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): September 26, 2022
LiveWire Group, Inc.
(Exact name of registrant as specified in its charter)
| Delaware (State or other jurisdiction of incorporation) |
001-41511 (Commission File Number) |
87-4730333 (I.R.S. Employer Identification No.) | ||
| 3700 West Juneau Avenue Milwaukee, WI |
53208 | |||
| (Address of principal executive offices) | (Zip Code) | |||
(650) 447-8424
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
| Common stock, $0.0001 par value per share | LVWR | New York Stock Exchange | ||
| Warrants to purchase common stock | LVWR WS | New York Stock Exchange |
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. ☐
INTRODUCTORY NOTE
Unless the context otherwise requires, “we,” “us,” “our,” “LiveWire” and the “Company” refer to LiveWire Group, Inc., a Delaware corporation, and its consolidated subsidiaries following the Closing (as defined below). Unless the context otherwise requires, references to “ABIC” refer to AEA-Bridges Impact Corp., a Cayman Islands exempted company, prior to the Domestication, and references to “Domesticated ABIC” refer to AEA-Bridges Impact Corp., a Delaware corporation, prior to the Closing. All references herein to the “Board” refer to the board of directors of the Company.
Terms used in this Current Report on Form 8-K (this “Report”) but not defined herein, or for which definitions are not otherwise incorporated by reference herein, shall have the respective meanings given to them in the section entitled “Frequently Used Terms” beginning on page iv of the Proxy Statement/Prospectus (as defined below).
Due to the large number of events reported under the specified items of Form 8-K, this Report is being filed in two parts. An amendment to this Form 8-K is being filed on the same date to include additional matters under Items 4.01, 5.03, 5.05 and 8.01 of Form 8-K.
Item 1.01. Entry into a Material Definitive Agreement.
Business Combination
As disclosed under the sections entitled “Shareholder Proposal 1: The Business Combination Proposal” and “The Business Combination Agreement” beginning on pages 127 and 192, respectively, of the proxy statement/prospectus (the “Proxy Statement/Prospectus”) filed with the Securities and Exchange Commission (the “SEC”) by ABIC and LiveWire on July 27, 2022, ABIC entered into a business combination agreement and plan of merger (the “Business Combination Agreement”), dated as of December 12, 2021, with LiveWire, a direct, wholly owned subsidiary of ABIC; LW EV Merger Sub Inc., a Delaware corporation and a direct, wholly owned subsidiary of LiveWire (“Merger Sub”); Harley-Davidson, Inc., a Wisconsin corporation (“H-D”); and LiveWire EV, LLC (“Legacy LiveWire”). Pursuant to the terms of the Business Combination Agreement: (a) on September 23, 2022, ABIC migrated to and domesticated as a Delaware corporation (the “Domestication”), in connection with which all of ABIC’s (i) outstanding ordinary shares were converted, on a one-for-one basis, into common stock, par value $0.0001 per share, of Domesticated ABIC, (ii) outstanding warrants were converted, on a one-for-one basis, into warrants to acquire one share each of common stock of Domesticated ABIC and (iii) outstanding units were canceled and instead entitle the holder thereof to, per unit, one share of common stock of Domesticated ABIC and one-half of one warrant of Domesticated ABIC; (b) on September 26, 2022, H-D and Legacy LiveWire consummated the separation of the Legacy LiveWire business and the other transactions contemplated by the Separation Agreement (as defined below), by and between H-D and Legacy LiveWire, dated as of September 26, 2022 (the “Separation”); (c) following the Domestication and immediately following the Separation, Merger Sub merged with and into Domesticated ABIC, with Domesticated ABIC surviving as a direct, wholly owned subsidiary of LiveWire (the “Merger”), and LiveWire continuing as the public company in the Merger, with each share of common stock of Domesticated ABIC being converted into the right of the holder thereof to receive one share of LiveWire common stock, par value $0.0001 (“LiveWire Common Stock”); (d) immediately following the Merger, H-D caused all of the membership interests of Legacy LiveWire (“Legacy LiveWire Equity”) held by ElectricSoul, LLC (the “Legacy LiveWire Equityholder”), a Delaware limited liability company and a subsidiary of H-D, to be contributed to LiveWire in exchange for 161,000,000 shares of LiveWire Common Stock and the right to receive up to an additional 12,500,000 shares of LiveWire Common Stock in the future (the “Earn-Out Shares”, and the transactions contemplated by this clause (d), collectively, the “Exchange), and, as a result of the Exchange, Legacy LiveWire became a direct, wholly owned subsidiary of LiveWire; (e) immediately following the consummation of the Exchange, LiveWire contributed 100% of the outstanding equity interests of Legacy Livewire to Domesticated ABIC (clauses (a) through (e) collectively, the “Business Combination”).
As previously reported on the Current Report on Form 8-K filed with the SEC on September 16, 2022, ABIC held a special meeting of shareholders on September 16, 2022 (the “Special Meeting”), at which the ABIC shareholders considered and adopted, among other matters, a proposal to approve the Business Combination, including (a) adopting the Business Combination Agreement and (b) approving the other transactions contemplated by the Business Combination Agreement and related agreements described in the Proxy Statement/Prospectus.
Pursuant to the terms and subject to the conditions set forth in the Business Combination Agreement, following the Special Meeting, on September 26, 2022 (the “Closing Date”), the Business Combination was consummated (the “Closing”).
Item 2.01 of this Report discusses the consummation of the Business Combination and the entry into agreements relating thereto and is incorporated herein by reference.
Registration Rights Agreement
On September 26, 2022, in connection with the consummation of the Business Combination and as contemplated by the Business Combination Agreement, LiveWire, Legacy LiveWire, AEA-Bridges Impact Sponsor, LLC, a Cayman Islands limited liability company (the “Sponsor”), the Legacy LiveWire Equityholder, John Garcia, John Replogle and George Serafeim entered into the Registration Rights Agreement (the “Registration Rights Agreement”). The material terms of the Registration Rights Agreement are described in the section of the Proxy Statement/Prospectus beginning on page 271 titled “Certain Relationships and Related Person Transactions—ABIC Relationships and Related Party Transactions—Registration and Shareholder Rights.” That description, which is incorporated herein by reference, is qualified in its entirety by the text of the Registration Rights Agreement, which is included as Exhibit 10.3 to this Report and also is incorporated herein by reference.
Separation Agreement
On September 26, 2022, in connection with the consummation of the Business Combination and as contemplated by the Business Combination Agreement, Legacy LiveWire and H-D entered into the Separation Agreement (the “Separation Agreement”). The material terms of the Separation Agreement are described in the section of the Proxy Statement/Prospectus beginning on page 272 titled “Certain Relationships and Related Person Transactions—HoldCo Relationships and Related Party Transactions—Separation Agreement.” That description, which is incorporated herein by reference, is qualified in its entirety by the text of the Separation Agreement, which is included as Exhibit 10.5 to this Report and also is incorporated herein by reference.
Tax Matters Agreement
On September 26, 2022, in connection with the consummation of the Business Combination and as contemplated by the Business Combination Agreement, LiveWire and H-D entered into the Tax Matters Agreement (the “Tax Matters Agreement”). The material terms of the Tax Matters Agreement are described in the section of the Proxy Statement/Prospectus beginning on page 279 titled “Certain Relationships and Related Person Transactions—HoldCo Relationships and Related Party Transactions—Tax Matters Agreement.” That description, which is incorporated herein by reference, is qualified in its entirety by the text of the Tax Matters Agreement, which is included as Exhibit 10.6 to this Report and also is incorporated herein by reference.
Contract Manufacturing Agreement
On September 26, 2022, in connection with the consummation of the Business Combination and as contemplated by the Business Combination Agreement, Legacy LiveWire and Harley-Davidson Motor Company Group, LLC (“HDMCG”) entered into the Contract Manufacturing Agreement (the “Contract Manufacturing Agreement”). The material terms of the Contract Manufacturing Agreement are described in the section of the Proxy Statement/Prospectus beginning on page 274 titled “Certain Relationships and Related Person Transactions—HoldCo Relationships and Related Party Transactions—Contract Manufacturing Agreement.” That description, which is incorporated herein by reference, is qualified in its entirety by the text of the Contract Manufacturing Agreement, which is included as Exhibit 10.7 to this Report and also is incorporated herein by reference.
Transition Services Agreement
On September 26, 2022, in connection with the consummation of the Business Combination and as contemplated by the Business Combination Agreement, Legacy LiveWire and H-D entered into the Transition Services Agreement (the “Transition Services Agreement”). The material terms of the Transition Services Agreement are described in the section of the Proxy Statement/Prospectus beginning on page 273 titled “Certain Relationships and Related Person Transactions—HoldCo Relationships and Related Party Transactions—Transition Services Agreement.” That description, which is incorporated herein by reference, is qualified in its entirety by the text of the Transition Services Agreement, which is included as Exhibit 10.8 to this Report and also is incorporated herein by reference.
Master Services Agreement
On September 26, 2022, in connection with the consummation of the Business Combination and as contemplated by the Business Combination Agreement, Legacy LiveWire and H-D entered into the Master Services Agreement (the “Master Services Agreement”). The material terms of the Master Services Agreement are described in the section of the Proxy Statement/Prospectus beginning on page 274 titled “Certain Relationships and Related Person Transactions—HoldCo Relationships and Related Party Transactions—Master Services Agreement.” That description, which is incorporated herein by reference, is qualified in its entirety by the text of the Master Services Agreement, which is included as Exhibit 10.9 to this Report and also is incorporated herein by reference.
Intellectual Property License Agreement
On September 26, 2022, in connection with the consummation of the Business Combination and as contemplated by the Business Combination Agreement, Legacy LiveWire and H-D entered into the Intellectual Property License Agreement (the “Intellectual Property License Agreement”). The material terms of the Intellectual Property License Agreement are described in the section of the Proxy Statement/Prospectus beginning on page 276 titled “Certain Relationships and Related Person Transactions—HoldCo Relationships and Related Party Transactions—Intellectual Property License Agreement.” That description, which is incorporated herein by reference, is qualified in its entirety by the text of the Intellectual Property License Agreement, which is included as Exhibit 10.10 to this Report and also is incorporated herein by reference.
Trademark License Agreement
On September 26, 2022, in connection with the consummation of the Business Combination and as contemplated by the Business Combination Agreement, Legacy LiveWire and H-D entered into the Trademark License Agreement (the “Trademark License Agreement”). The material terms of the Trademark License Agreement are described in the section of the Proxy Statement/Prospectus beginning on page 277 titled “Certain Relationships and Related Person Transactions—HoldCo Relationships and Related Party Transactions—Trademark License Agreement.” That description, which is incorporated herein by reference, is qualified in its entirety by the text of the Trademark License Agreement, which is included as Exhibit 10.11 to this Report and also is incorporated herein by reference.
Joint Development Agreement
On September 26, 2022, in connection with the consummation of the Business Combination and as contemplated by the Business Combination Agreement, Legacy LiveWire and H-D entered into the Joint Development Agreement (the “Joint Development Agreement”). The material terms of the Joint Development Agreement are described in the section of the Proxy Statement/Prospectus beginning on page 277 titled “Certain Relationships and Related Person Transactions—HoldCo Relationships and Related Party Transactions—Joint Development Agreement.” That description, which is incorporated herein by reference, is qualified in its entirety by the text of the Joint Development Agreement, which is included as Exhibit 10.12 to this Report and also is incorporated herein by reference.
Employee Matters Agreement
On September 26, 2022, in connection with the consummation of the Business Combination and as contemplated by the Business Combination Agreement, Legacy LiveWire and H-D entered into the Employee Maters Agreement (the “Employee Matters Agreement”). The material terms of the Employee Matters Agreement are described in the section of the Proxy Statement/Prospectus beginning on page 278 titled “Certain Relationships and Related Person Transactions—HoldCo Relationships and Related Party Transactions—Employee Matters Agreement.” That description, which is incorporated herein by reference, is qualified in its entirety by the text of the Employee Matters Agreement, which is included as Exhibit 10.13 to this Report and also is incorporated herein by reference.
KYMCO Contract Manufacturing Agreement
On September 26, 2022, Legacy LiveWire and Kwang Yang Motor Co., Ltd., a Taiwanese company (“KYMCO”) entered into the KYMCO Contract Manufacturing Agreement (the “KYMCO Contract Manufacturing Agreement”). Pursuant to the KYMCO Contract Manufacturing Agreement, KYMCO will provide contract manufacturing and procurement services to us for our Slayer powertrains and all two-wheel products that leverage Slayer powertrains. KYMCO will be our exclusive manufacturer for these products for five years from the date that KYMCO begins manufacturing the relevant product. Following this exclusivity period, we may terminate the agreement for one or more products within the relevant platform upon two years’ notice, subject to payment of certain termination charges (which are intended to compensate KYMCO for its capital investment and other sunken costs). The agreement may also be terminated, in whole or part, by either party upon the other party’s material, uncured breach, inability to perform its obligations for more than six months due to a force majeure event, bankruptcy or insolvency, or change of control.
Under the KYMCO Contract Manufacturing Agreement, we will be subject to a minimum annual volume commitment for each product and pay a deficit fee for failure to meet the minimum. The products that KYMCO manufactures for us will be priced on a cost-plus basis, with a mark-up for KYMCO’s cost for manufacturing the relevant product. The parties will meet quarterly to review changes to pricing and annually to review of changes to minimum volumes and other terms. KYMCO will procure, on our behalf, equipment and materials that are used in our products, and we will procure all other equipment and materials, as well as tooling, needed to manufacture the products.
The KYMCO Contract Manufacturing Agreement contains a limited warranty by KYMCO that the products it delivers to us will conform to our specifications, and that they will be free from defects in workmanship, liens and encumbrances. Additionally, the KYMCO Contract Manufacturing Agreement contains customary provisions relating to indemnification, consistent with those included in the KYMCO Contract Manufacturing Agreement.
That description, which is incorporated herein by reference, is qualified in its entirety by the text of the KYMCO Contract Manufacturing Agreement, which is included as Exhibit 10.14 to this Report and also is incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets.
As described above, on September 16, 2022, ABIC held the Special Meeting, at which the ABIC shareholders considered and adopted, among other matters, a proposal to approve the Business Combination Agreement and the transactions contemplated thereby, including the Business Combination. On September 26, 2022, the parties consummated the Business Combination.
Holders of 36,597,112 Class A Ordinary Shares sold in its initial public offering (the “Initial Shares”) properly exercised their right to have such shares redeemed for a full pro rata portion of the trust account holding the proceeds from ABIC’s initial public offering, calculated as of two business days prior to the consummation of the Business Combination, which was approximately $10.06 per share, or approximately $368,136,945.15 in the aggregate.
An aggregate of $368,136,945.15 was paid from the Company’s trust account to holders who properly exercised their right to have their Initial Shares redeemed, and the remaining balance immediately prior to the Closing of approximately $34 million remained in the trust account and was used to fund the Business Combination.
As a result of the Exchange, LiveWire issued 161,000,000 shares of LiveWire Common Stock to the Legacy LiveWire Equityholder, valued at a price per share of $10.00, in exchange for 100% of the Legacy LiveWire Equity.
In connection with the Business Combination, the Sponsor forfeited an aggregate of 2,000,000 Class B Ordinary Shares in accordance with the Investor Support Agreement, dated as of December 12, 2021, by and among the Sponsor, LiveWire, ABIC, John Garcia, John Replogle and George Serafeim. The remaining Class B Ordinary Shares held by Sponsor automatically converted to 7,950,000 shares of LiveWire Common Stock.
Pursuant to investment agreements entered into in connection with the Business Combination Agreement, Kwang Yang Motor Co., Ltd., KYMCO Capital Fund I Co., Ltd., SunBright Investment Co., Ltd., CycleLoop Co., Ltd. and Kwang Yang Holdings Limited (collectively, “KYMCO Group”) agreed to subscribe for an aggregate of 10,000,000 newly-issued shares of LiveWire Common Stock at a purchase price of $10.00 per share for an aggregate purchase price of $100,000,000 (the “KYMCO PIPE Investment”).
Pursuant to the Business Combination Agreement, and an investment agreement entered into prior to the Closing, the Legacy LiveWire Equityholder agreed to subscribe for an aggregate of 10,000,000 newly-issued shares of LiveWire Common Stock at a purchase price of $10.00 per share for an aggregate purchase price of $100,000,000 (the “Legacy LiveWire Equityholder PIPE Investment” and, together with the KYMCO PIPE Investment, the “PIPE Investments”). At the Closing, LiveWire consummated the PIPE Investments.
Pursuant to the Business Combination Agreement, H-D caused the Legacy LiveWire Equityholder to pay and deliver to LiveWire an amount in cash equal $100,000,000, which is the HD Backstop Amount (as defined in the Business Combination Agreement) in exchange for a number of shares of LiveWire Common Stock (the “H-D Backstop Shares”) for a purchase price of $10.00 per H-D Backstop Share.
After giving effect to the Business Combination, the redemption of Initial Shares as described above, the issuance of the H-D Backstop Shares and the consummation of the PIPE Investments, there are currently 202,402,888 shares of LiveWire Common Stock issued and outstanding.
The LiveWire Common Stock and warrants commenced trading on the New York Stock Exchange (“NYSE”) under the symbols “LWVR” and “LWVR WS,” respectively, on September 27, 2022, subject to ongoing review of LiveWire’s satisfaction of all listing criteria following the Business Combination.
FORM 10 INFORMATION
Item 2.01(f) of Form 8-K provides that if the predecessor registrant was a “shell company” (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as ABIC was immediately before the Business Combination, then the registrant must disclose the information that would be required if the registrant were filing a general form for registration of securities on Form 10. As a result of the consummation of the Business Combination, and as discussed below in Item 5.06 of this Report, the Company has ceased to be a shell company. Accordingly, the Company is providing the information below that would be included in a Form 10 if it were to file a Form 10. Please note that the information provided below relates to the combined company after the consummation of the Business Combination, unless otherwise specifically indicated or the context otherwise requires.
Cautionary Note Regarding Forward-Looking Statements
This Report includes statements that express LiveWire’s opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements.” Forward-looking statements include statements about LiveWires’s, Legacy LiveWire’s and ABIC’s respective expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Words or phrases such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will” and “would,” or similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. Examples of forward-looking statements in this proxy statement/prospectus include, but are not limited to, statements regarding LiveWire’s operations, cash flows, financial position and dividend policy. Such forward-looking statements are based on available current market material and management’s expectations, beliefs and forecasts concerning future events impacting LiveWire. Factors that may impact such forward-looking statements include:
| • | LiveWire’s history of losses and expectation to incur significant expenses and continuing losses for the foreseeable future; |
| • | LiveWire’s ability to execute its business model, including market acceptance of its planned electric vehicles; |
| • | LiveWire’s limited operating history, the rollout of its business and the timing of expected business milestones, including LiveWire’s ability to develop and manufacture electric vehicles of sufficient quality and appeal to customers on schedule and on a large scale; |
| • | LiveWire’s financial and business performance, including financial projections and business metrics and any underlying assumptions thereunder; |
| • | changes in LiveWire’s strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans; |
| • | LiveWire’s ability to attract and retain a large number of customers; |
| • | LiveWire’s future capital requirements and sources and uses of cash; |
| • | LiveWire’s ability to obtain funding for its operations and manage costs; |
| • | challenges LiveWire faces as a pioneer into the highly-competitive and rapidly evolving electric vehicle industry; |
| • | LiveWire’s operational and financial risks if it fails to effectively and appropriately separate the LiveWire business from the H-D business; |
| • | H-D making decisions for its overall benefit that could negatively impact LiveWire’s overall business; |
| • | LiveWire’s relationship with H-D and its impact on LiveWire’s other business relationships; |
| • | LiveWire’s ability to leverage contract manufacturers, including H-D and KYMCO, to contract manufacture its electric vehicles; |
| • | retail partners being unwilling to participate in LiveWire’s go-to-market business model or their inability to establish or maintain relationships with customers for LiveWire’s electric vehicles; |
| • | potential delays in the design, manufacture, financing, regulatory approval, launch and delivery of LiveWire’s electric vehicles; |
| • | building out LiveWire’s supply chain, including LiveWire’s dependency on its existing suppliers and LiveWire’s ability to source suppliers, in each case many of which are single-sourced or limited-source suppliers, for its critical components such as batteries and semiconductor chips; |
| • | LiveWire’s ability to rely on third-party and public charging networks; |
| • | LiveWire’s ability to attract and retain key personnel; |
| • | LiveWire’s business, expansion plans and opportunities, including its ability to scale its operations and manage its future growth effectively; |
| • | the effects on LiveWire’s future business of competition, the pace and depth of electric vehicle adoption generally and its ability to achieve planned competitive advantages with respect to its electric vehicles and products, including with respect to reliability, safety and efficiency; |
| • | LiveWire’s business and H-D’s business overlapping and being perceived as competitors; |
| • | LiveWire’s inability to maintain a strong relationship with H-D or to resolve favorably any disputes that may arise between LiveWire and H-D; |
| • | LiveWire’s dependency on H-D for a number of services, including services relating to quality and safety testing. If those service arrangements terminate, it may require significant investment for LiveWire to build its own safety and testing facilities, or LiveWire may be required to obtain such services from another third-party at increased costs; |
| • | any decision by LiveWire to electrify H-D products, or the products of any other company; |
| • | LiveWire’s expectations regarding its ability to obtain and maintain intellectual property protection and not infringe on the rights of others; |
| • | potential harm caused by misappropriation of LiveWire’s data and compromises in cybersecurity; |
| • | changes in laws, regulatory requirements, governmental incentives and fuel and energy prices; |
| • | the impact of health epidemics, including the COVID-19 pandemic, on LiveWire’s business, the other risks it face and the actions it may take in response thereto; |
| • | litigation, regulatory proceedings, complaints, product liability claims and/or adverse publicity; |
| • | the possibility that LiveWire may be adversely affected by other economic, business and/or competitive factors; and |
| • | other factors detailed under the section titled “Risk Factors” beginning on page 48 of the Proxy Statement/Prospectus and incorporated herein by reference. |
The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described in the “Risk Factors” section of the other documents filed by LiveWire from time to time with the SEC. The forward-looking statements contained in this Report and in any document incorporated by reference are based on current expectations and beliefs concerning future developments and their potential effects on LiveWire. There can be no assurance that future developments affecting LiveWire will be those that LiveWire has anticipated. LiveWire undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
Business
LiveWire’s business is described in the Proxy Statement/Prospectus in the section titled “Business of LiveWire and Certain Information About LiveWire” beginning on page 227, which is incorporated herein by reference.
Risk Factors
The risks associated with LiveWire’s business are described in the Proxy Statement/Prospectus in the section titled “Risk Factors” beginning on page 48 and are incorporated herein by reference. A summary of the risks associated with LiveWire’s business is also included on pages 42-44 of the Proxy Statement/Prospectus under the heading “Risk Factor Summary” and are incorporated herein by reference.
Financial Information
The audited combined financial statements of Legacy LiveWire as of and for the years ended December 31, 2021 and 2020, and the related combined statements of operations and comprehensive loss, changes in equity and cash flows for each of the three years in the period ended December 31, 2021 are included in the Proxy Statement/Prospectus beginning on page F-57 of the Proxy Statement/Prospectus, which is incorporated herein by reference.
The unaudited interim combined financial statements of Legacy LiveWire as of and for the periods ended June 26, 2022 and June 27, 2021 is set forth in Exhibit 99.1 hereto and is incorporated herein by reference.
The unaudited pro forma condensed combined financial information of ABIC and Legacy LiveWire as of and for the six months ended June 26, 2022 and for the year ended December 31, 2021 is set forth in Exhibit 99.2 hereto and is incorporated herein by reference.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s discussion and analysis of the financial condition and results of operation of Legacy LiveWire is set forth in Exhibit 99.3 hereto and is incorporated herein by reference.
Quantitative and Qualitative Disclosures about Market Risk
Reference is made to the disclosure contained in Exhibit 99.3 hereto, which is incorporated herein by reference.
Properties
The Company’s facilities are described in the Proxy Statement/Prospectus in the section titled “Business of LiveWire and Certain Information About LiveWire—Facilities” on page 242 and is incorporated herein by reference.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the beneficial ownership of LiveWire Common Stock following the consummation of the Business Combination and the PIPE Investments by:
| • | each person who is known to be the beneficial owner of more than 5% of shares of LiveWire Common Stock; |
| • | each of LiveWire’s current named executive officers and directors; and |
| • | all current executive officers and directors of LiveWire as a group. |
Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable within 60 days after that date through (a) the exercise of any option, warrant or right, (b) the conversion of a security, (c) the power to revoke a trust, discretionary account or similar arrangement, or (d) the automatic termination of a trust, discretionary account or similar arrangement. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of LiveWire Common Stock subject to options or other rights (as set forth above) held by that person that are currently exercisable, or will become exercisable within 60 days thereafter, are deemed outstanding, while such shares are not deemed outstanding for purposes of computing percentage ownership of any other person. The table below does not reflect the beneficial ownership of shares of LiveWire Common Stock issuable upon the exercise of public warrants. Each person named in the table has sole voting and investment power with respect to all of the shares shown as beneficially owned by such person, except as otherwise indicated in the table or footnotes below.
Unless otherwise indicated, LiveWire believes that all persons named in the table below have sole voting and investment power with respect to the voting securities beneficially owned by them. To our knowledge, no shares of LiveWire Common Stock beneficially owned by any executive officer or director have been pledged as security.
| Name and Address of Beneficial Owner(1) |
Number of Shares |
% of Ownership |
||||||
| 5% Holders |
||||||||
| Legacy LiveWire Equityholder(2) |
181,000,000 | 89.4 | % | |||||
| AEA-Bridges Impact Sponsor, LLC(3)(4) |
18,450,000 | 8.67 | % | |||||
| Directors and Executive Officers |
||||||||
| Jochen Zeitz |
— | — | ||||||
| Tralisa Maraj |
— | — | ||||||
| Ryan Morrissey |
— | — | ||||||
| Amanda Parker |
— | — | ||||||
| William Cornog |
— | — | ||||||
| Gina Goetter |
— | — | ||||||
| John Garcia(3) |
2,500,000 | 1.24 | % | |||||
| Kjell Gruner |
— | — | ||||||
| Glen Koval |
— | — | ||||||
| Edel O’Sullivan |
— | — | ||||||
| All directors and executive officers as a group (10 individuals) |
2,500,000 | 1.24 | % | |||||
| * | Less than one percent |
| (1) | Unless otherwise noted, the business address of each of those listed in the table above is 3700 West Juneau Avenue Milwaukee, WI 53208. |
| (2) | The Legacy LiveWire Equityholder is the record holder of such shares of LiveWire Common Stock. The Legacy LiveWire Equityholder is a direct, wholly owned subsidiary of HDMCG, which, in turn, is a wholly owned subsidiary of H-D. By reason of their relationships, HDMCG and H-D may be deemed to share the power to vote or to direct the vote and to dispose or direct the disposition of the shares of LiveWire Common Stock held by the Legacy LiveWire Equityholder and may be deemed to have shared beneficial ownership of the shares of LiveWire Common Stock held directly by the Legacy LiveWire Equityholder. |
| (3) | Represents securities held by the Sponsor. The Sponsor is governed by a three-member board of directors. Each director has one vote, and the approval of a majority of the directors is required to approve an action of our sponsor. Under the so-called “rule of three,” if voting and dispositive decisions regarding an entity’s securities are made by three or more individuals, and a voting and dispositive decision requires the approval of a majority of those individuals, then none of the individuals is deemed a beneficial owner of the entity’s securities. This is the situation with regard to the Sponsor. Based upon the foregoing analysis, no individual director of the Sponsor exercises voting or dispositive control over any of the securities held by the Sponsor, even those in which such director directly holds a pecuniary interest. |
| (4) | Interests shown consist of (i) 7,950,000 shares of Common Stock and (ii) 10,500,000 warrants to acquire Common Stock which are exercisable within 60 days of Closing. The business address for the Sponsor is 520 Madison Avenue, 40th Floor, New York, NY 10022. |
| (5) | Represents securities held directly by Mr. Garcia. Interests shown consists of 2,500,000 shares of LiveWire Common Stock. Does not include any shares indirectly owned by this individual as a result of his membership interest in the Sponsor. The business address for Mr. Garcia is 520 Madison Avenue, 40th Floor, New York, NY 10022. |
Directors and Executive Officers
Upon the consummation of the transactions contemplated by the Business Combination Agreement and documents related thereto, and in accordance with the terms of the Business Combination Agreement, each executive officer of Domesticated ABIC ceased serving in such capacities, and each of John Garcia, Michele Giddens, Ramzi Gedeon, Steven E. DeCillis II, John Replogle, George Serafeim and Brian Trelstad ceased serving on Domesticated ABIC’s board of directors.
Jochen Zeitz, William Cornog, Gina Goetter, John Garcia, Kjell Gruner, Glen Koval and Edel O’Sullivan were appointed as directors of LiveWire by the holders of LiveWire Common Stock, to serve until the end of their respective terms and until their successors are elected and qualified, with Jochen Zeitz appointed to serve as Chair of the Board. William Cornog, John Garcia and Kjell Gruner were appointed to serve on LiveWire’s audit committee with William Cornog serving as the chair and qualifying as an audit committee financial expert, as such term is defined in Item 407(d)(5) of Regulation S-K.
Jochen Zeitz was appointed as LiveWire’s Chief Executive Officer, Tralisa Maraj was appointed as LiveWire’s Chief Financial Officer, Amanda Parker was appointed as LiveWire’s Chief Legal Officer, Ryan Morrissey was appointed as LiveWire’s President and Jon Carter was appointed as LiveWire’s Chief Accounting Officer.
LiveWire’s directors and executive officers after the consummation of the Business Combination are described in the Proxy Statement/Prospectus in the section titled “Management of HoldCo Following the Business Combination” beginning on page 300 and that information is incorporated herein by reference.
Additionally, interlocks and insider participation information regarding LiveWire’s executive officers is described in the Proxy Statement/Prospectus in the section titled “Management of HoldCo Following the Business Combination —Human Resources Committee Interlocks and Insider Participation” beginning on page 306 and that information is incorporated herein by reference.
Executive Compensation
The executive compensation of Legacy LiveWire’s executive officers is described in the Proxy Statement/Prospectus in the section titled “Executive Compensation of LiveWire” beginning on page 243 and that information is incorporated herein by reference.
Director Compensation
The compensation of Legacy LiveWire’s directors is described in the Proxy Statement/Prospectus in the section titled “Executive Compensation of LiveWire—Non-Employee Director Compensation” beginning on page 251 and that information is incorporated herein by reference.
Certain Relationships and Related Transactions
Certain relationships and related party transactions of LiveWire are described in the Proxy Statement/Prospectus in the section titled “Certain Relationships and Related Party Transactions” beginning on page 270 and are incorporated herein by reference.
Director Independence
Certain relationships and related party transactions of LiveWire are described in the Proxy Statement/Prospectus in the section titled “Management of HoldCo Following The Business Combination—Independence of Directors” on page 303 and are incorporated herein by reference.
Legal Proceedings
Reference is made to the disclosure regarding legal proceedings in the section of the Proxy Statement/Prospectus titled “Business of LiveWire and Certain Information About LiveWire—Legal Proceedings” beginning on page 242, which is incorporated herein by reference.
Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters
Shares of LiveWire’s Common Stock and LiveWire’s warrants commenced trading on the NYSE under the symbols “LVWR” and “LVWR WS,” respectively, on September 27, 2022, in lieu of the Class A Ordinary Shares, warrants and units of ABIC. LiveWire has not paid any cash dividends on its shares of common stock to date. It is the present intention of the Board to retain all earnings, if any, for use in LiveWire’s business operations and, accordingly, the Board does not anticipate declaring any dividends in the foreseeable future. The payment of cash dividends in the future will be dependent upon LiveWire’s revenues and earnings, if any, capital requirements and general financial condition. The payment of any cash dividends is within the discretion of the Board. Further, the ability of LiveWire to declare dividends may be limited by the terms of financing or other agreements entered into by it or its subsidiaries from time to time.
Information respecting ABIC’s Class A Ordinary Shares, warrants and units and related shareholders matters are described in the Proxy Statement/Prospectus in the section titled “Market Price and Dividend Information” on page 45 and such information is incorporated herein by reference.
Recent Sales of Unregistered Securities
Reference is made to the disclosure set forth below under Item 3.02 of this Report concerning the issuance and sale by LiveWire of certain unregistered securities, which is incorporated herein by reference.
