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): June 16, 2022
Northern Lights Acquisition Corp.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
| 001-40524 | 86-2409612 | |
(Commission File Number) |
(IRS Employer Identification No.) |
10 East 53rd Street, Suite 3001
New York, New York 10022
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (510) 323-2526
(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(s) | Name of Each Exchange on Which Registered | ||
| Units, each consisting of one share of Class A Common Stock and one-half of one Redeemable Warrant | NLITU | The Nasdaq Stock Market LLC | ||
| Class A Common Stock, $0.0001 par value per share | NLIT | The Nasdaq Stock Market LLC | ||
| Redeemable Warrants, each whole warrant exercisable for one share of Class A Common Stock at an exercise price of $11.50 per share | NLITW | 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 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 1.01. | Entry into a Material Definitive Agreement. |
As previously disclosed, on February 11, 2022, Northern Lights Acquisition Corp., a Delaware corporation (the “Company”) and 5AK, LLC, the Company’s sponsor (the “Sponsor”), entered into a definitive unit purchase agreement (the “Unit Purchase Agreement”) with SHF, LLC d/b/a Safe Harbor Financial, a Colorado limited liability company (the “Target”), SHF Holding Co., LLC, the sole member of the Target (the “Seller”), and Partner Colorado Credit Union, the sole member of the Seller (the “Seller Parent”), whereby the Company will purchase all of the issued and outstanding membership interests of the Target from the Seller (the “Business Combination”).
On June 16, 2022, the Company, the Target, and Midtown East Management NL LLC, a Delaware limited liability company (“Midtown East”), entered into an agreement (the “Forward Purchase Agreement”) for an OTC Equity Prepaid Forward Transaction (the “Forward Purchase Transaction”). Pursuant to the terms of the Forward Purchase Agreement (a) Midtown East intends, but is not obligated, to purchase shares of the Company’s Class A Common Stock, par value $0.0001 per share (“Class A Common Stock”), after the date of the Forward Purchase Agreement from holders of Class A Common Stock, other than the Company or affiliates of the Company, who have requested that their shares of Class A Common Stock be redeemed or indicated an interest in having their shares of Class A Common Stock redeemed pursuant to the redemption rights set forth in the Company’s Amended and Restated Certificate of Incorporation in connection with the Business Combination (such holders, “Redeeming Holders”) and (b) Midtown East has agreed to waive any redemption rights in connection with the Business Combination with respect to any shares of Class A Common Stock it purchases in accordance with the Forward Purchase Agreement (the “Subject Shares”). The number of Subject Shares shall be no more than the lesser of (i) 5,000,000 and (ii) the maximum number of shares of Class A Common Stock such that Midtown East does not beneficially own greater than 9.9% of the Class A Common Stock on a post-combination pro forma basis. Midtown East will purchase any Additional Shares (as defined in the Forward Purchase Agreement) at the Redemption Price (as defined in Section 9.2 of the Amended and Restated Certificate of Incorporation of the Company (the “Certificate of Incorporation”)), and has undertaken to purchase all Subject Shares at a price no higher than the Redemption Price.
The Forward Purchase Agreement provides that (a) one business day following the closing of the Business Combination, the Company will pay to Midtown East, out of the funds held in the Company’s trust account, an amount (the “Prepayment Amount”) equal to the Redemption Price per share (the “Initial Price”) multiplied by the aggregate number of Subject Shares and Additional Shares (as defined in the Forward Purchase Agreement), if any (together, the “Number of Shares”), on the date of such prepayment, (b) on the first business day of each calendar quarter after the closing of the Business Combination, the Company will pay to Midtown Madison Management LLC a structuring fee in the amount of $5,000 per quarter and (c) on the date occurring one settlement cycle following the valuation date (which shall occur on the earlier of (i) the third anniversary of the closing of the Business Combination and (ii) the date specified by Midtown East in a written notice (not earlier than the day such notice is effective) that, during any 30 consecutive scheduled trading day-period following the closing of the Business Combination, the volume weighted average trading price per share for 20 scheduled trading days during such period shall have been less than $3.00 per share, Midtown East shall deliver to the Company the Number of Shares less any Terminated Shares, as described below.
From time to time and on any scheduled trading day after the closing of the Business Combination, Midtown East may sell Subject Shares or Additional Shares (or any other shares of common stock or other securities of the Company) at its absolute discretion in one or more transactions, publicly or privately, and, in connection with such sales, terminate the Forward Purchase Transaction in whole or in part in an amount corresponding to the number of Subject Shares or Additional Shares sold (the “Terminated Shares”). At the end of each calendar month during which any such early termination occurs, Midtown East will pay to the Company an amount equal to the product of (x) the number of shares terminated during such calendar month and (y) the Reset Price, where “Reset Price” refers to, initially, the Redemption Price. The Reset Price will be adjusted on the first scheduled trading day (as defined in the Forward Purchase Agreement) of each month commencing on the first calendar month following the closing of the Business Combination to be the lowest of (a) the then-current Reset Price, (b) $10.00 and (c) the VWAP Price (as defined in the Forward Purchase Agreement) of the last ten (10) scheduled trading days of the prior calendar month, but not lower than $5.00; provided, however, that if the Company offers and sells shares of Class A Common Stock in a follow-on offering, or series of related offerings, at a price lower than, or upon any conversion or exchange price of currently outstanding or future issuances of any securities convertible or exchangeable for shares of Class A Common Stock being equal to a price lower than, the then-current Reset Price (the “Offering Price”), then the Reset Price shall be further reduced to equal the Offering Price.
The Company and Safe Harbor have agreed to pay (jointly and severally) to Midtown East a break-up fee equal to the sum of (i) all quarterly structuring fees and attorney fees and other reasonable expenses related thereto incurred by Midtown East or its affiliates in connection with the Forward Purchase Transaction, plus (ii) $1,000,000, upon the occurrence of an “Additional Termination Event” following the consummation of the Forward Purchase Transaction except where the Additional Termination Event occurred as a result of regulatory items or a material breach of Seller’s obligations under the Forward Purchase Agreement. An “Additional Termination Event” is defined under the Forward Purchase Agreement to occur if (a) the Business Combination fails to close on or before the Outside Date (as defined in the Unit Purchase Agreement, and as such Outside Date may be amended or extended from time to time) or (b) the Unit Purchase Agreement is terminated prior to the closing of the Business Combination. Midtown East irrevocably waived any and all right, title and interest, or any claim of any kind it has or may have in the future, in or to any monies held in the Company’s trust account, and agreed not to seek recourse against the trust account. Luminous Capital Inc., an affiliate of our Sponsor, and Safe Harbor have agreed that any such break-up fee, if due, will be borne equally by them.
Midtown East’s obligations to the Company under the Forward Purchase Agreement are secured by perfected liens on (i) all cash proceeds of the sale, transfer, or other disposition (other than in connection with any Permitted PB Activities (as defined in the Limited Liability Company Agreement of Midtown East) and cash flow posted to Midtown East as credit enhancements under those Permitted PB Activities) of Subject Shares; (ii) the deposit account of Midtown East in which such cash proceeds will be deposited; and (iii) proceeds and products of the foregoing. The deposit account will be subject to a customary deposit account control agreement in favor of the Company.
Midtown East may assign its rights under the Forward Purchase Agreement if the Number of Shares it acquires would exceed 9.9% of the Company’s shares of Class A Stock outstanding.
The primary purpose of entering into the Forward Purchase Agreement is to help ensure the maximum redemption threshold condition in the Unit Purchase Agreement will be met, increasing the likelihood that the transaction will close.
Disclosure On Redemptions Relating to the Agreement.
Midtown East has agreed to waive all redemption rights under the Certificate of Incorporation that would require redemption by the Company of the Subject Shares. Such waiver may reduce the number of shares of common stock redeemed in connection with the Business Combination, which reduction could alter the perception of the potential strength of the Business Combination.
The foregoing description is only a summary of the Forward Purchase Agreement and is qualified in its entirety by reference to the full text of the Forward Purchase Agreement, which is filed as Exhibit 10.1 hereto and incorporated by reference herein. The Forward Purchase Agreement is included as an exhibit to this Current Report on Form 8-K in order to provide investors and security holders with material information regarding its terms and the transaction. It is not intended to provide any other factual information about the Company or Midtown East and its affiliates. The representations, warranties and covenants contained in the Forward Purchase Agreement were made only for purposes of that agreement; are solely for the benefit of the parties to the Forward Purchase Agreement; may have been made for the purposes of allocating contractual risk between the parties to the Forward Purchase Agreement instead of establishing these matters as facts; and may be subject to standards of materiality applicable to the parties that differ from those applicable to investors. Investors should not rely on the representations, warranties or covenants or any description thereof as characterizations of the actual state of facts or condition of the Company or Midtown East and its affiliates.
| Item 7.01. | Regulation FD Disclosure. |
On June 17, 2022, the Company issued a press release announcing its entry into the Forward Purchase Agreement.
The information in this Item 7.01, including Exhibit 99.1, is being furnished and will not be deemed to be filed for purposes of Section 18 of the Securities 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 8.01. | Other Events. |
The following disclosures supplement the disclosures contained in the definitive proxy statement, which was filed by the Company with the U.S. Securities and Exchange Commission (the “SEC”) and distributed on or about June 13, 2022 to the Company’s stockholders of record as of the close business on May 19, 2022 in connection with the Business Combination (the “Definitive Proxy Statement”).
The following disclosures should be read in conjunction with the disclosures contained in the Definitive Proxy Statement, which should be read in its entirety. To the extent that information set forth herein differs from or updates information contained in the Definitive Proxy Statement, the information contained herein supersedes the information contained in the Definitive Proxy Statement. All page references are to pages in the Definitive Proxy Statement, and any defined terms used but not defined herein shall have the meanings set forth in the Definitive Proxy Statement.
