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Conversion of Securities
Immediately prior to the effective time of the Merger (the “Effective Time”), the Company will cause each share of the Company’s preferred stock (“Company Preferred Stock”) that is issued and outstanding immediately prior to the Effective Time to be automatically converted into a number of shares of the Company’s Class A common stock (“Company Class A Common Stock”) in accordance with the Company’s amended and restated certificate of incorporation dated December 10, 2018 (the “Company Charter”), and each converted share of Company Preferred Stock will no longer be outstanding and will cease to exist, such that each holder of Company Preferred Stock will thereafter cease to have any rights with respect to such securities.
Also immediately prior to the Effective Time, the Company will cause the outstanding principal and accrued but unpaid interest due on the Company’s outstanding convertible notes (“Company Convertible Notes”) immediately prior to the Effective Time to be automatically converted into a number of shares of Company Class A Common Stock in accordance with the terms of such Company Convertible Notes, and such converted Company Convertible Notes will no longer be outstanding and will cease to exist.
Also immediately prior to the Effective Time, the Company will cause the convertible equity security of the Company (the “Company Convertible Equity Security”) that is issued and outstanding immediately prior to the Effective Time to be automatically converted into 5,882,352 shares of Company Class A Common Stock. The Company Convertible Equity Security that is converted into shares of Company Class A Common Stock will no longer be outstanding and will cease to exist, and each holder of the Company Convertible Equity Security will thereafter cease to have any rights with respect to such security.
At the Effective Time, by virtue of the Merger and without any action on the part of Spartan, Merger Sub, the Company or the holders of any of the Company’s securities:
(a) Each share of Company Class A Common Stock issued and outstanding immediately prior to the Effective Time (excluding any shares of Company Class A Common Stock resulting from the conversion of the Company Convertible Equity Security) will be canceled and converted into the right to receive the number of shares of Class A Common Stock, par value $0.0001 per share, of Spartan (“Spartan Class A Common Stock”) equal to the Exchange Ratio. The “Exchange Ratio” means the following ratio (rounded to four decimal places): the quotient obtained by dividing the Company Merger Shares by the Company Outstanding Shares. The “Company Merger Shares” means a number of shares equal to (i) the quotient obtained by dividing (A) $1,750,000,000, as adjusted pursuant to the Business Combination Agreement, by (B) $10.00, minus (ii) the number of shares of Spartan Class A Common Stock ultimately issuable to the holder of the Company Convertible Equity Security, plus (iii) the number of Sponsor Shares (as defined below). The “Company Outstanding Shares” means the total number of shares of Company Common Stock (as defined below) outstanding immediately prior to the Effective Time, expressed on a fully-diluted and as-converted to Company Common Stock basis, and including, without limitation or duplication, the number of shares of Company Class A Common Stock (x) issuable upon conversion of the Company Preferred Stock and Company Convertible Notes, (y) that would be issuable upon conversion of the shares of Company Founders Stock issued and outstanding immediately prior to the Effective Time at the then-effective conversion rate as calculated pursuant to the Company Charter, and (z) subject to unexpired, issued and outstanding the Company Options (as defined below), and excluding the number of shares of Company Class A Common Stock issuable upon conversion of the Company Equity Security;
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(b) Each share of Company Class A Common Stock issued and outstanding immediately prior to the Effective Time resulting from the conversion of the Company Convertible Equity Security will be canceled and converted into the right to receive one share of Spartan Class A Common Stock;
(c) Each share of the Company’s Class B common stock (together with the Company Class A Common Stock, the “Company Common Stock”) issued and outstanding immediately prior to the Effective Time will be canceled and converted into the right to receive the number of shares of newly authorized Class B Common Stock, par value $0.0001 per share, of Spartan, carrying voting rights in the form of 10 votes per such share (“Spartan Class B Common Stock”) equal to the Exchange Ratio;
(d) Each share of the Company Founders Stock issued and outstanding immediately prior to the Effective Time will be canceled and converted into the right to receive the number of shares of Spartan Class B Common Stock equal to the product of (rounded up or down to the nearest whole number, with a fraction of 0.5 rounded up) (i) the number of shares of Company Class A Common Stock that would have been issuable upon the conversion of such share of Company Founders Stock at the then-effective conversion rate as calculated pursuant to the Company Charter and (ii) the Exchange Ratio;
(e) All shares of Company Common Stock, Company Preferred Stock, Company Founders Stock and the Company Convertible Equity Security held in the treasury of the Company will be canceled without any conversion thereof and no payment or distribution will be made with respect thereto;