Description of Registrant’s Securities
The description of LiveWire’s securities is contained in the Proxy Statement/Prospectus in the section titled “Description of HoldCo’s Securities” beginning on page 308 and is incorporated herein by reference.
Indemnification of Directors and Officers
The indemnification of LiveWire’s directors and officers is set forth in the Proxy Statement/Prospectus in the section titled “Description of HoldCo’s Securities—Limitations on Liability and Indemnification” beginning on page 314 and is incorporated herein by reference.
Item 3.02. Unregistered Sales of Equity Securities.
At the Closing, LiveWire consummated the PIPE Investments and issued the H-D Backstop Shares. The disclosure under Item 2.01 of this Report relating to the PIPE Investments and issued the H-D Backstop Shares is incorporated into this Item 3.02 by reference.
LiveWire issued the foregoing securities under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and/or Rule 506 of Regulation D promulgated under the Securities Act, as a transaction not requiring registration under Section 5 of the Securities Act. The parties receiving the securities represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution, and appropriate restrictive legends were affixed to the certificates representing the securities (or reflected in restricted book entry with LiveWire’s transfer agent). The parties also had adequate access, through business or other relationships, to information about LiveWire.
Item 3.03. Material Modification to Rights of Security Holders.
The information set forth in Item 5.03 to this Report is incorporated herein by reference.
Item 5.01. Changes in Control of Registrant.
The information set forth above under Item 1.01 and Item 2.01 of this Report is incorporated herein by reference.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
The information set forth in the sections titled “Directors and Executive Officers”, “Executive Compensation”, “Director Compensation” and “Certain Relationships and Related Transactions” in Item 2.01 of this Report is incorporated herein by reference.
Incentive Plan
At the Special Meeting, the ABIC shareholders considered and approved the LiveWire Group, Inc. 2022 Incentive Award Plan (the “Incentive Plan”). The Incentive Plan was previously approved, subject to shareholder approval, by ABIC’s board of directors on December 12, 2021. The Incentive Plan became effective on the date on which the ABIC shareholders approved the Incentive Plan.
A summary of the terms of the Incentive Plan is set forth in the Proxy Statement/Prospectus in the section titled “Shareholder Proposal 5: The Incentive Plan Proposal” beginning on page 168 of the Proxy Statement/Prospectus, which is incorporated herein by reference. That description of the Incentive Plan is qualified in its entirety by the full text of the Incentive Plan, a copy of which is attached hereto as Exhibit 10.4 and also is incorporated herein by reference.
Item 5.06. Change in Shell Company Status.
As a result of the Business Combination, the Company ceased being a shell company. Reference is made to the disclosure in the Proxy Statement/Prospectus in the section titled “Shareholder Proposal 1: The Business Combination Proposal” beginning on page 127, which is incorporated herein by reference. Further, the information set forth in the Introductory Note and under Item 2.01 of this Report is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On September 27, 2022, LiveWire issued a press release announcing the Closing. A copy of the press release is filed hereto as Exhibit 99.4 and incorporated herein by reference.
The information in this Item 7.01, including Exhibit 99.4, is furnished and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to liabilities under that section, and shall not be deemed to be incorporated by reference into the filings of the registrant under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filings. This Report will not be deemed an admission as to the materiality of any information contained in this Item 7.01, including Exhibit 99.4.
Item 9.01. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
The audited combined financial statements of Legacy LiveWire as of and for the years ended December 31, 2021 and 2020, and the related combined statements of operations and comprehensive loss, changes in equity and cash flows for each of the three years in the period ended December 31, 2021 are included in the Proxy Statement/Prospectus beginning on page F-57 of the Proxy Statement/Prospectus, which is incorporated herein by reference.
The unaudited interim combined financial statements of Legacy LiveWire as of and for the periods ended June 26, 2022 and June 27, 2021 is set forth in Exhibit 99.1 hereto and is incorporated herein by reference.
(b) Pro forma financial information.
The unaudited pro forma condensed combined financial information of ABIC and Legacy LiveWire as of and for the six months ended June 26, 2022 and for the year ended December 31, 2021 is set forth in Exhibit 99.2 hereto and is incorporated herein by reference.
(d) Exhibits.
| † | The annexes, schedules, and certain exhibits to this Exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant hereby agrees to furnish supplementally a copy of any omitted annex, schedule or exhibit to the SEC upon request. |
| + | Indicates a management contract or compensatory plan. |
| # | Certain portions of this exhibit (indicated by “[***]”) have been omitted pursuant to Regulation S-K, Item 601(b)(10). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| LiveWire Group, Inc. | ||||||
| Date: September 30, 2022 | By: | /s/ Tralisa Maraj | ||||
| Name: | Tralisa Maraj | |||||
| Title: | Chief Financial Officer | |||||
Exhibit 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
LIVEWIRE GROUP, INC.
LiveWire Group, Inc. (the “Corporation”), a corporation organized and existing under the General Corporation Law of the State of Delaware (the “DGCL”), does hereby certify as follows:
1. The name of the Corporation is LiveWire Group, Inc. The Corporation was incorporated under the name LW EV Holdings, Inc. by the filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware on December 7, 2021.
2. This Amended and Restated Certificate of Incorporation (the “Restated Certificate”), which amends, restates and further integrates the certificate of incorporation of the Corporation as heretofore in effect, has been approved by the Board of Directors of the Corporation (the “Board of Directors”) in accordance with Sections 242 and 245 of the DGCL, and has been adopted by the written consent of the stockholders of the Corporation in accordance with Section 228 of the DGCL.
3. The text of the certificate of incorporation of the Corporation, as heretofore amended, is hereby amended and restated by this Restated Certificate to read in its entirety as set forth in EXHIBIT A attached hereto.
IN WITNESS WHEREOF, LiveWire Group, Inc. has caused this Restated Certificate to be signed by a duly authorized office of the Corporation, on September 26, 2022.
LiveWire Group, Inc., a Delaware corporation
| By: | /s/ John Garcia | |
| Name: | John Garcia | |
| Title: | President and Secretary | |
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EXHIBIT A
ARTICLE I
The name of the corporation is LiveWire Group, Inc. (the “Corporation”).
ARTICLE II
The address of the Corporation’s registered office in the State of Delaware is c/o The Corporation Trust Company, 1209 Orange Street, Corporation Trust Center, in the City of Wilmington, County of New Castle, Delaware 19801, and the name of its registered agent at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “DGCL”) as it now exists or may hereafter be amended and supplemented.
ARTICLE IV
The Corporation is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock.” The total number of shares of capital stock which the Corporation shall have authority to issue is 820,000,000. The total number of shares of Common Stock that the Corporation is authorized to issue is 800,000,000, having a par value of $0.0001 per share, and the total number of shares of Preferred Stock that the Corporation is authorized to issue is 20,000,000, having a par value of $0.0001 per share.
ARTICLE V
The designations and the powers, privileges and rights, and the qualifications, limitations or restrictions thereof in respect of each class of capital stock of the Corporation are as follows:
| A. | COMMON STOCK. |
1. General. The voting, dividend, liquidation, and other rights and powers of the Common Stock are subject to and qualified by the rights, powers and preferences of any series of Preferred Stock as may be designated by the Board of Directors of the Corporation (the “Board of Directors”) and outstanding from time to time.
2. Voting. Except as otherwise provided herein or expressly required by law, each holder of Common Stock, as such, shall be entitled to vote on each matter submitted to a vote of stockholders and shall be entitled to one (1) vote for each share of Common Stock held of record by such holder as of the record date for determining stockholders entitled to vote on such matter. Except as otherwise required by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Restated Certificate (including any Certificate of Designation (as defined below)) that relates solely to the rights, powers, preferences (or the qualifications, limitations or restrictions thereof) or other terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Restated Certificate (including any Certificate of Designation) or pursuant to the DGCL.
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Subject to the rights of any holders of any outstanding series of Preferred Stock, the number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the DGCL.
3. Dividends. Subject to applicable law and the rights and preferences of any holders of any outstanding series of Preferred Stock, the holders of Common Stock, as such, shall be entitled to the payment of dividends on the Common Stock when, as and if declared by the Board of Directors in accordance with applicable law.
4. Liquidation. Subject to the rights and preferences of any holders of any shares of any outstanding series of Preferred Stock, in the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the funds and assets of the Corporation that may be legally distributed to the Corporation’s stockholders shall be distributed among the holders of the then outstanding Common Stock pro rata in accordance with the number of shares of Common Stock held by each such holder.
| B. | PREFERRED STOCK |
Shares of Preferred Stock may be issued from time to time in one or more series, each of such series to have such terms as stated or expressed herein and in the resolution or resolutions providing for the creation and issuance of such series adopted by the Board of Directors as hereinafter provided.
Authority is hereby expressly granted to the Board of Directors from time to time to issue the Preferred Stock in one or more series, and in connection with the creation of any such series, by adopting a resolution or resolutions providing for the issuance of the shares thereof and by filing a certificate of designation relating thereto in accordance with the DGCL (a “Certificate of Designation”), to determine and fix the number of shares of such series and such voting powers, full or limited, or no voting powers, and such designations, preferences and relative participating, optional or other special rights, and qualifications, limitations or restrictions thereof, including without limitation thereof, dividend rights, conversion rights, redemption privileges and liquidation preferences, and to increase or decrease (but not below the number of shares of such series then outstanding) the number of shares of any series as shall be stated and expressed in such resolutions, all to the fullest extent now or hereafter permitted by the DGCL. Without limiting the generality of the foregoing, the resolution or resolutions providing for the creation and issuance of any series of Preferred Stock may provide that such series shall be superior or rank equally or be junior to any other series of Preferred Stock to the extent permitted by law and this Restated Certificate (including any Certificate of Designation). Except as otherwise required by law, holders of any series of Preferred Stock shall be entitled only to such voting rights, if any, as shall expressly be granted thereto by this Restated Certificate (including any Certificate of Designation).
The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of at least two-thirds of the holders of stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the DGCL.
ARTICLE VI
For the management of the business and for the conduct of the affairs of the Corporation it is further provided that:
A. At each annual meeting of stockholders of the Corporation beginning with the first annual meeting of stockholders following the date first set forth above, subject to any special rights of the holders of one or more outstanding series of Preferred Stock to elect directors, the successors of the directors whose term expires at that meeting shall be elected to hold office for a term expiring at the annual meeting of stockholders held in the year
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following the year of their election. Each director shall hold office until his or her successor is duly elected and qualified or until his or her earlier death, resignation, disqualification or removal. No decrease in the number of directors shall shorten the term of any incumbent director.
B. Except as otherwise expressly provided by the DGCL or this Restated Certificate, the business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. The number of directors which shall constitute the whole Board of Directors shall be fixed exclusively by one or more resolutions adopted from time to time by the Board of Directors.
C. Subject to the terms of any contractual agreement between the Corporation and one or more of its stockholders and the special rights of the holders of one or more outstanding series of Preferred Stock to elect directors, the Board of Directors or any individual director may be removed from office at any time by the affirmative vote of the holders of at least two-thirds of the voting power of all of the then outstanding shares of voting stock of the Corporation entitled to vote at an election of directors.
D. Subject to the special rights of the holders of one or more outstanding series of Preferred Stock to elect directors, except as otherwise provided by law, any vacancies on the Board of Directors resulting from death, resignation, disqualification, retirement, removal or other causes and any newly created directorships resulting from any increase in the number of directors shall be filled exclusively by the affirmative vote of a majority of the directors then in office, even though less than a quorum, or by a sole remaining director (other than any directors elected by the separate vote of one or more outstanding series of Preferred Stock), and shall not be filled by the stockholders. Any director appointed in accordance with the preceding sentence shall hold office until the expiration of the term to which such director shall have been appointed or until his or her earlier death, resignation, retirement, disqualification, or removal.
E. Whenever the holders of any one or more series of Preferred Stock issued by the Corporation shall have the right, voting separately as a series or separately as a class with one or more such other series, to elect directors at an annual or special meeting of stockholders, the election, term of office, removal and other features of such directorships shall be governed by the terms of this Certificate of Incorporation (including any Certificate of Designation). Notwithstanding anything to the contrary in this Article VI, the number of directors that may be elected by the holders of any such series of Preferred Stock shall be in addition to the number fixed pursuant to paragraph B of this Article VI, and the total number of directors constituting the whole Board of Directors shall be automatically adjusted accordingly. Except as otherwise provided in the Certificate of Designation(s) in respect of one or more series of Preferred Stock, whenever the holders of any series of Preferred Stock having such right to elect additional directors are divested of such right pursuant to the provisions of such Certificate of Designation(s), the terms of office of all such additional directors elected by the holders of such series of Preferred Stock, or elected to fill any vacancies resulting from the death, resignation, disqualification or removal of such additional directors, shall forthwith terminate (in which case each such director thereupon shall cease to be qualified as, and shall cease to be, a director) and the total authorized number of directors of the Corporation shall automatically be reduced accordingly.
F. In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to adopt, amend or repeal Bylaws of the Corporation. In addition to any vote of the holders of any class or series of stock of the Corporation required by applicable law or by this Certificate of Incorporation (including any Certificate of Designation in respect of one or more series of Preferred Stock) or the Bylaws of the Corporation, the adoption, amendment or repeal of the Bylaws of the Corporation by the stockholders of the Corporation shall require the affirmative vote of the holders of at least two-thirds of the voting power of all of the then outstanding shares of voting stock of the Corporation entitled to vote generally in an election of directors.
G. The directors of the Corporation need not be elected by written ballot unless the Bylaws so provide.
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ARTICLE VII
A. Any action required or permitted to be taken by the stockholders of the Corporation must be effected at an annual or special meeting of the stockholders of the Corporation, and shall not be taken by written consent in lieu of a meeting; provided, that so long as the Corporation qualifies as a “controlled company” under Section 303A.00 of the New York Stock Exchange Listed Company Manual, any action required or permitted to be taken by the stockholders of the Corporation may effected by the consent or consents in writing of the holders of the outstanding shares of voting stock of the Corporation having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Notwithstanding the foregoing, any action required or permitted to be taken by the holders of any series of Preferred Stock, voting separately as a series or separately as a class with one or more other such series, may be taken without a meeting, without prior notice and without a vote, to the extent expressly so provided by the applicable Certificate of Designation relating to such series of Preferred Stock, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding shares of the relevant series of Preferred Stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation in accordance with the applicable provisions of the DGCL.
B. Subject to the special rights of the holders of one or more series of Preferred Stock, special meetings of the stockholders of the Corporation may be called, for any purpose or purposes, at any time only by or at the direction of (i) the Board of Directors, (ii) the Chairperson of the Board of Directors, or (iii) so long as the Corporation qualifies as a “controlled company” under Section 303A.00 of the New York Stock Exchange Listed Company Manual, by the Secretary of the Corporation at the request of any holder of at least a majority of the voting power of all of the then outstanding shares of voting stock of the Corporation entitled to vote at an election of directors, and shall not be called by any other person or persons.
C. Advance notice of stockholder nominations for the election of directors and of other business proposed to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in the Bylaws of the Corporation.
ARTICLE VIII
No director of the Corporation shall have any personal liability to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL as the same exists or hereafter may be amended. Any amendment, repeal or modification of this Article VIII, or the adoption of any provision of the Restated Certificate inconsistent with this Article VIII, shall not adversely affect any right or protection of a director of the Corporation with respect to any act or omission occurring prior to such amendment, repeal, modification or adoption. If the DGCL is amended after approval by the stockholders of this Article VIII to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL as so amended.
ARTICLE IX
The Corporation shall have the power to provide rights to indemnification and advancement of expenses to its current and former officers, directors, employees and agents and to any person who is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise.
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ARTICLE X
Unless the Corporation consents in writing to the selection of an alternative forum, (a) the Court of Chancery (the “Chancery Court”) of the State of Delaware (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action, suit or proceeding brought on behalf of the Corporation, (ii) any action, suit or proceeding asserting a claim of breach of a fiduciary duty owed by any director or officer of the Corporation to the Corporation or to the Corporation’s stockholders, (iii) any action, suit or proceeding arising pursuant to any provision of the DGCL or the bylaws of the Corporation or this Restated Certificate (as either may be amended from time to time) or (iv) any action, suit or proceeding asserting a claim against the Corporation governed by the internal affairs doctrine; and (b) subject to the preceding provisions of this Article X, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause or causes of action arising under the Securities Act of 1933, as amended, including all causes of action asserted against any defendant to such complaint. If any action the subject matter of which is within the scope of clause (a) of the immediately preceding sentence is filed in a court other than the courts in the State of Delaware (a “Foreign Action”) in the name of any stockholder, such stockholder shall be deemed to have consented to (x) the personal jurisdiction of the state and federal courts in the State of Delaware in connection with any action brought in any such court to enforce the provisions of clause (a) of the immediately preceding sentence and (y) having service of process made upon such stockholder in any such action by service upon such stockholder’s counsel in the Foreign Action as agent for such stockholder.
Any person or entity purchasing or otherwise acquiring any interest in any security of the Corporation shall be deemed to have notice of and consented to this Article X. Notwithstanding the foregoing, the provisions of this Article X shall not apply to suits brought to enforce any liability or duty created by the Securities Exchange Act of 1934, as amended, or any other claim for which the federal courts of the United States have exclusive jurisdiction.
If any provision or provisions of this Article X shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever, (a) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Article X (including, without limitation, each portion of any paragraph of this Article X containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (b) the application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby.
ARTICLE XI
A. Notwithstanding anything contained in this Restated Certificate to the contrary, in addition to any vote required by applicable law, Part B of Article V, Article VI, Article VII, Article VIII, Article IX, Article X, and this Article XI may be amended, altered, repealed or rescinded, in whole or in part, or any provision inconsistent therewith or herewith may be adopted, only by the affirmative vote of the holders of (a) a majority of the total voting power of the outstanding shares of capital stock of the Corporation entitled to vote thereon, voting together as a single class, for so long as the Corporation qualifies as a “controlled company” under Section 303A.00 of the New York Stock Exchange Listed Company Manual or (b) at least two-thirds of the total voting power of all the then outstanding shares of stock of the Corporation entitled to vote thereon, voting together as a single class, from and after the time that the Corporation ceases to be a “controlled company” of the New York Stock Exchange Listed Company Manual.
B. If any provision or provisions of this Restated Certificate shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (i) the validity, legality and
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enforceability of such provisions in any other circumstance and of the remaining provisions of this Restated Certificate (including, without limitation, each portion of any paragraph of this Restated Certificate containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not, to the fullest extent permitted by applicable law, in any way be affected or impaired thereby and (ii) to the fullest extent permitted by applicable law, the provisions of this Restated Certificate (including, without limitation, each such portion of any paragraph of this Restated Certificate containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its directors, officers, employees and agents from personal liability in respect of their good faith service to or for the benefit of the Corporation to the fullest extent permitted by law.
ARTICLE XII
A. The provisions of this Article XII shall terminate upon the consummation of the transactions contemplated by the Business Combination Agreement, and Plan of Merger entered into as of December 12, 2021 by and among AEA-Bridges Impact Corp., a Delaware corporation (“ABIC”), LiveWire Group, Inc. (formerly known as LW EV Holdings, Inc.), a Delaware corporation, LW EV Merger Sub, Inc., a Delaware corporation, Harley-Davidson, Inc., a Wisconsin corporation, and LiveWire EV, LLC, a Delaware limited liability company (the “Business Combination”) and no amendment to this Article XII shall be effective prior to the consummation of the Business Combination unless approved by the affirmative vote of the holders of at least 66 2/3% of the total voting power of the then outstanding Voting Securities entitled to vote thereon, voting together as a single class.
B. In connection with ABIC’s initial public offering of securities (the “Offering”), ABIC established a trust account (the “Trust Account”) containing the proceeds of the Offering and the overallotment shares acquired by the Corporation’s underwriters and from certain private placements occurring simultaneously with the Offering (including interest accrued from time to time thereon) for the benefit of the ABIC’s public stockholders (including overallotment shares acquired by the Corporation’s underwriters, the “Public Stockholders”) as described in ABIC’s registration statement on Form S-1, as initially filed with the SEC on September 14, 2020, as amended (the “Registration Statement”), established for the benefit of the Public Stockholders pursuant to a trust agreement described in the Registration Statement. Except as otherwise described in the Registration Statement, ABIC may disburse monies from the Trust Account only: (i) to the Public Stockholders in the event they elect to redeem their shares in connection with the consummation of the Business Combination or in connection with an extension of ABIC’s deadline to consummate the Business Combination, (ii) to the Public Stockholders if ABIC fails to consummate the Business Combination within 24 months after the closing of the Offering, (iii) with respect to any interest earned on the amounts held in the Trust Account, as necessary to pay any taxes and dissolution expenses, or (iv) to ABIC after or concurrently with the consummation of the Business Combination.
C. Prior to the date of this Restated Certificate, ABIC has provided all Public Stockholders with the opportunity to have their Offering Shares redeemed (which redemption may be in the form of a repurchase by ABIC), subject to lawfully available funds, upon the consummation of the Business Combination pursuant to, and subject to the limitations of, Article XII, Sections D and E, (such rights of such holders to have their Offering Shares redeemed pursuant to such sections, the “Redemption Rights”) hereof for cash equal to the applicable redemption price per share determined in accordance with Article IX, Section 2(b) hereof (the “Redemption Price”); provided, however, that ABIC shall not have the power to redeem Offering Shares to the extent that such redemption would result in ABIC having net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act (or any successor rule)) of less than $5,000,001 (such limitation hereinafter called the “Redemption Limitation”). Notwithstanding anything to the contrary contained in this Restated Certificate, there shall be no Redemption Rights or liquidating distributions with respect to any warrant issued pursuant to the Offering.
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D. If, in connection with the redemption of the Offering Shares referenced in Article IX, Section 2(a) above, ABIC’s offer to redeem the Offering Shares was other than in conjunction with a stockholder vote on a Business Combination with a proxy solicitation pursuant to Regulation 14A of the Exchange Act (or any successor rules or regulations) (such rules and regulations hereinafter called the “Proxy Solicitation Rules”) and filing proxy materials with the SEC, ABIC shall have offered to redeem the Offering Shares upon the consummation of the Business Combination, subject to lawfully available funds therefor, in accordance with the provisions of Article IX, Section 2(a) hereof pursuant to a tender offer in accordance with Rule 13e-4 and Regulation 14E of the Exchange Act (or any successor rule or regulation) (such rules and regulations hereinafter called the “Tender Offer Rules”) which shall have commenced prior to the date of this Restated Certificate and shall have filed tender offer documents with the SEC prior to the consummation of the Business Combination that contain substantially the same financial and other information about the Business Combination and the Redemption Rights as is required under the Proxy Solicitation Rules, even if such information is not required under the Tender Offer Rules; provided, however, that if a stockholder vote is required by law to approve the proposed Business Combination, or ABIC decides to submit the proposed Business Combination to the stockholders for their approval for business or other reasons, ABIC shall offer to redeem the Offering Shares, subject to lawfully available funds therefor, in accordance with the provisions of Article IX, Section 2(a) hereof in conjunction with a proxy solicitation pursuant to the Proxy Solicitation Rules (and not the Tender Offer Rules) at a price per share equal to the Redemption Price calculated in accordance with the following provisions of this Article IX, Section 2(b). In the event that the Corporation offers to redeem the Offering Shares pursuant to a tender offer in accordance with the Tender Offer Rules, the Redemption Price per share of the Common Stock payable to holders of the Offering Shares tendering their Offering Shares pursuant to such tender offer shall be equal to the quotient obtained by dividing: (i) the aggregate amount on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination, including interest (net of taxes payable), by (ii) the total number of then outstanding Offering Shares. If ABIC offers to redeem the Offering Shares in conjunction with a stockholder vote on the proposed Business Combination pursuant to a proxy solicitation, the Redemption Price per share of the Common Stock payable to holders of the Offering Shares exercising their Redemption Rights shall be equal to the quotient obtained by dividing (a) the aggregate amount on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination, including interest (net of taxes payable), by (b) the total number of then outstanding Offering Shares. For the avoidance of doubt, any Redemption Rights are only with respect to the Business Combination to which they relate.
E. If ABIC offers to redeem the Offering Shares in conjunction with a stockholder vote on a Business Combination pursuant to a proxy solicitation, a Public Stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13(d)(3) of the Exchange Act), shall be restricted from seeking to exercise its Redemption Rights with respect to Offering Shares in excess of an aggregate of 15% of the Offering Shares without the consent of ABIC, unless ABIC waives such restriction with respect to a particular stockholder or “group.”
F. In the event that ABIC has not consummated a Business Combination within 24 months from the closing of the Offering or such later date as approved by holders of a majority of the voting power of the then outstanding Voting Securities that are voted at a meeting to extend such date, voting together as a single class, ABIC shall (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter subject to lawfully available funds therefor, redeem 100% of the Offering Shares in consideration of a per-share price, payable in cash, equal to the quotient obtained by dividing (A) the aggregate amount then on deposit in the Trust Account, including interest (net of taxes payable, and less up to $100,000 of such net interest to pay dissolution expenses), by (B) the total number of then outstanding Offering Shares, which redemption will completely extinguish rights of the Public Stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholder(s) and the Board in accordance with applicable law, dissolve and liquidate, subject in each case to ABIC’s obligations under the DGCL to provide for claims of creditors and other requirements of applicable law.
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G. Prior to the consummation of ABIC’s Business Combination, ABIC shall not have the power to issue any additional shares of Capital Stock that would entitle the holders thereof to receive funds from the Trust Account or vote pursuant to the Restated Certificate on any Business Combination or on any amendment to this paragraph C, except as a result of a stock-split or a share distribution.
H. ABIC shall not have the power to enter into a Business Combination solely with another blank check company or a similar company with nominal operations.
I. Notwithstanding any other provision in this Restated Certificate, approval of the Business Combination shall require the affirmative vote of a majority of the Board, which must include a majority of ABIC’s independent directors.
9
Exhibit 3.2
Amended and Restated Bylaws of
LiveWire Group, Inc.
(a Delaware corporation)
Table of Contents
| Page | ||||||
| Article I—Corporate Offices |
1 | |||||
| 1.1 |
Registered Office | 1 | ||||
| 1.2 |
Other Offices | 1 | ||||
| Article II—Meetings of Stockholders |
1 | |||||
| 2.1 |
Place of Meetings | 1 | ||||
| 2.2 |
Annual Meeting | 1 | ||||
| 2.3 |
Special Meeting | 1 | ||||
| 2.4 |
Notice of Business to be Brought before a Meeting. | 1 | ||||
| 2.5 |
Notice of Nominations for Election to the Board of Directors. | 4 | ||||
| 2.6 |
Additional Requirements for Valid Nomination of Candidates to Serve as Director and, if Elected, to be Seated as Directors. | 6 | ||||
| 2.7 |
Notice of Stockholders’ Meetings | 8 | ||||
| 2.8 |
Quorum | 8 | ||||
| 2.9 |
Adjourned Meeting; Notice | 8 | ||||
| 2.10 |
Conduct of Business | 8 | ||||
| 2.11 |
Voting | 9 | ||||
| 2.12 |
Record Date for Stockholder Meetings and Other Purposes | 9 | ||||
| 2.13 |
Proxies | 10 | ||||
| 2.14 |
List of Stockholders Entitled to Vote | 10 | ||||
| 2.15 |
Inspectors of Election | 10 | ||||
| 2.16 |
Delivery to the Corporation. | 11 | ||||
| Article III—Directors |
11 | |||||
| 3.1 |
Powers | 11 | ||||
| 3.2 |
Number of Directors | 11 | ||||
| 3.3 |
Election, Qualification and Term of Office of Directors | 11 | ||||
| 3.4 |
Resignation and Vacancies | 12 | ||||
| 3.5 |
Place of Meetings; Meetings by Telephone | 12 | ||||
| 3.6 |
Regular Meetings | 12 | ||||
| 3.7 |
Special Meetings; Notice | 12 | ||||
| 3.8 |
Quorum | 13 | ||||
| 3.9 |
Board Action without a Meeting | 13 | ||||
| 3.10 |
Fees and Compensation of Directors | 13 | ||||
| Article IV—Committees |
13 | |||||
| 4.1 |
Committees of Directors | 13 | ||||
| 4.2 |
Committee Minutes | 13 | ||||
| 4.3 |
Meetings and Actions of Committees | 14 | ||||
| 4.4 |
Subcommittees. | 14 | ||||
| Article V—Officers |
14 | |||||
| 5.1 |
Officers | 14 | ||||
| 5.2 |
Appointment of Officers | 14 | ||||
| 5.3 |
Subordinate Officers | 15 | ||||
| 5.4 |
Removal and Resignation of Officers | 15 | ||||
| 5.5 |
Vacancies in Offices | 15 | ||||
| 5.6 |
Representation of Shares of Other Corporations | 15 | ||||
i
TABLE OF CONTENTS
(continued)
| Page | ||||||
| 5.7 |
Authority and Duties of Officers | 15 | ||||
| 5.8 |
Compensation. | 15 | ||||
| Article VI—Records |
15 | |||||
| Article VII—General Matters |
16 | |||||
| 7.1 |
Execution of Corporate Contracts and Instruments | 16 | ||||
| 7.2 |
Stock Certificates | 16 | ||||
| 7.3 |
Special Designation of Certificates. | 16 | ||||
| 7.4 |
Lost Certificates | 17 | ||||
| 7.5 |
Shares Without Certificates | 17 | ||||
| 7.6 |
Construction; Definitions | 17 | ||||
| 7.7 |
Dividends | 17 | ||||
| 7.8 |
Fiscal Year | 17 | ||||
| 7.9 |
Seal | 17 | ||||
| 7.10 |
Transfer of Stock | 17 | ||||
| 7.11 |
Stock Transfer Agreements | 18 | ||||
| 7.12 |
Registered Stockholders | 18 | ||||
| 7.13 |
Waiver of Notice | 18 | ||||
| Article VIII—Notice |
18 | |||||
| 8.1 |
Delivery of Notice; Notice by Electronic Transmission | 18 | ||||
| Article IX—Indemnification |
19 | |||||
| 9.1 |
Indemnification of Directors and Officers | 19 | ||||
| 9.2 |
Indemnification of Others | 19 | ||||
| 9.3 |
Prepayment of Expenses | 20 | ||||
| 9.4 |
Determination; Claim | 20 | ||||
| 9.5 |
Non-Exclusivity of Rights | 20 | ||||
| 9.6 |
Insurance | 20 | ||||
| 9.7 |
Other Indemnification | 20 | ||||
| 9.8 |
Continuation of Indemnification | 20 | ||||
| 9.9 |
Amendment or Repeal; Interpretation | 20 | ||||
| Article X—Amendments |
21 | |||||
| Article XI—Definitions |
21 | |||||
ii
Amended and Restated Bylaws of
LiveWire Group, Inc.
Article I—Corporate Offices
1.1 Registered Office.
The address of the registered office of LiveWire Group, Inc. (the “Corporation”) in the State of Delaware, and the name of its registered agent at such address, shall be as set forth in the Corporation’s certificate of incorporation, as the same may be amended and/or restated from time to time (the “Certificate of Incorporation”).
1.2 Other Offices.
The Corporation may have additional offices at any place or places, within or outside the State of Delaware, as the Corporation’s board of directors (the “Board”) may from time to time establish or as the business of the Corporation may require.
Article II—Meetings of Stockholders
2.1 Place of Meetings.
Meetings of stockholders shall be held at any place within or outside the State of Delaware, designated by the Board. The Board may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211(a)(2) of the General Corporation Law of the State of Delaware (the “DGCL”). In the absence of any such designation or determination, stockholders’ meetings shall be held at the Corporation’s principal executive office.
2.2 Annual Meeting.
The Board shall designate the date and time of the annual meeting. At the annual meeting, directors shall be elected and other proper business properly brought before the meeting in accordance with Section 2.4 of these bylaws may be transacted. The Board may postpone, reschedule or cancel any previously scheduled annual meeting of stockholders.
2.3 Special Meeting.
Special meetings of the stockholders may be called only by such persons and only in such manner as set forth in the Certificate of Incorporation.
No business may be transacted at any special meeting of stockholders other than the business specified in the notice of such meeting. The Board may postpone, reschedule or cancel any previously scheduled special meeting of stockholders.