Supplements to the Definitive Proxy Statement
The Definitive Proxy Statement is amended and supplemented on page 32 by adding the following to the “SUMMARY OF THE PROXY STATEMENT – Related Agreements” section of the Definitive Proxy Statement:
Forward Purchase Agreement
On June 16, 2022, the Company, the Target, and Midtown East Management NL LLC, a Delaware limited liability company (“Midtown East”), entered into an agreement (the “Forward Purchase Agreement”) for an OTC Equity Prepaid Forward Transaction (the “Forward Purchase Transaction”). Pursuant to the terms of the Forward Purchase Agreement (a) Midtown East intends, but is not obligated, to purchase shares of the Class A Stock, after the date of the Forward Purchase Agreement from holders of Class A Stock, other than the Company or affiliates of the Company, who have redeemed shares of Class A Stock or indicated an interest in redeeming shares of Class A Stock pursuant to the redemptions rights set forth in the our Amended and Restated Certificate of Incorporation in connection with the Business Combination and (b) Midtown East has agreed to waive any redemption rights in connection with the Business Combination with respect to any shares of Class A Stock it purchases in accordance with the Forward Purchase Agreement (the “FPA Subject Shares”).
The Definitive Proxy Statement is amended and supplemented on page 83 by adding the following at the end of the risk factor entitled “We and SHF will incur significant transaction and transition costs in connection with the Business Combination.”:
On June 16, 2022, the Company entered into the Forward Purchase Agreement with Midtown East. To the extent Midtown East purchases shares of Class A Stock pursuant to the Forward Purchase Transaction, one business day following the closing of the Business Combination, the Company will pay to Midtown East, out of funds held in the Trust Account, the Prepayment Amount (as such term is defined in the “PROPOSAL NO. 1 – APPROVAL OF THE BUSINESS COMBINATION – The Purchase Agreement – Related Agreements” section below). We will not have access to the Prepayment Amount immediately following the Closing, and depending on the manner in which the Forward Purchase Transaction is settled may never have access to the Prepayment Amount, which may adversely affect our liquidity and our capital needs following the Business Combination.
The Definitive Proxy Statement is amended and supplemented on page 118 by adding the following to the “PROPOSAL NO. 1 – APPROVAL OF THE BUSINESS COMBINATION – The Purchase Agreement – Related Agreements” section of the Definitive Proxy Statement:
Forward Purchase Agreement
On June 16, 2022, the Company, the Target, and Midtown East, entered into the Forward Purchase Agreement. Pursuant to the terms of the Forward Purchase Agreement (a) Midtown East intends, but is not obligated, to purchase shares of Class A Stock after the date of the Forward Purchase Agreement from holders of Class A Stock, other than the Company or affiliates of the Company, who have requested that their shares of Class A Stock be redeemed or indicated an interest in having their shares of Class A Stock redeemed pursuant to the redemption rights set forth in the Amended and Restated Certificate of Incorporation in connection with the Business Combination and (b) Midtown East has agreed to waive any redemption rights in connection with the Business Combination with respect to any shares of Class A Stock it purchases in accordance with the Forward Purchase Agreement, or FPA Subject Shares. The number of FPA Subject Shares shall be no more than the lesser of (i) 5,000,000 and (ii) the maximum number of shares of Class A Stock such that Midtown East does not beneficially own greater than 9.9% of the Class A Stock on a post-combination pro forma basis.
The Forward Purchase Agreement provides that (a) one business day following the closing of the Business Combination, the Company will pay to Midtown East, out of the funds held in the Company’s trust account, an amount (the “Prepayment Amount”) equal to the Redemption Price (as defined in Section 9.2 of the Amended and Restated Certificate of Incorporation per share (the “Initial Price”) multiplied by the aggregate number of FPA Subject Shares and Additional Shares (as defined in the Forward Purchase Agreement), if any (together, the “Number of Shares”), on the date of such prepayment, (b) on the first business day of each calendar quarter after the closing of the Business Combination, the Company will pay to Midtown Madison Management LLC a structuring fee in the amount of $5,000 per quarter and (c) on the date occurring one settlement cycle following the valuation date (which shall occur on the earlier of (i) the third anniversary of the closing of the Business Combination and (ii) the date specified by Midtown East in a written notice (not earlier than the day such notice is effective) that, during any 30 consecutive scheduled trading day-period following the closing of the Business Combination, the volume weighted average trading price per share for 20 scheduled trading days during such period shall have been less than $3.00 per share, Midtown East shall deliver to the Company the Number of Shares less any Terminated Shares, as described below.
From time to time and on any scheduled trading day after the closing of the Business Combination, Midtown East may sell FPA Subject Shares or Additional Shares (or any other shares of common stock or other securities of the Company) at its absolute discretion in one or more transactions, publicly or privately, and, in connection with such sales, terminate the Forward Purchase Transaction in whole or in part in an amount corresponding to the number of FPA Subject Shares or Additional Shares sold (the “Terminated Shares”). At the end of each calendar month during which any such early termination occurs, Midtown East will pay to the Company an amount equal to the product of (x) the number of shares terminated during such calendar month and (y) the Reset Price, where “Reset Price” refers to, initially, the Initial Price. The Reset Price shall be adjusted on the first scheduled trading day (as defined in the Forward Purchase Agreement) of each month commencing on the first calendar month following the closing of the Business Combination to be the lowest of (a) the then-current Reset Price, (b) $10.00 and (c) the VWAP Price (as defined in the Forward Purchase Agreement) of the last ten (10) scheduled trading days of the prior calendar month, but not lower than $5.00; provided, however, that if the Company offers and sells shares of Class A Stock in a follow-on offering, or series of related offerings, at a price lower than, or upon any conversion or exchange price of currently outstanding or future issuances of any securities convertible or exchangeable for shares of Class A Stock being equal to a price lower than, the then-current Reset Price (the “Offering Price”), then the Reset Price shall be further reduced to equal the Offering Price.
The Company and Safe Harbor have agreed to pay (jointly and severally) to Midtown East a break-up fee equal to the sum of (i) all quarterly structuring fees and attorney fees and other reasonable expenses related thereto incurred by Midtown East or its affiliates in connection with the Forward Purchase Transaction, plus (ii) $1,000,000, upon the occurrence of an “Additional Termination Event” following the consummation of the Forward Purchase Transaction except where the Additional Termination Event occurred as a result of regulatory items or a material breach of Seller’s obligations under the Forward Purchase Agreement. An “Additional Termination Event” is defined under the Forward Purchase Agreement to occur if (a) the Business Combination fails to close on or before the Outside Date (as defined in the Unit Purchase Agreement, and as such Outside Date may be amended or extended from time to time) or (b) the Unit Purchase Agreement is terminated prior to the closing of the Business Combination. Midtown East irrevocably waived any and all right, title and interest, or any claim of any kind it has or may have in the future, in or to any monies held in the Company’s trust account, and agreed not to seek recourse against the trust account. Luminous Capital Inc., an affiliate of our Sponsor, and Safe Harbor have agreed that any such break-up fee, if due, will be borne equally by them.
Midtown East’s obligations to the Company under the Forward Purchase Agreement are secured by perfected liens on (i) all cash proceeds of the sale, transfer, or other disposition (other than in connection with any Permitted PB Activities (as defined in the Limited Liability Company Agreement of Midtown East) and cash flow posted to Midtown East as credit enhancements under those Permitted PB Activities) of FPA Subject Shares; (ii) the deposit account of Midtown East in which such cash proceeds will be deposited; and (iii) proceeds and products of the foregoing. The deposit account will be subject to a customary deposit account control agreement in favor of the Company.
Midtown East has agreed to waive all redemption rights under the Amended and Restated Certificate of Incorporation that would require redemption by the Company of the FPA Subject Shares. Such waiver may reduce the number of shares of common stock redeemed in connection with the Business Combination, which reduction could alter the perception of the potential strength of the Business Combination.
Midtown East may assign its rights under the Forward Purchase Agreement if the Number of Shares acquired by it exceeds 9.9% of the Company’s shares of Class A Stock outstanding.
The Definitive Proxy Statement is amended and supplemented on page 123 by adding the following to the “PROPOSAL NO. 1 – APPROVAL OF THE BUSINESS COMBINATION – Background of the Business Combination” section of the Definitive Proxy Statement:
In May 2022, representatives of the Company had preliminary discussions with representatives of Midtown East regarding a potential Forward Purchase Transaction. Representatives of Midtown East sent a term sheet to the Company detailing the terms of a potential Forward Purchase Transaction. Discussions regarding the terms of such transaction continued in May 2022. On May 22, 2022, management of the Company discussed a potential Forward Purchase Transaction with the Board and the Board authorized management of the Company to negotiate and execute a definitive agreement with respect to the Forward Purchase Transaction, and a term sheet was finalized and executed on May 23, 2022. On May 31, 2022, Loeb & Loeb LLP, counsel to Midtown East, provided a draft Forward Purchase Agreement to the Company and Nelson Mullins. On June 2, 2022, Midtown East provided a due diligence request to the Company and Safe Harbor and commenced its diligence processes. The Company, Safe Harbor, and Midtown East continued its negotiations regarding the terms of the Forward Purchase Agreement, and Midtown East conducted its diligence. The respective boards of the Company and Safe Harbor approved the terms of the Forward Purchase Agreement on June 16, 2022 and on June 16, 2022, the Company, the Target, and Midtown East executed the Forward Purchase Agreement.
The Definitive Proxy Statement is amended and supplemented on page 158 by adding the following to the “THE COMPANY’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Contractual Obligations” section of the Definitive Proxy Statement:
On June 16, 2022, the Company entered into the Forward Purchase Agreement with Midtown East. To the extent Midtown East purchases shares of Class A Stock pursuant to the Forward Purchase Transaction, one business day following the closing of the Business Combination, the Company will pay to Midtown East, out of funds held in the Trust Account, the Prepayment Amount (as such term is defined in the “PROPOSAL NO. 1 – APPROVAL OF THE BUSINESS COMBINATION – The Purchase Agreement – Related Agreements” section above).
Additional Information and Where to Find It
The proposed business combination involving the Company and the Target has been submitted to the stockholders of the Company for their consideration. The Company filed a definitive Proxy Statement on Schedule 14A (the “Proxy Statement”) with the SEC on June 10, 2022, which has been distributed to the stockholders of the Company in connection with the Company’s solicitation for proxies for the vote by the stockholders of the Company in connection with the proposed business combination and other matters as described in the Proxy Statement. Before making any voting decision, the stockholders of the Company and other interested persons are advised to read the Proxy Statement along with all other relevant documents filed or that will be filed with the SEC in connection with the proposed business combination and the Company’s solicitation of proxies for its special meeting of stockholders to be held to approve, among other things, the proposed business combination, because these documents contain important information about the Company, the Target, and the proposed business combination. Stockholders will be able to obtain free copies of the Proxy Statement as well as other documents filed with the SEC regarding the proposed business combination and other documents filed with the SEC by the Company, without charge, at the SEC’s website located at www.sec.gov or by directing a request to Northern Lights Acquisition Corp., 10 East 53rd Street, Suite 3001, New York, NY, 10022, or by telephone at (615) 554-0044.
