the Officers will serve at the pleasure of the Managing Member, subject to all rights, if any, of such Officer under any contract of employment. Any individual may hold any number of offices, and an Officer may, but need not, be a Member of the Company. The Officers will exercise such powers and perform such duties as specified in this LLC Agreement or as reasonably determined from time to time by the Managing Member.

 

(e) Subject to this LLC Agreement and to the rights, if any, of an Officer under a contract of employment, any Officer may be removed, either with or without cause, by the Managing Member. Any Officer may resign at any time by giving written notice to the Managing Member. Any resignation will take effect at the date of the receipt of that notice or at any later time specified in that notice and, unless otherwise specifie