2.4 Notice of Business to be Brought before a Meeting.
(i) At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (a) specified in a notice of meeting given by or at the direction of the Board of Directors, (b) if not specified in a notice of meeting, otherwise brought before the meeting by the Board of Directors or the Chairman of the Board or (c) otherwise properly brought before the meeting by a stockholder present in person who (A) (1) was a record
owner of shares of the Corporation both at the time of giving the notice provided for in this Section 2.4 and at the time of the meeting, (2) is entitled to vote at the meeting, and (3) has complied with this Section 2.4 in all applicable respects or (B) properly made such proposal in accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (as so amended and inclusive of such rules and regulations, the “Exchange Act”). The foregoing clause (c) shall be the exclusive means for a stockholder to propose business to be brought before an annual meeting of the stockholders. For purposes of this Section 2.4, “present in person” shall mean that the stockholder proposing that the business be brought before the annual meeting of the Corporation, or a qualified representative of such proposing stockholder, appear at such annual meeting. A “qualified representative” of such proposing stockholder shall be a duly authorized officer, manager or partner of such stockholder or any other person authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders. Stockholders seeking to nominate persons for election to the Board of Directors must comply with Section 2.5 and Section 2.6 and this Section 2.4 shall not be applicable to nominations except as expressly provided in Section 2.5 and Section 2.6.
(ii) Without qualification, for business to be properly brought before an annual meeting by a stockholder, the stockholder must (a) provide Timely Notice (as defined below) thereof in writing and in proper form to the Secretary of the Corporation and (b) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.4. To be timely, a stockholder’s notice must be delivered to, or mailed and received at, the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred twenty (120) days prior to the one-year anniversary of the preceding year’s annual meeting; provided, however, that if the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after such anniversary date, notice by the stockholder to be timely must be so delivered, or mailed and received, not later than the ninetieth (90th) day prior to such annual meeting or, if later, the tenth (10th) day following the day on which public disclosure of the date of such annual meeting was first made by the Corporation (such notice within such time periods, “Timely Notice”). In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period for the giving of Timely Notice as described above.
(iii) To be in proper form for purposes of this Section 2.4, a stockholder’s notice to the Secretary shall set forth:
(a) As to each Proposing Person (as defined below), (A) the name and address of such Proposing Person (including, if applicable, the name and address that appear on the Corporation’s books and records); and (B) the class or series and number of shares of the Corporation that are, directly or indirectly, owned of record or beneficially owned (within the meaning of Rule 13d-3 under the Exchange Act) by such Proposing Person, except that such Proposing Person shall in all events be deemed to beneficially own any shares of any class or series of the Corporation as to which such Proposing Person has a right to acquire beneficial ownership at any time in the future (the disclosures to be made pursuant to the foregoing clauses (A) and (B) are referred to as “Stockholder Information”);
(b) As to each Proposing Person, (A) the full notional amount of any securities that, directly or indirectly, underlie any “derivative security” (as such term is defined in Rule 16a-1(c) under the Exchange Act) that constitutes a “call equivalent position” (as such term is defined in Rule 16a-1(b) under the Exchange Act) (“Synthetic Equity Position”) and that is, directly or indirectly, held or maintained by such Proposing Person with respect to any shares of any class or series of shares of the Corporation; provided that, for the purposes of the definition of “Synthetic Equity Position,” the term “derivative security” shall also include any security or instrument that would not otherwise constitute a “derivative security” as a result of any feature that would make any conversion, exercise or similar right or privilege of such security or instrument becoming determinable only at some future date or upon the happening of a future occurrence, in which case the determination of the amount of securities into which such security or instrument would be convertible or exercisable shall be made assuming that
2
such security or instrument is immediately convertible or exercisable at the time of such determination; and, provided, further, that any Proposing Person satisfying the requirements of Rule 13d-1(b)(1) under the Exchange Act (other than a Proposing Person that so satisfies Rule 13d-1(b)(1) under the Exchange Act solely by reason of Rule 13d-1(b)(1)(ii)(E)) shall not be deemed to hold or maintain the notional amount of any securities that underlie a Synthetic Equity Position held by such Proposing Person as a hedge with respect to a bona fide derivatives trade or position of such Proposing Person arising in the ordinary course of such Proposing Person’s business as a derivatives dealer, (B) any rights to dividends on the shares of any class or series of shares of the Corporation owned beneficially by such Proposing Person that are separated or separable from the underlying shares of the Corporation, (C) any material pending or threatened legal proceeding in which such Proposing Person is a party or material participant involving the Corporation or any of its officers or directors, or any affiliate of the Corporation, (D) any other material relationship between such Proposing Person, on the one hand, and the Corporation, any affiliate of the Corporation, on the other hand, (E) any direct or indirect material interest in any material contract or agreement of such Proposing Person with the Corporation or any affiliate of the Corporation (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement), (F) a representation that such Proposing Person intends or is part of a group which intends to deliver a proxy statement or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt the proposal or otherwise solicit proxies from stockholders in support of such proposal and (G) any other information relating to such Proposing Person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies or consents by such Proposing Person in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the Exchange Act (the disclosures to be made pursuant to the foregoing clauses (A) through (G) are referred to as “Disclosable Interests”); provided, however, that Disclosable Interests shall not include any such disclosures with respect to the ordinary course business activities of any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by these bylaws on behalf of a beneficial owner; and
(c) As to each item of business that the stockholder proposes to bring before the annual meeting, (A) a brief description of the business desired to be brought before the annual meeting, the reasons for conducting such business at the annual meeting and any material interest in such business of each Proposing Person, (B) the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the bylaws, the language of the proposed amendment), and (C) a reasonably detailed description of all agreements, arrangements and understandings (x) between or among any of the Proposing Persons or (y) between or among any Proposing Person and any other record or beneficial holder(s) or persons(s) who have a right to acquire beneficial ownership at any time in the future of the shares of any class or series of the Corporation or any other person or entity (including their names) in connection with the proposal of such business by such stockholder; and (D) any other information relating to such item of business that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the Exchange Act; provided, however, that the disclosures required by this paragraph (c) shall not include any disclosures with respect to any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by these bylaws on behalf of a beneficial owner.
For purposes of this Section 2.4, the term “Proposing Person” shall mean (i) the stockholder providing the notice of business proposed to be brought before an annual meeting, (ii) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the business proposed to be brought before the annual meeting
3
is made, and (iii) any participant (as defined in paragraphs (a)(ii)-(vi) of Instruction 3 to Item 4 of Schedule 14A) with such stockholder in such solicitation.
(iv) A Proposing Person shall update and supplement its notice to the Corporation of its intent to propose business at an annual meeting, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.4 shall be true and correct as of the record date for stockholders entitled to vote at the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for stockholders entitled to vote at the meeting (in the case of the update and supplement required to be made as of such record date), and not later than eight (8) business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof). For the avoidance of doubt, the obligation to update and supplement as set forth in this paragraph or any other Section of these bylaws shall not limit the Corporation’s rights with respect to any deficiencies in any notice provided by a stockholder, extend any applicable deadlines hereunder or enable or be deemed to permit a stockholder who has previously submitted notice hereunder to amend or update any proposal or to submit any new proposal, including by changing or adding matters, business or resolutions proposed to be brought before a meeting of the stockholders.
(v) Notwithstanding anything in these bylaws to the contrary, no business shall be conducted at an annual meeting that is not properly brought before the meeting in accordance with this Section 2.4. The presiding officer of the meeting shall, if the facts warrant, determine that the business was not properly brought before the meeting in accordance with this Section 2.4, and if he or she should so determine, he or she shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.
(vi) This Section 2.4 is expressly intended to apply to any business proposed to be brought before an annual meeting of stockholders other than any proposal made in accordance with Rule 14a-8 under the Exchange Act and included in the Corporation’s proxy statement. In addition to the requirements of this Section 2.4 with respect to any business proposed to be brought before an annual meeting, each Proposing Person shall comply with all applicable requirements of the Exchange Act with respect to any such business. Nothing in this Section 2.4 shall be deemed to affect the rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.
(vii) For purposes of these bylaws, “public disclosure” shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act.
2.5 Notice of Nominations for Election to the Board of Directors.
(i) Nominations of any person for election to the Board of Directors at an annual meeting or at a special meeting (but only if the election of directors is a matter specified in the notice of meeting given by or at the direction of the person calling such special meeting) may be made at such meeting only (a) by or at the direction of the Board of Directors, including by any committee or persons authorized to do so by the Board of Directors or these bylaws, or (b) by a stockholder present in person (A) who was a record owner of shares of the Corporation both at the time of giving the notice provided for in this Section 2.5 and at the time of the meeting, (B) is entitled to vote at the meeting, and (C) has complied with this Section 2.5 and Section 2.6 as to such notice and nomination. For purposes of this Section 2.5, “present in person” shall mean that the stockholder proposing that the business be brought before the meeting of the Corporation, or a qualified representative of such stockholder, appear at such meeting. A “qualified representative” of such proposing stockholder shall be a duly authorized officer, manager or partner of such stockholder or any other person authorized by a writing executed
4
by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders. The foregoing clause (ii) shall be the exclusive means for a stockholder to make any nomination of a person or persons for election to the Board of Directors at an annual meeting or special meeting.
(ii)
(a) Without qualification, for a stockholder to make any nomination of a person or persons for election to the Board of Directors at an annual meeting, the stockholder must (A) provide Timely Notice (as defined in Section 2.4) thereof in writing and in proper form to the Secretary of the Corporation, (B) provide the information, agreements and questionnaires with respect to such stockholder and its candidate for nomination as required to be set forth by this Section 2.5 and Section 2.6 and (C) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.5 and Section 2.6.
(b) Without qualification, if the election of directors is a matter specified in the notice of meeting given by or at the direction of the person calling a special meeting, then for a stockholder to make any nomination of a person or persons for election to the Board of Directors at a special meeting, the stockholder must (A) provide timely notice thereof in writing and in proper form to the Secretary of the Corporation at the principal executive offices of the Corporation, (B) provide the information with respect to such stockholder and its candidate for nomination as required by this Section 2.5 and Section 2.6 and (C) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.5. To be timely, a stockholder’s notice for nominations to be made at a special meeting must be delivered to, or mailed and received at, the principal executive offices of the Corporation not earlier than the one hundred twentieth (120th) day prior to such special meeting and not later than the ninetieth (90th) day prior to such special meeting or, if later, the tenth (10th) day following the day on which public disclosure (as defined in Section 2.4) of the date of such special meeting was first made.
(c) In no event shall any adjournment or postponement of an annual meeting or special meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described above.
(d) In no event may a Nominating Person provide Timely Notice with respect to a greater number of director candidates than are subject to election by stockholders at the applicable meeting. If the Corporation shall, subsequent to such notice, increase the number of directors subject to election at the meeting, such notice as to any additional nominees shall be due on the later of (A) the conclusion of the time period for Timely Notice, (B) the date set forth in Section 2.5(ii)(b) or (C) the tenth day following the date of public disclosure (as defined in Section 2.4) of such increase.
(iii) To be in proper form for purposes of this Section 2.5, a stockholder’s notice to the Secretary shall set forth:
(a) As to each Nominating Person (as defined below), the Stockholder Information (as defined in Section 2.4(iii)(a)), except that for purposes of this Section 2.5 the term “Nominating Person” shall be substituted for the term “Proposing Person” in all places it appears in Section 2.4(iii)(a);
(b) As to each Nominating Person, any Disclosable Interests (as defined in Section 2.4(iii)(b), except that for purposes of this Section 2.5 the term “Nominating Person” shall be substituted for the term “Proposing Person” in all places it appears in Section 2.4(iii)(b) and the disclosure with respect to the business to be brought before the meeting in Section 2.4(iii)(b) shall be made with respect to the election of directors at the meeting); and
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(c) As to each candidate whom a Nominating Person proposes to nominate for election as a director, (A) all information with respect to such candidate for nomination that would be required to be set forth in a stockholder’s notice pursuant to this Section 2.5 and Section 2.6 if such candidate for nomination were a Nominating Person, (B) all information relating to such candidate for nomination that is required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14(a) under the Exchange Act (including such candidate’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected), (C) a description of any direct or indirect material interest in any material contract or agreement between or among any Nominating Person, on the one hand, and each candidate for nomination or his or her respective associates or any other participants in such solicitation, on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Item 404 under Regulation S-K if such Nominating Person were the “registrant” for purposes of such rule and the candidate for nomination were a director or executive officer of such registrant (the disclosures to be made pursuant to the foregoing clauses (A) through (C) are referred to as “Nominee Information”), and (D) a completed and signed questionnaire, representation and agreement as provided in Section 2.6(i)
For purposes of this Section 2.5, the term “Nominating Person” shall mean (i) the stockholder providing the notice of the nomination proposed to be made at the meeting, (ii) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the nomination proposed to be made at the meeting is made, and (iii) any other participant in such solicitation.
(iv) A stockholder providing notice of any nomination proposed to be made at a meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.5 shall be true and correct as of the record date for stockholders entitled to vote at the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for stockholders entitled to vote at the meeting (in the case of the update and supplement required to be made as of such record date), and not later than eight (8) business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof). For the avoidance of doubt, the obligation to update and supplement as set forth in this paragraph or any other Section of these bylaws shall not limit the Corporation’s rights with respect to any deficiencies in any notice provided by a stockholder, extend any applicable deadlines hereunder or enable or be deemed to permit a stockholder who has previously submitted notice hereunder to amend or update any nomination or to submit any new nomination.
(v) In addition to the requirements of this Section 2.5 with respect to any nomination proposed to be made at a meeting, each Nominating Person shall comply with all applicable requirements of the Exchange Act with respect to any such nominations.
2.6 Additional Requirements for Valid Nomination of Candidates to Serve as Director and, if Elected, to be Seated as Directors.
(i) To be eligible to be a candidate for election as a director of the Corporation at an annual or special meeting, a candidate must be nominated in the manner prescribed in Section 2.5 and the candidate for nomination, whether nominated by the Board of Directors or by a stockholder of record, must have previously delivered (in accordance with the time period prescribed for delivery in a notice to such candidate given by or on behalf of the Board of Directors), to the Secretary at the principal executive offices of the Corporation, (a) a completed written questionnaire (in a form provided by the Corporation) with respect to the background,
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qualifications, stock ownership and independence of such proposed nominee, and such additional information with respect to such proposed nominee as would be required to be provided by the Corporation pursuant to Schedule 14A if such proposed nominee were a participant in the solicitation of proxies by the Corporation in connection with such annual or special meeting and (b) a written representation and agreement (in form provided by the Corporation) that such candidate for nomination (A) is not and, if elected as a director during his or her term of office, will not become a party to (1) any agreement, arrangement or understanding with, and has not given and will not give any commitment or assurance to, any person or entity as to how such proposed nominee, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) or (2) any Voting Commitment that could limit or interfere with such proposed nominee’s ability to comply, if elected as a director of the Corporation, with such proposed nominee’s fiduciary duties under applicable law, (B) is not, and will not become a party to, any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation or reimbursement for service as a director that has not been disclosed to the Corporation, (C) if elected as a director of the Corporation, will comply with all applicable corporate governance, conflict of interest, confidentiality, stock ownership and trading and other policies and guidelines of the Corporation applicable to directors and in effect during such person’s term in office as a director (and, if requested by any candidate for nomination, the Secretary of the Corporation shall provide to such candidate for nomination all such policies and guidelines then in effect), (D) if elected as director of the Corporation, intends to serve the entire term until the next meeting at which such candidate would face re-election and (E) consents to being named as a nominee in the Corporation’s proxy statement pursuant to Rule 14a-4(d) under the Exchange Act and any associated proxy card of the Corporation and agrees to serve if elected as a director.
(ii) The Board of Directors may also require any proposed candidate for nomination as a director to furnish such other information as may reasonably be requested by the Board of Directors in writing prior to the meeting of stockholders at which such candidate’s nomination is to be acted upon in order for the Board of Directors to determine the eligibility of such candidate for nomination to be an independent director of the Corporation in accordance with the corporate governance guidelines adopted by the Corporation.
(iii) A candidate for nomination as a director shall further update and supplement the materials delivered pursuant to this Section 2.6, if necessary, so that the information provided or required to be provided pursuant to this Section 2.6 shall be true and correct as of the record date for stockholders entitled to vote at the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary at the principal executive offices of the Corporation (or any other office specified by the Corporation in any public announcement) not later than five (5) business days after the record date for stockholders entitled to vote at the meeting (in the case of the update and supplement required to be made as of such record date), and not later than eight (8) business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof). For the avoidance of doubt, the obligation to update and supplement as set forth in this paragraph or any other Section of these bylaws shall not limit the Corporation’s rights with respect to any deficiencies in any notice provided by a stockholder, extend any applicable deadlines hereunder or enable or be deemed to permit a stockholder who has previously submitted notice hereunder to amend or update any proposal or to submit any new proposal, including by changing or adding nominees, matters, business or resolutions proposed to be brought before a meeting of the stockholders.
(iv) No candidate shall be eligible for nomination as a director of the Corporation unless such candidate for nomination and the Nominating Person seeking to place such candidate’s name in nomination has complied with Section 2.5 and this Section 2.6, as applicable. The presiding officer at the meeting shall, if the facts warrant, determine that a nomination was not properly made in accordance with Section 2.5 and this Section 2.6, and if he or she should so determine, he or she shall so declare such determination to the meeting, the defective nomination shall be disregarded and any ballots cast for the candidate in question (but in the case of any form of
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ballot listing other qualified nominees, only the ballots cast for the nominee in question) shall be void and of no force or effect.
(v) Notwithstanding anything in these bylaws to the contrary, no candidate for nomination shall be eligible to be seated as a director of the Corporation unless nominated and elected in accordance with Section 2.5 and this Section 2.6.
2.7 Notice of Stockholders’ Meetings.
Unless otherwise provided by law, the Certificate of Incorporation or these bylaws, the notice of any meeting of stockholders shall be sent or otherwise given in accordance with Section 8.1 of these bylaws not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. The notice shall specify the place, if any, date and time of the meeting, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called.
2.8 Quorum.
Unless otherwise provided by law, the Certificate of Incorporation or these bylaws, the holders of a majority in voting power of the stock issued and outstanding and entitled to vote, present in person, or by remote communication, if applicable, or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of the stockholders. A quorum, once established at a meeting, shall not be broken by the withdrawal of enough votes to leave less than a quorum. If, however, a quorum is not present or represented at any meeting of the stockholders, then either (i) the person presiding over the meeting or (ii) a majority in voting power of the stockholders entitled to vote at the meeting, present in person, or by remote communication, if applicable, or represented by proxy, shall have power to recess the meeting or adjourn the meeting from time to time in the manner provided in Section 2.9 of these bylaws until a quorum is present or represented. At any recessed or adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed.
2.9 Adjourned Meeting; Notice.
When a meeting is adjourned to another time or place, unless these bylaws otherwise require, notice need not be given of the adjourned meeting if the time, place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At any adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for determination of stockholders entitled to vote is fixed for the adjourned meeting, the Board shall fix as the record date for determining stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote at the adjourned meeting, and shall give notice of the adjourned meeting to each stockholder of record entitled to vote at such meeting as of the record date so fixed for notice of such adjourned meeting.
2.10 Conduct of Business.
The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting by the person presiding over the meeting. The Board may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board, the person presiding over any meeting of stockholders shall have the right and authority to convene and (for any or
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no reason) to recess and/or adjourn the meeting, to prescribe such rules, regulations and procedures (which need not be in writing) and to do all such acts as, in the judgment of such presiding person, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board or prescribed by the person presiding over the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present (including, without limitation, rules and procedures for removal of disruptive persons from the meeting); (iii) limitations on attendance at or participation in the meeting to stockholders entitled to vote at the meeting, their duly authorized and constituted proxies or such other persons as the person presiding over the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. The presiding person at any meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting (including, without limitation, determinations with respect to the administration and/or interpretation of any of the rules, regulations or procedures of the meeting, whether adopted by the Board or prescribed by the person presiding over the meeting), shall, if the facts warrant, determine and declare to the meeting that a matter of business was not properly brought before the meeting and if such presiding person should so determine, such presiding person shall so declare to the meeting and any such matter or business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined by the Board or the person presiding over the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.
2.11 Voting.
Except as may be otherwise provided in the Certificate of Incorporation, these bylaws or the DGCL, each stockholder shall be entitled to one (1) vote for each share of capital stock held by such stockholder.
Except as otherwise provided by the Certificate of Incorporation, at all duly called or convened meetings of stockholders at which a quorum is present, for the election of directors, a plurality of the votes cast shall be sufficient to elect a director. Except as otherwise provided by the Certificate of Incorporation, these bylaws, the rules or regulations of any stock exchange applicable to the Corporation, or applicable law or pursuant to any regulation applicable to the Corporation or its securities, each other matter presented to the stockholders at a duly called or convened meeting at which a quorum is present shall be decided by the affirmative vote of the holders of a majority in voting power of the votes cast (excluding abstentions and broker non-votes) on such matter.
2.12 Record Date for Stockholder Meetings and Other Purposes.
In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall, unless otherwise required by law, not be more than sixty (60) days nor less than ten (10) days before the date of such meeting. If the Board so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be the close of business on the next day preceding the day on which notice is first given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for determination of stockholders entitled to vote at the adjourned meeting; and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance herewith at the adjourned meeting.
In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment or any rights or the stockholders entitled to exercise any rights in respect of any
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change, conversion or exchange of capital stock, or for the purposes of any other lawful action, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.
2.13 Proxies.
Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212 of the DGCL. A proxy may be in the form of an electronic transmission which sets forth or is submitted with information from which it can be determined that the transmission was authorized by the stockholder.
2.14 List of Stockholders Entitled to Vote.
The Corporation shall prepare, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting (provided, however, that if the record date for determining the stockholders entitled to vote is less than ten (10) days before the date of the meeting, the list shall reflect the stockholders entitled to vote as of the tenth day before the meeting date), arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. The Corporation shall not be required to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting for a period of at least ten (10) days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the Corporation’s principal executive office. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Such list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them. Except as otherwise provided by law, the stock ledger shall be the only evidence as to who are the stockholders entitled to examine the list of stockholders required by this Section 2.14 or to vote in person or by proxy at any meeting of stockholders.
2.15 Inspectors of Election.
Before any meeting of stockholders, the Corporation shall appoint an inspector or inspectors of election to act at the meeting or its adjournment and make a written report thereof. The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If any person appointed as inspector or any alternate fails to appear or fails or refuses to act, then the person presiding over the meeting shall appoint a person to fill that vacancy.
Such inspectors shall:
(i) determine the number of shares outstanding and the voting power of each, the number of shares represented at the meeting and the validity of any proxies and ballots;
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(ii) count all votes or ballots;
(iii) count and tabulate all votes;
(iv) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspector(s); and
(v) certify its or their determination of the number of shares represented at the meeting and its or their count of all votes and ballots.
Each inspector, before entering upon the discharge of the duties of inspector, shall take and sign an oath faithfully to execute the duties of inspection with strict impartiality and according to the best of such inspector’s ability. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein. The inspectors of election may appoint such persons to assist them in performing their duties as they determine.
2.16 Delivery to the Corporation.
Whenever this Article II requires one or more persons (including a record or beneficial owner of stock) to deliver a document or information to the Corporation or any officer, employee or agent thereof (including any notice, request, questionnaire, revocation, representation or other document or agreement), such document or information shall be in writing exclusively (and not in an electronic transmission) and shall be delivered exclusively by hand (including, without limitation, overnight courier service) or by certified or registered mail, return receipt requested, and the Corporation shall not be required to accept delivery of any document not in such written form or so delivered. For the avoidance of doubt, the Corporation expressly opts out of Section 116 of the DGCL with respect to the delivery of information and documents to the Corporation required by this Article II.
Article III—Directors
3.1 Powers.
Except as otherwise provided by the Certificate of Incorporation or the DGCL, the business and affairs of the Corporation shall be managed by or under the direction of the Board.
3.2 Number of Directors.
Subject to the Certificate of Incorporation, the total number of directors constituting the Board shall be determined from time to time by resolution of the Board. No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires.
3.3 Election, Qualification and Term of Office of Directors.
Except as provided in Section 3.4 of these bylaws, and subject to the Certificate of Incorporation and the terms of any contractual agreement between the Corporation and one or more of its stockholders, each director, including a director elected to fill a vacancy or newly created directorship, shall hold office until such director’s successor is duly elected and qualified or until such director’s earlier death, resignation, disqualification or removal. Directors need not be stockholders. The Certificate of Incorporation or these bylaws may prescribe qualifications for directors.
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3.4 Resignation and Vacancies.
Any director may resign at any time upon notice given in writing or by electronic transmission to the Corporation. The resignation shall take effect at the time specified therein or upon the happening of an event specified therein, and if no time or event is specified, at the time of its receipt. When one or more directors so resigns and the resignation is effective at a future date or upon the happening of an event to occur on a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in Section 3.3.
Unless otherwise provided in the Certificate of Incorporation or these bylaws, vacancies resulting from the death, resignation, disqualification or removal of any director, and newly created directorships resulting from any increase in the authorized number of directors shall be filled only by a majority of the directors then in office, although less than a quorum, or by a sole remaining director.
3.5 Place of Meetings; Meetings by Telephone.
The Board may hold meetings, both regular and special, either within or outside the State of Delaware.
Unless otherwise restricted by the Certificate of Incorporation or these bylaws, members of the Board, or any committee designated by the Board, may participate in a meeting of the Board, or any committee, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting pursuant to this bylaw shall constitute presence in person at the meeting.
3.6 Regular Meetings.
Regular meetings of the Board may be held within or outside the State of Delaware and at such time and at such place as which has been designated by the Board and publicized among all directors, either orally or in writing, by telephone, including a voice-messaging system or other system designed to record and communicate messages, facsimile, telegraph or telex, or by electronic mail or other means of electronic transmission. No further notice shall be required for regular meetings of the Board.
3.7 Special Meetings; Notice.
Special meetings of the Board for any purpose or purposes may be called at any time by the chairperson of the Board, the Chief Executive Officer, the President, the Secretary or a majority of the total number of directors constituting the Board.
Notice of the time and place of special meetings shall be:
(i) delivered personally by hand, by courier or by telephone;
(ii) sent by United States first-class mail, postage prepaid;
(iii) sent by facsimile or electronic mail; or
(iv) sent by other means of electronic transmission,
directed to each director at that director’s address, telephone number, facsimile number or electronic mail address, or other address for electronic transmission, as the case may be, as shown on the Corporation’s records.
If the notice is (i) delivered personally by hand, by courier or by telephone, (ii) sent by facsimile or electronic mail, or (iii) sent by other means of electronic transmission, it shall be delivered or sent at least
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twenty-four (24) hours before the time of the holding of the meeting. If the notice is sent by U.S. mail, it shall be deposited in the U.S. mail at least four (4) days before the time of the holding of the meeting. The notice need not specify the place of the meeting (if the meeting is to be held at the Corporation’s principal executive office) nor the purpose of the meeting.
3.8 Quorum.
At all meetings of the Board, unless otherwise provided by the Certificate of Incorporation, a majority of the total number of directors shall constitute a quorum for the transaction of business. The vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board, except as may be otherwise specifically provided by statute, the Certificate of Incorporation or these bylaws. If a quorum is not present at any meeting of the Board, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.
3.9 Board Action without a Meeting.
Unless otherwise restricted by the Certificate of Incorporation or these bylaws, any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission. After an action is taken, the consent or consents relating thereto shall be filed with the minutes of the proceedings of the Board, or the committee thereof, in the same paper or electronic form as the minutes are maintained. Such action by written consent or consent by electronic transmission shall have the same force and effect as a unanimous vote of the Board.
3.10 Fees and Compensation of Directors.
Unless otherwise restricted by the Certificate of Incorporation or these bylaws, the Board shall have the authority to fix the compensation, including fees and reimbursement of expenses, of directors for services to the Corporation in any capacity.
Article IV—Committees
4.1 Committees of Directors.
The Board may designate one (1) or more committees, each committee to consist, of one (1) or more of the directors of the Corporation. The Board may designate one (1) or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board or in these bylaws, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) approve or adopt, or recommend to the stockholders, any action or matter expressly required by the DGCL to be submitted to stockholders for approval, or (ii) adopt, amend or repeal any bylaw of the Corporation.
4.2 Committee Minutes.
Each committee shall keep regular minutes of its meetings and report the same to the Board when required.
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4.3 Meetings and Actions of Committees.
Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of:
(i) Section 3.5 (place of meetings; meetings by telephone);
(ii) Section 3.6 (regular meetings);
(iii) Section 3.7 (special meetings; notice);
(iv) Section 3.9 (board action without a meeting); and
(v) Section 7.13 (waiver of notice),
with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the Board and its members. However:
(i) the time of regular meetings of committees may be determined either by resolution of the Board or by resolution of the committee;
(ii) special meetings of committees may also be called by resolution of the Board or the chairperson of the applicable committee; and
(iii) the Board may adopt rules for the governance of any committee to override the provisions that would otherwise apply to the committee pursuant to this Section 4.3, provided that such rules do not violate the provisions of the Certificate of Incorporation or applicable law.
4.4 Subcommittees.
Unless otherwise provided in the Certificate of Incorporation, these bylaws or the resolutions of the Board designating the committee, a committee may create one (1) or more subcommittees, each subcommittee to consist of one (1) or more members of the committee, and delegate to a subcommittee any or all of the powers and authority of the committee.
Article V—Officers
5.1 Officers.
The officers of the Corporation shall include a Chief Executive Officer, a President and a Secretary. The Corporation may also have, at the discretion of the Board, a Chairperson of the Board, a Vice Chairperson of the Board, a Chief Financial Officer, a Treasurer, one (1) or more Vice Presidents, one (1) or more Assistant Vice Presidents, one (1) or more Assistant Treasurers, one (1) or more Assistant Secretaries, and any such other officers as may be appointed in accordance with the provisions of these bylaws. Any number of offices may be held by the same person. No officer need be a stockholder or director of the Corporation.
5.2 Appointment of Officers.
The Board shall appoint the officers of the Corporation, except such officers as may be appointed in accordance with the provisions of Section 5.3 of these bylaws.
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5.3 Subordinate Officers.
The Board may appoint, or empower the Chief Executive Officer or, in the absence of a Chief Executive Officer, the President, to appoint, such other officers and agents as the business of the Corporation may require. Each of such officers and agents shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the Board may from time to time determine.
5.4 Removal and Resignation of Officers.
Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by the Board or, except in the case of an officer chosen by the Board, by any officer upon whom such power of removal may be conferred by the Board.
Any officer may resign at any time by giving written notice to the Corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice. Unless otherwise specified in the notice of resignation, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the Corporation under any contract to which the officer is a party.
5.5 Vacancies in Offices.
Any vacancy occurring in any office of the Corporation shall be filled by the Board or as provided in Section 5.2.
5.6 Representation of Shares of Other Corporations.
The Chairperson of the Board, the Chief Executive Officer, or the President of this Corporation, or any other person authorized by the Board, the Chief Executive Officer or the President, is authorized to vote, represent and exercise on behalf of this Corporation all rights incident to any and all shares or voting securities of any other corporation or other person standing in the name of this Corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.
5.7 Authority and Duties of Officers.
All officers of the Corporation shall respectively have such authority and perform such duties in the management of the business of the Corporation as may be provided herein or designated from time to time by the Board and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board.
5.8 Compensation.
The compensation of the officers of the Corporation for their services as such shall be fixed from time to time by or at the direction of the Board. An officer of the Corporation shall not be prevented from receiving compensation by reason of the fact that he or she is also a director of the Corporation.
Article VI—Records
A stock ledger consisting of one or more records in which the names of all of the Corporation’s stockholders of record, the address and number of shares registered in the name of each such stockholder, and all issuances and transfers of stock of the Corporation are recorded in accordance with Section 224 of the DGCL shall be administered by or on behalf of the Corporation. Any records administered by or on behalf of the Corporation in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on,
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or by means of, or be in the form of, any information storage device, or method, or one or more electronic networks or databases (including one or more distributed electronic networks or databases), provided that the records so kept can be converted into clearly legible paper form within a reasonable time and, with respect to the stock ledger, that the records so kept (i) can be used to prepare the list of stockholders specified in Sections 219 and 220 of the DGCL, (ii) record the information specified in Sections 156, 159, 217(a) and 218 of the DGCL, and (iii) record transfers of stock as governed by Article 8 of the Uniform Commercial Code as adopted in the State of Delaware.
