Item 1.01. Entry into a Material Definitive Agreement
Entry into Agreement and Plan of Merger
On January 4, 2021, Ideanomics, Inc. ("Ideanomics") entered into an agreement
and plan of merger (the "Agreement") to acquire 100% of privately held Wireless
Advanced Vehicle Electrification, Inc. ("WAVE") for an aggregate purchase price
of $50,000,000 in a combination of $15,000,000 of cash and $35,000,000 worth of
Ideanomics stock as consideration (the "Transaction"), subject to customary
purchase price adjustments set forth in the Agreement. WAVE is a provider of
wireless charging solutions for medium and heavy-duty electric vehicles.
The Agreement contains customary representations, warranties, covenants,
termination rights and indemnities of the parties. Non-fundamental
representations and warranties survive for 18 months following the closing date
and fundamental representations and warranties survive either indefinitely or
for the statute of limitations. The Agreement also contains mutual
indemnification obligations of the parties thereto on customary grounds. The
indemnification obligations of the parties are capped at $5,000,000 for
non-fundamental representations and warranties. The indemnification obligations
of the parties for breaches of non-fundamental representations and warranties
are subject to a $250,000 deductible, except in the case of fraud. The Agreement
contains customary covenants.
The Agreement is subject to customary closing conditions, including, among other
things, that certain employees of WAVE enter into non-competition and
solicitation agreements, and that Ideanomics will have agreed to fund
$25,000,000 in growth capital to WAVE over the course of the two years following
closing. Under the terms of the Agreement, $5,000,000 of the cash consideration
portion of the purchase price shall be placed in an indemnity escrow to satisfy
future indemnification obligations of the parties (if any). The Agreement also
provides that $10,000,000 of the Ideanomics share consideration shall be held
back at closing, to be released upon the receipt of certain consents to the
Transaction not obtained prior to closing. If any such consent is not obtained
within six months following the closing date, the portion of the $10,000,000
allocated to such consent in the Agreement will not be issued to the sellers.
In addition to the purchase price to be paid at closing, the Agreement contains
three earnouts that could result in an additional payment of up to $30,000,000
to the sellers based upon: (i) revenue and gross profit margin metrics in
calendar year 2021; (ii) revenue and gross profit margin metrics in calendar
year 2022 and (iii) revenue and gross profit margin metrics for 2021 and 2022
collectively. Ideanomics has also agreed to a performance and retention plan
for the benefit of certain WAVE's employees which could result in up to
$10,000,000 paid to such employees if certain gross revenue targets and certain
gross profit margins are achieved for 2021 and 2022.
The foregoing description of the Agreement is not purported to be complete and
is qualified in its entirety by reference to the complete text of such
agreement, which will be filed as an exhibit to Ideanomics' upcoming annual
report on Form 10-K, as required.
Convertible Debenture Financing
Ideanomics, Inc. (the "Company") entered into a convertible debenture (the
"Note"), dated January 4, 2021, with YA II PN, Ltd. (the "Investor") with a
principal amount of $37,500,000 (the "Principal"). The Note has a fixed
conversion price of $2.00 (the "Conversion Price). The Conversion Price is not
subject to adjustment except for subdivisions or combinations of common stock.
The Principal and the interest payable under the Note will mature on July 4,
2021 (the "Maturity Date), unless earlier converted or redeemed by the Company.
At any time before the Maturity Date, the Investor may convert the Note at their
option into shares of Company common stock at a fixed conversion price of $2.00.
The Company has the right, but not the obligation, to redeem ("Optional
Redemption") a portion or all amounts outstanding under this Note prior to the
Maturity Date at a cash redemption price equal to the Principal to be redeemed,
plus accrued and unpaid interest, if any; provided that the Company provides
Investor with at least 15 business days' prior written notice of its desire to
exercise an Optional Redemption and the volume weighted average price of the
Company's common stock over the 10 Business Days' immediately prior to such
redemption notice is less than the Conversion Price. The Investor may convert
all or any part of the Note after receiving a redemption notice, in which case
the redemption amount shall be reduced by the amount so converted. No public
market currently exists for the Note, and the Company does not intend to apply
to list the Note on any securities exchange or for quotation on any inter-dealer
quotation system. The Note contains customary events of default, indemnification
obligations of the Company and other obligations and rights of the parties.
The Note was offered pursuant to the Company's effective registration statement
on Form S-3 (Registration Statement No. 333-239371) previously filed with the
Securities and Exchange Commission and a prospectus supplement thereunder. A
prospectus supplement relating to the offering of the securities has been filed
with the SEC and is available on the SEC's website at http://www.sec.gov.
The foregoing description of the Note is qualified in its entirety by reference
to the full text of the Note, a copy of which is filed herewith as Exhibit 10.1
to this Current Report on Form 8-K and is incorporated by reference herein.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information in Item 1.01 of this Form 8-K is incorporated herein by
reference in its entirety.
Item 7.01. Regulation FD Disclosure
On January 5, 2021, the Company issued a press release announcing the Agreement.
A copy of the press release is attached as Exhibit 99.1 to this Current Report
on Form 8-K and is hereby incorporated by reference herein.
The information in Item 7.01 and Exhibit 99.1 of this Current Report on Form 8-K
is being furnished, not filed, for the purposes of Section 18 of the Securities
Exchange Act of 1934, as amended, and will not be incorporated by reference into
any filing under the Securities Act of 1933, as amended, unless specifically
identified therein as being incorporated therein by reference.
Item 9.01 Financial Statements and Exhibits
d) Exhibits
Exhibit No. Description
10.1 Convertible Debenture between the Company and YA II PN, Ltd, dated
January 4, 2021 in the principal amount of $37,500,000
99.1 Press Release of Ideanomics, Inc., dated January 5, 2021
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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