Participants in Solicitation
The Company and its directors and executive officers may be deemed participants in the solicitation of proxies from the Company’s stockholders with respect to the business combination. Information about those directors and executive officers and a description of their interests in the Company is contained in the Company’s Registration Statement on Form S-1 filed with the SEC on June 2, 2021 in connection with its initial public offering, its Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 25, 2022, the Proxy Statement, each of which was filed with the SEC and is available free of charge at the SEC’s web site at www.sec.gov, or by directing a request to Northern Lights Acquisition Corp., 10 East 53rd Street, Suite 3001, New York, NY, 10022.
The Seller, the Seller Parent, the Target, and their respective directors, managers, and executive officers may also be deemed to be participants in the solicitation of proxies from the Company’s stockholders in connection with the business combination. A list of the names of such parties and information regarding their interests in the business combination may be obtained by reading the Proxy Statement regarding the business combination when it becomes available.
Cautionary Statement Regarding Forward-Looking Statements
This Current Report on Form 8-K contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about future financial and operating results, our plans, objectives, expectations and intentions with respect to future operations, products and services; and other statements identified by words such as “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimated,” “believe,” “intend,” “plan,” “projection,” “outlook” or words of similar meaning. These forward-looking statements include, but are not limited to, statements with respect to trends in the cannabis industry, including changes in U.S and state laws, rules, regulations and guidance relating to the Target’s services, the Target’s growth prospects and the Target’s market size, the Target’s projected financial and operational performance, including relative to its competitors, new product and service offerings the Target may introduce in the future, the proposed business combination, including the implied enterprise value, the expected post-closing ownership structure and the likelihood and ability of the parties to successfully consummate the potential transaction, the risk that the proposed business combination may not be completed in a timely manner or at all, which may adversely affect the price of the Company’s securities, the failure to satisfy the conditions to the consummation of the proposed business combination, including the approval of the proposed business combination by the stockholders of the Company, the effect of the announcement or pendency of the proposed business combination on the Company’s or the Target’s business relationships, performance, and business generally, the outcome of any legal proceedings that may be instituted against the Company or the Target related to the Unit Purchase Agreement or the proposed business combination, the ability to maintain the listing of the Company’s securities on the Nasdaq Capital Market, the price of the Company’s securities, including volatility resulting from changes in the competitive and highly regulated industry in which the Target plans to operate, variations in performance across competitors, changes in laws and regulations affecting the Target’s business and changes in the combined capital structure, the ability to implement business plans, forecasts, and other expectations after the completion of the proposed business combination, and identify and realize additional opportunities, and other statements regarding the Target’s and the Company’s expectations, hopes, beliefs, intentions or strategies regarding the future. Such forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond our control. Actual results and the timing of events may differ materially from the results anticipated in these forward-looking statements.
In addition to factors previously disclosed in the Company’s reports filed with the SEC, the Definitive Proxy Statement, and those identified elsewhere in this communication, the following factors, among others, could cause actual results and the timing of events to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: (i) the risk that the transactions contemplated by the Unit Purchase Agreement may not be completed in a timely manner or at all, which may adversely affect the price of the Company’s securities; (ii) the risk that the transactions contemplated by the Unit Purchase Agreement may not be completed by the Company’s business combination deadline and the potential failure to obtain an extension of the business combination deadline if sought by the Company; (iii) the failure to satisfy the conditions to the consummation of the transactions contemplated by the Unit Purchase Agreement, including the adoption of the Unit Purchase Agreement by the stockholders of the Company, the satisfaction of the minimum cash amount following redemptions by the Company’s public stockholders and the receipt of certain governmental and regulatory approvals; (iv) the lack of a third-party valuation in determining whether or not to pursue the transactions contemplated by the Unit Purchase Agreement; (v) the occurrence of any event, change or other circumstance that could give rise to the termination of the Unit Purchase Agreement; (vi) the effect of the announcement or pendency of the transactions contemplated by the Unit Purchase Agreement on the Target’s business relationships, performance and business generally; (vii) risks that the transactions contemplated by the Unit Purchase Agreement disrupt current plans and operations of the Target; (viii) the outcome of any legal proceedings that may be instituted against the Target or the Company related to the Unit Purchase Agreement or the transactions contemplated thereby; (ix) the ability to maintain the listing of the Company’s securities on Nasdaq Capital Market; (x) the price of the Company’s securities, including following the Closing, may be volatile due to a variety of factors, including changes in the competitive and regulated industries in which the Target operates, variations in performance across competitors, changes in laws and regulations affecting the Target’s business and changes in the capital structure, and the dilutive impact of the shares to be issued in connection with the business combination, the private placement to be completed in conjunction with the business combination, and the terms of the Forward Purchase Agreement; (xi) the ability to implement business plans, forecasts, and other expectations after the completion of the transactions contemplated by the Unit Purchase Agreement, and identify and realize additional opportunities; (xii) the risk of downturns and the possibility of rapid change in the highly competitive industry in which the Target operates, and the risk of changes in applicable law, rules, regulations and regulatory guidance that could adversely impact the Target’s operations; (xiii) the risk that the Target and its current and future collaborators are unable to successfully develop and commercialize the Target’s products or services, or experience significant delays in doing so; (xiv) the risk that the Target may not achieve or sustain profitability; (xv) the risk that the Target will need to raise additional capital to execute its business plan, which may not be available on acceptable terms or at all; and (xvi) the risk that the Target experiences difficulties in managing its growth and expanding operations.
Actual results, performance or achievements may differ materially, and potentially adversely, from any projections and forward-looking statements and the assumptions on which those forward-looking statements are based. There can be no assurance that the data contained herein is reflective of future performance to any degree. You are cautioned not to place undue reliance on forward-looking statements as a predictor of future performance as projected financial information and other information are based on estimates and assumptions that are inherently subject to various significant risks, uncertainties and other factors, many of which are beyond our control. All information set forth herein speaks only as of the date hereof in the case of information about the Company and the Target or the date of such information in the case of information from persons other than the Company or the Target, and we disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this communication. Forecasts and estimates regarding the Target’s industry and end markets are based on sources we believe to be reliable, however there can be no assurance these forecasts and estimates will prove accurate in whole or in part. Annualized, pro forma, projected, and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results.
No Offer or Solicitation
This Current Report on Form 8-K relates to a proposed business combination between the Company and the Target and does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, 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.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
| Exhibit No. | Description | |
| 10.1 | Forward Purchase Agreement | |
| 99.1 | Press Release | |
| 104 | Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| NORTHERN LIGHTS ACQUISITION CORP. | ||
| Date: June 17, 2022 | By: | /s/ John Darwin |
| John Darwin | ||
| Co-Chief Executive Officer | ||
Exhibit 10.1
| Date: | June 16, 2022 | |
| To: | Northern Lights Acquisition Corp. (“Counterparty”) and SHF, LLC, doing business as Safe Harbor Financial (the “Target”) | |
| Address: | 10 East 53rd Street, Suite 3001 | |
| New York, New York 10022 | ||
| From: | Midtown East Management NL LLC, a Delaware limited liability company (“Seller”) | |
| Re: | OTC Equity Prepaid Forward Transaction |
The purpose of this agreement (this “Confirmation”) is to confirm the terms and conditions of the transaction (the “Transaction”) entered into between Seller and Counterparty on the Trade Date specified below. Certain terms of the Transaction shall be as set forth in this Confirmation, with additional terms as set forth in a Pricing Date Notice (the “Pricing Date Notice”) in the form of Schedule A hereto. This Confirmation, together with the Pricing Date Notice, constitutes a “Confirmation” and the Transaction constitutes a separate “Transaction” as referred to in the ISDA Form (as defined below).
This Confirmation, together with the Pricing Date Notice, evidences a complete binding agreement between Seller, Target and Counterparty as to the subject matter and terms of the Transaction to which this Confirmation relates and shall supersede all prior or contemporaneous written or oral communications with respect thereto.
The 2006 ISDA Definitions (the “Swap Definitions”) and the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”, and with the Swap Definitions, the “Definitions”), each as published by the International Swaps and Derivatives Association, Inc., are incorporated into this Confirmation. If there is any inconsistency between the Definitions and this Confirmation, this Confirmation governs. If, in relation to the Transaction to which this Confirmation relates, there is any inconsistency between the ISDA Form, this Confirmation (including the Pricing Date Notice), the Swap Definitions and the Equity Definitions, the following will prevail for purposes of such Transaction in the order of precedence indicated: (i) this Confirmation (including the Pricing Date Notice); (ii) the Equity Definitions; (iii) the Swap Definitions, and (iv) the ISDA Form.
This Confirmation, together with the Pricing Date Notice, shall supplement, form a part of, and be subject to an agreement in the form of the 2002 ISDA Master Agreement (the “ISDA Form”) as if Seller, Target and Counterparty had executed an agreement in such form (but without any Schedule except as set forth herein under “Schedule Provisions”) on the Trade Date of the Transaction.