Article VII—General Matters
7.1 Execution of Corporate Contracts and Instruments.
The Board, except as otherwise provided in these bylaws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation; such authority may be general or confined to specific instances.
7.2 Stock Certificates.
The shares of the Corporation may be certificated or uncertificated, subject to the sole discretion of the Board and applicable law. Certificates for the shares of stock, if any, shall be in such form as is consistent with the Certificate of Incorporation and applicable law. Every holder of stock represented by a certificate shall be entitled to have a certificate signed by, or in the name of the Corporation by, any two officers authorized to sign stock certificates representing the number of shares registered in certificate form. The Chairperson or Vice Chairperson of the Board, Chief Executive Officer, the President, Vice President, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Corporation shall be specifically authorized to sign stock certificates. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.
The Corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, or upon the books and records of the Corporation in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the Corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon.
7.3 Special Designation of Certificates.
If the Corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or on the back of the certificate that the Corporation shall issue to represent such class or series of stock (or, in the case of uncertificated shares, set forth in a notice provided pursuant to Section 151 of the DGCL); provided, however, that except as otherwise provided in Section 202 of the DGCL, in lieu of the foregoing requirements, there may be set forth on the face of back of the certificate that the Corporation shall issue to represent such class or series of stock (or, in the case of any uncertificated shares, included in the aforementioned notice) a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.
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7.4 Lost Certificates.
Except as provided in this Section 7.4, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the Corporation and cancelled at the same time. The Corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.
7.5 Shares Without Certificates
The Corporation may adopt a system of issuance, recordation and transfer of its shares of stock by electronic or other means not involving the issuance of certificates, provided the use of such system by the Corporation is permitted in accordance with applicable law.
7.6 Construction; Definitions.
Unless the context requires otherwise, the general provisions, rules of construction and definitions in the DGCL shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural and the plural number includes the singular.
7.7 Dividends.
The Board, subject to any restrictions contained in either (i) the DGCL or (ii) the Certificate of Incorporation, may declare and pay dividends upon the shares of its capital stock. Dividends may be paid in cash, in property or in shares of the Corporation’s capital stock.
The Board may set apart out of any of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the Corporation, and meeting contingencies.
7.8 Fiscal Year.
The fiscal year of the Corporation shall be fixed by resolution of the Board and may be changed by the Board.
7.9 Seal.
The Corporation may adopt a corporate seal, which shall be adopted and which may be altered by the Board. The Corporation may use the corporate seal by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.
7.10 Transfer of Stock.
Shares of the Corporation shall be transferable in the manner prescribed by law and in these bylaws, other than as contemplated in any contractual agreement or registration rights agreement, in each case, between the Corporation and one or more of its stockholders. Shares of stock of the Corporation shall be transferred on the books of the Corporation only by the holder of record thereof or by such holder’s attorney duly authorized in writing, upon surrender to the Corporation of the certificate or certificates representing such shares endorsed by the appropriate person or persons (or by delivery of duly executed instructions with respect to uncertificated shares), with such evidence of the authenticity of such endorsement or execution, transfer, authorization and
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other matters as the Corporation may reasonably require, and accompanied by all necessary stock transfer stamps. No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing the names of the persons from and to whom it was transferred.
7.11 Stock Transfer Agreements.
The Corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes or series of stock of the Corporation to restrict the transfer of shares of stock of the Corporation of any one or more classes owned by such stockholders in any manner not prohibited by the DGCL.
7.12 Registered Stockholders.
The Corporation:
(i) shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner; and
(ii) shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Delaware.
7.13 Waiver of Notice.
Whenever notice is required to be given under any provision of the DGCL, the Certificate of Incorporation or these bylaws, a written waiver, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the Certificate of Incorporation or these bylaws.
Article VIII—Notice
8.1 Delivery of Notice; Notice by Electronic Transmission.
Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the Corporation under any provisions of the DGCL, the Certificate of Incorporation, or these bylaws may be given in writing directed to the stockholder’s mailing address (or by electronic transmission directed to the stockholder’s electronic mail address, as applicable) as it appears on the records of the Corporation and shall be given (1) if mailed, when the notice is deposited in the U.S. mail, postage prepaid, (2) if delivered by courier service, the earlier of when the notice is received or left at such stockholder’s address or (3) if given by electronic mail, when directed to such stockholder’s electronic mail address unless the stockholder has notified the Corporation in writing or by electronic transmission of an objection to receiving notice by electronic mail. A notice by electronic mail must include a prominent legend that the communication is an important notice regarding the Corporation.
Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the Corporation under any provision of the DGCL, the Certificate of Incorporation or
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these bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice or electronic transmission to the Corporation. Notwithstanding the provisions of this paragraph, the Corporation may give a notice by electronic mail in accordance with the first paragraph of this section without obtaining the consent required by this paragraph.
Any notice given pursuant to the preceding paragraph shall be deemed given:
| (i) | if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice; |
| (ii) | if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and |
| (iii) | if by any other form of electronic transmission, when directed to the stockholder. |
Notwithstanding the foregoing, a notice may not be given by an electronic transmission from and after the time that (1) the Corporation is unable to deliver by such electronic transmission two (2) consecutive notices given by the Corporation and (2) such inability becomes known to the Secretary or an Assistant Secretary of the Corporation or to the transfer agent, or other person responsible for the giving of notice, provided, however, the inadvertent failure to discover such inability shall not invalidate any meeting or other action.
An affidavit of the Secretary or an Assistant Secretary or of the transfer agent or other agent of the Corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
Article IX—Indemnification
9.1 Indemnification of Directors and Officers.
The Corporation shall indemnify and hold harmless, to the fullest extent permitted by the DGCL as it presently exists or may hereafter be amended, any director or officer of the Corporation who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”) by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or officer of the Corporation or, while serving as a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership (a “covered person”), joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees, judgments, fines ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred by such person in connection with any such Proceeding. Notwithstanding the preceding sentence, except as otherwise provided in Section 9.4, the Corporation shall be required to indemnify a person in connection with a Proceeding initiated by such person only if the Proceeding was authorized in the specific case by the Board.
9.2 Indemnification of Others.
The Corporation shall have the power to indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any employee or agent of the Corporation who was or is made or is threatened to be made a party or is otherwise involved in any Proceeding by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was an employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses reasonably incurred by such person in connection with any such Proceeding.
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9.3 Prepayment of Expenses.
The Corporation shall to the fullest extent not prohibited by applicable law pay the expenses (including attorneys’ fees) incurred by any covered person, and may pay the expenses incurred by any employee or agent of the Corporation, in defending any Proceeding in advance of its final disposition; provided, however, that such payment of expenses in advance of the final disposition of the Proceeding shall be made only upon receipt of an undertaking by the person to repay all amounts advanced if it should be ultimately determined that the person is not entitled to be indemnified under this Article IX or otherwise.
9.4 Determination; Claim.
If a claim for indemnification (following the final disposition of such Proceeding) under this Article IX is not paid in full within sixty (60) days, or a claim for advancement of expenses under this Article IX is not paid in full within thirty (30) days, after a written claim therefor has been received by the Corporation the claimant may thereafter (but not before) file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim to the fullest extent permitted by law. In any such action the Corporation shall have the burden of proving that the claimant was not entitled to the requested indemnification or payment of expenses under applicable law.
9.5 Non-Exclusivity of Rights.
The rights conferred on any person by this Article IX shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, these bylaws, agreement, vote of stockholders or disinterested directors or otherwise.
9.6 Insurance.
The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust enterprise or non-profit entity against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of the DGCL.
9.7 Other Indemnification.
The Corporation’s obligation, if any, to indemnify or advance expenses to any person who was or is serving at its request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, enterprise or non-profit entity shall be reduced by any amount such person may collect as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, enterprise or non-profit enterprise.
9.8 Continuation of Indemnification.
The rights to indemnification and to prepayment of expenses provided by, or granted pursuant to, this Article IX shall continue notwithstanding that the person has ceased to be a director or officer of the Corporation and shall inure to the benefit of the estate, heirs, executors, administrators, legatees and distributees of such person.
9.9 Amendment or Repeal; Interpretation.
The provisions of this Article IX shall constitute a contract between the Corporation, on the one hand, and, on the other hand, each individual who serves or has served as a director or officer of the Corporation (whether
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before or after the adoption of these bylaws), in consideration of such person’s performance of such services, and pursuant to this Article IX the Corporation intends to be legally bound to each such current or former director or officer of the Corporation. With respect to current and former directors and officers of the Corporation, the rights conferred under this Article IX are present contractual rights and such rights are fully vested, and shall be deemed to have vested fully, immediately upon adoption of theses bylaws. With respect to any directors or officers of the Corporation who commence service following adoption of these bylaws, the rights conferred under this provision shall be present contractual rights and such rights shall fully vest, and be deemed to have vested fully, immediately upon such director or officer commencing service as a director or officer of the Corporation. Any repeal or modification of the foregoing provisions of this Article IX shall not adversely affect any right or protection (i) hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification or (ii) under any agreement providing for indemnification or advancement of expenses to an officer or director of the Corporation in effect prior to the time of such repeal or modification.
Any reference to an officer of the Corporation in this Article IX shall be deemed to refer exclusively to the Chief Executive Officer, President, and Secretary, or other officer of the Corporation appointed by (x) the Board pursuant to Article V of these bylaws or (y) an officer to whom the Board has delegated the power to appoint officers pursuant to Article V of these bylaws, and any reference to an officer of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be deemed to refer exclusively to an officer appointed by the board of directors (or equivalent governing body) of such other entity pursuant to the certificate of incorporation and bylaws (or equivalent organizational documents) of such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise. The fact that any person who is or was an employee of the Corporation or an employee of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise has been given or has used the title of “Vice President” or any other title that could be construed to suggest or imply that such person is or may be an officer of the Corporation or of such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall not result in such person being constituted as, or being deemed to be, an officer of the Corporation or of such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise for purposes of this Article IX.
Article X—Amendments
The Board is expressly empowered to adopt, amend or repeal the bylaws of the Corporation. The stockholders also shall have power to adopt, amend or repeal the bylaws of the Corporation; provided, however, that such action by stockholders shall require, in addition to any other vote required by the Certificate of Incorporation or applicable law, the affirmative vote of the holders of at least two-thirds of the voting power of all the then-outstanding shares of voting stock of the Corporation with the power to vote generally in an election of directors, voting together as a single class.
Article XI—Definitions
As used in these bylaws, unless the context otherwise requires, the following terms shall have the following meanings:
An “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, including the use of, or participation in, one or more electronic networks or databases (including one or more distributed electronic networks or databases), that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.
An “electronic mail” means an electronic transmission directed to a unique electronic mail address (which electronic mail shall be deemed to include any files attached thereto and any information hyperlinked to a
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website if such electronic mail includes the contact information of an officer or agent of the Corporation who is available to assist with accessing such files and information).
An “electronic mail address” means a destination, commonly expressed as a string of characters, consisting of a unique user name or mailbox (commonly referred to as the “local part” of the address) and a reference to an internet domain (commonly referred to as the “domain part” of the address), whether or not displayed, to which electronic mail can be sent or delivered.
The term “person” means any individual, general partnership, limited partnership, limited liability company, corporation, trust, business trust, joint stock company, joint venture, unincorporated association, cooperative or association or any other legal entity or organization of whatever nature, and shall include any successor (by merger or otherwise) of such entity.
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LiveWire Group, Inc.
Certificate of Amendment and Restatement of Bylaws
The undersigned hereby certifies that he is the duly elected, qualified, and acting Secretary of LiveWire Group, Inc., a Delaware corporation (the “Corporation”), and that the foregoing bylaws were approved on September 26, 2022, effective as of September 26, 2022 by the Corporation’s board of directors.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 26th day of September, 2022.
| /s/ John Garcia |
| John Garcia |
| President and Secretary |
Exhibit 10.1
INDEMNIFICATION AND ADVANCEMENT AGREEMENT
This Indemnification and Advancement Agreement (“Agreement”) is made as of September 26, 2022 by and between LiveWire Group, Inc., a Delaware corporation (the “Company”), and , [a member of the Board of Directors/an officer] of the Company (“Indemnitee”). This Agreement supersedes and replaces any and all previous Agreements between the Company and Indemnitee covering indemnification and advancement.
RECITALS
WHEREAS, the Board of Directors of the Company (the “Board”) believes that highly competent persons have become more reluctant to serve publicly-held corporations as directors, officers, or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification and advancement of expenses against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation;
WHEREAS, the Board has determined that, in order to attract and retain qualified individuals, the Company will use its best efforts to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities. Although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions. At the same time, directors, officers, and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself. The Amended and Restated Bylaws, dated as of September 26, 2022 (the “Bylaws”), and the Amended and Restated Certificate of Incorporation, dated as of September 26, 2022, (the “Certificate of Incorporation”) of the Company require indemnification of the officers and directors of the Company. Indemnitee may also be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware (the “DGCL”). The Bylaws, Certificate of Incorporation, and the DGCL expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the board of directors, officers and other persons with respect to indemnification and advancement of expenses;
WHEREAS, the uncertainties relating to such insurance, to indemnification, and to advancement of expenses may increase the difficulty of attracting and retaining such persons;
WHEREAS, the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company and its stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;
WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified;
WHEREAS, this Agreement is a supplement to and in furtherance of the Bylaws, Certificate of Incorporation and any resolutions adopted pursuant thereto, as well as any rights of Indemnitee under any directors’ and officers’ liability insurance policy, and is not a substitute therefor, and does not diminish or abrogate any rights of Indemnitee thereunder; and
WHEREAS, Indemnitee does not regard the protection available under the Bylaws, Certificate of Incorporation, DGCL and insurance as adequate in the present circumstances, and may not be willing to serve or continue to serve as an officer or director without adequate additional protection, and the Company desires Indemnitee to serve or continue to serve in such capacity. Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that Indemnitee be so indemnified and be advanced expenses.
NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:
Section 1. Services to the Company. Indemnitee agrees to serve as [a][an] [director][officer][employee] of the Company. Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or any obligation imposed by operation of law). This Agreement does not create any obligation on the Company to continue Indemnitee in such position and is not an employment contract between the Company (or any of its subsidiaries or any Enterprise) and Indemnitee.
Section 2. Definitions. As used in this Agreement:
(a) “Agent” means any person who is authorized by the Company or an Enterprise to act for or represent the interests of the Company or an Enterprise, respectively.
(b) A “Change in Control” occurs upon the earliest to occur after the date of this Agreement of any of the following events:
i. Acquisition of Stock by Third Party. Any Person (as defined below) is or becomes the Beneficial Owner (as defined below), directly or indirectly, of securities of the Company representing fifteen percent (15%) or more of the combined voting power of the Company’s then outstanding securities unless the change in relative beneficial ownership of the Company’s securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securities entitled to vote generally in the election of directors;
ii. Change in Board of Directors. During any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in Sections 2(b)(i), 2(b)(iii) or 2(b)(iv)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the members of the Board;
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iii. Corporate Transactions. The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity;
iv. Liquidation. The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; and
v. Other Events. There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement.
vi. For purposes of this Section 2(b), the following terms have the following meanings:
| 1 | “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time. |
| 2 | “Person” has the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person excludes (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any entity owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company. |
| 3 | “Beneficial Owner” has the meaning given to such term in Rule 13d-3 under the Exchange Act; provided, however, that Beneficial Owner excludes any Person otherwise becoming a Beneficial Owner by reason of the stockholders of the Company approving a merger of the Company with another entity. |
(c) “Corporate Status” describes the status of a person who is or was acting as a director, officer, employee, fiduciary, or Agent of the Company or an Enterprise.
(d) “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.
(e) “Enterprise” means any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other entity for which Indemnitee is or was serving at the request of the Company as a director, officer, employee, or Agent.
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(f) “Expenses” includes all reasonable attorneys’ fees, retainers, court costs, arbitration and mediation costs, transcript costs, fees of experts and other professionals, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, ERISA excise taxes and penalties, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding. Expenses also include (i) Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent, and (ii) for purposes of Section 14(d) only, Expenses incurred by Indemnitee in connection with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement, by litigation or otherwise. The parties agree that for the purposes of any advances of Expenses for which Indemnitee has made written demand to the Company in accordance with this Agreement, all Expenses included in such demand that are certified by affidavit of Indemnitee’s counsel as being reasonable in the good faith judgment of such counsel will be presumed conclusively to be reasonable. Expenses, however, do not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.
(g) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” does not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.
(h) [Reserved].
(i) The term “Proceeding” includes any threatened, pending or completed action, suit, claim, counterclaim, cross claim, arbitration, mediation, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought in the right of the Company or otherwise and whether of a civil, criminal, administrative, legislative or investigative (formal or informal) nature, including any appeal therefrom, in which Indemnitee was, is or will be involved as a party, potential party, non-party witness or otherwise by reason of Indemnitee’s Corporate Status or by reason of any action taken by Indemnitee (or a failure to take action by Indemnitee) or of any action (or failure to act) on Indemnitee’s part while acting pursuant to Indemnitee’s Corporate Status, in each case whether or not serving in such capacity at the time any liability or Expense is incurred for which indemnification, reimbursement, or advances of Expenses can be provided under this Agreement. A Proceeding also includes a situation the Indemnitee believes in good faith may lead to or culminate in the institution of a Proceeding.
(j) [“Sponsor Entities” means AEA Investors LP or any of the respective Affiliates of the foregoing, as applicable.]
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Section 3. Indemnity in Third-Party Proceedings. The Company will indemnify Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 3, the Company will indemnify Indemnitee to the fullest extent permitted by applicable law against all Expenses, judgments, fines and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines and amounts paid in settlement) actually incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and, in the case of a criminal Proceeding had no reasonable cause to believe that Indemnitee’s conduct was unlawful.
Section 4. Indemnity in Proceedings by or in the Right of the Company. The Company will indemnify Indemnitee in accordance with the provisions of this Section 4 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 4, the Company will indemnify Indemnitee to the fullest extent permitted by applicable law against all Expenses actually incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company. The Company will not indemnify Indemnitee for Expenses under this Section 4 related to any claim, issue or matter in a Proceeding for which Indemnitee has been finally adjudged by a court to be liable to the Company, unless, and only to the extent that, the Court of Chancery of the state of Delaware (the “Delaware Court”) or any court in which the Proceeding was brought determines upon application by Indemnitee that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification.
Section 5. Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provisions of this Agreement, to the fullest extent permitted by applicable law, the Company will indemnify Indemnitee against all Expenses actually incurred by Indemnitee in connection with any Proceeding to the extent that Indemnitee is successful, on the merits or otherwise. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company will indemnify Indemnitee against all Expenses actually incurred by Indemnitee or on Indemnitee’s behalf in connection with or related to each successfully resolved claim, issue or matter to the fullest extent permitted by law. For purposes of this Section 5 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, will be deemed to be a successful result as to such claim, issue or matter.
Section 6. Indemnification for Expenses of a Witness. To the fullest extent permitted by applicable law, the Company will indemnify Indemnitee against all Expenses actually incurred by Indemnitee or on Indemnitee’s behalf in connection with any Proceeding to which Indemnitee is not a party but to which Indemnitee is a witness, deponent, interviewee, or otherwise asked to participate.
Section 7. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses, but not, however, for the total amount thereof, the Company will indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.
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Section 8. Additional Indemnification. Notwithstanding any limitation in Sections 3, 4, or 5, the Company will indemnify Indemnitee to the fullest extent permitted by applicable law (including but not limited to, the DGCL and any amendments to or replacements of the DGCL adopted after the date of this Agreement that expand the Company’s ability to indemnify its officers and directors) if Indemnitee is a party to or threatened to be made a party to any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor).
Section 9. Exclusions. Notwithstanding any provision in this Agreement, the Company is not obligated under this Agreement to make any indemnification payment to Indemnitee in connection with any Proceeding:
(a) for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except to the extent provided in Section 16(b) and except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision; or
(b) for (i) an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act (as defined in Section 2(b) hereof) or similar provisions of state statutory law or common law, if Indemnitee is held liable therefor (including pursuant to any settlement arrangement), (ii) any reimbursement of the Company by the Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by the Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act), if Indemnitee is held liable therefor (including pursuant to any settlement arrangement) or (iii) any reimbursement of the Company by Indemnitee of any compensation pursuant to any compensation recoupment or clawback policy adopted by the Board or the compensation committee of the Board, including but not limited to any such policy adopted to comply with stock exchange listing requirements implementing Section 10D of the Exchange Act; or
(c) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Proceeding or part of any Proceeding is to enforce Indemnitee’s rights to indemnification or advances of Expenses under this Agreement, including without limitation, a Proceeding (or any part of any Proceeding) initiated pursuant to Section 14 of this Agreement, the Certificate of Incorporation or the Bylaws, (ii) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (iii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law.
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Section 10. Advances of Expenses.
(a) The Company will advance, to the extent not prohibited by law, the Expenses incurred by Indemnitee in connection with any Proceeding (or any part of any Proceeding) not initiated by Indemnitee or any Proceeding (or any part of any Proceeding) initiated by Indemnitee if (i) the Proceeding or part of any Proceeding is to enforce Indemnitee’s rights to obtain indemnification or advances of Expenses under this Agreement, including a proceeding initiated pursuant to Section 14, the Certificate of Incorporation or Bylaws, or (ii) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation. The Company will advance the Expenses within thirty (30) days after the receipt by the Company of a statement or statements requesting such advances from time to time.
(b) Advances will be unsecured and interest free. Indemnitee undertakes to repay the amounts advanced (without interest) to the extent that it is ultimately determined by a court of competent jurisdiction that Indemnitee is not entitled to be indemnified by the Company, thus Indemnitee qualifies for advances upon the execution of this Agreement and delivery to the Company. No other form of undertaking is required other than the execution of this Agreement. The Company will make advances without regard to Indemnitee’s ability to repay the Expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement.
Section 11. Procedure for Notification of Claim for Indemnification or Advances of Expenses.
(a) Indemnitee will notify the Company in writing of any Proceeding with respect to which Indemnitee intends to seek indemnification or advances of Expenses hereunder as soon as reasonably practicable following the receipt by Indemnitee of written notice thereof. Indemnitee will include in the written notification to the Company a description of the nature of the Proceeding and the facts underlying the Proceeding and provide such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification following the final disposition of such Proceeding. Indemnitee’s failure to notify the Company will not relieve the Company from any obligation it may have to Indemnitee under this Agreement, and any delay in so notifying the Company will not constitute a waiver by Indemnitee of any rights under this Agreement. The Secretary of the Company will, promptly upon receipt of such a request for indemnification or advancement, advise the Board in writing that Indemnitee has requested indemnification or advancement.
(b) The Company will be entitled to participate in the Proceeding at its own expense.
Section 12. Procedure Upon Application for Indemnification.
(a) Unless a Change in Control has occurred, the determination of Indemnitee’s entitlement to indemnification will be made:
i. by a majority vote of the Disinterested Directors, even though less than a quorum of the Board;
ii. by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum of the Board;
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iii. if there are no such Disinterested Directors or, if such Disinterested Directors so direct, by written opinion provided by Independent Counsel selected by the Board; or
iv. if so directed by the Board, by the stockholders of the Company.
(b) If a Change in Control has occurred, the determination of Indemnitee’s entitlement to indemnification will be made by written opinion provided by Independent Counsel selected by Indemnitee (unless Indemnitee requests such selection be made by the Board).
(c) The party selecting Independent Counsel pursuant to subsection (a)(iii) or (b) of this Section 12 will provide written notice of the selection to the other party. The notified party may, within ten (10) days after receiving written notice of the selection of Independent Counsel, deliver to the selecting party a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 2 of this Agreement, and the objection will set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected will act as Independent Counsel. If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or the Delaware Court has determined that such objection is without merit. If, within thirty (30) days after the later of submission by Indemnitee of a written request for indemnification pursuant to Section 11(a) hereof and the final disposition of the Proceeding, Independent Counsel has not been selected or, if selected, any objection to has not been resolved, either the Company or Indemnitee may petition the Delaware Court for resolution of any objection made by the Company or Indemnitee to the other’s selection or Independent Counsel and/or for the appointment as Independent Counsel of a person selected by such court or by such other person as such court designates. Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 14(a) of this Agreement, Independent Counsel will be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).
(d) Indemnitee will cooperate with the person, persons or entity making the determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. The Company will advance and pay any Expenses incurred by Indemnitee in so cooperating with the person, persons or entity making the indemnification determination irrespective of the determination as to Indemnitee’s entitlement to indemnification and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom. The Company promptly will advise Indemnitee in writing of the determination that Indemnitee is or is not entitled to indemnification, including a description of any reason or basis for which indemnification has been denied and providing a copy of any written opinion provided to the Board by Independent Counsel.
(e) If it is determined that Indemnitee is entitled to indemnification, the Company will make payment to Indemnitee within thirty (30) days after such determination.
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Section 13. Presumptions and Effect of Certain Proceedings.
(a) In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination will, to the fullest extent not prohibited by law, presume Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 11(a) of this Agreement, and the Company will, to the fullest extent not prohibited by law, have the burden of proof and burden of persuasion to overcome that presumption by clear and convincing evidence. Neither the failure of the Company (including by its directors or Independent Counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or Independent Counsel) that Indemnitee has not met such applicable standard of conduct, will be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.
(b) If the determination of the Indemnitee’s entitlement to indemnification has not been made pursuant to Section 12 within sixty (60) days after the later of (i) receipt by the Company of Indemnitee’s request for indemnification pursuant to Section 11(a) and (ii) the final disposition of the Proceeding for which Indemnitee requested Indemnification (the “Determination Period”), the requisite determination of entitlement to indemnification will, to the fullest extent not prohibited by law, be deemed to have been made and Indemnitee will be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law. The Determination Period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto; and provided, further, the Determination Period may be extended an additional fifteen (15) days if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 12(a)(iv) of this Agreement.
(c) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, will not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.
(d) For purposes of any determination of good faith, Indemnitee will be deemed to have acted in good faith if Indemnitee acted based on the records or books of account of the Company, its subsidiaries, or an Enterprise, including financial statements, or on information supplied to Indemnitee by the directors or officers of the Company, its subsidiaries, or an Enterprise in the course of their duties, or on the advice of legal counsel for the Company, its subsidiaries, or an Enterprise or on information or records given or reports made to the Company or an Enterprise by an independent certified public accountant or by an appraiser, financial advisor or other expert selected with reasonable care by or on behalf of the Company, its subsidiaries, or an Enterprise. Further, Indemnitee will be deemed to have acted in a manner “not opposed to the best interests of the Company,” as referred to in this Agreement if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the best interests of the participants and
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beneficiaries of an employee benefit plan. The provisions of this Section 13(d) are not exclusive and do not limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.
(e) The knowledge and/or actions, or failure to act, of any director, officer, trustee, partner, managing member, fiduciary, agent or employee of the Enterprise may not be imputed to Indemnitee for purposes of determining Indemnitee’s right to indemnification under this Agreement.
Section 14. Remedies of Indemnitee.
(a) Indemnitee may commence litigation against the Company in the Delaware Court to obtain indemnification or advances of Expenses provided by this Agreement in the event that (i) a determination is made pursuant to Section 12 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) the Company does not advance Expenses pursuant to Section 10 of this Agreement, (iii) the determination of entitlement to indemnification is not made pursuant to Section 12 of this Agreement within the Determination Period, (iv) the Company does not indemnify Indemnitee pursuant to Section 5 or 6 or the second to last sentence of Section 12(d) of this Agreement within thirty (30) days after receipt by the Company of a written request therefor, (v) the Company does not indemnify Indemnitee pursuant to Section 3, 4, 7, or 8 of this Agreement within thirty (30) days after a determination has been made that Indemnitee is entitled to indemnification, or (vi) in the event that the Company or any other person takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or Proceeding designed to deny, or to recover from, the Indemnitee the benefits provided or intended to be provided to the Indemnitee hereunder. Alternatively, Indemnitee, at Indemnitee’s option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Indemnitee must commence such Proceeding seeking an adjudication or an award in arbitration within one hundred and eighty (180) days following the date on which Indemnitee first has the right to commence such Proceeding pursuant to this Section 14(a); provided, however, that the foregoing clause does not apply in respect of a Proceeding brought by Indemnitee to enforce Indemnitee’s rights under Section 5 of this Agreement. The Company will not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.
(b) If a determination is made pursuant to Section 12 of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 14 will be conducted in all respects as a de novo trial, or arbitration, on the merits and Indemnitee may not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced pursuant to this Section 14, the Company will have the burden of proving Indemnitee is not entitled to indemnification or advances of Expenses, as the case may be, and will not introduce evidence of the determination made pursuant to Section 12 of this Agreement.
(c) If a determination is made pursuant to Section 12 of this Agreement that Indemnitee is entitled to indemnification, the Company will be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 14, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.
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(d) The Company is, to the fullest extent not prohibited by law, precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 14 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and will stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement.
(e) It is the intent of the Company that, to the fullest extent permitted by law, the Indemnitee not be required to incur legal fees or other Expenses associated with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement by litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Indemnitee hereunder. The Company, to the fullest extent permitted by law, will (within thirty (30) days after receipt by the Company of a written request therefor) advance to Indemnitee such Expenses which are incurred by Indemnitee in connection with any Proceeding concerning this Agreement, Indemnitee’s right to indemnification or advances of Expenses under this Agreement, or concerning any directors’ and officers’ liability insurance policies maintained by the Company, and will indemnify and advance Expenses incurred by Indemnitee in connection with such Proceeding unless, and only to the extent that, the court determines that each of the Indemnitee’s claims in such action were made in bad faith or were frivolous or are prohibited by law.
Section 15. [Reserved].
Section 16. Non-exclusivity; Survival of Rights; Insurance; Subrogation.
(a) The indemnification and advances of Expenses provided by this Agreement are not exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation, the Bylaws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. The indemnification and advances of Expenses provided by this Agreement may not be limited or restricted by any amendment, alteration or repeal of this Agreement in any way with respect to any action taken or omitted by Indemnitee in Indemnitee’s Corporate Status occurring prior to any amendment, alteration or repeal of this Agreement. To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advances of Expenses than would be afforded currently under the Bylaws, Certificate of Incorporation, or this Agreement, it is the intent of the parties hereto that Indemnitee enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy is cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, will not prevent the concurrent assertion or employment of any other right or remedy.
(b) The Company hereby acknowledges that Indemnitee may have certain rights to indemnification, advances of Expenses and/or insurance provided by one or more other Persons with whom or which Indemnitee may be associated [(including, without limitation, any Sponsor Entities)]. The relationship between the Company and such other Persons, other than an Enterprise, with respect to the Indemnitee’s rights to indemnification, advances of Expenses, and insurance is described by this subsection, subject to the provisions of subsection (d) of this Section 16 with respect to a Proceeding concerning Indemnitee’s Corporate Status with an Enterprise.
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i. The Company hereby acknowledges and agrees:
1) the Company is the indemnitor of first resort with respect to any request for indemnification or advances of Expenses made pursuant to this Agreement concerning any Proceeding;
2) the Company is primarily liable for all indemnification and advances of Expenses obligations for any Proceeding, whether created by law, the Bylaws, the Certificate of Incorporation, contract (including this Agreement) or otherwise;
3) any obligation of any other Persons with whom or which Indemnitee may be associated [(including, without limitation, any Sponsor Entities)] to indemnify Indemnitee and/or advance Expenses to Indemnitee in respect of any proceeding are secondary to the obligations of the Company’s obligations;
4) the Company will indemnify Indemnitee and advance Expenses to Indemnitee hereunder to the fullest extent provided herein without regard to any rights Indemnitee may have against any other Person with whom or which Indemnitee may be associated [(including, without limitation, any Sponsor Entities)] or insurer of any such Person; and
ii. the Company irrevocably waives, relinquishes and releases (A) any other Person with whom or which Indemnitee may be associated [(including, without limitation, any Sponsor Entities)] from any claim of contribution, subrogation, reimbursement, exoneration or indemnification, or any other recovery of any kind in respect of amounts paid by the Company to Indemnitee pursuant to this Agreement and (B) any right to participate in any claim or remedy of Indemnitee against any Person [(including, without limitation, any Sponsor Entities)], whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from any Person [(including, without limitation, any Sponsor Entities)], directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right.
iii. In the event any other Person with whom or which Indemnitee may be associated [(including, without limitation, any Sponsor Entities)] or their insurers advances or extinguishes any liability or loss for Indemnitee, the payor has a right of subrogation against the Company or its insurers for all amounts so paid which would otherwise be payable by the Company or its insurers under this Agreement. In no event will payment by any other Person with whom or which Indemnitee may be associated [(including, without limitation, any Sponsor Entities)] or their insurers affect the obligations of the Company hereunder or shift primary liability for the Company’s obligation to indemnify or advance of Expenses to any other Person with whom or which Indemnitee may be associated [(including, without limitation, any Sponsor Entities)].
iv. Any indemnification or advances of Expenses provided by any other Person with whom or which Indemnitee may be associated [(including, without limitation, any Sponsor Entities)] is specifically in excess over the Company’s obligation to indemnify and advance Expenses or any valid and collectible insurance (including but not limited to any malpractice insurance or professional errors and omissions insurance) provided by the Company.