(f) Each share of common stock, par value $0.0001 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time will be converted into and exchanged for one validly issued, fully paid and nonassessable share of common stock, par value $0.00001 per share, of the Surviving Corporation;
(g) Each unexpired, issued and outstanding option to purchase shares of Company Class A Common Stock, whether or not exercisable and whether or not vested (“Company Option”) that is outstanding immediately prior to the Effective Time, whether vested or unvested, will be converted into an option to purchase a number of shares of Spartan Class A Common Stock (such option, an “Exchanged Option”) equal to the product (rounded up or down to the nearest whole number, with a fraction of 0.5 rounded up) of (i) the number of shares of Company Class A Common Stock subject to such Company Option immediately prior to the Effective Time and (ii) the Exchange Ratio, at an exercise price per share (rounded up or down to the nearest whole cent, with a fraction of $0.005 rounded up) equal to (A) the exercise price per share of such Company Option immediately prior to the Effective Time divided by (B) the Exchange Ratio. Except as specifically provided in the Business Combination Agreement, following the Effective Time, each Exchanged Option will continue to be governed by the same terms and conditions (including vesting and exercisability terms) as were applicable to the corresponding former Company Option immediately prior to the Effective Time; and
(h) No certificates or scrip or shares representing fractional shares of Spartan Class A Common Stock or Spartan Class B Common Stock will be issued upon the exchange of Company Common Stock or Company Founders Stock. Any fractional shares will be rounded up or down to the nearest whole share of Spartan Class A Common Stock or Spartan Class B Common Stock, as applicable, with a fraction of 0.5 rounded up. No cash settlements will be made with respect to fractional shares.
Proxy Statement
As promptly as practicable after the date of the Business Combination Agreement, Spartan will prepare and file with the Securities and Exchange Commission (the “SEC”) a proxy statement (as amended or supplemented from time to time, the “Proxy Statement”) to be sent to the stockholders of Spartan (the “Spartan Stockholders”) relating to the meeting of the Spartan Stockholders (the “Spartan Stockholders’ Meeting”) to be held to consider (a) approval and adoption of the Business Combination Agreement and the Merger, (b) approval of the issuance of Spartan Class A Common Stock and Spartan Class B Common Stock as contemplated by the Business Combination Agreement and the Subscription Agreements (as defined below), (c) adoption of the second amended and restated certificate of incorporation of Spartan and (d) any other proposals the parties deem necessary to effectuate the Merger (collectively, the “Spartan Proposals”).
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Stock Exchange Listing
Spartan will use its reasonable best efforts to cause the shares of Spartan Class A Common Stock to be issued in connection with the Proposed Transactions to be approved for listing on the New York Stock Exchange at the closing of the Merger (the “Closing”). Until the Closing, Spartan will use its reasonable best efforts to keep the Spartan Class A Common Stock and warrants listed for trading on the New York Stock Exchange.
Registration Rights Agreement
In connection with the Closing, that certain Registration Rights Agreement dated August 9, 2018 (the “IPO Registration Rights Agreement”) will be amended and restated and Spartan, certain persons and entities holding securities of Spartan prior to the Closing (the “Initial Holders”) and certain persons and entities receiving Spartan Class A Common Stock or Spartan Class B Common Stock pursuant to the Merger (the “New Holders” and together with the Initial Holders, the “Reg Rights Holders”) will enter into that amended and restated IPO Registration Rights Agreement attached as an exhibit to the Business Combination Agreement (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, Spartan will agree that, within 30 calendar days after the Closing, Spartan will file with the SEC (at Spartan’s sole cost and expense) a registration statement registering the resale of certain securities held by or issuable to the Initial Holders and certain of the New Holders (the “Founders Registration Statement”), and Spartan will use its reasonable best efforts to have the Founders Registration Statement declared effective as soon as reasonably practicable after the filing thereof. Additionally, Spartan will agree that, as soon as reasonably practicable after Spartan is eligible to register the Reg Rights Holders’ securities on a registration statement on Form S-3, Spartan will file with the SEC (at Spartan’s sole cost and expense) a registration statement registering the resale of certain securities held by or issuable to the New Holders that were not included on the Founders Registration Statement (the “New Holders Registration Statement”) and Spartan will use its reasonable best efforts to have the New Holders Registration Statement declared effective as soon as reasonably practicable after the filing thereof. In certain circumstances, the Reg Rights Holders can demand up to three underwritten offerings and will be entitled to customary piggyback registration rights.
The foregoing description of the Registration Rights Agreement is qualified in its entirety by reference to the full text of the form of Registration Rights Agreement, a copy of which is included as Exhibit A to the Business Combination Agreement, filed as Exhibit 2.1 to this Current Report on Form 8-K, and incorporated herein by reference.