The terms of the particular Transaction to which this Confirmation relates are as follows:
General Terms
| Type of Transaction: | Share Forward Transaction | |
| Trade Date: | June 16, 2022 | |
| Pricing Date: | As specified in the Pricing Date Notice. | |
| Effective Date: | One (1) Settlement Cycle following the Pricing Date. | |
| Valuation Date: | The earlier to occur of (a) the third anniversary of the closing of the transactions (the “Maturity Date”) between Counterparty and Target pursuant to the Unit Purchase Agreement, dated as of February 11, 2022 (the “Purchase Agreement”), by and among Counterparty, 5AK, LLC, a Delaware limited liability company, in its capacity as the representative for the stockholders of the Counterparty other than the Target, SHF Holding Co, LLC, a Colorado limited liability company, Partner Colorado Credit Union, a Colorado corporation, and the Target, as reported on the Form 8-K filed by the Counterparty on February 14, 2022 (the “Form 8-K”) (the “Business Combination”) and (b) the date specified by Seller in a written notice to be delivered at Seller’s discretion (not earlier than the day such notice is effective) of the occurrence of a VWAP Trigger Event. | |
| VWAP Trigger Event: | An event that occurs if either: (i) the Shares are delisted from The Nasdaq Stock Market (“Nasdaq”) or (ii) during any 30 consecutive Scheduled Trading Day-period following the closing of the Business Combination, the VWAP Price for 20 Scheduled Trading Days during such period shall be less than $3.00 per Share. | |
| VWAP Price: | For any Scheduled Trading Day, the Rule 10b-18 volume weighted average price per Share for such day as reported on Bloomberg Screen “NLIT <Equity> AQR SEC” (or any successor thereto). | |
| Pricing Date Notice: | Seller shall deliver to Counterparty a Pricing Date Notice no later than one (1) Exchange Business Day following the closing of the Business Combination. | |
| Seller: | Seller. | |
| Buyer: | Counterparty, to be renamed SHF Holdings, Inc. after the closing of the Business Combination. | |
| Shares: | Prior to the closing of the Business Combination, the Class A Common Stock, $0.0001 par value per share, of Northern Lights Acquisition Corp., a Delaware corporation (Ticker: “NLIT”) and, after the closing of the Business Combination, the shares of Class A Common Stock, $0.0001 par value per share, of SHF Holdings, Inc. (the “Issuer”) | |
| Number of Shares: | The sum of (a) the number of Recycled Shares and (b) the number of Additional Shares, as specified in the Pricing Date Notice, but in no event more than the Maximum Number of Shares. The Number of Shares is subject to reduction as described under “Optional Early Termination.” | |
| Maximum Number of Shares: | The lesser of 5,000,000 and such number of Shares such that the Section 16 Percentage (as defined below) as of the Pricing Date is equal to 9.9%. | |
| Seller Purchases: | Seller shall use commercially reasonable efforts to purchase up to the Maximum Number of Shares; provided that, Seller shall not purchase any Shares to the extent such purchases would breach any U.S. federal or state securities laws or the rules, regulations or applicable interpretations of the Securities and Exchange Commission. | |
| Forward Price: | The Redemption Price (the “Redemption Price”) as defined in Section 9.2(a) of the Counterparty’s Amended and Restated Certificate of Incorporation, filed by the Counterparty with the Secretary of State of the State of Delaware on June 21, 2021 (the “Certificate of Incorporation”). | |
| Reset Price: | Initially, the Redemption Price. The Reset Price shall be adjusted on the first Scheduled Trading Day of each month commencing on the first calendar month following the closing of the Business Combination to be the lowest of (a) the then-current Reset Price, (b) $10.00 and (c) the VWAP Price of the last ten (10) Scheduled Trading Days of the prior calendar month, but not lower than $5.00; provided, however, that if the Counterparty offers and sells Shares in a follow-on offering, or series of related offerings, at a price lower than, or upon any conversion or exchange price of currently outstanding or future issuances of any securities convertible or exchangeable for Shares being equal to a price lower than, the then-current Reset Price (the “Offering Price”), then the Reset Price shall be further reduced to equal the Offering Price. | |
| Recycled Shares: | The number of Shares purchased by Seller from third parties (other than Counterparty) prior to the redemption date for such Shares (as determined pursuant to the Certificate of Incorporation; provided that Seller shall have irrevocably waived all redemption rights with respect to such Shares as provided below in the section captioned “Transactions by Seller in the Shares.” Seller shall specify the number of Recycled Shares (the “Number of Recycled Shares”) in the Pricing Date Notice. | |
| Additional Shares: | Any Additional Shares will be purchased from the Counterparty at the Redemption Price, with such number of Shares to be equal to the difference of (x) the Maximum Number of Shares minus (y) the Recycled Shares, provided that no issuance or agreement to issue Additional Shares shall occur until permitted under the securities purchase agreement dated as of February 11, 2022 between the Counterparty and certain investors. | |
| Prepayment: | Applicable. | |
| Prepayment Amount: | An amount equal to the Number of Shares underlying the Transaction multiplied by the Redemption Price. | |
| Prepayment Date: | One (1) Local Business Day after the closing of the Business Combination. | |
| Variable Obligation: | Not applicable. | |
| Exchange(s): | Nasdaq Capital Market. | |
| Related Exchange(s): | All Exchanges. | |
| Structuring Fees: | On the Prepayment Date and each Payment Date, Counterparty shall pay to Midtown Madison Management LLC, a designated affiliate of Seller, a structuring fee (the “Structuring Fee”) in the amount of $5,000 on the last day of each calendar quarter or, if such date is not a Local Business Day, the next following Local Business Day, until the Maturity Date, payable in advance. | |
| Break-Up Fees: | A Break-Up Fee equal to (i) all (a) Structuring Fees and (b) attorney fees and other reasonable expenses related thereto incurred by Seller or its affiliates in connection with this Transaction, plus (ii) $1,000,000, shall be payable to Seller upon any Additional Termination Event following the consummation of the Transaction except where the Additional Termination Event occurred as a result of regulatory items or a material breach of Seller’s obligations hereunder; except that, Seller hereby irrevocably waives any and all right, title and interest, or any claim of any kind they have or may have in the future, in or to any monies held in the Counterparty’s Trust Account, as described more fully in its final prospectus for its initial public offering filed with the Securities and Exchange Commission on June 23, 2021, and agrees not to seek recourse against the Trust Account; in each case, as a result of, or arising out of, this Transaction; provided, however, that nothing herein shall (x) serve to limit or prohibit Seller’s right to pursue a claim against the Counterparty for legal relief against assets held outside the Trust Account, for specific performance or other equitable relief, (y) serve to limit or prohibit any claims that the Seller may have in the future against the Counterparty’s assets or funds that are not held in the Trust Account (including any funds that have been released from the Trust Account and any assets that have been purchased or acquired with any such funds) or (z) be deemed to limit any Seller’s right, title, interest or claim to the Trust Account by virtue of such Seller’s record or beneficial ownership of securities of the Counterparty acquired by any means other than pursuant to this Transaction, including but not limited to any redemption right with respect to any such securities of the Seller. The Counterparty and Target shall be jointly and severally liable for any Break-Up Fees payable hereunder. | |
| Payment Dates: | With respect to Counterparty, the last day of each calendar quarter or, if such date is not a Local Business Day, the next following Local Business Day, until the Maturity Date. | |
| Period End Date: | Each Payment Date during the term of the Transaction. | |
| Calculation Period: | Notwithstanding anything to the contrary in Section 4.13 of the Swap Definitions, each period from, and including, one Period End Date to, but excluding, the next following applicable Period End Date during the term of the Transaction, except that (a) the initial Calculation Period will commence on, and include, the date of the closing of the Business Combination and (b) the final Calculation Period will end on, but exclude the Settlement Date. | |
| Reimbursement of Legal Fees and Expenses: | On the Effective Date, Counterparty shall pay to Seller an amount equal to the attorney fees and other reasonable expenses related thereto incurred by Seller or its affiliates in connection with this Transaction in an amount not to exceed $100,000. In addition, on the Effective Date, Counterparty shall reimburse Seller for its reasonable costs and expenses incurred in connection with the acquisition of Subject Shares in an amount not to exceed $0.05 per Share. | |
Settlement Terms
| Settlement Method Election: | Not Applicable. | |
| Settlement Method: | Physical Settlement. | |
| Settlement Currency: | USD. | |
| Settlement Date: | Two (2) Exchange Business Days following the Valuation Date. | |
| Excess Dividend Amount | Ex Amount. | |
| Additional Payment on Settlement: | On the Settlement Date, Counterparty shall pay to Midtown Madison Management any accrued and unpaid Structuring Fees. | |
| Optional Early Termination: | From time to time and on any Exchange Business Day following the date of the closing of the Business Combination (any such date, an “OET Date”) and subject to the terms and conditions below, Seller may, in its absolute discretion, terminate the Transaction in whole or in part so long as Seller provides written notice to Counterparty (the “OET Notice”) no later than the later of (a) the third Local Business Day following the OET Date and (b) the first Payment Date after the OET Date, which shall specify the quantity by which the Number of Shares is to be reduced (such quantity, the “Terminated Shares”). The effect of an OET Notice given shall be to reduce the Number of Shares by the number of Terminated Shares specified in such OET Notice with effect as of the related OET Date. As of each OET Date, Counterparty shall be entitled to an amount from Seller equal to the product of (x) the number of Terminated Shares and (y) the Reset Price in respect of such OET Date (an “Early Termination Obligation”); the remainder of the Transaction, if any, shall continue in accordance with its terms; provided that if the OET Date is also the stated Valuation Date, the remainder of the Transaction shall be settled in accordance with the other provisions of “Settlement Terms.” Seller shall pay to Counterparty any and all unsatisfied Early Termination Obligations, calculated as of the last day of each calendar month, on the first Local Business Day following such day. | |
| Maturity Consideration | At the Maturity Date, Seller shall be entitled to (1) the product of the Shares then held by Seller multiplied by the Forward Price, and (2) an amount, in cash or Shares at the sole discretion of Counterparty, equal to (a) in the case of cash, the product of (i)(x) the Maximum Number of Shares less (y) the number of Terminated Shares and (ii) $2.00 (the “Maturity Cash Consideration”) and (b) in the case of Shares, (i) the Maturity Cash Consideration divided by (ii) the VWAP Price for the 30 Scheduled Trading Days prior to the Maturity Date. |
Share Adjustments:
| Method of Adjustment: | Calculation Agent Adjustment. |
Extraordinary Events:
Consequences of Merger Events involving Counterparty:
| Share-for-Share: | Calculation Agent Adjustment. | |
| Share-for-Other: | Cancellation and Payment. | |
| Share-for-Combined: | Component Adjustment. | |
| Tender Offer: | Applicable; provided, however, that Section 12.1(d) of the Equity Definitions is hereby amended by adding “, or of the outstanding Shares,” before “of the Issuer” in the fourth line thereof. Sections 12.1(e) and 12.1(l)(ii) of the Equity Definitions are hereby amended by adding “or Shares, as applicable,” after “voting Shares”. |
Consequences of Tender Offers:
| Share-for-Share: | Calculation Agent Adjustment. | |
| Share-for-Other: | Calculation Agent Adjustment. | |
| Share-for-Combined: | Calculation Agent Adjustment. | |
| Composition of Combined Consideration: | Not Applicable. | |
| Nationalization, Insolvency or Delisting: | Cancellation and Payment (Calculation Agent Determination); provided that in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, the Nasdaq Global Select Market or the Nasdaq Global Market (or their respective successors) or such other exchange or quotation system which, in the determination of the Calculation Agent, has liquidity comparable to the aforementioned exchanges; if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall be deemed to be the Exchange. | |
| Business Combination Exclusion: | Notwithstanding the foregoing or any other provision herein, the parties agree that the Business Combination shall not constitute a Merger Event, Tender Offer, Delisting or any other Extraordinary Event hereunder. |
Additional Disruption Events:
| (a) Change in Law: | Applicable; provided that Section 12.9(a)(ii) of the Equity Definitions is hereby amended by adding the words “(including, for the avoidance of doubt and without limitation, adoption or promulgation of new regulations authorized or mandated by existing statute)” after the word “regulation” in the second line thereof. |
| (a) Failure to Deliver: | Not Applicable. |
| (b) Insolvency Filing: | Applicable. | |
| (c) Hedging Disruption: | Not Applicable. | |
| (d) Increased Cost of Hedging: | Not Applicable. | |
| (e) Loss of Stock Borrow: | Not Applicable. | |
| (f) Increased Cost of Stock Borrow: | Not Applicable. | |
| Determining Party: | For all applicable events, Seller, unless (i) an Event of Default, Potential Event of Default or Termination Event has occurred and is continuing with respect to Seller, or (ii) if Seller fails to perform its obligations as Determining Party, in which case a Third Party Dealer (as defined below) in the relevant market selected by Counterparty will be the Determining Party. | |
| Additional Provisions: | ||
| Calculation Agent: | Seller, unless (i) an Event of Default, Potential Event of Default or Termination Event has occurred and is continuing with respect to Seller, or (ii) if Seller fails to perform its obligations as Calculation Agent, in which case an unaffiliated leading dealer in the relevant market selected by Counterparty in its sole discretion will be the Calculation Agent.