(c) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or agents of the Company, the Company will obtain a policy or policies covering Indemnitee to the maximum extent of the
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coverage available for any such director, officer, employee or agent under such policy or policies, including coverage in the event the Company does not or cannot, for any reason, indemnify or advance Expenses to Indemnitee as required by this Agreement. If, at the time of the receipt of a notice of a claim pursuant to this Agreement, the Company has director and officer liability insurance in effect, the Company will give prompt notice of such claim or of the commencement of a Proceeding, as the case may be, to the insurers in accordance with the procedures set forth in the respective policies. The Company will thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies. Indemnitee agrees to assist the Company’s efforts to cause the insurers to pay such amounts and will comply with the terms of such policies, including selection of an approved panel of counsel, if required.
(d) Notwithstanding anything in this Section 16 to the contrary, the Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee for any Proceeding concerning Indemnitee’s Corporate Status with an Enterprise will be reduced by any amount Indemnitee has actually received as indemnification or advances from such Enterprise. Notwithstanding anything in this Section 16 to the contrary, the Company and Indemnitee intend that any such Enterprise (and its insurers) be the indemnitor of first resort with respect to indemnification and advances of Expenses for any Proceeding related to or arising from Indemnitee’s Corporate Status with such Enterprise. Notwithstanding anything in this Section 16 to the contrary, the Company’s obligation to indemnify and advance Expenses to Indemnitee is secondary to the obligations the Enterprise or its insurers owe to Indemnitee. Indemnitee agrees to take all reasonably necessary and desirable action to obtain from an Enterprise indemnification and advances of Expenses for any Proceeding related to or arising from Indemnitee’s Corporate Status with such Enterprise.
(e) Notwithstanding anything in this Section 16 to the contrary, in the event of any payment made by the Company under this Agreement, the Company will be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee from any Enterprise or insurance carrier. Indemnitee will execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.
Section 17. Duration of Agreement. This Agreement continues until and terminates upon the later of: (a) ten (10) years after the date that Indemnitee ceases to have a Corporate Status or (b) one (1) year after the final termination of any Proceeding then pending in respect of which Indemnitee is granted rights of indemnification or advances of Expenses hereunder and of any Proceeding commenced by Indemnitee pursuant to Section 14 of this Agreement relating thereto. The indemnification and advances of Expenses rights provided by or granted pursuant to this Agreement are binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), continue as to an Indemnitee who has ceased to be a director, officer, employee or agent of the Company or of any other Enterprise, and inure to the benefit of Indemnitee and Indemnitee’s spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.
Section 18. Severability. If any provision or provisions of this Agreement is held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each
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portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) will not in any way be affected or impaired thereby and remain enforceable to the fullest extent permitted by law; (b) such provision or provisions will be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) will be construed so as to give effect to the intent manifested thereby.
Section 19. Interpretation. Any ambiguity in the terms of this Agreement will be resolved in favor of Indemnitee and in a manner to provide the maximum indemnification and advances of Expenses permitted by law. The Company and Indemnitee intend that this Agreement provide to the fullest extent permitted by law for indemnification and advancement in excess of that expressly provided, without limitation, by the Certificate of Incorporation, the Bylaws, vote of the Company stockholders or disinterested directors, or applicable law.
Section 20. Enforcement.
(a) The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director or officer of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving or continuing to serve as a director or officer of the Company.
(b) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof; provided, however, that this Agreement is a supplement to and in furtherance of the Certificate of Incorporation, the Bylaws, any directors’ and officers’ insurance maintained by the Company and applicable law, and is not a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.
Section 21. Modification and Waiver. No supplement, modification or amendment of this Agreement is binding unless executed in writing by the parties hereto. No waiver of any of the provisions of this Agreement will be deemed or constitutes a waiver of any other provisions of this Agreement nor will any waiver constitute a continuing waiver.
Section 22. Notice by Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advances of Expenses covered hereunder. The failure of Indemnitee to so notify the Company does not relieve the Company of any obligation which it may have to the Indemnitee under this Agreement or otherwise.
Section 23. Notices. All notices, requests, demands and other communications under this Agreement will be in writing and will be deemed to have been duly given if (a) delivered by hand to the other party, (b) sent by reputable overnight courier to the other party or (c) sent by facsimile transmission or electronic mail, with receipt of oral confirmation that such communication has been received:
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(a) If to Indemnitee, at the address indicated on the signature page of this Agreement, or such other address as Indemnitee provides to the Company.
(b) If to the Company to:
Name: LiveWire Group, Inc.
Address: 3700 West Juneau Avenue, Milwaukee, WI
53208
Attention: Chief Legal Officer
Email: amanda.parker@livewire.com
or to any other address as may have been furnished to Indemnitee by the Company.
Section 24. Contribution. To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, will contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).
Section 25. Applicable Law and Consent to Jurisdiction. This Agreement and the legal relations among the parties are governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. Except with respect to any arbitration commenced by Indemnitee pursuant to Section 14(a) of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or Proceeding arising out of or in connection with this Agreement may be brought only in the Delaware Court and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or Proceeding arising out of or in connection with this Agreement, (iii) waive any objection to the laying of venue of any such action or Proceeding in the Delaware Court, and (iv) waive, and agree not to plead or to make, any claim that any such action or Proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.
Section 26. Identical Counterparts. This Agreement may be executed in one or more counterparts, each of which will for all purposes be deemed to be an original but all of which together constitutes one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.
Section 27. Headings. The headings of this Agreement are inserted for convenience only and do not constitute part of this Agreement or affect the construction thereof.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year first above written.
| COMPANY: | INDEMNITEE: | |||||
| LIVEWIRE GROUP, INC. | ||||||
| By: | ||||||
| Name: | Name: | |||||
| Office: | Address: | |||||
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Exhibit 10.3
Execution Version
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of September 26, 2022, is made and entered into by and among LiveWire Group, Inc. (formerly known as LW EV Holdings, Inc.), a Delaware corporation (“HoldCo”), AEA-Bridges Impact Sponsor LLC, a Cayman Islands limited liability company (the “Sponsor”), the equityholder of LiveWire EV LLC, a Delaware limited liability company (the “Target”), set forth on Schedule I hereto (such equityholder, the “Target Holder”) and certain shareholders of AEA-Bridges Impact Corp., a Cayman Islands exempted company (“SPAC”), set forth on Schedule II hereto (such shareholders, the “SPAC Holders” and, collectively with the Sponsor, the Target Holder and any person or entity who hereafter becomes a party to this Agreement pursuant to Section 6.3 or Section 6.10 of this Agreement, the “Holders” and each, a “Holder”). Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Business Combination Agreement (as defined below).
RECITALS
WHEREAS, HoldCo has entered into a Business Combination Agreement, dated as of December 12, 2021 (as it may be amended, supplemented or otherwise modified from time to time, the “Business Combination Agreement”), by and among HoldCo, SPAC, LW EV Merger Sub, Inc., a Delaware corporation and a direct wholly owned subsidiary of HoldCo that was formed for the purposes of consummating the transactions contemplated by the Business Combination Agreement (“Merger Sub”), Harley-Davidson, Inc., a Wisconsin corporation (“HD”), and Target, pursuant to which, among other things, (a) HoldCo will become the sole stockholder of SPAC as a result of SPAC merging with Merger Sub, with SPAC surviving such merger, (b) HD will contribute, or cause to be contributed, Target to HoldCo, (c) HoldCo will contribute Target to SPAC and (d) SPAC will become the sole equityholder and managing member of Target.
(a) Merger Sub, will merge with and into SPAC (the “Merger”), with SPAC continuing as the surviving corporation as a direct, wholly owned subsidiary of HoldCo, (the “Business Combination”) and (b) SPAC will become the sole equityholder and managing member of Target.
WHEREAS, on or about the date hereof, pursuant to the Business Combination Agreement, the Holders received certain of HoldCo’s Common Stock, par value $0.0001 per share (the “HoldCo Shares”);
WHEREAS, prior to the consummation of the Business Combination, the SPAC redomesticated as a Delaware corporation (the “Redomesticated SPAC”), and as a result of such redomestication, immediately prior to the consummation of the Business Combination, the Sponsor and the SPAC Holders owned, in the aggregate, (i) 10,000,000 shares of Class A Common Stock, par value $0.01 per share of the Redomesticated SPAC (the “Sponsor Shares”) and (ii) 10,500,000 warrants to purchase shares of Class A Common Stock of the Redomesticated SPAC (the “Sponsor Warrants”);
WHEREAS, in connection with the Business Combination, the Sponsor Shares were exchanged for a certain number of HoldCo Shares;
WHEREAS, in connection with the Business Combination, the Sponsor Warrants were converted pursuant to the terms of the warrant agreement governing the Sponsor Warrants into the right to purchase HoldCo Shares (the “Company Warrants”), subject to substantially the same contractual terms and conditions governing the Sponsor Warrants;
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WHEREAS, SPAC, the Sponsor, Mr. John Garcia, Mr. John Replogle and Mr. George Serafeim are parties to that certain Registration and Shareholder Rights Agreement, dated as of October 1, 2020 (the “Prior Agreement”);
WHEREAS, in contemplation of the execution and delivery of this Agreement, the parties to the Prior Agreement desire to terminate the Prior Agreement effective as of the date of this Agreement; and
WHEREAS, the parties hereto desire to enter into this Agreement, pursuant to which HoldCo shall grant the Holders certain registration rights with respect to certain securities of HoldCo, as set forth in this Agreement.
NOW, THEREFORE, in consideration of the representations, covenants and agreements contained herein, and certain other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. The terms defined in this Article I shall, for all purposes of this Agreement, have the respective meanings set forth below:
“Additional Holder” shall have the meaning given in Section 6.10.
“Additional Holder HoldCo Shares” shall have the meaning given in Section 6.10.
“Adverse Disclosure” shall mean any public disclosure of material non-public information, which disclosure, in the good faith judgment of the Board, Chief Executive Officer of HoldCo or the principal financial officer of HoldCo, after consultation with counsel to HoldCo, (a) would be required to be made in any Registration Statement or Prospectus in order for the applicable Registration Statement or Prospectus not to contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein (in the case of any prospectus and any preliminary prospectus, in the light of the circumstances under which they were made) not misleading, (b) would not be required to be made at such time if the Registration Statement or Prospectus were not being filed, declared effective or used, as the case may be and (c) HoldCo has a bona fide business purpose for not making such information public.
“Agreement” shall have the meaning given in the Preamble hereto.
“Applicable Law” means any statute, law, act, code, ordinance, rule, treaty, directive, regulation or oder, in each case, of any Governmental Authority.
“Block Trade” shall have the meaning given in Section 2.3.1.
“Board” shall mean the Board of Directors of HoldCo.
“Business Combination” shall have the meaning given in the recitals to this Agreement.
“Business Combination Agreement” shall have the meaning given in the recitals to this Agreement.
“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in Milwaukee, Wisconsin or New York, New York are authorized or required by Applicable Law to close.
“Closing” shall have the meaning given in the Business Combination Agreement.
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“Closing Date” shall have the meaning given in the Business Combination Agreement.
“Commission” shall mean the Securities and Exchange Commission.
“Demanding Holder” shall have the meaning given in Section 2.1.4.
“EDGAR” shall have the meaning given in Section 3.1.3.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect at the time.
“Form S-1 Shelf” shall have the meaning given in Section 2.1.1.
“Form S-3 Shelf” shall have the meaning given in Section 2.1.1.
“Governmental Authority” shall mean any federal, state, provincial, municipal, local or foreign government, governmental authority, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, court or tribunal, including any data protection regulators or supervisory authorities, or any arbitral body (public or private).
“HoldCo” shall have the meaning given in the Preamble hereto and includes HoldCo’s successors by recapitalization, merger, consolidation, spin-off, reorganization or similar transaction.
“HoldCo Shares” shall have the meaning given in the recitals to this Agreement.
“Holder Information” shall have the meaning given in Section 4.1.2.
“Holders” shall have the meaning given in the Preamble hereto, for so long as such person or entity holds any Registrable Securities.
“Joinder” shall have the meaning given in Section 6.10.
“Lock-up” shall have the meaning given in Section 5.1.
“Lock-up Parties” shall mean, as applicable, the Sponsor, the Target Holder, Mr. Garcia, Mr. Replogle and Mr. Serafeim and their respective Permitted Transferees.
“Lock-up Period” shall mean:
(A) with respect to the Target Holder, the period beginning on the Closing Date and ending on the earliest of (i) the date that is seven years after the Closing Date, (ii) when the volume weighted average price of HoldCo Shares is greater than or equal to $18.00 for any 20 trading days within a 30-trading day period commencing at least 18 months after the Closing Date and (iii) when written notice of termination is given by LiveWire (or its permitted assigns or successor), pursuant to Section 13.3 to that certain Contract Manufacturing Agreement, dated as of the date hereof, by and between HD and Target;
(B) with respect to the Sponsor, Mr. Replogle and Mr. Serafeim in respect of Lock-up Shares, the period beginning on the Closing Date and ending on the earliest of (i) 365 days after the Closing Date and (ii) if the volume weighted average price of a HoldCo Share equals or exceeds $18.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period; and
(C) with respect to Mr. Garcia in respect of Lock-up Shares, the period beginning on the Closing Date and ending on the earliest of (i) eighteen months after the Closing Date and (ii) if the volume weighted average price of a HoldCo Share equals or exceeds $18.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period.
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“Lock-up Shares” shall mean HoldCo Shares and any other equity securities convertible into or exercisable or exchangeable for HoldCo Shares (including any Company Warrants) held by the Sponsor, the Target Holder, Mr. Garcia, Mr. Replogle and Mr. Serafeim immediately following the Closing (other than HoldCo Shares and any other equity securities convertible into or exercisable or exchangeable for HoldCo Shares acquired pursuant to open market purchases subsequent to the Closing).
“Maximum Number of Securities” shall have the meaning given in Section 2.1.5.
“Merger” shall have the meaning given in the Recitals hereto.
“Merger Sub” shall have the meaning given in the Recitals hereto.
“Minimum Takedown Threshold” shall have the meaning given in Section 2.1.4.
“Misstatement” shall mean an untrue statement of a material fact or an omission to state a material fact required to be stated in a Registration Statement or Prospectus or necessary to make the statements in a Registration Statement or Prospectus (in the case of a Prospectus, in light of the circumstances under which they were made) not misleading.
“Other Coordinated Offering” shall have the meaning given in Section 2.3.1.
“own” or “ownership” (and derivatives of such terms) shall mean (i) ownership of record and (ii) “beneficial ownership” as defined in Rule 13d-3 or Rule 16a-1(a)(2) promulgated by the Commission under the Exchange Act (but without regard to any requirement for a security or other interest to be registered under Section 12 of the Securities Act of 1933, as amended).
“Permitted Transferees” shall mean (a) with respect to the Sponsor, Target Holder and Mr. Garcia and their respective Permitted Transferees, (i) prior to the expiration of the Lock-up Period, any person or entity to whom such Holder is permitted to transfer such Registrable Securities prior to the expiration of the Lock-up Period pursuant to Section 5.2 and (ii) after the expiration of the Lock-up Period, any person or entity to whom such Holder is permitted to transfer such Registrable Securities, subject to and in accordance with any applicable agreement between such Holder and/or their respective Permitted Transferees and HoldCo and any transferee thereafter, and (b) with respect to all other Holders and their respective Permitted Transferees, any person or entity to whom a Holder of Registrable Securities is permitted to transfer such Registrable Securities, including prior to the expiration of any lock-up period applicable to such Registrable Securities, subject to and in accordance with any applicable agreement between such Holder and/or their respective Permitted Transferees and HoldCo and any transferee thereafter.
“Person” means any individual, firm, corporation, partnership, limited liability company, incorporated or unincorporated association, joint venture, joint stock company, Governmental Authority or instrumentality or other entity of any kind.
“Piggyback Registration” shall have the meaning given in Section 2.2.1.
“Prior Agreement” shall have the meaning given in the recitals to this Agreement.
“Prospectus” shall mean the prospectus included in any Registration Statement, as supplemented by any and all prospectus supplements and as amended by any and all post-effective amendments and including all material incorporated by reference in such prospectus.
“Registrable Security” shall mean (a) any issued and outstanding HoldCo Shares and any other equity security (including warrants of HoldCo and any other warrants to purchase HoldCo Shares and HoldCo Shares
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issued or issuable upon the exercise or conversion of any other equity security) of HoldCo held by a Holder immediately following the Closing (including any securities distributable pursuant to the Business Combination Agreement), (b) any Additional Holder HoldCo Shares, and (c) any other equity security of HoldCo or any of its subsidiaries issued or issuable with respect to any securities referenced in clause (a), (b) or (c) above by way of a stock dividend or stock split or in connection with a recapitalization, merger, consolidation, spin-off, reorganization or similar transaction; provided, however, that, as to any particular Registrable Security, such securities shall cease to be Registrable Securities upon the earliest to occur of: (A) a Registration Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been sold, transferred, disposed of or exchanged in accordance with such Registration Statement by the applicable Holder; (B) (i) such securities shall have been otherwise transferred (other than to a Permitted Transferee), (ii) new certificates for such securities not bearing (or book entry positions not subject to) a legend restricting further transfer shall have been delivered by HoldCo and (iii) subsequent public distribution of such securities shall not require registration under the Securities Act; (C) such securities shall have ceased to be outstanding; (D) such securities may be sold without registration pursuant to Rule 144 or any successor rule promulgated under the Securities Act (but with no volume or other restrictions or limitations including as to manner or timing of sale); (E) such securities have been sold without registration pursuant to Section 4(a)(1) of the Securities Act or Rule 145 promulgated under the Securities Act or any successor rules promulgated under the Securities Act and (F) such securities have been sold to, or through, a broker, dealer or underwriter in a public distribution or other public securities transaction.
“Registration” shall mean a registration, including any related Shelf Takedown, effected by preparing and filing a registration statement, Prospectus or similar document in compliance with the requirements of the Securities Act, and the applicable rules and regulations promulgated thereunder, and such registration statement becoming effective.
“Registration Expenses” shall mean the documented, out-of-pocket expenses of a Registration, including, without limitation, the following:
(A) all registration and filing fees (including fees with respect to filings required to be made with the Financial Industry Regulatory Authority, Inc.) and any national securities exchange on which HoldCo Shares are then listed;
(B) fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of outside counsel for the Underwriters in connection with blue sky qualifications of Registrable Securities);
(C) printing, messenger, telephone, delivery and road show or other marketing expenses;
(D) reasonable fees and disbursements of counsel for HoldCo;
(E) reasonable fees and disbursements of the independent registered public accounting firm of HoldCo incurred specifically in connection with such Registration; and
(F) in an Underwritten Offering or Other Coordinated Offering, reasonable fees and expenses of one (1) legal counsel selected by the majority-in-interest of the Demanding Holders.
“Registration Statement” shall mean any registration statement that covers the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus included in such registration statement, amendments (including post-effective amendments) and supplements to such registration statement, and all exhibits to and all material incorporated by reference in such registration statement.
“Requesting Holders” shall have the meaning given in Section 2.1.5.
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“Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect at the time.
“Shelf” shall have the meaning given in Section 2.1.1.
“Shelf Registration” shall mean a registration of securities pursuant to a registration statement filed with the Commission in accordance with and pursuant to Rule 415 promulgated under the Securities Act (or any successor rule then in effect).
“Shelf Takedown” shall mean an Underwritten Shelf Takedown or any proposed transfer or sale using a Registration Statement, including a Piggyback Registration.
“SPAC” shall have the meaning given in the Preamble hereto.
“SPAC Holders” shall have the meaning given in the Preamble hereto.
“Sponsor” shall have the meaning given in the Preamble hereto.
“Sponsor Member” shall mean a member of Sponsor who becomes party to this Agreement as a Permitted Transferee of Sponsor.
“Sponsor Shares” shall have the meaning given in the recitals to this Agreement.
“Sponsor Warrants” shall have the meaning given in the recitals to this Agreement.
“Subsequent Shelf Registration Statement” shall have the meaning given in Section 2.1.2.
“Target” shall have the meaning given in the Preamble hereto.
“Target Holder” shall have the meaning given in the Preamble hereto.
“Transfer” shall mean directly or indirectly, sell, transfer, assign, pledge, encumber, hypothecate or similarly dispose of, either voluntarily or involuntarily, or to enter into any contract, option or other arrangement or understanding with respect to the sale, transfer, assignment, pledge, encumbrance, hypothecation or similar disposition of, any interest owned by a Person or any interest (including a beneficial interest or an economic entitlement) in, or the ownership, control or possession of, any interest owned by a Person.
“Underwriter” shall mean a securities dealer who purchases any Registrable Securities as principal in an Underwritten Offering and not as part of such dealer’s market-making activities.
“Underwritten Offering” shall mean a Registration in which securities of HoldCo are sold to an Underwriter in a firm commitment underwriting for distribution to the public.
“Underwritten Shelf Takedown” shall have the meaning given in Section 2.1.4.
“Withdrawal Notice” shall have the meaning given in Section 2.1.6.
ARTICLE II
REGISTRATIONS AND OFFERINGS
2.1 Shelf Registration.
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2.1.1 Filing. HoldCo shall use commercially reasonable efforts to submit or file with the Commission a Registration Statement for a Shelf Registration on Form S-1 (the “Form S-1 Shelf”) within thirty (30) calendar days after the Closing Date, covering the public resale of all the Registrable Securities (determined as of two (2) business days prior to such submission or filing) on a delayed or continuous basis and shall use its commercially reasonable efforts to have such Shelf declared effective as soon as practicable after the filing thereof, but no later than the earlier of (a) the sixtieth (60th) calendar day after the filing date thereof (or the ninetieth (90th) calendar day following the filing date thereof if the Commission notifies HoldCo that it will “review” the Registration Statement) and (b) the fifth (5th) business day after the date HoldCo is notified (orally or in writing whichever is earlier) by the Commission that the Registration Statement will not be “reviewed” or will not be subject to further review. HoldCo shall use commercially reasonable efforts to convert the Form S-1 (and any subsequent Registration Statement) to a shelf registration statement on Form S-3 (a “Form S-3 Shelf”, and together with the Form S-1 and any subsequent Registration Statement, the “Shelf”) as promptly as practicable after HoldCo is eligible to use a Form S-3 Shelf. HoldCo shall use commercially reasonable efforts to cause a Shelf to remain effective, and to be supplemented and amended to the extent necessary to ensure that such Shelf is continuously effective, available for use to permit the Holders named therein to sell their Registrable Securities included therein and in compliance with the provisions of the Securities Act until such time as there are no longer any Registrable Securities. HoldCo’s obligation under this Section 2.1.1, shall, for the avoidance of doubt, be subject to Section 3.4.
2.1.2 Subsequent Shelf Registration. If any Shelf ceases to be effective under the Securities Act for any reason at any time while Registrable Securities are still outstanding, HoldCo shall, subject to Section 3.4, use its commercially reasonable efforts to as promptly as is reasonably practicable cause such Shelf to again become effective and to comply with the provisions of the Securities Act with respect to the disposition of all the Registrable Securities (including using its commercially reasonable efforts to obtain the prompt withdrawal of any order suspending the effectiveness of such Shelf), and shall use its commercially reasonable efforts to as promptly as is reasonably practicable amend such Shelf in a manner reasonably expected to result in the withdrawal of any order suspending the effectiveness of such Shelf or file an additional registration statement as a Shelf Registration (a “Subsequent Shelf Registration Statement”) registering the resale of all Registrable Securities (determined as of two (2) Business Days prior to such filing). If a Subsequent Shelf Registration Statement is filed, HoldCo shall use its commercially reasonable efforts to (i) cause such Subsequent Shelf Registration Statement to become effective under the Securities Act as promptly as is reasonably practicable after the filing thereof (it being agreed that the Subsequent Shelf Registration Statement shall be an automatic shelf registration statement (as defined in Rule 405 promulgated under the Securities Act) if HoldCo is a well-known seasoned issuer at the time of filing (as defined in Rule 405 promulgated under the Securities Act) at the most recent applicable eligibility determination date) and (ii) keep such Subsequent Shelf Registration Statement continuously effective, available for use to permit the Holders named therein to sell their Registrable Securities included therein and in compliance with the provisions of the Securities Act until such time as there are no longer any Registrable Securities. Any such Subsequent Shelf Registration Statement shall be on Form S-3 to the extent that HoldCo is eligible to use such form at the time of filing. Otherwise, such Subsequent Shelf Registration Statement shall be on another appropriate form. HoldCo’s obligation under this Section 2.1.2, shall, for the avoidance of doubt, be subject to Section 3.4.
2.1.3 Additional Registrable Securities. Subject to Section 3.4, in the event that any Holder holds Registrable Securities that are not registered for resale on a delayed or continuous basis, HoldCo, upon written request of Sponsor, any SPAC Holder or any Target Holder, shall promptly use its commercially reasonable efforts to cause the resale of such Registrable Securities to be covered by either, at HoldCo’s option, any then available Shelf (including by means of a post-effective amendment) or by filing a Subsequent Shelf Registration Statement and cause the same to become effective as soon as practicable after such filing and such Shelf or Subsequent Shelf Registration Statement shall be subject to the terms hereof; provided, however, that HoldCo shall only be required to cause such additional Registrable Securities to be so covered twice per calendar year for each of the Target Holder, Sponsor and the SPAC Holders.
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2.1.4 Requests for Underwritten Shelf Takedowns. Subject to Section 3.4, at any time and from time to time after the expiration of any Lock-up to which a Holder’s shares are subject, if any, and when an effective Shelf is on file with the Commission, the Sponsor and any Target Holder or SPAC Holder may request to sell all or any portion of its Registrable Securities in an Underwritten Offering (any such Holder, a “Demanding Holder” and collectively, the “Demanding Holders”) that is registered pursuant to the Shelf (each, an “Underwritten Shelf Takedown”); provided that HoldCo shall only be obligated to effect an Underwritten Shelf Takedown if such offering shall include Registrable Securities proposed to be sold by the Demanding Holder, either individually or together with other Demanding Holders, with a total offering price reasonably expected to exceed, in the aggregate, $50 million (the “Minimum Takedown Threshold”). All requests for Underwritten Shelf Takedowns shall be made by giving written notice to HoldCo, which shall specify the approximate number of Registrable Securities proposed to be sold in the Underwritten Shelf Takedown. Subject to Section 2.3.4, HoldCo shall have the right to select the managing Underwriter or Underwriters for such offering (which shall consist of one or more reputable nationally recognized investment banks), subject to the initial Demanding Holder’s prior approval (which shall not be unreasonably withheld, conditioned or delayed). The Sponsor may demand not more than three (3) Underwritten Shelf Takedowns and the Target Holder’s may demand not more than three (3) Underwritten Shelf Takedowns, as applicable, pursuant to this Section 2.1.4, in any twelve (12) month period. Notwithstanding anything to the contrary in this Agreement, HoldCo may effect any Underwritten Offering pursuant to any then effective Registration Statement, including a Form S-3, that is then available for such offering.
2.1.5 Reduction of Underwritten Offering. If the managing Underwriter or Underwriters in an Underwritten Shelf Takedown, advises HoldCo, the Demanding Holders and the Holders requesting piggy-back rights pursuant to this Agreement with respect to such Underwritten Shelf Takedown (the “Requesting Holders”) (if any) in writing that the dollar amount or number of Registrable Securities that the Demanding Holders and the Requesting Holders (if any) desire to sell, taken together with all other HoldCo Shares or other equity securities that HoldCo desires to sell and all other HoldCo Shares or other equity securities, if any, that have been requested to be sold in such Underwritten Offering pursuant to separate written contractual piggy-back registration rights held by any other stockholders, exceeds the maximum dollar amount or maximum number of equity securities that can be sold in such Underwritten Offering without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering (such maximum dollar amount or maximum number of such securities, as applicable, the “Maximum Number of Securities”), then HoldCo shall include in such Underwritten Offering, before including any HoldCo Shares or other equity securities proposed to be sold by Company or by other holders of HoldCo Shares or other equity securities, the Registrable Securities of (i) first, the Demanding Holders that can be sold without exceeding the Maximum Number of Securities (pro rata, as nearly as practicable, based on the respective number of Registrable Securities that each Demanding Holder has requested be included in such Underwritten Shelf Takedown and the aggregate number of Registrable Securities that all of the Demanding Holders have requested be included in such Underwritten Shelf Takedown) and (ii) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (i), the Requesting Holders (if any) (pro rata, as nearly as practicable, based on the respective number of Registrable Securities that each Requesting Holder (if any) has requested be included in such Underwritten Shelf Takedown and the aggregate number of Registrable Securities that all of the Requesting Holders have requested be included in such Underwritten Shelf Takedown, or in such other proportion as shall mutually be agreed to by all such Demanding Holders and Requesting Holders, that can be) that can be sold without exceeding the Maximum Number of Securities.
2.1.6 Withdrawal. Prior to the filing of the applicable “red herring” prospectus or prospectus supplement used for marketing such Underwritten Shelf Takedown, a majority-in-interest of the Demanding Holders initiating an Underwritten Shelf Takedown shall have the right to withdraw from such Underwritten Shelf Takedown for any or no reason whatsoever upon written notification (a “Withdrawal Notice”) to HoldCo and the Underwriter or Underwriters (if any) of their intention to withdraw from such Underwritten Shelf Takedown; provided that a Target Holder may elect to have HoldCo continue an Underwritten Shelf Takedown if the Minimum Takedown Threshold would still be satisfied by the Registrable Securities proposed to be sold in the
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Underwritten Shelf Takedown by the Target Holder or any of their respective Permitted Transferees. If withdrawn, a demand for an Underwritten Shelf Takedown shall constitute a demand for an Underwritten Shelf Takedown by the withdrawing Demanding Holder for purposes of Section 2.1.4, unless either (i) such Demanding Holder has not previously withdrawn any Underwritten Shelf Takedown or (ii) such Demanding Holder reimburses HoldCo for all Registration Expenses with respect to such Underwritten Shelf Takedown (or, if there is more than one Demanding Holder, a pro rata portion of such Registration Expenses based on the respective number of Registrable Securities that each Demanding Holder has requested be included in such Underwritten Shelf Takedown); provided that, if a Target Holder elects to continue an Underwritten Shelf Takedown pursuant to the proviso in the immediately preceding sentence, such Underwritten Shelf Takedown shall instead count as an Underwritten Shelf Takedown demanded by such Target Holder for purposes of Section 2.1.4. Following the receipt of any Withdrawal Notice, HoldCo shall promptly forward such Withdrawal Notice to any other Holders that had elected to participate in such Shelf Takedown. Notwithstanding anything to the contrary in this Agreement, HoldCo shall be responsible for the Registration Expenses incurred in connection with a Shelf Takedown prior to its withdrawal under this Section 2.1.6, other than if a Demanding Holder elects to pay such Registration Expenses pursuant to clause (ii) of the second sentence of this Section 2.1.6.
