CASCADIA ACQUISITION CORP. Item 1.01 Entry Into A Material Definitive Agreement.
Business Combination Agreement
On
The Business Combination Agreement and the Business Combination were approved by the boards of directors of each of Cascadia and RealWear. The Business Combination is expected to close in the second half of 2023, following the receipt of the required approvals by the stockholders of Cascadia and shareholders of RealWear and the fulfillment of regulatory requirements and other customary closing conditions.
Business Combination Consideration
In accordance with the terms and subject to the conditions of the Business Combination Agreement: (i) immediately prior to the closing of the Merger (the "Closing"), the outstanding shares of each class of RealWear's preferred stock will be converted into shares of common stock of RealWear; and (ii) at the Closing, (A) outstanding shares of common stock of RealWear (other than treasury shares and any Company Dissenting Shares (as defined in the Business Combination Agreement)), will be automatically converted into the right to receive shares of common stock of Cascadia ("Cascadia Shares"), (B) each of RealWear's outstanding options will be converted into an option to purchase Cascadia Shares having substantially similar terms and conditions as such outstanding RealWear option, and (C) each of RealWear's outstanding warrants will be converted into a warrant to acquire Cascadia Shares having substantially similar terms and conditions as such outstanding RealWear warrant, and in each case on the terms and subject to the conditions set forth in the Business Combination Agreement.
At Closing, Cascadia will issue and deposit 4,170,000 additional Cascadia Shares
(the "Earn Out Shares") in escrow. Eligible equityholders of RealWear will be
entitled to receive the Earn Out Shares as follows: (i) one fifth of the Earn
Out Shares will be distributed to eligible equityholders when the volume
weighted average price of a Cascadia Share ("VWAP") equals or exceeds
Representations and Warranties; Covenants
The Business Combination Agreement contains representations, warranties and covenants of each of the parties to the agreement that are customary for transactions of this type, including, among others, providing for, (i) the parties to conduct their respective businesses in the ordinary course in all material respects through the Closing, (ii) the parties to not initiate any negotiations or enter into any agreements for certain alternative transactions,
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(iii) Cascadia to approve and adopt an incentive equity plan and employee stock purchase plan, in forms to be mutually agreed upon between Cascadia and RealWear, (iv) the parties to prepare, and Cascadia to file, a registration statement on Form S-4 (which will include a proxy statement for holders of Cascadia Shares) (the "Registration Statement") relating to the Business Combination, and take certain other actions to obtain the requisite approval of Cascadia stockholders of certain proposals regarding the Business Combination and (iv) the parties to use reasonable best efforts to obtain necessary approvals from governmental agencies.. The parties have also agreed to take all action as may be necessary or reasonably appropriate such that, as of the Closing, the Cascadia board of directors will consist of seven directors, which will include one director designated by Cascadia and the remainder determined by RealWear, divided into three classes as nearly equal in number as possible, and otherwise meeting the independence and committee requirements of the Nasdaq rules.
Conditions to
The obligation of Cascadia and RealWear to consummate the Business Combination
is subject to certain closing conditions, including, but not limited to, (i) the
expiration or termination of the applicable waiting period or the obtaining of
any consent or approval, in each case as required under applicable antitrust
laws, (ii) the absence of any order, law or other legal restraint or prohibition
entered, issued, enacted or promulgated by any court of competent jurisdiction
or other governmental entity of competent jurisdiction enjoining or prohibiting
the Business Combination, (iii) the effectiveness of the Registration Statement
in accordance with the provisions of the Securities Act of 1933, as amended (the
"Securities Act"), registering the Cascadia Shares to be issued in the Merger,
(iv) the required approvals of Cascadia's stockholders, (v) the required
approvals of RealWear's shareholders, (iv) the conditional approval by Nasdaq of
Cascadia's listing application in connection with the Business Combination, and
(v) Cascadia having at least
Termination
The Business Combination Agreement may be terminated under certain customary and
limited circumstances prior to the Closing, including, but not limited to,
(i) by mutual written consent of Cascadia and RealWear, (ii) by Cascadia if the
representations and warranties of RealWear are not true and correct or if
RealWear fails to perform any covenant or agreement set forth in the Business
Combination Agreement such that certain conditions to closing cannot be
satisfied and the breach or breaches of such representations or warranties or
the failure to perform such covenant or agreement, as applicable, are not cured
or cannot be cured within certain specified time periods, (iii) by RealWear if
the representations and warranties of the Cascadia Parties are not true and
correct or if any
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respect of such financing transactions, does not equal or exceed
If the Business Combination Agreement is validly terminated, none of the parties to the Business Combination Agreement will have any liability or any further obligation under the Business Combination Agreement, except in the case of willful breach or fraud and for customary obligations that survive the termination thereof (such as confidentiality obligations).
A copy of the Business Combination Agreement is filed with this Current Report on Form 8-K as Exhibit 2.1 and is incorporated herein by reference, and the foregoing description of the Business Combination Agreement is qualified in its entirety by reference thereto. The Business Combination Agreement contains representations, warranties and covenants that the respective parties made to each other as of the date of the Business Combination Agreement or other specific dates, as specified therein. The assertions embodied in those representations, warranties and covenants were made for purposes of the contract among the respective parties and are subject to important qualifications and limitations agreed to by the parties in connection with negotiating such agreement. The representations, warranties and covenants in the Business Combination Agreement are also modified in important part by the underlying disclosure schedules which are not filed publicly and which are subject to a contractual standard of materiality different from that generally applicable to stockholders and were used for the purpose of allocating risk among the parties rather than establishing matters as facts.
Sponsor Letter Agreement
Concurrently with the execution of the Business Combination Agreement, Cascadia,
RealWear,
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits Exhibit Number Description 2.1* Business Combination Agreement, dated as ofFebruary 5, 2023 , by and amongCascadia Acquisition Corp. ,CAC MergerSub, Inc. , andRealWear, Inc. 10.1 Sponsor Letter Agreement 10.2 Form of Transaction Support Agreement 10.3 Form of Lock-Up Agreement 104 Cover Page Interactive Data File (the cover page XBRL tags are embedded within the inline XBRL document)
* Exhibits and schedules have been omitted from this filing pursuant to Item
601(a)(5) of Regulation S-K and will be furnished to the Securities and
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