In the event that a party (the “Disputing Party”) does not agree with any determination made (or the failure to make any determination) by the Calculation Agent, the Disputing Party shall have the right to require that the Calculation Agent have such determination reviewed by a disinterested third party that is a dealer in derivatives of the type that is the subject of the dispute and that is not an Affiliate of either party (a “Third Party Dealer”). Such Third Party Dealer shall be jointly selected by the parties within one (1) Business Day after the Disputing Party’s exercise of its rights hereunder (once selected, such Third Party Dealer shall be the “Substitute Calculation Agent”). If the parties are unable to agree on a Substitute Calculation Agent within the prescribed time, each of the parties shall elect a Third Party Dealer and such two dealers shall agree on a Third Party Dealer by the end of the subsequent Business Day. Such Third Party Dealer shall be deemed to be the Substitute Calculation Agent. Any exercise by the Disputing Party of its rights hereunder must be in writing and shall be delivered to the Calculation Agent not later than the third Business Day following the Business Day on which the Calculation Agent notifies the Disputing Party of any determination made (or of the failure to make any determination). Any determination by the Substitute Calculation Agent shall be binding in the absence of manifest error and shall be made as soon as possible but no later than the second Business Day following the Substitute Calculation Agent’s appointment. The costs of such Substitute Calculation Agent shall be borne by (a) the Disputing Party if the Substitute Calculation Agent substantially agrees with the Calculation Agent or (b) the non-Disputing Party if the Substitute Calculation Agent does not substantially agree with the Calculation Agent. If, after following the procedures and within the specified time frames set forth above, a binding determination is not achieved, the original determination of the Calculation Agent shall apply. | |
| Non-Reliance: | Applicable. | |
| Agreements and Acknowledgements Regarding Hedging Activities: | Applicable. | |
| Additional Acknowledgements: | Applicable. |
Collateral Provisions:
| Grant of Security Interest: | Seller hereby grants a security interest in the Collateral to Counterparty to secure the payment or performance of all of Seller’s present and future obligations to Counterparty with respect to this Transaction. | |
| Collateral: | All of the following personal property of Seller, wherever located, and now owned, held or existing, or hereafter acquired or arising: (i) all cash proceeds of the sale, transfer or other disposition (other than in connection with any Permitted PB Activities (as defined in the Limited Liability Agreement of Seller) and cash flow posted to the Seller as credit enhancements under those Permitted PB Activities) of Recycled Shares or the Additional Shares (together, the “Subject Shares”) standing to the credit of the Securities Account; (ii) the deposit account of Seller at First Republic Bank in which such cash proceeds will be deposited; and (iii) to the extent not listed above as original collateral, proceeds and products of the foregoing. | |
| Securities Account: | The securities account opened or to be opened in the name of Seller and maintained at the Securities Intermediary, and any renumbering of that account and any permitted account in replacement thereof. Seller will immediately upon establishment of the Securities Account furnish to Counterparty information identifying the Securities Account. Seller will instruct the Securities Intermediary to deposit all cash proceeds of any sale or other disposition (other than in connection with any Permitted PB Activities) of the Subject Shares into a deposit account in the name of Seller at First Republic Bank. | |
| Securities Intermediary: | Cantor Fitzgerald or U.S. Bank, each a nationally recognized “securities intermediary” (as defined in Article 8 of the UCC) that will maintain the Securities Account. | |
| Perfection: | Seller authorizes Counterparty to file one or more financing statements, in the standard form for a UCC-1 filing or other appropriate form, describing the Collateral to perfect the security interest created hereby and otherwise make it effective against third parties. Seller hereby authorizes Counterparty at any time and from time to time to amend any financing statements naming Seller as “debtor” to include the Collateral. In addition, Seller, Counterparty and First Republic Bank shall enter into a customary deposit account control agreement in form and substance acceptable to such Bank. Counterparty agrees that it will not send to First Republic Bank a notice of exclusive control (or similar communication), and that it will not otherwise exercise any of its rights under such deposit account control agreement unless an Event of Default has occurred and is continuing and Counterparty is exercising its rights as a secured creditor in the Collateral. | |
Schedule Provisions:
| Specified Entity: | In relation to both Seller and Counterparty for the purpose of: Section 5(a)(v), Not Applicable Section 5(a)(vi), Not Applicable Section 5(a)(vii), Not Applicable Section 5(b)(v), Not Applicable | |
| Cross-Default | The “Cross-Default” provisions of Section 5(a)(vi) of the ISDA Form will not apply to either party. | |
| Credit Event Upon Merger | The “Credit Event Upon Merger” provisions of Section 5(b)(v) of the ISDA Form will not apply to either party. | |
| Automatic Early Termination: | The “Automatic Early Termination” of Section 6(a) of the ISDA Form will not apply to either party. | |
| Termination Currency: | United States Dollars. | |
| Additional Termination Event: | Will apply to Seller and to Counterparty. The occurrence of either of the following events shall constitute an Additional Termination Event in respect of which Seller and Counterparty shall both be Affected Parties: (a) The Business Combination fails to close on or before the Outside Date (as defined in the Purchase Agreement) (as such Outside Date may be amended or extended from time to time). (b) The Purchase Agreement is terminated prior to the closing of the Business Combination. Subject to the Break-Up Fee, if this Transaction terminates due to the occurrence of either of the foregoing Additional Termination Events, then, subject to the immediately following sentence, no further payments or deliveries shall be due by either Seller to Counterparty or Counterparty to Seller in respect of the Transaction, including without limitation in respect of any settlement amount, breakage costs or any amounts representing the future value of the Transaction, and neither party shall have any further obligation under the Transaction and, for the avoidance of doubt and without limitation, no payments will have accrued or be due under Sections 2, 6 or 11 of the ISDA Form. Notwithstanding the foregoing, Counterparty’s obligations set forth under the captions, “Reimbursement of Legal Fees and Expenses,” and “Other Provisions — (d) Indemnification” shall survive any termination due to the occurrence of either of the foregoing Additional Termination Events. | |
| Governing Law: | New York law (without reference to choice of law doctrine). | |
| Credit Support Document: | With respect to Seller, the deposit account control agreement referred to under “Perfection” above shall be a Credit Support Document in respect of the Seller. With respect to Counterparty, None. | |
| Credit Support Provider: | With respect to Seller and Counterparty, None. | |
| Local Business Days: | Seller specifies the following places for the purposes of the definition of Local Business Day as it applies to it: New York. Counterparty specifies the following places for the purposes of the definition of Local Business Day as it applies to it: New York. | |
Representations, Warranties and Covenants
| 1. | Each of Counterparty and Seller represents and warrants to, and covenants and agrees with, the other as of the date on which it enters into the Transaction that (in the absence of any written agreement between the parties that expressly imposes affirmative obligations to the contrary for the Transaction): |
| (a) | Non-Reliance. It is acting for its own account, and it has made its own independent decisions to enter into the Transaction and as to whether the Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into the Transaction, it being understood that information and explanations related to the terms and conditions of the Transaction will not be considered investment advice or a recommendation to enter into the Transaction. No communication (written or oral) received from the other party will be deemed to be an assurance or guarantee as to the expected results of the Transaction. |
| (b) | Assessment and Understanding. It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of the Transaction. It is also capable of assuming, and assumes, the risks of the Transaction. |
| (c) | Non-Public Information. It is in compliance with Section 10(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). |
| (d) | Eligible Contract Participant. It is an “eligible contract participant” under, and as defined in, the Commodity Exchange Act (7 U.S.C. § 1a(18)) and CFTC regulations (17 CFR § 1.3). |
| (e) | Tax Characterization. It shall treat the Transaction as a derivative financial contract for U.S. federal income tax purposes, and it shall not take any action or tax return filing position contrary to this characterization. |
| (f) | Private Placement. It (i) is an “accredited investor” as such term is defined in Regulation D as promulgated under the Securities Act of 1933, as amended (the “Securities Act”), (ii) is entering into the Transaction for its own account without a view to the distribution or resale thereof and (iii) understands that the assignment, transfer or other disposition of the Transaction has not been and will not be registered under the Securities Act. |
| (g) | Investment Company Act. It is not and, after giving effect to the Transaction, will not be required to register as an “investment company” under, and as such term is defined in, the Investment Company Act of 1940, as amended. |