2.2 Piggyback Registration.
2.2.1 Piggyback Rights. Subject to Section 2.3.3, if at any time after the expiration of any Lock-up to which a Holder’s shares are subject, if any, HoldCo or any Holder proposes to conduct a registered offering of, or HoldCo proposes to file a Registration Statement under the Securities Act with respect to the Registration of, equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into equity securities, for its own account or for the account of stockholders of HoldCo (or by HoldCo and by the stockholders of HoldCo including, without limitation, an Underwritten Shelf Takedown pursuant to Section 2.1), other than a Registration Statement (or any registered offering with respect thereto) (i) filed in connection with any employee stock option or other benefit plan, (ii) for an offering in connection with a merger, consolidation or other acquisition, an exchange offer or offering of securities solely to HoldCo’s existing shareholders, (iii) pursuant to a Registration Statement on Form S-4 (or similar form that relates to a transaction subject to Rule 145 under the Securities Act or any successor rule thereto), (iv) for an offering of debt that is convertible into or exchangeable for equity securities of HoldCo, (v) for a dividend reinvestment plan, (vi) for a rights offering (including any rights offering with a backstop or standby commitment), (vii) a Block Trade or (viii) an Other Coordinated Offering, then HoldCo shall give written notice of such proposed offering to all of the Holders of Registrable Securities as soon as practicable but not less than ten (10) days before the anticipated filing date of such Registration Statement or, in the case of an Underwritten Offering pursuant to a Shelf Registration, the applicable “red herring” prospectus or prospectus supplement used for marketing such offering, which notice shall (A) describe the amount and type of securities to be included in such offering, the intended method(s) of distribution, and the name of the proposed managing Underwriter or Underwriters, if any, in such offering, and (B) offer to all of the Holders of Registrable Securities the opportunity to include in such registered offering such number of Registrable Securities as such Holders may request in writing within five (5) days after receipt of such written notice (such registered offering, a “Piggyback Registration”). The rights provided under this Section 2.2.1 shall not be available to any Holder at such time as there is an effective Shelf available for the resale of the Registrable Securities pursuant to Section 2.1. Subject to Section 2.2.2, HoldCo shall, in good faith, cause such Registrable Securities to be included in such Piggyback Registration and, if applicable, shall use its commercially reasonable efforts to cause the managing Underwriter or Underwriters of such Piggyback Registration to permit the Registrable Securities requested by the Holders pursuant to this Section 2.2.1 to be included therein on the same terms and conditions as any similar securities of HoldCo included in such registered offering and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. The inclusion of any Holder’s Registrable Securities in a Piggyback Registration shall be subject to such Holder’s agreement to enter into an underwriting agreement in customary form with the Underwriter(s) selected for such Underwritten Offering.
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2.2.2 Reduction of Piggyback Registration. Subject to Section 2.2.3, if the managing Underwriter or Underwriters in an Underwritten Offering that is to be a Piggyback Registration, in good faith, advises HoldCo and the Holders of Registrable Securities participating in the Piggyback Registration in writing that the dollar amount or number of HoldCo Shares or other equity securities that HoldCo desires to sell, taken together with (i) HoldCo Shares or other equity securities, if any, as to which Registration or a registered offering has been demanded pursuant to separate written contractual arrangements with persons or entities other than the Holders of Registrable Securities hereunder, (ii) the Registrable Securities as to which registration has been requested pursuant to Section 2.2 hereof, and (iii) HoldCo Shares or other equity securities, if any, as to which Registration or a registered offering has been requested pursuant to separate written contractual piggy-back registration rights of persons or entities other than the Holders of Registrable Securities hereunder, exceeds the Maximum Number of Securities, then:
(a) if the Registration or registered offering is undertaken for HoldCo’s account, HoldCo shall include in any such Registration or registered offering (A) first, HoldCo Shares or other equity securities that HoldCo desires to sell, which can be sold without exceeding the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable Securities of Holders exercising their rights to register their Registrable Securities pursuant to Section 2.2.1, pro rata (as nearly as practicable), based on the respective number of Registrable Securities that each Holder has requested be included in such Underwritten Offering and the aggregate number of Registrable Securities that the Holders have requested to be included in such Underwritten Offering or in such other proportions as shall mutually be agreed to by all such selling Holders, which can be sold without exceeding the Maximum Number of Securities; and (C) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A) and (B), HoldCo Shares or other equity securities, if any, as to which Registration or a registered offering has been requested pursuant to separate written contractual piggy-back registration rights of persons or entities other than the Holders of Registrable Securities hereunder, which can be sold without exceeding the Maximum Number of Securities;
(b) if the Registration or registered offering is pursuant to a demand by persons or entities other than the Holders of Registrable Securities, then HoldCo shall include in any such Registration or registered offering (A) first, HoldCo Shares or other equity securities, if any, of such requesting persons or entities, other than the Holders of Registrable Securities, which can be sold without exceeding the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable Securities of Holders exercising their rights to register their Registrable Securities pursuant to Section 2.2.1, pro rata (as nearly as practicable), based on the respective number of Registrable Securities that each Holder has requested be included in such Underwritten Offering and the aggregate number of Registrable Securities that the Holders have requested to be included in such Underwritten Offering or in such other proportions as shall mutually be agreed to by all such selling Holders, which can be sold without exceeding the Maximum Number of Securities; (C) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A) and (B), HoldCo Shares or other equity securities that HoldCo desires to sell, which can be sold without exceeding the Maximum Number of Securities; and (D) fourth, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A), (B) and (C), HoldCo Shares or other equity securities, if any, as to which Registration or a registered offering has been requested pursuant to separate written contractual piggy-back registration rights of persons or entities other than the Holders of Registrable Securities hereunder, which can be sold without exceeding the Maximum Number of Securities; and
(c) if the Registration or registered offering and Underwritten Shelf Takedown is pursuant to a request by Holder(s) of Registrable Securities pursuant to Section 2.1 hereof, then HoldCo shall include in any such Registration or registered offering securities in the priority set forth in Section 2.1.5.
2.2.3 Piggyback Registration Withdrawal. Any Holder of Registrable Securities (other than a Demanding Holder, whose right to withdraw from an Underwritten Shelf Takedown, and related obligations, shall be
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governed by Section 2.1.6) shall have the right to withdraw from a Piggyback Registration for any or no reason whatsoever upon written notification to HoldCo and the Underwriter or Underwriters (if any) of his, her or its intention to withdraw from such Piggyback Registration prior to the effectiveness of the Registration Statement filed with the Commission with respect to such Piggyback Registration or, in the case of a Piggyback Registration pursuant to a Shelf Registration, the filing of the applicable “red herring” prospectus or prospectus supplement with respect to such Piggyback Registration used for marketing such transaction. HoldCo (whether on its own good faith determination or as the result of a request for withdrawal by persons or entities pursuant to separate written contractual obligations) may withdraw a Registration Statement filed with the Commission in connection with a Piggyback Registration (which, in no circumstance, shall include a Shelf) at any time prior to the effectiveness of such Registration Statement. Notwithstanding anything to the contrary in this Agreement (other than Section 2.1.6), HoldCo shall be responsible for the Registration Expenses incurred in connection with the Piggyback Registration prior to its withdrawal under this Section 2.2.3.
2.2.4 Unlimited Piggyback Registration Rights. For purposes of clarity, subject to Section 2.1.6, any Piggyback Registration effected pursuant to Section 2.2 hereof shall not be counted as a demand for an Underwritten Shelf Takedown under Section 2.1.4 hereof.
2.3 Block Trades; Other Coordinated Offerings.
2.3.1 Notwithstanding any other provision of this Article II, but subject to Section 3.4, at any time and from time to time when an effective Shelf is on file with the Commission, if a Demanding Holder wishes to engage in (a) an offering and/or sale of Registrable Securities by any Holder on a block trade or underwritten basis (whether firm commitment or otherwise) not involving a “roadshow” or other marketing efforts involving HoldCo prior to pricing, including, without limitation, a same day trade, overnight trade or similar transaction, but excluding a variable price reoffer (a “Block Trade”), or (b) an “at the market” or similar registered offering through a broker, sales agent or distribution agent, whether as agent or principal (an “Other Coordinated Offering”), in each case, with a total offering price reasonably expected to exceed the Minimum Takedown Threshold and notifies HoldCo at least five (5) Business Days prior to the day such offering is to commence, then HoldCo shall use its commercially reasonable efforts to facilitate such Block Trade or Other Coordinated Offering; provided that the Demanding Holders representing a majority of the Registrable Securities wishing to engage in the Block Trade or Other Coordinated Offering shall use commercially reasonable efforts to work with HoldCo and any Underwriters, brokers, sales agents or placement agents prior to making any such request in order to facilitate preparation of the registration statement, prospectus and other offering documentation related to the Block Trade or Other Coordinated Offering.
2.3.2 Prior to the filing of the applicable “red herring” prospectus or prospectus supplement used in connection with a Block Trade or Other Coordinated Offering, a majority-in-interest of the Demanding Holders initiating such Block Trade or Other Coordinated Offering shall have the right to submit a Withdrawal Notice to HoldCo, the Underwriter or Underwriters (if any) and any brokers, sales agents or placement agents (if any) of their intention to withdraw from such Block Trade or Other Coordinated Offering. Notwithstanding anything to the contrary in this Agreement, HoldCo shall be responsible for the Registration Expenses incurred in connection with a Block Trade or Other Coordinated Offering prior to its withdrawal under this Section 2.3.2.
2.3.3 Notwithstanding anything to the contrary in this Agreement, Section 2.2 shall not apply to a Block Trade or Other Coordinated Offering initiated by a Demanding Holder pursuant to this Agreement.
2.3.4 The Demanding Holder in a Block Trade or Other Coordinated Offering shall have the right to select the Underwriters and any brokers, sales agents or placement agents (if any) for such Block Trade or Other Coordinated Offering (in each case, which shall consist of one or more reputable nationally recognized investment banks).
2.3.5 A Demanding Holder in the aggregate may demand no more than two (2) Block Trades or Other Coordinated Offerings pursuant to this Section 2.3 in any twelve (12) month period. For the avoidance of doubt,
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any Block Trade or Other Coordinated Offering effected pursuant to this Section 2.3 shall not be counted as a demand for an Underwritten Shelf Takedown pursuant to Section 2.1.4 hereof.
ARTICLE III
COMPANY PROCEDURES
3.1 General Procedures. In connection with any Shelf and/or Shelf Takedown, HoldCo shall use its commercially reasonable efforts to effect such Registration to permit the sale of such Registrable Securities in accordance with the intended plan of distribution thereof, and pursuant thereto HoldCo shall:
3.1.1 prepare and file with the Commission, as soon as reasonably practicable, a Registration Statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such Registration Statement to become effective and remain effective until all Registrable Securities covered by such Registration Statement are sold in accordance with the intended plan of distribution set forth in such Registration Statement or have ceased to be Registrable Securities;
3.1.2 prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement, and such supplements to the Prospectus, as may be reasonably requested by any Holder that holds at least five percent (5%) of the Registrable Securities registered on such Registration Statement or any Underwriter of Registrable Securities or as may be required by the rules, regulations or instructions applicable to the registration form used by HoldCo or by the Securities Act or rules and regulations thereunder to keep the Registration Statement effective until all Registrable Securities covered by such Registration Statement are sold in accordance with the intended plan of distribution set forth in such Registration Statement or supplement to the Prospectus or have ceased to be Registrable Securities;
3.1.3 prior to filing a Registration Statement or Prospectus, or any amendment or supplement thereto, furnish without charge to the Underwriters, if any, and the Holders of Registrable Securities included in such Registration, and such Holders’ legal counsel, copies of such Registration Statement as proposed to be filed, each amendment and supplement to such Registration Statement (in each case including all exhibits thereto and documents incorporated by reference therein), the Prospectus included in such Registration Statement (including each preliminary Prospectus), and such other documents as the Underwriters and the Holders of Registrable Securities included in such Registration or the legal counsel for any such Holders may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Holders; provided that HoldCo shall have no obligation to furnish any documents publicly filed or furnished with the Commission pursuant to the Electronic Data Gathering, Analysis and Retrieval System (“EDGAR”);
3.1.4 prior to any public offering of Registrable Securities, use its commercially reasonable efforts to (i) register or qualify the Registrable Securities covered by the Registration Statement under such securities or “blue sky” laws of such jurisdictions in the United States as the Holders of Registrable Securities included in such Registration Statement (in light of their intended plan of distribution) may request (or provide evidence satisfactory to such Holders that the Registrable Securities are exempt from such registration or qualification) and (ii) take such action necessary to cause such Registrable Securities covered by the Registration Statement to be registered with or approved by such other Governmental Authorities as may be necessary by virtue of the business and operations of HoldCo and do any and all other acts and things that may be necessary or advisable to enable the Holders of Registrable Securities included in such Registration Statement to consummate the disposition of such Registrable Securities in such jurisdictions; provided, however, that HoldCo shall not be required to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify or take any action to which it would be subject to general service of process or taxation in any such jurisdiction where it is not then otherwise so subject;
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3.1.5 cause all such Registrable Securities to be listed on each national securities exchange on which similar securities issued by HoldCo are then listed;
3.1.6 provide a transfer agent or warrant agent, as applicable, and registrar for all such Registrable Securities no later than the effective date of such Registration Statement;
3.1.7 advise each seller of such Registrable Securities, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceeding for such purpose and promptly use its commercially reasonable efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued;
3.1.8 at least three (3) days prior to the filing of any Registration Statement or Prospectus or any amendment or supplement to such Registration Statement or Prospectus (or such shorter period of time as may be (a) necessary in order to comply with the Securities Act, the Exchange Act, and the rules and regulations promulgated under the Securities Act or Exchange Act, as applicable or (b) advisable in order to reduce the number of days that sales are suspended pursuant to Section 3.4), furnish a copy thereof to each seller of such Registrable Securities or its counsel (excluding any exhibits thereto and any filing made under the Exchange Act that is to be incorporated by reference therein);
3.1.9 notify the Holders at any time when a Prospectus relating to such Registration Statement is required to be delivered under the Securities Act, of the happening of any event as a result of which the Prospectus included in such Registration Statement, as then in effect, includes a Misstatement, and then to correct such Misstatement as set forth in Section 3.4 hereof;
3.1.10 in the event of an Underwritten Offering, a Block Trade, an Other Coordinated Offering, or sale by a broker, placement agent or sales agent pursuant to such Registration permit a representative of the Holders, the Underwriters or other financial institutions facilitating such Underwritten Offering, Block Trade, Other Coordinated Offering or other sale pursuant to such Registration, if any, and any attorney, consultant or accountant retained by such Holders or Underwriter to participate, at each such person’s or entity’s own expense, in the preparation of the Registration Statement, and cause HoldCo’s officers, directors and employees to supply all information reasonably requested by any such representative, Underwriter, financial institution, attorney, consultant or accountant in connection with the Registration; provided, however, that such representatives, Underwriters or financial institutions agree to confidentiality arrangements in form and substance reasonably satisfactory to HoldCo, prior to the release or disclosure of any such information;
3.1.11 may permit a representative of the Holders (such representative to be selected by a majority of the participating Holders), the Underwriters, if any, and any attorney or accountant retained by such Holders or Underwriters to participate, at each such Person’s own expense, in the preparation of the Registration Statement; provided, however, that HoldCo may not include the name of any Holder or Underwriter or any information regarding any Holder or Underwriter in any Registration Statement or Prospectus, any amendment or supplement to such Registration Statement or Prospectus, any document that is to be incorporated by reference into such Registration Statement or Prospectus, or any response to any comment letter, without the prior written consent of such Holder or Underwriter;
3.1.12 obtain a “cold comfort” letter from HoldCo’s independent registered public accountants in the event of an Underwritten Offering, a Block Trade, an Other Coordinated Offering or sale by a broker, placement agent or sales agent pursuant to such Registration (subject to such broker, placement agent or sales agent providing such certification or representation reasonably requested by HoldCo’s independent registered public accountants and HoldCo’s counsel) in customary form and covering such matters of the type customarily covered by “cold comfort” letters as the managing Underwriter may reasonably request, and reasonably satisfactory to a majority-in-interest of the participating Holders;
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3.1.13 in the event of an Underwritten Offering, a Block Trade, an Other Coordinated Offering or sale by a broker, placement agent or sales agent pursuant to such Registration, on the date the Registrable Securities are delivered for sale pursuant to such Registration obtain an opinion, dated such date, of counsel representing HoldCo for the purposes of such Registration, addressed to the participating Holders, the broker, placement agents or sales agent, if any, and the Underwriters, if any, covering such legal matters with respect to the Registration in respect of which such opinion is being given as the participating Holders, broker, placement agent, sales agent or Underwriter may reasonably request and as are customarily included in such opinions and negative assurance letters;
3.1.14 in the event of any Underwritten Offering, a Block Trade, an Other Coordinated Offering or sale by a broker, placement agent or sales agent pursuant to such Registration, enter into and perform its obligations under an underwriting agreement or other purchase or sales agreement, in usual and customary form, with the managing Underwriter or Underwriters or the broker, placement agent or sales agent of such offering or sale;
3.1.15 make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve (12) months beginning with the first day of HoldCo’s first full calendar quarter after the effective date of the Registration Statement which satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any successor rule then in effect);
3.1.16 with respect to an Underwritten Offering pursuant to Section 2.1.4, use its commercially reasonable efforts to make available senior executives of HoldCo to participate in customary “road show” presentations that may be reasonably requested by the Underwriter in such Underwritten Offering; and
3.1.17 otherwise, in good faith, cooperate reasonably with, and take such customary actions as may reasonably be requested by the participating Holders, consistent with the terms of this Agreement, in connection with such Registration.
Notwithstanding the foregoing, HoldCo shall not be required to provide any documents or information to an Underwriter, broker, sales agent or placement agent if such Underwriter, broker, sales agent or placement agent has not then been named with respect to the applicable Underwritten Offering or other offering involving a registration as an Underwriter, broker, sales agent or placement agent, as applicable.
3.2 Registration Expenses. The Registration Expenses of all Registrations shall be borne by HoldCo. It is acknowledged by the Holders that the Holders shall bear all incremental selling expenses relating to the sale of Registrable Securities, such as Underwriters’ commissions and discounts, brokerage fees, Underwriter marketing costs and, other than as set forth in the definition of “Registration Expenses,” all reasonable fees and expenses of any legal counsel representing the Holders; provided, however, that if, at the time of a withdrawal pursuant to Section 2.1.6, the withdrawing Demanding Holders shall have learned of a material adverse effect in the condition or business of the Company and its subsidiaries (taken as a whole), and such material adverse effect was not known or should have been known (including if reasonably available upon request from the Company or otherwise) to the withdrawing Demanding Holders at the time of their request pursuant to Section 2.1.3 and such Demanding Holders have withdrawn the request with reasonable promptness after learning of such information, then the withdrawing Demanding Holders shall not be required to pay any of such expenses.
3.3 Requirements for Participation in Registration Statement in Offerings. Notwithstanding anything in this Agreement to the contrary, if any Holder does not provide HoldCo with its requested Holder Information, HoldCo may exclude such Holder’s Registrable Securities from the applicable Registration Statement or Prospectus if HoldCo determines, based on the advice of counsel, that it is necessary or advisable to include such information in the applicable Registration Statement or Prospectus and such Holder continues thereafter to withhold such information. In addition, no person or entity may participate in any Underwritten Offering or other offering for equity securities of HoldCo pursuant to a Registration initiated by HoldCo hereunder unless such person or entity (i) agrees to sell such person’s or entity’s securities on the basis provided in any underwriting,
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sales, distribution or placement arrangements approved by HoldCo and (ii) completes and executes all customary questionnaires, powers of attorney, indemnities, lock-up agreements, underwriting or other agreements and other customary documents as may be reasonably required under the terms of such underwriting, sales, distribution or placement arrangements. For the avoidance of doubt, the exclusion of a Holder’s Registrable Securities as a result of this Section 3.3 shall not affect the registration of the other Registrable Securities to be included in such Registration.
3.4 Suspension of Sales; Adverse Disclosure; Restrictions on Registration Rights.
3.4.1 Upon receipt of written notice from HoldCo that: (a) a Registration Statement or Prospectus contains a Misstatement; (b) any request by the Commission for any amendment or supplement to any Registration Statement or Prospectus or for additional information or of the occurrence of an event requiring the preparation of a supplement or amendment to such Prospectus so that, as thereafter delivered to the purchasers of the securities covered by such Registration Statement or Prospectus, such Registration Statement or Prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; or (c) upon any suspension by HoldCo, pursuant to a written insider trading compliance program adopted by the Board, of the ability of all “insiders” covered by such program to transact in HoldCo’s securities because of the existence of material non-public information, each of the Holders shall forthwith discontinue disposition of Registrable Securities pursuant to such Registration Statement covering such Registrable Securities until (x) in the case of (a) or (b), it has received copies of a supplemented or amended Prospectus (it being understood that HoldCo hereby covenants to prepare and file such supplement or amendment as soon as reasonably practicable after the time of such notice), or until it is advised in writing by HoldCo that the use of the Prospectus may be resumed, or (y) in the case of (c), until the restriction on the ability of “insiders” to transact in HoldCo’s securities is removed, and, if so directed by HoldCo, each such Holder will deliver to HoldCo all copies, other than permanent file copies then in such Holder’s possession, of the most recent Prospectus covering such Registrable Securities at the time of receipt of such notice.
3.4.2 Subject to Section 3.4.4, if the submission, filing, initial effectiveness or continued use of a Registration Statement in respect of any Registration at any time would (a) require HoldCo to make an Adverse Disclosure, (b) require HoldCo to update the financial statements included in the Registration Statement in order to comply with Regulation S-X age of financial statement requirements, (c) require the inclusion in such Registration Statement of financial statements that are unavailable to HoldCo for reasons beyond HoldCo’s control, or (d) in the good faith judgment of the majority of the Board such Registration, be seriously detrimental to HoldCo and the majority of the Board concludes as a result that it is in HoldCo’s best interest to defer such submission, filing, initial effectiveness or continued use at such time, HoldCo may, upon giving prompt written notice of such action to the Holders (which notice shall not specify the nature of the event giving rise to such delay or suspension), delay the submission, filing or initial effectiveness of, or suspend use of, such Registration Statement for the shortest period of time determined in good faith by HoldCo to be necessary for such purpose notwithstanding the requirements of any other provision contained herein, including, without limitation, Section 2.1 purpose. In the event HoldCo exercises its rights under this Section 3.4.2, the Holders agree to suspend, immediately upon their receipt of the notice referred to above, their use of the Prospectus relating to any Registration in connection with any sale or offer to sell Registrable Securities until such Holder receives written notice from HoldCo that such sales or offers of Registrable Securities may be resumed, and in each case maintain the confidentiality of such notice and its contents. HoldCo shall notify the Holders as soon as reasonable practicable after the expiration of any period during which it exercised its rights under this Section 3.4.2.
3.4.3 Subject to Section 3.4.4, (a) during the period starting with the date sixty (60) days prior to HoldCo’s good faith estimate of the date of the filing of, and ending on a date one hundred and twenty (120) days after the effective date of, a HoldCo-initiated Registration and provided that HoldCo continues to actively employ, in good faith, all commercially reasonable efforts to maintain the effectiveness of the applicable Shelf Registration Statement, or (b) if, pursuant to Section 2.1.4, Holders have requested an Underwritten Shelf Takedown and HoldCo and such Holders are unable to obtain the commitment of underwriters to firmly underwrite such
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offering, HoldCo may, upon giving prompt written notice of such action to the Holders, delay any other registered offering pursuant to Section 2.1.4 or 2.3.
3.4.4 The right to delay or suspend any submission, filing, initial effectiveness or continued use of a Registration Statement pursuant to clause (a) or (d) of Section 3.4.2 or a registered offering pursuant to Section 3.4.3 shall be exercised by HoldCo, in the aggregate, for not more than ninety (90) consecutive calendar days or more than one hundred and twenty (120) total calendar days in each case, during any twelve (12)-month period.
3.5 Reporting Obligations. As long as any Holder shall own Registrable Securities, HoldCo, at all times while it shall be a reporting company under the Exchange Act, covenants to file timely (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by HoldCo after the date hereof pursuant to Sections 13(a) or 15(d) of the Exchange Act and to promptly furnish the Holders with true and complete copies of all such filings; provided that any documents publicly filed or furnished with the Commission pursuant to EDGAR shall be deemed to have been furnished or delivered to the Holders pursuant to this Section 3.5. HoldCo further covenants that it shall take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell shares of HoldCo Shares held by such Holder without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 promulgated under the Securities Act (or any successor rule then in effect). Upon the request of any Holder, HoldCo shall deliver to such Holder a written certification of a duly authorized officer as to whether it has complied with such requirements.
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
4.1 Indemnification and Contribution.
4.1.1 Indemnification by HoldCo. HoldCo agrees to indemnify, to the extent permitted by law, each Holder of Registrable Securities, its officers, directors and agents and each person or entity who controls such Holder (within the meaning of the Securities Act), against all losses, claims, damages, liabilities and out-of-pocket expenses (including, without limitation, reasonable and documented outside attorneys’ fees) resulting from any untrue or alleged untrue statement of material fact contained in or incorporated by reference in any Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are caused by or contained in any information or affidavit so furnished in writing to HoldCo by such Holder expressly for use therein. HoldCo shall indemnify the Underwriters, their officers and directors and each person or entity who controls such Underwriters (within the meaning of the Securities Act) to the same extent as provided in the foregoing with respect to the indemnification of the Holder.
4.1.2 Indemnification by Holders of Registrable Securities. In connection with any Registration Statement in which a Holder of Registrable Securities is participating, such Holder shall furnish (or cause to be furnished) to HoldCo in writing such information and affidavits as HoldCo reasonably requests for use in connection with any such Registration Statement or Prospectus (the “Holder Information”) and, to the extent permitted by law, shall indemnify HoldCo, its directors, officers and agents and each person or entity who controls HoldCo (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and out-of-pocket expenses (including, without limitation, reasonable and documented outside attorneys’ fees) resulting from any untrue or alleged untrue statement of material fact contained or incorporated by reference in any Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not
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misleading, but only to the extent that such untrue statement or omission is contained in (or not contained in, in the case of an omission) any information or affidavit so furnished in writing by or on behalf of such Holder expressly for use therein; provided, however, that the obligation to indemnify shall be several, not joint and several, among such Holders of Registrable Securities, and the liability of each such Holder of Registrable Securities shall be in proportion to and limited to the net proceeds received by such Holder from the sale of Registrable Securities pursuant to such Registration Statement, except in the case of fraud or willful misconduct by such Holder. The Holders of Registrable Securities shall indemnify the Underwriters, their officers, directors and each person or entity who controls such Underwriters (within the meaning of the Securities Act) to the same extent as provided in the foregoing with respect to indemnification of HoldCo.
4.1.3 Conduct of Indemnification Proceedings. Any person or entity entitled to indemnification herein shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any person’s or entity’s right to indemnification hereunder to the extent such failure has not materially prejudiced the indemnifying party) and (ii) unless in such indemnified party’s reasonable judgment (acting in good faith) a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party (acting in good faith) a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. No indemnifying party shall, without the consent of the indemnified party, consent to the entry of any judgment or enter into any settlement which cannot be settled in all respects by the payment of money (and such money is so paid by the indemnifying party pursuant to the terms of such settlement) or which settlement includes a statement or admission of fault and culpability on the part of such indemnified party or which settlement does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.
4.1.4 Survival. The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling person or entity of such indemnified party and shall survive the transfer of securities. HoldCo and each Holder of Registrable Securities participating in an offering also agrees to make such provisions as are reasonably requested by any indemnified party for contribution to such party in the event HoldCo’s or such Holder’s indemnification is unavailable for any reason.
4.1.5 Contribution. If the indemnification provided under Section 4.1 hereof from the indemnifying party is unavailable or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities and out-of-pocket expenses referred to herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities and out-of-pocket expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by (or not made by, in the case of an omission), or relates to information supplied by (or not supplied by in the case of an omission), such indemnifying party or indemnified party, and the indemnifying party’s and indemnified party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action; provided, however, that the liability of any Holder under this Section 4.1.5 shall be limited to the amount of the net proceeds received by such Holder in such offering giving rise to such liability. The amount paid or payable by a party as a result of the losses or other liabilities referred to above shall be deemed to include, subject to the
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limitations set forth in Sections 4.1.1, 4.1.2 and 4.1.3 above, any legal or other fees, charges or out-of-pocket expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 4.1.5 were determined by pro rata allocation or by any other method of allocation, which does not take account of the equitable considerations referred to in this Section 4.1.5. No person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant to this Section 4.1.5 from any person or entity who was not guilty of such fraudulent misrepresentation.
ARTICLE V
LOCK-UP
5.1 Lock-Up. Subject to Section 5.2 and Section 5.3, each Lock-up Party agrees that it shall not Transfer any Lock-up Shares prior to the end of, in respect of such Lock-up Party, the applicable Lock-up Period (the “Lock-up”).
5.2 Permitted Transferees. Notwithstanding the provisions set forth in Section 5.1, each Lock-up Party may Transfer the Lock-up Shares during the Lock-up Period (a) to (i) HoldCo’s officers or directors, (ii) any affiliates or family members of HoldCo’s officers or directors, (iii) if the undersigned is a corporation, partnership (whether general, limited or otherwise), limited liability company, trust or other business entity, (1) transfers to another corporation, partnership, limited liability company, trust, syndicate, association or other business entity that controls, is controlled by or is under common control or management with the undersigned, and (2) distributions of HoldCo Shares to its partners, limited liability company members, equity holders or shareholders of the undersigned, or (iv) any other Lock-up Party or any direct partners, members or equity holders of such other Lock-up Party, any affiliates of such other Lock-up Party or any related investment funds or vehicles controlled or managed by such persons or entities or their respective affiliates, (b) in the case of an individual, by gift to a member of the individual’s immediate family or to a trust, the beneficiary of which is a member of the individual’s immediate family or an affiliate of such person or entity, or to a charitable organization, (c) in the case of an individual, by virtue of laws of descent and distribution upon death of the individual, (d) in the case of an individual, pursuant to a qualified domestic relations order, (e) in the case of a trust, by distribution to one or more of the permissible beneficiaries of such trust, (f) to the partners, members or equity holders of such Lock-up Party by virtue of the Lock-up Party’s organizational documents, as amended, upon dissolution of the Lock-up Party, (g) bona fide pledges of HoldCo Shares as security or collateral in connection with any bona fide borrowing or incurrence of any indebtedness by any Holder or any member of its group; provided, that any Holder who is subject to any pre-clearance and trading policies of HoldCo must also comply with any additional restrictions on the pledging of HoldCo Shares imposed on such Holder by HoldCo’s policies, (h) to HoldCo, or (i) in connection with a liquidation, merger, stock exchange, reorganization, tender offer approved by the Board or a duly authorized committee thereof or other similar transaction which results in all of HoldCo’s stockholders having the right to exchange their HoldCo Shares for cash, securities or other property subsequent to the Closing Date. The parties acknowledge and agree that any Permitted Transferee of a Lock-up Party shall be subject to the transfer restrictions set forth in this ARTICLE V with respect to the Lock-Up Shares upon and after acquiring such Lock-Up Shares.
ARTICLE VI
MISCELLANEOUS
6.1 Other Registration Rights. The parties hereto that were parties to the Prior Agreement hereby terminate the Prior Agreement, which shall be of no further force and effect and is hereby superseded and replaced in its entirety by this Agreement.
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6.2 Notices. Any notice or communication under this Agreement must be in writing and given by (i) recorded mail, addressed to the party to be notified, postage prepaid and registered or certified with return receipt requested, (ii) delivery in person or by courier service providing evidence of delivery, or (iii) transmission by hand delivery, or electronic mail. Each notice or communication that is mailed, delivered, or transmitted in the manner described above shall be deemed sufficiently given, served, sent, and received, in the case of mailed notices, on the third business day following the date on which it is mailed and, in the case of notices delivered by courier service, hand delivery or electronic mail, at such time as it is delivered to the addressee (with the delivery receipt or the affidavit of messenger) or at such time as delivery is refused by the addressee upon presentation. Any notice or communication under this Agreement must be addressed, as follows:
if to HoldCo, to:
c/o LiveWire
3700 West Juneau Avenue
Milwaukee, WI 53208
Attention: Paul Krause
Email: paul.krause@harley-davidson.com;
H-DGeneralCounsel@harley-davidson.com
with a copy to (which shall not constitute notice):
Latham & Watkins, LLP
Latham & Watkins LLP
811 Main St.
Houston, TX 77002
Attention: Ryan J. Maierson
Jason Morelli
Email: ryan.maierson@lw.com
jason.morelli@lw.com
and
Kirkland & Ellis LLP
601 Lexington Avenue
New York, NY 10022
United States of America
Attention: Joshua Kogan, P.C.
Christian Nagler
Email: Joshua.kogan@kirkland.com
Christian.nagler@kirkland.com
Kirkland & Ellis LLP
1601 Elm Street, Suite 2700
Dallas, TX 75201
United States of America
Attention: Melissa D. Kalka
Email: melissa.kalka@kirkland.com
and, if to any Holder, at such Holder’s address or electronic mail address as set forth in HoldCo’s books and records.