| (h) | Authorization. The Transaction has been entered into pursuant to authority granted by its board of directors or other governing authority. It has no internal policy, whether written or oral, that would prohibit it from entering into any aspect of the Transaction, including, but not limited to, the purchase of Shares to be made in connection therewith. |
| 2. | Counterparty represents and warrants to, and covenants and agrees with Seller as of the date on which it enters into the Transaction that: |
| (a) | Total Assets. It has total assets of at least USD 117,000,000 as of the date hereof. |
| (b) | Non-Reliance. Without limiting the generality of Section 13.1 of the Equity Definitions, Counterparty acknowledges that Seller is not making any representations or warranties or taking any position or expressing any view with respect to the treatment of the Transaction under any accounting standards. |
| (c) | Solvency. Counterparty is, and shall be as of the date of any payment or delivery by Counterparty under the Transaction, solvent and able to pay its debts as they come due, with assets having a fair value greater than liabilities and with capital sufficient to carry on the businesses in which it engages. Counterparty: (i) has not engaged in and will not engage in any business or transaction after which the property remaining with it will be unreasonably small in relation to its business, (ii) has not incurred and does not intend to incur debts beyond its ability to pay as they mature, and (iii) as a result of entering into and performing its obligations under the Transaction, (a) it has not violated and will not violate any relevant state law provision applicable to the acquisition or redemption by an issuer of its own securities and (b) it would not be nor would it be rendered “insolvent” (as such term is defined under Section 101(32) of the Bankruptcy Code). If on any Exchange Business Day the Counterparty has liquidity, including cash and amounts available for borrowing under any applicable credit facility, of less than $20 million, the Counterparty shall promptly provide written notice of such condition to Seller. |
| (d) | Public Reports. As of the Trade Date, Counterparty is in compliance with its reporting obligations under the Exchange Act, and all reports and other documents filed by Counterparty with the Securities and Exchange Commission pursuant to the Exchange Act, when considered as a whole (with the most recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), do not contain any untrue statement of a material fact or any omission of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. |
| (e) | No Distribution. Counterparty is not entering into the Transaction to facilitate a distribution of the Shares (or any security that may be converted into or exercised or exchanged for Shares, or whose value under its terms may in whole or in significant part be determined by the value of the Shares) or in connection with any future issuance of securities. |
| (f) | SEC Documents. The Counterparty shall comply with the Securities and Exchange Commission’s Compliance and Disclosure Interpretation No. 166.01 for all relevant disclosure in connection with this Confirmation and the Transaction, and will not file with the Securities and Exchange Commission any Form 8-K, Registration Statement on Form S-4, proxy statement, or other document that includes any disclosure regarding this Confirmation or the Transaction without consulting with and reasonably considering any comments received from Seller, provided that, no consultation shall be required with respect to any subsequent disclosures that are substantially similar to prior disclosures by Counterparty that were reviewed by Seller. |
| 3. | Seller represents and warrants to, and covenants and agrees with Counterparty as of the date on which it enters into the Transaction and each other date specified that: |
| (a) | Regulatory Filings. It, together with each other person in the Seller Group (as defined in “Other Provisions” below), is in compliance with all material regulatory filings relating to the Counterparty and the Transaction. Counterparty covenants that it will make all regulatory filings that it is required by law or regulation to make with respect to the Transaction including, without limitation, as may be required by Section 13 or Section 16 under the Exchange Act and, assuming the accuracy of Counterparty’s Repurchase Notices (as described under “Repurchase Notices” below) any sales of Subject Shares will be in compliance therewith. |
| (b) | Compliance with SPV Provisions. During the term of this Transaction it will comply with all provisions of Section 9(d) of the Limited Liability Company Agreement of Seller and shall not amend or permit the amendment of such provisions without the written consent of Counterparty. Failure to comply with the foregoing covenant shall constitute an Event of Default hereunder. |
| (c) | Compliance with Law. Seller will comply with applicable law in all material respects in connection with its purchases or sales of any Shares in connection with the Transaction. |
| (d) | Shareholder Vote. Seller agrees to not vote any Shares it holds as of the applicable record date in connection with the Business Combination at any meeting of the Counterparty’s shareholders (or to provide a written consent for that purpose with respect to such Shares). |
Transactions by Seller in the Shares
| (a) | Seller hereby waives the redemption rights (“Redemption Rights”) set forth in Section 9.2(a) of the Certificate of Incorporation in connection with the Business Combination with respect to Shares it acquires from holders of Shares and identifies on the Pricing Notice, other than the Counterparty or affiliates of the Counterparty (each, a “Third Party Shareholder”) who have redeemed Shares or indicated an interest in redeeming Shares pursuant to the Redemption Rights during the period (the “Hedging Period”) beginning on the date of execution of this Agreement and ending at the time reversals of redemptions in connection with the Business Combination are no longer permitted (the Shares so acquired, the “Subject Shares”), except as required to not exceed the Excess Ownership Position. Following such date, Seller shall notify Counterparty of the number of Subject Shares. For the avoidance of doubt, Seller may sell or otherwise transfer, loan or dispose of any of the Subject Shares or any other shares or securities of the Counterparty in one or more public or private transactions at any time; provided that if such Subject Shares are so transferred prior to the Closing of the Business Combination, such transferee also agrees to waive Redemption Rights with respect to such Subject Shares and provided, further, that upon the sale of any Subject Shares the Seller shall immediately be deemed to have delivered an OET Notice with respect to such Subject Shares specifying the settlement date of such sale as the OET Settlement Date. Any Subject Shares sold by Seller during the term of the Transaction will cease to be Subject Shares. |
| (b) | Seller will give written notice to Counterparty of any sale of Subject Shares by Seller within one (1) Local Business Day following the date of such sale, such notice to include the date of the sale and the number of Subject Shares sold. |
| (c) | If the Business Combination does not close, Counterparty hereby waives the provisions of Section 9.2(c) of the Certificate of Incorporation with respect to the Subject Shares (or any other shares of the Counterparty held by Seller or any of its affiliates) in any subsequent stockholder meeting to amend the Certificate of Incorporation or approve an initial business combination, and any other applicable provisions that would impose redemption or transfer restrictions with respect to the Subject Shares (or any other shares of the Counterparty held by Seller or any of its affiliates) provided that such Subject Shares shall not be permitted to be redeemed by Seller during the term of this Agreement pursuant to Section (a) above. Notwithstanding anything to the contrary set forth herein, the waiver set forth in this paragraph (c) shall survive any termination or expiration of this Confirmation. |
No Arrangements
Seller and Counterparty each acknowledge and agree that: (i) there are no voting, hedging or settlement arrangements between Seller and Counterparty with respect to any Shares or the Issuer, other than those set forth herein; (ii) although Seller may hedge its risk under the Transaction in any way Seller determines, Seller has no obligation to hedge with the purchase or maintenance of any Shares or otherwise; (iii) Counterparty will not be entitled to any voting rights in respect of any of the Shares underlying the Transaction; and (iv) Counterparty will not seek to influence Seller with respect to the voting of any Hedge Positions of Seller consisting of Shares.
Wall Street Transparency and Accountability Act
In connection with Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“WSTAA”), the parties hereby agree that neither the enactment of WSTAA or any regulation under WSTAA, nor any requirement under WSTAA or an amendment made by WSTAA, nor any similar legal certainty provision in any legislation enacted, or rule or regulation promulgated, on or after the date of this Confirmation, shall limit or otherwise impair either party’s otherwise applicable rights to terminate, renegotiate, modify, amend or supplement this Confirmation or the ISDA Form, as applicable, arising from a termination event, force majeure, illegality, increased costs, regulatory change or similar event under this Confirmation, the Equity Definitions incorporated herein, or the ISDA Form.
Address for Notices
Notice to Seller:
Midtown East Management NL LLC
One Rockefeller Center
32nd Floor
New York, NY 10020
Notice to Counterparty:
Northern Lights Acquisition Corp.
10 East 53rd Street, Suite 3001
New York, New York 10022
Following the Closing of the Business Combination:
SHF Holdings, Inc.
5269 W. 62nd Avenue
Arvada, Colorado 80003
Att’n: Chief Financial Officer
Notice to Target:
SHF, LLC d/b/a Safe Harbor Financial
5269 W. 62nd Avenue
Arvada, Colorado 80003
Att’n: Chief Executive Officer
Account Details
Account details for Seller: To be advised.
Account details for Counterparty: To be advised.
Other Provisions.
| (a) | Rule 10b5-1. |
| (i) | Counterparty represents and warrants to Seller that Counterparty is not entering into the Transaction to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for the Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for the Shares) for the purpose of inducing the purchase or sale of such securities or otherwise in violation of the Exchange Act, and Counterparty represents and warrants to Seller that Counterparty has not entered into or altered, and agrees that Counterparty will not enter into or alter, any corresponding or hedging transaction or position with respect to the Shares. Counterparty acknowledges that it is the intent of the parties that the Transaction comply with the requirements of paragraphs (c)(1)(i)(A) and (B) of Rule 10b5-1 under the Exchange Act (“Rule 10b5-1”) and the Transaction shall be interpreted to comply with the requirements of Rule 10b5-1(c). |
| (ii) | Counterparty agrees that it will not seek to control or influence Seller’s decision to make any “purchases or sales” (within the meaning of Rule 10b5-1(c)(1)(i)(B)(3)) under the Transaction, including, without limitation, Seller’s decision to enter into any hedging transactions. Counterparty represents and warrants that it has consulted with its own advisors as to the legal aspects of its adoption and implementation of this Confirmation and the Transaction under Rule 10b5-1. |
| (iii) | Counterparty and Seller each acknowledges and agrees that any amendment, modification, waiver or termination of this Confirmation must be effected in accordance with the requirements for the amendment or termination of a “plan” as defined in Rule 10b5-1(c). Without limiting the generality of the foregoing, Counterparty and Seller each acknowledges and agrees that any such amendment, modification, waiver or termination shall be made in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b-5, and no such amendment, modification or waiver shall be made at any time at which Counterparty, Seller, or any officer, director, manager or similar person of Counterparty or Seller is aware of any material non-public information regarding Counterparty or the Shares. |
| (b) | Repurchase Notices. Counterparty shall, on any day on which Counterparty effects any repurchase of Shares, promptly give Seller a written notice of such repurchase (a “Repurchase Notice”) on such day if following such repurchase, the number of outstanding Shares as determined on such day is (i) less than the number of Shares outstanding that would result in the percentage of total Shares outstanding represented by the number of Shares underlying the Transaction increasing by 0.10% (in the case of the first such notice) or (ii) thereafter more than the number of Shares that would need to be repurchased to result in the percentage of total Shares outstanding represented by the number of Shares underlying the Transaction increasing by a further 0.10% less than the number of Shares included in the immediately preceding Repurchase Notice. Counterparty agrees to indemnify and hold harmless Seller and its affiliates and their respective officers, directors, employees, affiliates, advisors, agents and controlling persons (each, an “Indemnified Person”) from and against any and all losses (including losses relating to Seller’s hedging activities as a consequence of remaining or becoming a Section 16 “insider” following the closing of the Business Combination, including without limitation, any forbearance from hedging activities or cessation of hedging activities and any losses in connection therewith with respect to the Transaction), claims, damages, judgments, liabilities and expenses (including reasonable attorney’s fees), joint or several, which an Indemnified Person may become subject to, as a result of Counterparty’s failure to provide Seller with a Repurchase Notice on the day and in the manner specified in this paragraph, and to reimburse, within thirty (30) days, upon written request, each of such Indemnified Persons for any reasonable legal or other expenses incurred in connection with investigating, preparing for, providing testimony or other evidence in connection with or defending any of the foregoing; provided, however, for the avoidance of doubt, Counterparty has no indemnification or other obligations with respect to Seller becoming a Section 16 “insider” prior to the closing of the Business Combination. If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against the Indemnified Person as a result of Counterparty’s failure to provide Seller with a Repurchase Notice in accordance with this paragraph, such Indemnified Person shall promptly notify Counterparty in writing, and Counterparty, upon request of the Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others Counterparty may designate in such proceeding and shall pay the fees and expenses of such counsel related to such proceeding. Counterparty shall not be liable for any settlement of any proceeding contemplated by this paragraph that is effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, Counterparty agrees to indemnify any Indemnified Person from and against any loss or liability by reason of such settlement or judgment. Counterparty shall not, without the prior written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding contemplated by this paragraph that is in respect of which any Indemnified Person is or could have been a party and indemnity could have been sought hereunder by such Indemnified Person, unless such settlement includes an unconditional release of such Indemnified Person from all liability on claims that are the subject matter of such proceeding on terms reasonably satisfactory to such Indemnified Person. If the indemnification provided for in this paragraph is unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then Counterparty hereunder, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities. The remedies provided for in this paragraph are not exclusive and shall not limit any rights or remedies which may otherwise be available to any Indemnified Person at law or in equity. The indemnity and contribution agreements contained in this paragraph shall remain operative and in full force and effect regardless of the termination of the Transaction. |
| (c) | Transfer or Assignment. Except in cases where the Seller assigns or transfers the rights and duties under this Confirmation in order to cause the Section 16 Percentage to remain less than or equal to 9.9%, in which case the Seller may freely transfer or assign the rights and duties under this Confirmation, the rights and duties under this Confirmation may not be transferred or assigned by any party hereto without the prior written consent of the other party, such consent not to be unreasonably withheld. If at any time following the closing of the Business Combination at which (A) the Section 16 Percentage exceeds 9.9%, or (B) the Share Amount exceeds the Applicable Share Limit (if any applies) (any such condition described in clause (A) or (B), an “Excess Ownership Position”), Seller is unable after using its commercially reasonable efforts to effect a transfer or assignment of a portion of the Transaction to a third party on pricing terms reasonably acceptable to Seller and within a time period reasonably acceptable to Seller such that no Excess Ownership Position exists, then Seller may designate any Exchange Business Day as an Early Termination Date with respect to a portion of the Transaction (the “Terminated Portion”), such that following such partial termination no Excess Ownership Position exists. In the event that Seller so designates an Early Termination Date with respect to a portion of the Transaction, a portion of the Shares with respect to the Transaction shall be delivered to Counterparty as if the Early Termination Date was the Valuation Date in respect of a Transaction having terms identical to the Transaction and a Number of Shares equal to the number of Shares underlying the Terminated Portion. The “Section 16 Percentage” as of any day is the fraction, expressed as a percentage, as determined by Seller, (A) the numerator of which is the number of Shares that Seller and each person subject to aggregation of Shares with Seller under Section 13 or Section 16 of the Exchange Act and rules promulgated thereunder and all persons who may form a “group” (within the meaning of Rule 13d-5(b)(1) of the Exchange Act) with Seller directly or indirectly beneficially own (as defined under Section 13 or Section 16 of the Exchange Act and rules promulgated thereunder) (the “Seller Group” ) and (B) the denominator of which is the number of Shares outstanding. |
The “Share Amount” as of any day is the number of Shares that Seller and any person whose ownership position would be aggregated with that of Seller and any group (however designated) of which Seller is a member (Seller or any such person or group, a “Seller Person”) under any law, rule, regulation, regulatory order or organizational documents or contracts of Counterparty that are, in each case, applicable to ownership of Shares (“Applicable Restrictions”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership under any Applicable Restriction, as determined by Seller in its sole discretion.
The “Applicable Share Limit” means a number of Shares equal to (A) the minimum number of Shares that could give rise to reporting or registration obligations or other requirements (including obtaining prior approval from any person or entity) of a Seller Person, or could result in an adverse effect on a Seller Person, under any Applicable Restriction, as determined by Seller in its sole discretion, minus (B) 0.1% of the number of Shares outstanding.
| (d) | Indemnification. To the extent an indemnification pursuant to Paragraph (b) above is not applicable, Counterparty agrees to indemnify and hold harmless Seller, its affiliates and its assignees and their respective directors, officers, employees, agents and controlling persons (each such person being an “Indemnified Party”) from and against any and all losses (but not including financial losses to an Indemnified Party relating to the economic terms of the Transaction provided that the Counterparty performs its obligations under this Confirmation in accordance with its terms), claims, damages and liabilities (or actions in respect thereof), joint or several, incurred by or asserted against such Indemnified Party arising out of, in connection with, or relating to, the execution or delivery of this Confirmation, the performance by the parties hereto of their respective obligations under the Transaction, any breach of any covenant or representation made by Counterparty in this Confirmation or the ISDA Form, regulatory filings related to the Transaction (other than as relates to any information provided by Seller or its affiliates), or the consummation of the transactions contemplated hereby; provided, however, Counterparty has no indemnification obligations with respect to any loss, claim, damage, liability or expense related to the manner in which Seller sells the Subject Shares or any other Shares owned by Seller. Counterparty will not be liable under the foregoing indemnification provision to the extent that any loss, claim, damage, liability or expense is found in a nonappealable judgment by a court of competent jurisdiction to have resulted from Seller’s material breach of any covenant, representation or other obligation in this Confirmation or the ISDA Form or from Seller’s willful misconduct, gross negligence or bad faith in performing the services that are subject of the Transaction. If for any reason the foregoing indemnification is unavailable to any Indemnified Party or insufficient to hold harmless any Indemnified Party, then Counterparty shall contribute, to the maximum extent permitted by law, to the amount paid or payable by the Indemnified Party as a result of such loss, claim, damage or liability. In addition (and in addition to any other reimbursement of legal fees and expenses contemplated by this Confirmation), Counterparty will reimburse any Indemnified Party for all expenses (including reasonable counsel fees and expenses) as they are incurred in connection with the investigation of, preparation for or defense or settlement of any pending or threatened claim or any action, suit or proceeding arising therefrom, whether or not such Indemnified Party is a party thereto and whether or not such claim, action, suit or proceeding is initiated or brought by or on behalf of Counterparty; provided, however, that to the extent any indemnification payments are paid in advance, but the amount paid by the Indemnified Party as a result of such loss, claim, damage or liabilityis reduced in a nonappealable judgment by a court of competent jurisdiction to an amount lower than the advance payment amount, then Seller shall repay, or if the Seller is not the Indemnified Party, shall use commercially reasonable efforts to cause the Indemnified Party to repay, all amounts to which such Indemnified Party is determined to be not entitled. Counterparty also agrees that no Indemnified Party shall have any liability to Counterparty or any person asserting claims on behalf of or in right of Counterparty in connection with or as a result of any matter referred to in this Confirmation except to the extent that any losses, claims, damages, liabilities or expenses incurred by Counterparty result from such Indemnified Party’s breach of any covenant, representation or other obligation in this Confirmation or the ISDA Form or from the gross negligence, willful misconduct or bad faith of the Indemnified Party or breach of any U.S. federal or state securities laws or the rules, regulations or applicable interpretations of the Securities and Exchange Commission. The provisions of this paragraph shall survive the completion of the Transaction contemplated by this Confirmation and any assignment and/or delegation of the Transaction made pursuant to the ISDA Form or this Confirmation shall inure to the benefit of any permitted assignee of Seller. |
| (e) | Amendments to Equity Definitions. |
| (i) | Section 11.2(a) of the Equity Definitions is hereby amended by (i) replacing the words “a diluting or concentrative” with the word “an” and adding the phrase “or such Transaction” at the end thereof; |
| (ii) | The first sentence of Section 11.2(c) of the Equity Definitions, prior to clause (A) thereof, is hereby amended to read as follows: ‘(c) If “Calculation Agent Adjustment” is specified as the Method of Adjustment in the related Confirmation of a Share Option Transaction or Share Forward Transaction, then, following the announcement or occurrence of any Potential Adjustment Event, the Calculation Agent will determine whether such Potential Adjustment Event has an economic effect on the Transaction and, if so, will (i) make appropriate adjustment(s), if any, to any one or more of:’ and the portion of such sentence immediately preceding clause (ii) thereof is hereby amended by deleting the words “diluting or concentrative”. | |
| (iii) | Section 11.2(e)(vii) of the Equity Definitions is hereby amended by (i) replacing the words “a diluting or concentrative” with the word “an” and (ii) adding the phrase “or the relevant Transaction” at the end thereof; |
| (iv) | Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (i) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (ii) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) the occurrence of any of the events specified in Section 5(a)(vii)(1) through (9) of the ISDA Form with respect to that Issuer.”; |
| (v) | Section 12.6(c)(ii) of the Equity Definitions is hereby amended by replacing the words “the Transaction will be cancelled,” in the first line with the words “Seller will have the right, which it must exercise or refrain from exercising, as applicable, in good faith acting in a commercially reasonable manner, to cancel the Transaction,”; and |
| (vi) | Section 12.9(b)(i) of the Equity Definitions is hereby amended by (i) replacing “either party may elect” with “Seller may elect” and (ii) replacing “notice to the other party” with “notice to Counterparty” in the first sentence of such section. |
| (f) | Waiver of Jury Trial. Each party waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding relating to the Transaction. Each party (i) certifies that no representative, agent or attorney of either party has represented, expressly or otherwise, that such other party would not, in the event of such a suit, action or proceeding, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other party have been induced to enter into the Transaction, as applicable, by, among other things, the mutual waivers and certifications provided herein. |
| (g) | Tax Disclosure. Effective from the date of commencement of discussions concerning the Transaction, Counterparty and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Counterparty relating to such tax treatment and tax structure. |
| (h) | Securities Contract; Swap Agreement. The parties hereto intend for (i) the Transaction to be (a) a “securities contract” as defined in the Bankruptcy Code, in which case each payment and delivery made pursuant to the Transaction is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “settlement payment,” within the meaning of Section 546 of the Bankruptcy Code, and (b) a “swap agreement” as defined in the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “transfer,” as such term is defined in Section 101(54) of the Bankruptcy Code and a “payment or other transfer of property” within the meaning of Sections 362 and 546 of the Bankruptcy Code, and the parties hereto to be entitled to the protections afforded by, among other Sections, Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code, (ii) a party’s right to liquidate, terminate and accelerate the Transaction and to exercise any other remedies upon the occurrence of any Event of Default under the ISDA Form with respect to the other party to constitute a “contractual right” as described in the Bankruptcy Code, and (iii) each payment and delivery of cash, securities or other property hereunder to otherwise constitute a “margin payment” or “settlement payment” and a “transfer” as defined in the Bankruptcy Code. |
| (i) | Process Agent. For the purposes of Section 13(c) of the ISDA Form: |
Seller appoints as its Process Agent: None
Counterparty appoints as its Process Agent: None.