Any party may change its address for notice at any time and from time to time by written notice to the other parties hereto, and such change of address shall become effective thirty (30) days after delivery of such notice as provided in this Section 6.2.
6.3 Assignment; No Third Party Beneficiaries.
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6.3.1 This Agreement and the rights, duties and obligations of HoldCo hereunder may not be assigned or delegated by HoldCo in whole or in part.
6.3.2 Subject to Section 6.3.4 and Section 6.3.5, this Agreement and the rights, duties and obligations of a Holder hereunder may be assigned in whole or in part to such Holder’s Permitted Transferees to which it transfers Registrable Securities; provided that with respect to the Sponsor and SPAC Holders, the rights hereunder that are personal to such Holders may not be assigned or delegated in whole or in part, except that the Sponsor shall be permitted to transfer its rights hereunder to one or more affiliates or any direct or indirect partners, members or equity holders of the Sponsor (including Sponsor Members), which, for the avoidance of doubt, shall include a transfer of its rights in connection with a distribution of any Registrable Securities held by Sponsor to Sponsor Members (it being understood that no such transfer shall reduce or multiply any rights of the Sponsor or such transferees).
6.3.3 This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties hereto and their respective successors and the permitted assigns and transferees of the Holders, which shall include Permitted Transferees.
6.3.4 This Agreement shall not confer any rights or benefits on any persons or entities that are not parties hereto, other than as expressly set forth in this Agreement and Section 6.3.
6.3.5 No assignment by any party hereto of such party’s rights, duties and obligations hereunder shall be binding upon or obligate HoldCo unless and until HoldCo shall have received (i) written notice of such assignment as provided in Section 6.2 hereof and (ii) the written agreement of the assignee, in a form reasonably satisfactory to HoldCo, to be bound by the terms and provisions of this Agreement (which may be accomplished by an addendum or certificate of joinder to this Agreement, including the joinder in the form of Exhibit A attached hereto). Any transfer or assignment of this Agreement or any rights, duties or obligations hereunder made other than as provided in this Section 6.3 shall be null and void.
6.4 Counterparts. This Agreement may be executed in multiple counterparts (including PDF counterparts), each of which shall be deemed an original, and all of which together shall constitute the same instrument, but only one of which need be produced.
6.5 Governing Law; Venue. This Agreement, and all claims or causes of action based upon, arising out of, or related to this Agreement or, shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to principles or rules of conflict of Laws to the extent such principles or rules would require or permit the application of Laws of another jurisdiction. To the fullest extent permitted by Applicable Law, any claim or cause pf action based upon, arising out of or related to this Agreement must be brought in the Court of Chancery of the State of Delaware (or, to the extent such court does not have subject matter jurisdiction, the Superior Court of the State of Delaware), or, if it has or can acquire jurisdiction, in the United States District Court for the District of Delaware, and each of the parties hereto irrevocably (i) submits to the exclusive jurisdiction of each such court in any such proceeding or claim or cause of action, (ii) waives any objection it may now or hereafter have to personal jurisdiction, venue or convenience of forum, (iii) agrees that all claims in respect of such cause of action shall be heard and determined only in any such court and (iv) agrees not to bring any proceeding, claim or cause of action arising out of or relating to this Agreement in any other court
6.6 Trial by Jury. EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND, THEREFORE, EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH OR
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RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
6.7 Amendments and Modifications. Upon the written consent of (a) HoldCo and (b) the Holders of at least a majority in interest of the total Registrable Securities at the time in question, compliance with any of the provisions, covenants and conditions set forth in this Agreement may be waived, or any of such provisions, covenants or conditions may be amended or modified; provided, however, that notwithstanding the foregoing, any amendment hereto or waiver hereof that adversely affects one Holder, solely in its capacity as a holder of the shares of capital stock of HoldCo, in a manner that is materially different from the other Holders (in such capacity) shall require the consent of the Holder so affected. No course of dealing between any Holder or HoldCo and any other party hereto or any failure or delay on the part of a Holder or HoldCo in exercising any rights or remedies under this Agreement shall operate or be construed as a waiver of any rights or remedies of any Holder or HoldCo. No single or partial exercise of any rights or remedies under this Agreement by a party shall operate as a waiver or preclude the exercise of any other rights or remedies hereunder or thereunder by such party.
6.8 Term. This Agreement shall terminate on the earlier of (a) the tenth anniversary of the date of this Agreement or (b) with respect to any Holder, on the date that such Holder no longer holds any Registrable Securities (but in no event prior to the applicable period referred to in Section 4(a)(3) of the Securities Act and Rule 174 thereunder (or any successor rule promulgated thereafter by the Commission)). The provisions of Section 3.5 and Article IV shall survive any termination.
6.9 Holder Information. Each Holder agrees, if requested in writing, to represent to HoldCo the total number of Registrable Securities held by such Holder in order for HoldCo to make determinations hereunder.
6.10 Additional Holders; Joinder. In addition to persons or entities who may become Holders pursuant to Section 6.3 hereof, subject to the prior written consent of each Holder (so long as such Holder and its affiliates hold, in the aggregate, Registrable Securities representing at least five percent (5%) of the outstanding HoldCo Shares), HoldCo may make any person or entity who acquires HoldCo Shares or rights to acquire HoldCo Shares after the date hereof a party to this Agreement (each such person or entity, an “Additional Holder”) by obtaining an executed joinder to this Agreement from such Additional Holder in the form of Exhibit A attached hereto (a “Joinder”). Such Joinder shall specify the rights and obligations of the applicable Additional Holder under this Agreement. Upon the execution and delivery and subject to the terms of a Joinder by such Additional Holder, HoldCo Shares then owned, or underlying any rights then owned, by such Additional Holder (the “Additional Holder HoldCo Shares”) shall be Registrable Securities to the extent provided herein and therein and such Additional Holder shall be a Holder under this Agreement with respect to such Additional Holder HoldCo Shares.
6.11 Interpretation. The headings set forth in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. No party, nor its respective counsel, shall be deemed the drafter of this Agreement for purposes of construing the provisions hereof, and all provisions of this Agreement shall be construed according to their fair meaning and not strictly for or against any party. Unless otherwise indicated to the contrary herein by the context or use thereof: (a) the words, “herein”, “hereto”, “hereof” and words of similar import refer to this Agreement as a whole, and not to any particular section, subsection, paragraph, subparagraph or clause set forth in this Agreement; (b) masculine gender shall also include the feminine and neutral genders, and vice versa; (c) words importing the singular shall also include the plural, and vice versa; (d) the words “include”, “includes” or “including” shall be deemed to be followed by the words “without limitation”; (e) the word “or” is disjunctive but not necessarily exclusive; (f) the words “writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form; (g) the word “day” means calendar day unless Business Day is expressly specified; (h) the word “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”; (i) all references to Articles or Sections are to Articles and Sections of this Agreement unless otherwise specified; (j) all references to any Applicable Law will be to such
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Applicable Law as amended, supplemented or otherwise modified or re-enacted from time to time; (k) all references to any agreement (including this Agreement), document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof; and (l) reference to any person includes such person’s successors and permitted assigns to the extent such successors and assigns are permitted by the terms of this Agreement, and reference to a person in a particular capacity excludes such person in any other capacity or individually. If any action under this Agreement is required to be done or taken on a day that is not a Business Day, then such action shall be required to be done or taken not on such day but on the first succeeding Business Day thereafter.
6.12 Severability. It is the desire and intent of the parties that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.
6.13 Equitable Remedies. Each party acknowledges that the other parties would be irreparably damaged in the event of a breach by such party of any of its obligations under this Agreement and hereby agrees that in the event of a breach by such party of any such obligations, each of the other parties shall, in addition to any and all other rights and remedies that may be available to them in respect of such breach, be entitled to an injunction from a court of competent jurisdiction (without any requirement to post bond but without limiting Section 6.5) granting such parties specific performance by such party of its obligations under this Agreement.
6.14 Entire Agreement. This Agreement constitutes the full and entire agreement and understanding between the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings relating to such subject matter.
6.15 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by email, or scanned pages shall be effective as delivery of a manually executed counterpart to this Agreement.
6.16 Adjustments. If, and as often as, there are any changes in the Registrable Securities by way of stock split, stock dividend, combination or reclassification, or through merger, consolidation, reorganization, recapitalization or sale, or by any other means, appropriate adjustment shall be made in the provisions of this Agreement, as may be required, so that the rights, privileges, duties and obligations hereunder shall continue with respect to the Registrable Securities as so changed.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the date first written above.
| COMPANY: | ||
| LIVEWIRE GROUP, INC. | ||
| By: | /s/ John Garcia | |
| Name: | John Garcia | |
| Title: | President, Secretary and Treasurer | |
| AEA-BRIDGES IMPACT SPONSOR LLC | ||
| By: | /s/ John Garcia | |
| Name: | John Garcia | |
| Title: | Co-Chief Executive Officer | |
| TARGET HOLDER: | ||
| ELECTRICSOUL, LLC | ||
| By: | /s/ Paul J. Krause | |
| Name: | Paul J. Krause | |
| Title: | Authorized Signatory | |
| SPAC HOLDERS: | ||
| JOHN GARCIA | ||
| /s/ John Garcia | ||
| JOHN REPLOGLE | ||
| /s/ John Replogle | ||
| GEORGE SERAFEIM | ||
| /s/ George Serafeim | ||
[Signature Page to Registration Rights Agreement]
Schedule 1
Target Holder
| 1. | ElectricSoul, LLC, a Delaware limited liability company |
Schedule 2
SPAC Holders
| 1. | John Garcia |
| 2. | John Replogle |
| 3. | George Serafeim |
Exhibit A
REGISTRATION RIGHTS AGREEMENT JOINDER
The undersigned is executing and delivering this joinder (this “Joinder”) pursuant to the Registration Rights Agreement, dated as of September 26, 2022 (as the same may hereafter be amended, the “Registration Rights Agreement”), among LiveWire Group, Inc. (formerly known as LW EV Holdings, Inc.), a Delaware corporation (the “Company”), and the other persons or entities named as parties therein. Capitalized terms used but not otherwise defined herein shall have the meanings provided in the Registration Rights Agreement.
By executing and delivering this Joinder to HoldCo, and upon acceptance hereof by HoldCo upon the execution of a counterpart hereof, the undersigned hereby agrees to become a party to, to be bound by, and to comply with the Registration Rights Agreement as a Holder of Registrable Securities in the same manner as if the undersigned were an original signatory to the Registration Rights Agreement, and the undersigned’s HoldCo Shares shall be included as Registrable Securities under the Registration Rights Agreement to the extent provided therein.
Accordingly, the undersigned has executed and delivered this Joinder as of the [ ☐ ] day of [ ☐ ], 20[ ☐ ].
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Signature of Stockholder | ||
|
Print Name of Stockholder | ||
| Its: | ||
| Address: |
| |
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| Agreed and Accepted as of | ||
| [ ☐ ], 20[ ☐ ] | ||
| LiveWire Group, Inc. | ||
| By: |
| |
| Name: | ||
| Title: | ||
Exhibit 10.4
LIVEWIRE GROUP, INC.
2022 INCENTIVE AWARD PLAN
ARTICLE I.
PURPOSE
The Plan’s purpose is to enhance the Company’s ability to attract, retain and motivate persons who make (or are expected to make) important contributions to the Company by providing these individuals with equity ownership opportunities and/or equity-linked compensatory opportunities. Capitalized terms used in the Plan are defined in Article XI.
ARTICLE II.
ELIGIBILITY
Service Providers are eligible to be granted Awards under the Plan, subject to the limitations described herein.
ARTICLE III.
ADMINISTRATION AND DELEGATION
3.1 Administration. The Plan is administered by the Administrator. The Administrator has authority to determine which Service Providers receive Awards, grant Awards and set Award terms and conditions, subject to the conditions and limitations in the Plan. The Administrator also has the authority to take all actions and make all determinations under the Plan, to interpret the Plan and Award Agreements and to adopt, amend and repeal Plan administrative rules, guidelines and practices as it deems advisable. The Administrator may correct defects and ambiguities, supply omissions and reconcile inconsistencies in the Plan or any Award Agreement as it deems necessary or appropriate to administer the Plan and any Awards. The Administrator’s determinations under the Plan are in its sole discretion and will be final and binding on all persons having or claiming any interest in the Plan or any Award.
3.2 Appointment of Committees. To the extent Applicable Laws permit, the Board or the Administrator may delegate any or all of its powers under the Plan to one or more Committees or committees of officers of the Company or any of its Subsidiaries. The Board or the Administrator, as applicable, may rescind any such delegation, abolish any such Committee or committee and/or re-vest in itself any previously delegated authority at any time.
ARTICLE IV.
STOCK AVAILABLE FOR AWARDS
4.1 Number of Shares. Subject to adjustment under Article VIII and the terms of this Article IV, the maximum number of Shares that may be issued pursuant to Awards under the Plan shall be equal to the Overall Share Limit. Shares issued under the Plan may consist of authorized but unissued Shares, Shares purchased on the open market or treasury Shares.
4.2 Share Recycling. If all or any part of an Award expires, lapses or is terminated, exchanged for or settled in cash, surrendered, repurchased, canceled without having been fully exercised/settled or forfeited, in any case, in a manner that results in the Company acquiring Shares covered by the Award at a price not greater than the price (as adjusted to reflect any Equity Restructuring) paid by the Participant for such Shares or not issuing any Shares covered by the Award, the unused Shares covered by the Award will, as applicable, become or again be available for Award grants under the Plan. In addition, Shares delivered (either by actual delivery or attestation) to the Company by a Participant to satisfy the applicable exercise or purchase price of an Award and/or to satisfy any applicable tax withholding obligation with respect to an Award (including Shares retained by the Company from the Award being exercised or purchased and/or creating the tax obligation) will, as applicable, become or again be available for Award grants under the Plan. The payment of Dividend Equivalents in cash in conjunction with any outstanding Awards shall not count against the Overall Share Limit. Notwithstanding anything to the contrary contained herein, the following Shares shall not be added to the Shares authorized for grant under Section 4.1 and shall not be available for future grants of Awards: (a) Shares subject to a Stock Appreciation Right that are not issued in connection with the stock settlement of the Stock Appreciation Right on exercise thereof; and (b) Shares purchased on the open market with the cash proceeds from the exercise of Options.
4.3 Incentive Stock Option Limitations. Notwithstanding anything to the contrary herein, no more than 51,263,641 Shares may be issued pursuant to the exercise of Incentive Stock Options.
4.4 Substitute Awards. In connection with an entity’s merger or consolidation with the Company or any Subsidiary or the Company’s or any Subsidiary’s acquisition of an entity’s property, equity or stock, the Administrator may grant Awards in substitution for any options or other equity or equity-based awards granted before such merger or consolidation by such entity or its affiliate. Substitute Awards may be granted on such terms as the Administrator deems appropriate, notwithstanding limitations on Awards in the Plan. Substitute Awards will not count against the Overall Share Limit (nor shall Shares subject to a Substitute Award be added to the Shares available for Awards under the Plan as provided above), except that Shares acquired by exercise of substitute Incentive Stock Options will count against the maximum number of Shares that may be issued pursuant to the exercise of Incentive Stock Options under the Plan. Additionally, in the event that a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines has shares or equity interests available under a pre-existing plan approved by equity holders and not adopted in contemplation of such acquisition or combination, the shares or equity interests available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock or common equity interests of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the Shares authorized for grant under the Plan (and Shares subject to such Awards shall not be added to the Shares available for Awards under the Plan as provided above); provided that Awards using such available shares or equity interests shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to (a) individuals who were employees, consultants, managers or directors of such entity acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines immediately prior to such acquisition or combination and (b) individuals who first become Service Providers following such acquisition or combination.
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4.5 Non-Employee Director Compensation. Notwithstanding any provision to the contrary in the Plan, the Administrator may establish compensation for non-employee Directors from time to time, subject to the limitations in the Plan. The Administrator will from time to time determine the terms, conditions and amounts of all such non-employee Director compensation in its discretion and pursuant to the exercise of its business judgment, taking into account such factors, circumstances and considerations as it shall deem relevant from time to time; provided that, the sum of any cash compensation, or other compensation, and the value (determined as of the grant date in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, or any successor thereto) of Awards granted to a non-employee Director as compensation for services as a non-employee Director during any fiscal year of the Company may not exceed $750,000.
ARTICLE V.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
5.1 General. The Administrator may grant Options or Stock Appreciation Rights to Service Providers subject to the limitations in the Plan, including any limitations in the Plan that apply to Incentive Stock Options. The Administrator will determine the number of Shares covered by each Option and Stock Appreciation Right, the exercise price of each Option and Stock Appreciation Right and the conditions and limitations applicable to the exercise of each Option and Stock Appreciation Right. A Stock Appreciation Right will entitle the Participant (or other person entitled to exercise the Stock Appreciation Right) to receive from the Company upon exercise of the exercisable portion of the Stock Appreciation Right an amount determined by multiplying the excess, if any, of the Fair Market Value of one Share on the date of exercise over the exercise price per Share of the Stock Appreciation Right by the number of Shares with respect to which the Stock Appreciation Right is exercised, subject to any limitations of the Plan or that the Administrator may impose, and which amount shall be payable in cash, Shares valued at Fair Market Value or a combination of the two as the Administrator may determine or provide in the applicable Award Agreement.
5.2 Exercise Price. The Administrator will establish each Option’s and Stock Appreciation Right’s exercise price and specify the exercise price in the Award Agreement. The exercise price will not be less than 100% of the Fair Market Value on the grant date of the Option (subject to Section 5.6) or Stock Appreciation Right. Notwithstanding the foregoing, in the case of an Option or a Stock Appreciation Right that is a Substitute Award, the exercise price per share of the Shares subject to such Option or Stock Appreciation Right, as applicable, may be less than the Fair Market Value per share on the date of grant; provided that the exercise price of any Substitute Award shall be determined in accordance with the applicable requirements of Sections 424 and 409A of the Code.
5.3 Duration. Each Option or Stock Appreciation Right will be exercisable at such times and as specified in the Award Agreement, provided that, subject to Section 5.6, the term of an Option or Stock Appreciation Right will not exceed ten years. Notwithstanding the foregoing and unless determined otherwise by the Company, in the event that on the last business day of the
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term of an Option or Stock Appreciation Right (other than an Incentive Stock Option) (a) the exercise of the Option or Stock Appreciation Right is prohibited by Applicable Law, as determined by the Company, or (b) Shares may not be purchased or sold by the applicable Participant due to any Company insider trading policy (including blackout periods) or a “lock-up” agreement undertaken in connection with an issuance of securities by the Company, then the term of the Option or Stock Appreciation Right shall be automatically extended, except to the extent such extension would violate Section 409A (to the extent Section 409A applies to such Option or Stock Appreciation Right), until the date that is 30 days after the end of the legal prohibition, black-out period or lock-up agreement, as determined by the Company; provided, however, that in no event shall the extension last beyond the ten year term (or any shorter term, if applicable) of the applicable Option or Stock Appreciation Right. Notwithstanding the foregoing, to the extent permitted under Applicable Laws, if the Participant, prior to the end of the term of an Option or Stock Appreciation Right, violates the non-competition, non-solicitation, confidentiality or other similar restrictive covenant provisions of any employment contract, confidentiality and nondisclosure agreement or other agreement between the Participant and the Company or any of its Subsidiaries, the right of the Participant and the Participant’s transferees to exercise any Option or Stock Appreciation Right issued to the Participant shall terminate immediately upon such violation, unless the Company otherwise determines.
5.4 Exercise. Options and Stock Appreciation Rights may be exercised by delivering to the Company (or its Agent) a written notice of exercise, in a form approved by the Administrator (which may be electronic and provided through the online platform maintained by an Agent), signed or submitted by the person authorized to exercise the Option or Stock Appreciation Right, together with payment in full of the required amount(s), in each case, as applicable, (a) as specified in Section 5.5 for the number of Shares for which the Award is exercised and (b) as specified in Section 9.5 for any applicable taxes. Unless the Administrator otherwise determines, an Option or Stock Appreciation Right may not be exercised for a fraction of a Share.
5.5 Payment Upon Exercise. Subject to Section 10.8, any Company insider trading policy (including blackout periods) and Applicable Laws, the exercise price of an Option must be paid by online payment through the Agent’s electronic platform or by wire transfer of immediately available funds to the Agent (or, in each case, if the Company has no Agent accepting payment, by wire transfer of immediately available funds to the Company) or, solely with the consent of the Administrator (in its discretion), by:
(a) cash, wire transfer of immediately available funds or check payable to the order of the Company, provided that the Administrator may limit the use of one of the foregoing payment forms if one or more of the payment forms below is permitted;
(b) if there is a public market for Shares at the time of exercise, unless the Administrator otherwise determines, (i) delivery (including electronically or telephonically to the extent permitted by the Administrator) of an irrevocable and unconditional undertaking by a broker acceptable to the Administrator to deliver promptly to the Company sufficient funds to pay the exercise price, or (ii) the Participant’s delivery to the Company of a copy of irrevocable and unconditional instructions to a broker acceptable to the Administrator to deliver promptly to the Company cash or a check sufficient to pay the exercise price; provided that such amount is paid to the Company at such time as may be required by the Administrator;
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(c) delivery (either by actual delivery or attestation) of Shares owned by the Participant valued at their Fair Market Value;
(d) surrendering Shares then issuable upon the Option’s exercise valued at their Fair Market Value on the exercise date; or
(e) any combination of the above payment forms approved by the Administrator.
5.6 Additional Terms of Incentive Stock Options. The Administrator may grant Incentive Stock Options only to employees of the Company, any of its present or future parent or subsidiary corporations, as defined in Sections 424(e) or (f) of the Code, respectively, and any other entities the employees of which are eligible to receive Incentive Stock Options under the Code. If an Incentive Stock Option is granted to a Greater Than 10% Stockholder, the exercise price will not be less than 110% of the Fair Market Value on the Option’s grant date, and the term of the Option will not exceed five years. All Incentive Stock Options will be subject to and construed consistently with Section 422 of the Code. By accepting an Incentive Stock Option, the Participant agrees to give prompt notice to the Company of dispositions or other transfers (other than in connection with a Change in Control) of Shares acquired under the Option made within (a) two years from the grant date of the Option or (b) one year after the transfer of such Shares to the Participant, specifying the date of the disposition or other transfer and the amount the Participant realized, in cash, other property, assumption of indebtedness or other consideration, in such disposition or other transfer. Neither the Company nor the Administrator will be liable to a Participant, or any other party, if an Incentive Stock Option fails or ceases to qualify as an “incentive stock option” under Section 422 of the Code. Any Incentive Stock Option or portion thereof that fails to qualify as an “incentive stock option” under Section 422 of the Code for any reason, including becoming exercisable with respect to Shares having a fair market value exceeding the $100,000 limitation under Treasury Regulation Section 1.422-4, will be a Non-Qualified Stock Option.
ARTICLE VI.
RESTRICTED STOCK; RESTRICTED STOCK UNITS
6.1 General. The Administrator may grant Restricted Stock, or the right to purchase Restricted Stock, to any Service Provider, subject to the Company’s right to repurchase all or part of such Shares at their issue price or other stated or formula price from the Participant (or to require forfeiture of such Shares) if conditions the Administrator specifies in the Award Agreement are not satisfied before the end of the applicable restriction period or periods that the Administrator establishes for such Award. In addition, the Administrator may grant Restricted Stock Units to any Service Provider, which may be subject to vesting and forfeiture conditions during the applicable restriction period or periods, as set forth in an Award Agreement. The Administrator will determine and set forth in the Award Agreement the terms and conditions for each Restricted Stock and Restricted Stock Unit Award, subject to the conditions and limitations contained in the Plan.
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6.2 Restricted Stock.
(a) Dividends. Participants holding Shares of Restricted Stock will be entitled to all ordinary cash dividends paid with respect to such Shares, unless the Administrator provides otherwise in the Award Agreement. In addition, unless the Administrator provides otherwise, if any dividends or distributions are paid in Shares, or consist of a dividend or distribution to holders of Common Stock of property other than an ordinary cash dividend, the Shares or other property will be subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid. Notwithstanding anything to the contrary herein, with respect to any award of Restricted Stock, dividends which are paid to holders of Common Stock prior to vesting shall only be paid out to the Participant holding such Restricted Stock to the extent that the vesting conditions are subsequently satisfied. All such dividend payments will be made no later than March 15 of the calendar year following the calendar year in which the right to the dividend payment becomes nonforfeitable.
(b) Stock Certificates. The Company may require that the Participant deposit in escrow with the Company (or its designee) any stock certificates issued in respect of Shares of Restricted Stock, together with a stock power endorsed in blank.
6.3 Restricted Stock Units.
(a) Settlement. The Administrator may provide that settlement of Restricted Stock Units will occur upon or as soon as reasonably practicable after the Restricted Stock Units vest or will instead be deferred, on a mandatory basis or at the Participant’s election, in a manner intended to comply with Section 409A.
(b) Stockholder Rights. A Participant will have no rights of a stockholder with respect to Shares subject to any Restricted Stock Unit unless and until the Shares are delivered in settlement of the Restricted Stock Unit.
(c) Dividend Equivalents. Any Dividend Equivalents with respect to Restricted Stock Units will be subject to the terms, conditions and limitations set forth in Section 7.2.
ARTICLE VII.
OTHER STOCK OR CASH BASED AWARDS; DIVIDEND EQUIVALENTS
7.1 Other Stock or Cash Based Awards. Other Stock or Cash Based Awards may be granted to Participants, including Awards entitling Participants to receive Shares to be delivered in the future and including annual or other periodic or long-term cash bonus awards (whether based on specified Performance Criteria or otherwise), in each case subject to any conditions and limitations in the Plan. Such Other Stock or Cash Based Awards will also be available as a payment form in the settlement of other Awards, as standalone payments and as payment in lieu of compensation to which a Participant is otherwise entitled. Other Stock or Cash Based Awards may be paid in Shares, cash or other property, or any combination of the foregoing, as the Administrator determines. Subject to the provisions of the Plan, the Administrator will determine the terms and conditions of each Other Stock or Cash Based Award, including any purchase price, performance goal(s) (which may be based on the Performance Criteria), transfer restrictions, and vesting conditions, which will be set forth in the applicable Award Agreement. In addition, the Company may adopt subplans or programs under the Plan pursuant to which it makes Awards available in a manner consistent with the terms and conditions of the Plan.
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7.2 Dividend Equivalents. A grant of Restricted Stock Units or Other Stock or Cash Based Award may provide a Participant with the right to receive Dividend Equivalents, and no dividends or Dividend Equivalents shall be payable with respect to Options or Stock Appreciation Rights. Dividend Equivalents may be paid currently or credited to an account for the Participant, settled in cash or Shares and subject to the same restrictions on transferability and forfeitability as the Award with respect to which the Dividend Equivalents are paid and subject to other terms and conditions as set forth in the Award Agreement. Notwithstanding anything to the contrary herein, Dividend Equivalents with respect to an Award shall only be paid out to the Participant to the extent that the vesting conditions applicable to the underlying Award are satisfied. All such Dividend Equivalent payments will be made no later than March 15 of the calendar year following calendar year in which the right to the Dividend Equivalent payment becomes nonforfeitable in accordance with the foregoing, unless otherwise determined by the Administrator.
ARTICLE VIII.
ADJUSTMENTS FOR CHANGES IN COMMON STOCK
AND CERTAIN OTHER EVENTS
8.1 Equity Restructuring. In connection with any Equity Restructuring, notwithstanding anything to the contrary in this Article VIII, the Administrator will equitably adjust each outstanding Award as it deems appropriate to reflect the Equity Restructuring, which may include adjusting the number and type of securities subject to each outstanding Award and/or the Award’s exercise price or grant price (if applicable), granting new Awards to Participants, and/or making a cash payment to Participants. The adjustments provided under this Section 8.1 will be nondiscretionary and final and binding on the affected Participant and the Company; provided that the Administrator will determine whether an adjustment is equitable.
8.2 Corporate Transactions. In the event of any dividend (other than ordinary cash dividends) or other distribution (whether in the form of cash, Common Stock, other securities, or other property), reorganization, merger, consolidation, combination, amalgamation, repurchase, recapitalization, liquidation, dissolution, or sale, transfer, exchange or other disposition of all or substantially all of the assets of the Company, or sale or exchange of Common Stock or other securities of the Company, Change in Control, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, other similar corporate transaction or event, other unusual or nonrecurring transaction or event affecting the Company or its financial statements or any change in any Applicable Laws or accounting principles, the Administrator, on such terms and conditions as it deems appropriate, either by the terms of the Award or by action taken prior to the occurrence of such transaction or event (except that action to give effect to a change in Applicable Law or accounting principles may be made within a reasonable period of time after such change), is hereby authorized to take any one or more of the following actions whenever the Administrator determines that such action is appropriate in order to (x) prevent dilution or enlargement of the benefits or potential benefits intended by the Company to be made available under the Plan or with respect to any Award granted or issued under the Plan, (y) to facilitate such transaction or event or (z) give effect to such changes in Applicable Laws or accounting principles:
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(a) To provide for the cancellation of any such Award in exchange for either an amount of cash or other property with a value equal to the amount that could have been obtained upon the exercise or settlement of the vested portion of such Award or realization of the Participant’s rights under the vested portion of such Award, as applicable; provided that, if the amount that could have been obtained upon the exercise or settlement of the vested portion of such Award or realization of the Participant’s rights, in any case, is equal to or less than zero, then the Award may be terminated without payment;
(b) To provide that such Award shall vest and, to the extent applicable, be exercisable as to all Shares covered thereby, notwithstanding anything to the contrary in the Plan or the provisions of such Award;
(c) To provide that such Award be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and/or applicable exercise or purchase price, in all cases, as determined by the Administrator;
(d) To make adjustments in the number and type of Shares (or other securities or property) subject to outstanding Awards and/or with respect to which Awards may be granted under the Plan (including, but not limited to, adjustments of the limitations in Article IV on the maximum number and kind of shares which may be issued) and/or in the terms and conditions of (including the grant or exercise price or applicable performance goals), and the criteria included in, outstanding Awards;
(e) To replace such Award with other rights or property selected by the Administrator; and/or
(f) To provide that the Award will terminate and cannot vest, be exercised or become payable after the applicable event.
8.3 Effect of Non-Assumption in a Change in Control. Notwithstanding the provisions of Section 8.2, if a Change in Control occurs and a Participant’s Award is not continued, converted, assumed, or replaced with an award (which may include, without limitation, a cash-based award) with substantially the same value and vesting terms that are no less favorable than those applicable to the underlying award, in each case, as of immediately prior to the Change in Control by (a) the Company, or (b) a successor entity or its parent or subsidiary (an “Assumption”), and provided that the Participant has not had a Termination of Service, then, immediately prior to the Change in Control, such Award shall become fully vested (or with respect to an Award that, as of the date of such Change in Control, remains subject to vesting based on the attainment of Performance Criteria, shall become vested at the greater of (i) target achievement of the Performance Criteria and (ii) actual achievement of the Performance Criteria through the date of the Change in Control), exercisable and/or payable, as applicable, and all forfeiture, repurchase and other restrictions on such Award shall lapse, in which case, such Award shall be canceled upon the consummation of the Change in Control in exchange for the right to receive the Change in Control consideration payable to other holders of Common Stock (A) which may be on such terms and conditions as apply generally to holders of Common Stock under the Change in Control documents (including,
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without limitation, any escrow, earn-out or other deferred consideration provisions) or such other terms and conditions as the Administrator may provide, and (B) determined by reference to the number of Shares subject to such Award and net of any applicable exercise price; provided that to the extent that any Award constitutes “nonqualified deferred compensation” that may not be paid upon the Change in Control under Section 409A (to the extent applicable to such Award) without the imposition of taxes thereon under Section 409A, the timing of such payments shall be governed by the applicable Award Agreement (subject to any deferred consideration provisions applicable under the Change in Control documents); and provided, further, that if the amount to which the Participant would be entitled upon the settlement or exercise of such Award at the time of the Change in Control is equal to or less than zero, then such Award may be terminated without payment. The Administrator shall determine whether an Assumption of an Award has occurred in connection with a Change in Control.
8.4 Administrative Stand Still. In the event of any pending stock dividend, stock split, combination or exchange of shares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets to stockholders, or any other extraordinary transaction or change affecting the Shares or the share price of Common Stock, including any Equity Restructuring or any securities offering or other similar transaction, for administrative convenience, the Administrator may refuse to permit the exercise of any Award for up to 60 days before or after such transaction.