[Signature page follows]
Please confirm that the foregoing correctly sets forth the terms of our agreement by executing a copy of this Confirmation and returning it to us at your earliest convenience.
| Very truly yours, | ||
| MIDTOWN EAST MANAGEMENT NL LLC | ||
| By: | /s/ Drew Phillips | |
| Name: | Drew Phillips | |
| Title: | Authorized Signatory | |
Agreed and accepted by:
| NORTHERN LIGHTS ACQUISITION CORP. | ||
| By: | /s/ John Darwin | |
| Name: | John Darwin | |
| Title: | Co-Chief Executive Officer | |
| SHF, LLC D/B/A SAFE HARBOR FINANCIAL | ||
| By: | /s/ Sundie Seefried | |
| Name: | Sundie Seefried | |
| Title: | Chief Executive Officer | |
SCHEDULE A
FORM OF PRICING DATE NOTICE
| Date: | [ ], 2022 | |
| To: | Northern Lights Acquisition Corp. (“Counterparty”) | |
| Address: | 10 East 53rd Street, Suite 3001 New York, New York 10022 | |
| Phone: | (510) 323-2526 | |
| From: | Midtown East Management NL LLC, a Delaware limited liability company (“Seller”) | |
| Re: | OTC Equity Prepaid Forward Transaction | |
1. This Pricing Date Notice supplements, forms part of, and is subject to the Confirmation Re: OTC Equity Prepaid Forward Transaction dated as of __, 2022 (the “Confirmation”) between Counterparty and Seller, as amended and supplemented from time to time. All provisions contained in the Confirmation govern this Pricing Date Notice except as expressly modified below.
2. The purpose of this Pricing Date Notice is to confirm certain terms and conditions of the Transaction entered into between Seller and Counterparty pursuant to the Confirmation.
| Pricing Date: | , 2022 | |
| Number of Shares: | [__] |
Exhibit 99.1
Northern Lights Acquisition Corp. and Safe Harbor Financial Announce Redemption Backstop of Up to $50M in Connection with SPAC Business Combination
NEW YORK and ARVADA, Colo., June 17, 2022 — Northern Lights Acquisition Corp. (NASDAQ: “NLIT”) (“Northern Lights”) a special purpose acquisition corporation, and SHF, LLC d/b/a/ Safe Harbor Financial (“Safe Harbor”), a leading financial services provider to the cannabis industry, are announcing that they have entered into a redemption backstop arrangement in the form of an OTC Equity Prepaid Forward Transaction agreement for up to $50 million with Midtown East Management NL LLC (“Midtown East”). Midtown East has agreed to not redeem any public shares it purchases in connection with the planned business combination. Northern Lights anticipates that the shares purchased in connection with the agreement will help ensure the maximum redemption threshold condition in the business combination agreement will be met.
Please refer to Northern Lights’ Current Report on Form 8-K, filed today with the Securities and Exchange Commission, for additional information.
The redemption backstop arrangement is in addition to the $60 million PIPE commitment from certain accredited investors previously announced on February 14, 2022.
About Safe Harbor
Safe Harbor is one of the first financial services providers to offer reliable access to banking solutions for cannabis, hemp, CBD, and ancillary operators, making communities safer, driving growth in local economies, and fostering long-term partnerships. Safe Harbor, through its partners, serves the regulated cannabis industry and implements the highest standard of accountability, transparency, monitoring, reporting, and risk mitigation measures while meeting BSA obligations in line with FinCEN guidance on CRBs. Over the past seven years, Safe Harbor (including its predecessor) has processed over $12 billion in deposit transactions with operations spanning 20 states with regulated cannabis markets. For more information, visit www.shfinancial.org.
About Northern Lights Acquisition Corp.
Northern Lights is a blank check company formed for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses. For more information, visit https://northernlightsacquisitioncorp.com/home/default.aspx.
Cautionary Statement Regarding Forward Looking Statements
Certain statements contained in this press release constitute “forward-looking statements” within the meaning of federal securities laws. Forward-looking statements may include, but are not limited to, statements with respect to (i) trends in the cannabis industry, including changes in U.S and state laws, rules, regulations and guidance relating to Safe Harbor’s services; (ii) Safe Harbor’s growth prospects and Safe Harbor’s market size; (iii) Safe Harbor’s projected financial and operational performance, including relative to its competitors; (iv) new product and service offerings Safe Harbor may introduce in the future; (v) the proposed business combination, including the implied enterprise value, the expected post-closing ownership structure and the likelihood and ability of the parties to successfully consummate the potential transaction; (vi) the risk that the proposed business combination may not be completed in a timely manner or at all, whether as a result of recent volatility in the capital markets or otherwise, which may adversely affect the price of Northern Lights’ securities; (vii) the failure to satisfy the conditions to the consummation of the proposed business combination, including the approval of the proposed business combination by the stockholders of Northern Lights; (viii) the effect of the announcement or pendency of the proposed business combination on Northern Lights’ or Safe Harbor’s business relationships, performance, and business generally; (ix) the outcome of any legal proceedings that may be instituted against Northern Lights or Safe Harbor related to the definitive unit purchase agreement or the proposed business combination; (x) the ability to maintain the listing of Northern Lights’ securities on the Nasdaq Capital Market; (xi) the price of Northern Lights’ securities, including volatility resulting from changes in the competitive and highly regulated industry in which Safe Harbor plans to operate, variations in performance across competitors, changes in laws and regulations affecting Safe Harbor’s business and changes in the combined capital structure; (xii) the ability to implement business plans, forecasts, and other expectations after the completion of the proposed business combination, and identify and realize additional opportunities; and (xiii) other statements regarding Safe Harbor’s and Northern Lights’ expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “outlook,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would,” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject, are subject to risks and uncertainties. You should carefully consider the risks and uncertainties described in the “Risk Factors” section of Northern Lights’ registration statement on Form S-1, the proxy statement relating to the proposed business combination, which has been filed in preliminary form by Northern Lights with the SEC, other documents filed by Northern Lights from time to time with SEC, and any risk factors made available to you in connection with Northern Lights, Safe Harbor, and the transaction. These forward-looking statements involve a number of risks and uncertainties (some of which are beyond the control of Safe Harbor and Northern Lights), and other assumptions, that may cause the actual results or performance to be materially different from those expressed or implied by these forward-looking statements.
Additional Information about the Business Combination and Where to Find It
The proposed business combination involving Northern Lights and Safe Harbor has been submitted to the stockholders of Northern Lights for their consideration. Northern Lights has filed a definitive proxy statement on Schedule 14A (the “Proxy Statement”) with the SEC on June 10, 2022, which has been distributed to the stockholders of Northern Lights in connection with Northern Lights’ solicitation for proxies for the vote by the stockholders of Northern Lights connection with the proposed business combination and other matters as described in the Proxy Statement. Before making any voting decision, the stockholders of Northern Lights and other interested persons are advised to read the Proxy Statement, along with all other relevant documents filed or that will be filed with the SEC in connection with the proposed business combination and Northern Lights’ solicitation of proxies for its special meeting of stockholders to be held to approve, among other things, the proposed business combination, because these documents will contain important information about Northern Lights, Safe Harbor, and the proposed business combination. Stockholders may obtain free copies of the Proxy Statement, as well as other documents filed with the SEC regarding the proposed business combination and other documents filed with the SEC by Northern Lights, without charge, at the SEC’s website located at www.sec.gov or by directing a request to Northern Lights Acquisition Corporation, 10 East 53rd Street, Suite 3001, New York, NY, 10022, or by telephone at (615) 554-0044.
No Offer or Solicitation
This press release relates to a proposed business combination between Northern Lights and Safe Harbor and does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, 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.
Participants in the Solicitation
Northern Lights and Safe Harbor, and certain of their respective directors and executive officers, under the rules of the SEC, may be deemed to be participants in the solicitation of proxies from Northern Lights’ stockholders in favor of the approval of the business combination. Information about the directors and officers of Northern Lights and their ownership of Northern Lights Class B common stock can also be found in Northern Lights’ registration statement on Form S-1 filed with the SEC on June 2, 2021 in connection with its initial public offering, its Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 25, 2022, the Proxy Statement, and other documents subsequently filed by Northern Lights with the SEC. Information about the directors and executive officers of Safe Harbor, as well as information regarding the interests of other persons who may be deemed participants in the transaction, may be obtained by reading the Proxy Statement regarding the business combination. Free copies of this document may be obtained as described above.
Safe Harbor Investor Relations Contact:
KCSA Strategic Communications
Adam Holdsworth
safeharbor@kcsa.com
Safe Harbor Public Relations Contacts:
KCSA Strategic Communications
Joshua Greenwald / Anu Kher
safeharbor@kcsa.com