8.5 General. Except as expressly provided in the Plan or the Administrator’s action under the Plan, no Participant will have any rights due to any subdivision or consolidation of Shares of any class, dividend payment, increase or decrease in the number of Shares of any class or dissolution, liquidation, merger, or consolidation of the Company or other corporation. Except as expressly provided with respect to an Equity Restructuring under Section 8.1 or the Administrator’s action under the Plan, no issuance by the Company of Shares of any class, or securities convertible into Shares of any class, will affect, and no adjustment will be made regarding, the number of Shares subject to an Award or the Award’s grant or exercise price. The existence of the Plan, any Award Agreements and the Awards granted hereunder will not affect or restrict in any way the Company’s right or power to make or authorize (a) any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, (b) any merger, consolidation dissolution or liquidation of the Company or sale of Company assets or (c) any sale or issuance of securities, including securities with rights superior to those of the Shares or securities convertible into or exchangeable for Shares. The Administrator may treat Participants and Awards (or portions thereof) differently under this Article VIII.
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ARTICLE IX.
GENERAL PROVISIONS APPLICABLE TO AWARDS
9.1 Transferability. Except as the Administrator may determine or provide in an Award Agreement or otherwise for Awards other than Incentive Stock Options, Awards may not be sold, assigned, transferred, pledged or otherwise encumbered, either voluntarily or by operation of law, except for certain beneficiary designations, by will or the laws of descent and distribution, or, subject to the Administrator’s consent, pursuant to a domestic relations order, and, during the life of the Participant, will be exercisable, if applicable, only by the Participant. Any permitted transfer of an Award hereunder shall be without consideration, except as required by Applicable Law. References to a Participant, to the extent relevant in the context, will include references to a Participant’s authorized transferee that the Administrator specifically approves.
9.2 Documentation. Each Award will be evidenced in an Award Agreement, which may be written or electronic, as the Administrator determines. The Award Agreement will contain the terms and conditions applicable to an Award. Each Award may contain terms and conditions in addition to those set forth in the Plan.
9.3 Discretion. Except as the Plan otherwise provides, each Award may be made alone or in addition or in relation to any other Award. The terms of each Award to a Participant need not be identical, and the Administrator need not treat Participants or Awards (or portions thereof) uniformly.
9.4 Termination of Status. The Administrator will determine how a Participant’s Disability, death, retirement or authorized leave of absence or any other change or purported change in a Participant’s Service Provider status affects an Award (including whether and when a Termination of Service has occurred) and the extent to which, and the period during which the Participant, the Participant’s legal representative, conservator, guardian or Designated Beneficiary may exercise rights under the Award, if applicable.
9.5 Withholding. Each Participant must pay the Company, or make provision satisfactory to the Administrator for payment of, any taxes required by Applicable Law to be withheld in connection with such Participant’s Awards by the date of the event creating the tax liability. The Company or one of its Subsidiaries may deduct an amount sufficient to satisfy such tax obligations based on the applicable statutory withholding rates (or such other rate as may be determined by the Administrator after considering any accounting consequences or costs) from any payment of any kind otherwise due to a Participant. Subject to Section 10.8 and any Company insider trading policy (including blackout periods), Participants may satisfy such tax obligations through the Agent’s electronic platform or by wire transfer of immediately available funds to the Agent (or, in each case, if the Company has no Agent accepting payment, by wire transfer of immediately available funds to the Company) or, solely with the consent of the Administrator, by (a) cash, wire transfer of immediately available funds or check made payable to the order of the Company, provided that the Administrator may limit the use of the foregoing payment forms in its discretion, (b) to the extent permitted by the Administrator, delivery of Shares (in whole or in part), including Shares delivered by attestation and Shares retained from the Award creating the tax obligation, valued at their Fair Market Value on the date of delivery, (c) if there is a public market for Shares at the time the tax obligations are satisfied, unless the Administrator otherwise
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determines, (i) delivery (including electronically or telephonically to the extent permitted by the Administrator) of an irrevocable and unconditional undertaking by a broker acceptable to the Administrator to deliver promptly to the Company sufficient funds to satisfy the tax obligations, or (ii) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a broker acceptable to the Administrator to deliver promptly to the Company cash or a check sufficient to satisfy the tax withholding; provided that such amount is paid to the Company at such time as may be required by the Administrator, or (d) to the extent permitted by the Administrator, any combination of the foregoing payment forms approved by the Administrator. Notwithstanding any other provision of the Plan, the number of Shares which may be so delivered or retained pursuant to clause (b) of the immediately preceding sentence shall be limited to the number of Shares which have a Fair Market Value on the date of delivery or retention no greater than the aggregate amount of such liabilities based on the maximum individual statutory tax rate in the applicable jurisdiction at the time of such withholding (or such other rate as may be required to avoid the liability classification of the applicable award under generally accepted accounting principles in the U.S.), and for clarity, may be less than such minimum individual statutory tax rate if so determined by the Administrator. If any tax withholding obligation will be satisfied under clause (b) above by the Company’s retention of Shares from the Award creating the tax obligation and there is a public market for Shares at the time the tax obligation is satisfied, the Company may elect to instruct any brokerage firm determined acceptable to the Company for such purpose to sell on the applicable Participant’s behalf some or all of the Shares retained and to remit the proceeds of the sale to the Company or its designee, and each Participant’s acceptance of an Award under the Plan will constitute the Participant’s authorization to the Company and instruction and authorization to such brokerage firm to complete the transactions described in this sentence.
9.6 Amendment of Award; Repricing. The Administrator may amend, modify or terminate any outstanding Award, including by substituting another Award of the same or a different type, changing the exercise or settlement date, and converting an Incentive Stock Option to a Non-Qualified Stock Option. The Participant’s consent to such action will be required unless (a) the action, taking into account any related action, does not materially and adversely affect the Participant’s rights under the Award, or (b) the change is permitted under Article VIII or pursuant to Section 10.6. The Administrator may not, except as provided in Article VIII, without the approval of the stockholders of the Company, (i) reduce the exercise price per share of outstanding Options or Stock Appreciation Rights or (ii) cancel outstanding Options or Stock Appreciation Rights that have an exercise price that is greater than the then-current Fair Market Value of the Shares in exchange for cash, other Awards or Options or Stock Appreciation Rights with an exercise price per share that is less than the exercise price per share of the original Options or Stock Appreciation Rights.
9.7 Conditions on Delivery of Stock. The Company will not be obligated to deliver any Shares under the Plan or remove restrictions from Shares previously delivered under the Plan until (a) all Award conditions have been met or removed to the Company’s satisfaction, (b) as determined by the Company, all other legal matters regarding the issuance and delivery of such Shares have been satisfied, including any applicable securities laws and stock exchange or stock market rules and regulations, and (c) the Participant has executed and delivered to the Company such representations or agreements as the Administrator deems necessary or appropriate to satisfy any Applicable Laws. The Company’s inability to obtain authority from any regulatory body
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having jurisdiction, which the Administrator determines is necessary to the lawful issuance and sale of any securities, will relieve the Company of any liability for failing to issue or sell such Shares as to which such requisite authority has not been obtained.
9.8 Acceleration. The Administrator may at any time provide that any Award will become immediately vested and fully or partially exercisable, free of some or all restrictions or conditions, or otherwise fully or partially realizable.
9.9 Cash Settlement. Without limiting the generality of any other provision of the Plan, the Administrator may provide, in an Award Agreement or subsequent to the grant of an Award, in its discretion, that any Award may be settled in cash, Shares or a combination thereof.
9.10 Broker-Assisted Sales. In the event of a broker-assisted sale of Shares in connection with the payment of amounts owed by a Participant under or with respect to the Plan or Awards, including amounts to be paid under the final sentence of Section 9.5: (a) any Shares to be sold through the broker-assisted sale will be sold on the day the payment first becomes due, or as soon thereafter as practicable; (b) such Shares may be sold as part of a block trade with other Participants in the Plan in which all participants receive an average price; (c) the applicable Participant will be responsible for all broker’s fees and other costs of sale, and by accepting an Award, each Participant agrees to indemnify and hold the Company and its Subsidiaries harmless from any losses, costs, damages, or expenses relating to any such sale; (d) to the extent the Company, its Subsidiaries or their designee receives proceeds of such sale that exceed the amount owed, the Company or its Subsidiary will pay such excess in cash to the applicable Participant as soon as reasonably practicable; (e) the Company, its Subsidiaries and their designees are under no obligation to arrange for such sale at any particular price; and (f) in the event the proceeds of such sale are insufficient to satisfy the Participant’s applicable obligation, the Participant may be required to pay immediately upon demand to the Company, its Subsidiaries or their designee an amount in cash sufficient to satisfy any remaining portion of the Participant’s obligation.
ARTICLE X.
MISCELLANEOUS
10.1 No Right to Employment or Other Status. No person will have any claim or right to be granted an Award, and the grant of an Award will not be construed as giving a Participant the right to continued employment or any other relationship with the Company or any of its Subsidiaries. The Company and its Subsidiaries expressly reserve the right at any time to dismiss or otherwise terminate their respective relationships with a Participant free from any liability or claim under the Plan or any Award, except as expressly provided in an Award Agreement or in the Plan.
10.2 No Rights as Stockholder; Certificates. Subject to the Award Agreement, no Participant or Designated Beneficiary will have any rights as a stockholder with respect to any Shares to be distributed under an Award until becoming the record holder of such Shares. Notwithstanding any other provision of the Plan, unless the Administrator otherwise determines or Applicable Laws require, the Company will not be required to deliver to any Participant certificates evidencing Shares issued in connection with any Award and instead such Shares may be recorded in the books of the Company (or, as applicable, its transfer agent or stock plan administrator). The Company may place legends on stock certificates issued under the Plan that the Administrator deems necessary or appropriate to comply with Applicable Laws.
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10.3 Effective Date and Term of Plan. Unless earlier terminated by the Board, the Plan will become effective on the date on which the Company’s stockholders approve the Plan (the “Effective Date”) and will remain in effect until the tenth anniversary of the Effective Date. Notwithstanding anything to the contrary in the Plan, an Incentive Stock Option may not be granted under the Plan after 10 years from the earlier of (a) the date the Board adopted the Plan or (b) the date the Company’s stockholders approved the Plan, but Awards previously granted may extend beyond that date in accordance with the Plan. If the Plan is not approved by the Company’s stockholders, the Plan will not become effective and no Awards will be granted under the Plan.
10.4 Amendment of Plan. The Board may amend, suspend or terminate the Plan at any time; provided that no amendment, other than (a) as permitted by the applicable Award Agreement, (b) as provided under Sections 10.6 and 10.15 hereof, or (c) an amendment to increase the Overall Share Limit, may materially and adversely affect any Award outstanding at the time of such amendment without the affected Participant’s consent. No Awards may be granted under the Plan during any suspension period or after the Plan’s termination. Awards outstanding at the time of any Plan suspension or termination will continue to be governed by the Plan and the Award Agreement, as in effect before such suspension or termination. The Board will obtain stockholder approval of any Plan amendment to the extent necessary to comply with Applicable Laws.
10.5 Provisions for Foreign Participants. The Administrator may modify Awards granted to Participants who are foreign nationals or employed outside the United States or establish subplans or procedures under the Plan to address differences in laws, rules, regulations or customs of such foreign jurisdictions with respect to tax, securities, currency, employee benefit or other matters.
10.6 Section 409A.
(a) General. To the extent that the Administrator determines that any Award granted under the Plan is subject to Section 409A, the Award Agreement evidencing such Award shall incorporate the terms and conditions required by Section 409A. To the extent applicable, the Plan and the Award Agreements shall be interpreted to comply with, or to be exempt from, Section 409A, such that no adverse tax consequences, interest, or penalties under Section 409A apply. Notwithstanding anything in the Plan or any Award Agreement to the contrary, the Administrator may, without a Participant’s consent, amend this Plan or Awards, adopt policies and procedures, or take any other actions (including amendments, policies, procedures and retroactive actions) as are necessary or appropriate to preserve the intended tax treatment of Awards, including any such actions intended to (i) exempt this Plan or any Award from Section 409A, or (ii) comply with Section 409A, including regulations, guidance, compliance programs and other interpretative authority that may be issued after an Award’s grant date. The Company makes no representations or warranties as to an Award’s tax treatment under Section 409A or otherwise. The Company will have no obligation under this Section 10.6 or otherwise to avoid the taxes, penalties or interest under Section 409A with respect to any Award and will have no liability to any Participant or any other person if any Award, compensation or other benefits under the Plan are determined to constitute noncompliant “nonqualified deferred compensation” subject to taxes, penalties or
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interest under Section 409A. Notwithstanding any contrary provision of the Plan or any Award Agreement, any payment of “nonqualified deferred compensation” under the Plan that may be made in installments shall be treated as a right to receive a series of separate and distinct payments.
(b) Separation from Service. If an Award is subject to and constitutes “nonqualified deferred compensation” under Section 409A, any payment or settlement of such Award upon a termination of a Participant’s Service Provider relationship will, to the extent necessary to avoid taxes under Section 409A, be made only upon the Participant’s “separation from service” (within the meaning of Section 409A), whether such “separation from service” occurs upon or after the termination of the Participant’s Service Provider relationship. For purposes of this Plan or any Award Agreement relating to any such payments or benefits, references to a “termination,” “termination of employment” or like terms means a “separation from service.”
(c) Payments to Specified Employees. Notwithstanding any contrary provision in the Plan or any Award Agreement, any payment(s) of “nonqualified deferred compensation” required to be made under an Award subject to Section 409A to a “specified employee” (as defined under Section 409A and as the Administrator determines) due to his or her “separation from service” will, to the extent necessary to avoid taxes under Section 409A(a)(2)(B)(i) of the Code, be delayed for the six-month period immediately following such “separation from service” (or, if earlier, until the specified employee’s death) and will instead be paid (as set forth in the Award Agreement) on the day immediately following such six-month period or as soon as administratively practicable thereafter (without interest). Any payments of “nonqualified deferred compensation” under such Award payable more than six months following the Participant’s “separation from service” will be paid at the time or times the payments are otherwise scheduled to be made.
10.7 Limitations on Liability. Notwithstanding any other provisions of the Plan, no individual acting as a director, officer, other employee or agent of the Company or any Subsidiary will be liable to any Participant, former Participant, spouse, beneficiary, or any other person for any claim, loss, liability, or expense incurred in connection with the Plan or any Award, and such individual will not be personally liable with respect to the Plan because of any contract or other instrument executed in his or her capacity as an Administrator, director, officer, other employee or agent of the Company or any Subsidiary. The Company will indemnify and hold harmless each director, officer, other employee and agent of the Company or any Subsidiary that has been or will be granted or delegated any duty or power relating to the Plan’s administration or interpretation, against any cost or expense (including attorneys’ fees) or liability (including any sum paid in settlement of a claim with the Administrator’s approval) arising from any act or omission concerning this Plan unless arising from such person’s own fraud or bad faith.
10.8 Lock-Up Period. The Company may, at the request of any underwriter representative or otherwise, in connection with registering the offering of any Company securities under the Securities Act, prohibit Participants from, directly or indirectly, selling or otherwise transferring any Shares or other Company securities during a period of up to 180 days following the effective date of a Company registration statement filed under the Securities Act, or such longer period as determined by the underwriter.
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10.9 Data Privacy. As a condition for receiving any Award, each Participant explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of personal data as described in this section by and among the Company and its Subsidiaries and affiliates exclusively for implementing, administering and managing the Participant’s participation in the Plan. The Company and its Subsidiaries and affiliates may hold certain personal information about a Participant, including the Participant’s name, address and telephone number; birthdate; social security number, insurance number or other identification number; salary; nationality; job title(s); any Shares held in the Company or its Subsidiaries and affiliates; and Award details, to implement, manage and administer the Plan and Awards (the “Data”). The Company and its Subsidiaries and affiliates may transfer the Data amongst themselves as necessary to implement, administer and manage a Participant’s participation in the Plan, and the Company and its Subsidiaries and affiliates may transfer the Data to third parties assisting the Company with Plan implementation, administration and management. These recipients may be located in the Participant’s country, or elsewhere, and the Participant’s country may have different data privacy laws and protections than the recipients’ country. By accepting an Award, each Participant authorizes such recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, to implement, administer and manage the Participant’s participation in the Plan, including any required Data transfer to a broker or other third party with whom the Company or the Participant may elect to deposit any Shares. The Data related to a Participant will be held only as long as necessary to implement, administer, and manage the Participant’s participation in the Plan. A Participant may, at any time, view the Data that the Company and its Subsidiaries hold regarding such Participant, request additional information about the storage and processing of the Data regarding such Participant, recommend any necessary corrections to the Data regarding the Participant or refuse or withdraw the consents in this Section 10.9 in writing, without cost, by contacting the local human resources representative. If the Participant refuses or withdraws the consents in this Section 10.9, the Company may cancel Participant’s ability to participate in the Plan and, in the Administrator’s discretion, the Participant may forfeit any outstanding Awards. For more information on the consequences of refusing or withdrawing consent, Participants may contact their local human resources representative.
10.10 Severability. If any portion of the Plan or any action taken under it is held illegal or invalid for any reason, the illegality or invalidity will not affect the remaining parts of the Plan, and the Plan will be construed and enforced as if the illegal or invalid provisions had been excluded, and the illegal or invalid action will be null and void.
10.11 Governing Documents. If any contradiction occurs between the Plan and any Award Agreement or other written agreement between a Participant and the Company (or any Subsidiary) that the Administrator has approved, the Plan will govern, unless it is expressly specified in such Award Agreement or other written document that the specific provision of the Plan will not apply. For clarity, the foregoing sentence shall not limit the applicability of any additive language contained in an Award Agreement or other written agreement which provides supplemental or additional terms not inconsistent with the Plan.
10.12 Governing Law. The Plan and all Awards will be governed by and interpreted in accordance with the laws of the State of Delaware, disregarding any state’s choice-of-law principles requiring the application of a jurisdiction’s laws other than the State of Delaware.
15
10.13 Claw-back Provisions. All Awards (including, without limitation, any proceeds, gains or other economic benefit actually or constructively received by a Participant upon any receipt or exercise of any Award or upon the receipt or resale of any Shares underlying the Award) shall be subject to the provisions of any claw-back policy implemented by the Company, including, without limitation, any claw-back policy adopted to comply with Applicable Laws (including the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or regulations promulgated thereunder), as and to the extent set forth in such claw-back policy or the Award Agreement.
10.14 Titles and Headings. The titles and headings in the Plan are for convenience of reference only and, if any conflict, the Plan’s text, rather than such titles or headings, will control.
10.15 Conformity to Securities Laws. Participant acknowledges that the Plan is intended to conform to the extent necessary with Applicable Laws. Notwithstanding anything herein to the contrary, the Plan and all Awards will be administered only in conformance with Applicable Laws. To the extent Applicable Laws permit, the Plan and all Award Agreements will be deemed amended as necessary to conform to Applicable Laws.
10.16 Unfunded Status of Awards. The Plan is intended to be an “unfunded” plan for incentive compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award Agreement shall give the Participant any rights that are greater than those of a general creditor of the Company or any Subsidiary.
10.17 Relationship to Other Benefits. No payment under the Plan will be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any Subsidiary except as expressly provided in writing in such other plan or an agreement thereunder.
ARTICLE XI.
DEFINITIONS
As used in the Plan, the following words and phrases will have the following meanings:
11.1 “Administrator” means the Board or a Committee to the extent that the Board’s powers or authority under the Plan have been delegated to such Committee. Notwithstanding anything herein to the contrary, the Board shall conduct the general administration of the Plan with respect to Awards granted to non-employee Directors and, with respect to such Awards, the term “Administrator” as used in the Plan shall mean and refer to the Board.
11.2 “Agent” means the brokerage firm, bank or other financial institution, entity or person(s), if any, engaged, retained, appointed or authorized to act as the agent of the Company or a Participant with regard to the Plan.
11.3 “Applicable Laws” means the requirements relating to the administration of equity incentive plans under U.S. federal and state securities, tax and other applicable laws, rules and regulations, the applicable rules of any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws and rules of any foreign country or other jurisdiction where Awards are granted.
16
11.4 “Award” means, individually or collectively, a grant under the Plan of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Dividend Equivalents, or Other Stock or Cash Based Awards.
11.5 “Award Agreement” means a written agreement evidencing an Award, which may be electronic, that contains such terms and conditions as the Administrator determines, consistent with and subject to the terms and conditions of the Plan.
11.6 “Board” means the Board of Directors of the Company.
11.7 “Cause,” with respect to a Participant, means “Cause” (or any term of similar effect) as defined in such Participant’s Award Agreement or employment or service agreement (or similar agreement) with the Company or any Subsidiary thereof, or, if no such agreement contains a definition of Cause (or term of similar effect), then Cause shall include: (a) the Participant’s unauthorized use or disclosure of confidential information or trade secrets of the Company or any of its Subsidiaries or any material breach of a written agreement between the Participant and the Company or any of its Subsidiaries or any applicable policy of the Company or any of its Subsidiaries, including without limitation a material breach of any employment, confidentiality, non-compete, non-solicit or similar agreement, or any code of conduct or similar policy; (b) the Participant’s commission of, indictment for or the entry of a plea of guilty or nolo contendere by the Participant to, a felony under the laws of the United States or any state thereof or any crime involving dishonesty or moral turpitude (or any similar crime in any jurisdiction outside the United States); (c) the Participant’s negligence or willful misconduct in the performance of the Participant’s duties or the Participant’s willful or repeated failure or refusal to substantially perform assigned duties (other than due to the Participant’s Disability); (d) any act of fraud, embezzlement, material misappropriation or dishonesty committed by the Participant against the Company or any of its Subsidiaries; or (e) any acts, omissions or statements by a Participant which the Company determines to be materially detrimental or damaging to the reputation, operations, prospects or business relations of the Company or any of its Subsidiaries.
11.8 “Change in Control” means and includes each of the following:
(a) A transaction or series of transactions (other than an offering of Common Stock to the general public through a registration statement filed with the Securities and Exchange Commission or a transaction or series of transactions that meets the requirements of clauses (i) and (ii) of subsection (c) below) whereby any “person” or related “group” of “persons” (as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company or the Parent (as applicable) possessing 50% or more of the total combined voting power of the Company’s or the Parent’s (as applicable) securities outstanding immediately after such acquisition, as applicable, other than (x) an acquisition by the Company or Parent (as applicable) or (y) an acquisition by any employee benefit plan maintained by the Company, the Parent or any of their Subsidiaries; provided, however, that a transaction or series of transactions whereby Parent directly or indirectly acquires beneficial ownership of securities of the Company possessing 100% of the total combined voting power of the Company’s securities outstanding immediately after such acquisition shall constitute a Change in Control; or
17
(b) During any period of two consecutive years, individuals who, at the beginning of such period, constitute the Board together with any new Director(s) (other than a Director designated by a person who shall have entered into an agreement with the Company to effect a transaction described in subsections (a) or (c)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the Directors then still in office who either were Directors at the beginning of the two-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or
(c) The consummation by the Company or the Parent (whether directly involving the Company or the Parent or indirectly involving the Company or Parent through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of the Company’s or the Parent’s assets, as applicable, in any single transaction or series of related transactions or (z) the acquisition of assets or stock of another entity, in each case other than a transaction:
(i) which results in the Company’s or the Parent’s (as applicable) voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Company, the Parent or the person that, as a result of the transaction, controls, directly or indirectly, the Company or the Parent (as applicable) or owns, directly or indirectly, all or substantially all of the Company’s or the Parent’s (as applicable) assets or otherwise succeeds to the business of the Company (the Company, the Parent or such person, the “Successor Entity”)) directly or indirectly, at least a majority of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction, and
(ii) after which no person or group beneficially owns voting securities representing 50% or more of the combined voting power of the Successor Entity; provided, however, that no person or group shall be treated for purposes of this clause (ii) as beneficially owning 50% or more of the combined voting power of the Successor Entity solely as a result of the voting power held in the Company or the Parent, as applicable, prior to the consummation of the transaction;
provided, however, that any transaction described under this subsection (c) (without regard to clauses (i) or (ii) hereof) which results in the Parent acquiring, directly or indirectly, 100% of the voting securities or assets of the Company shall constitute a Change in Control.
(d) The approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.
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Notwithstanding the foregoing, if a Change in Control constitutes a payment event with respect to any Award (or portion of any Award) that provides for the deferral of compensation that is subject to Section 409A, to the extent required to avoid the imposition of additional taxes under Section 409A, the transaction or event described in subsection (a), (b), (c) or (d) with respect to such Award (or portion thereof) shall only constitute a Change in Control for purposes of the payment timing of such Award if such transaction also constitutes a “change in control event,” as defined in Treasury Regulation Section 1.409A-3(i)(5).
The Administrator shall have full and final authority, which shall be exercised in its discretion, to determine conclusively whether a Change in Control has occurred pursuant to the above definition, the date of the occurrence of such Change in Control and any incidental matters relating thereto; provided that any exercise of authority in conjunction with a determination of whether a Change in Control is a “change in control event” as defined in Treasury Regulation Section 1.409A-3(i)(5) shall be consistent with such regulation.
11.9 “Code” means the Internal Revenue Code of 1986, as amended, and the regulations issued thereunder.
11.10 “Committee” means one or more committees or subcommittees of the Board, which may include one or more Company directors or executive officers, to the extent Applicable Laws permit. To the extent required to comply with the provisions of Rule 16b-3, it is intended that each member of the Committee will be, at the time the Committee takes any action with respect to an Award that is subject to Rule 16b-3, a “non-employee director” within the meaning of Rule 16b-3; however, a Committee member’s failure to qualify as a “non-employee director” within the meaning of Rule 16b-3 will not invalidate any Award granted by the Committee that is otherwise validly granted under the Plan.
11.11 “Common Stock” means the common stock of the Company.
11.12 “Company” means LiveWire Group, Inc., a Delaware corporation, or any successor.
11.13 “Consultant” means any consultant or advisor engaged by the Company or any of its Subsidiaries to render services to such entity that qualifies as a consultant or advisor under the applicable rules of Form S-8 Registration Statements.
11.14 “Designated Beneficiary” means the beneficiary or beneficiaries the Participant designates, in a manner the Administrator determines, to receive amounts due or exercise the Participant’s rights if the Participant dies or becomes incapacitated. Without a Participant’s effective designation, “Designated Beneficiary” will mean the Participant’s estate.
11.15 “Director” means a Board member.
11.16 “Disability” means that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months.
19
11.17 “Dividend Equivalents” means a right granted to a Participant under the Plan to receive the equivalent value (in cash or Shares) of dividends paid on Shares.
11.18 “Employee” means any employee of the Company or its Subsidiaries.
11.19 “Equity Restructuring” means, as determined by the Administrator, a non-reciprocal transaction between the Company and its stockholders, such as a stock dividend, stock split, spin-off or recapitalization through a large, nonrecurring cash dividend, or other large, nonrecurring cash dividend, that affects the number or kind of Shares (or other securities of the Company) or the share price of Common Stock (or other securities of the Company) and causes a change in the per share value of the Common Stock underlying outstanding Awards.
11.20 “Exchange Act” means the Securities Exchange Act of 1934, as amended.
11.21 “Fair Market Value” means, as of any date, the value of a Share determined as follows: (a) if the Common Stock is listed on any established stock exchange, its Fair Market Value will be the closing sales price for such Common Stock as quoted on such exchange for such date, or if no sale occurred on such date, the last day preceding such date during which a sale occurred, as reported in The Wall Street Journal or another source the Administrator deems reliable; (b) if the Common Stock is not traded on a stock exchange but is quoted on a national market or other quotation system, the closing sales price on such date, or if no sales occurred on such date, then on the last date preceding such date during which a sale occurred, as reported in The Wall Street Journal or another source the Administrator deems reliable; or (c) without an established market for the Common Stock, the Administrator will determine the Fair Market Value in its discretion.
Notwithstanding the foregoing, with respect to any Award granted on the pricing date of the Company’s initial public offering, the Fair Market Value shall mean the initial public offering price of a Share as set forth in the Company’s final prospectus relating to its initial public offering filed with the Securities and Exchange Commission.
11.22 “Greater Than 10% Stockholder” means an individual then owning (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or its parent or subsidiary corporation, as defined in Section 424(e) and (f) of the Code, respectively.
11.23 “Incentive Stock Option” means an Option intended to qualify as an “incentive stock option” as defined in Section 422 of the Code.
11.24 “Non-Qualified Stock Option” means an Option, or portion thereof, not intended or not qualifying as an Incentive Stock Option.
11.25 “Option” means an option to purchase Shares, which will either be an Incentive Stock Option or a Non-Qualified Stock Option.
11.26 “Other Stock or Cash Based Awards” means cash awards, awards of Shares, and other awards valued wholly or partially by referring to, or are otherwise based on, Shares or other property awarded to a Participant under Article VII.
20
11.27 “Overall Share Limit” means 29,293,509 Shares.
11.28 “Parent” means Harley-Davidson, Inc., a Wisconsin corporation.
11.29 “Participant” means a Service Provider who has been granted an Award.
11.30 “Performance Criteria” means the criteria (and adjustments) that the Administrator may select for an Award to establish performance goals for a performance period, which may include (but is not limited to) the following: net earnings or losses (either before or after one or more of interest, taxes, depreciation, amortization, and non-cash equity-based compensation expense); gross or net sales or revenue or sales or revenue growth; net income (either before or after taxes) or adjusted net income; profits (including but not limited to gross profits, net profits, profit growth, net operation profit or economic profit), profit return ratios or operating margin; operating efficiency; budget or operating earnings (either before or after taxes or before or after allocation of corporate overhead and bonus); cash flow (including operating cash flow and free cash flow or cash flow return on capital); return on assets; return on capital or invested capital; cost of capital; return on stockholders’ equity; total stockholder return; return on sales; costs, reductions in costs and cost control measures; expenses; working capital; earnings or loss per share; adjusted earnings or loss per share; price per share or dividends per share (or appreciation in or maintenance of such price or dividends); regulatory achievements or compliance; implementation, completion or attainment of objectives relating to research, development, regulatory, commercial, or strategic milestones or developments; market share; economic value or economic value added models; division, group or corporate financial goals; customer satisfaction/growth; customer service; employee satisfaction; recruitment and maintenance of personnel; human resources management; supervision of litigation and other legal matters; strategic partnerships, collaborations and transactions; financial ratios (including those measuring liquidity, activity, profitability or leverage); debt levels or reductions; sales-related goals; financing and other capital raising transactions; cash on hand; acquisition, licensing or divestiture activity; investment sourcing activity; and marketing initiatives, any of which may be measured in absolute terms or as compared to any incremental increase or decrease. Such performance goals also may be (a) based solely by reference to the Company’s performance or the performance of a Subsidiary, division, business segment or business unit of the Company or a Subsidiary, (b) based upon performance relative to performance of other companies or upon comparisons of any of the indicators of performance relative to performance of other companies, (c) based on GAAP or non-GAAP metrics, and/or (d) adjusted to reflect the impact of unusual or non-recurring transactions, extraordinary events or otherwise as determined by the Administrator.
11.31 “Plan” means this 2022 Incentive Award Plan.
11.32 “Restricted Stock” means Shares awarded to a Participant under Article VI subject to certain vesting conditions and other restrictions.
11.33 “Restricted Stock Unit” means an unfunded, unsecured right to receive, on the applicable settlement date, one Share or an amount in cash or other consideration determined by the Administrator to be of equal value as of such settlement date awarded to a Participant under Article VI subject to certain vesting conditions and other restrictions.
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11.34 “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act.
11.35 “Section 409A” means Section 409A of the Code and all regulations, guidance, compliance programs and other interpretative authority thereunder.
11.36 “Securities Act” means the Securities Act of 1933, as amended.
11.37 “Service Provider” means an Employee, Consultant or Director.
11.38 “Shares” means shares of Common Stock.
11.39 “Stock Appreciation Right” means a stock appreciation right granted under Article V.
11.40 “Subsidiary” means any entity (other than the Company), whether domestic or foreign, in an unbroken chain of entities beginning with the Company if each of the entities other than the last entity in the unbroken chain beneficially owns, at the time of the determination, securities or interests representing at least 50% of the total combined voting power of all classes of securities or interests in one of the other entities in such chain.
11.41 “Substitute Awards” means Awards granted or Shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, in each case by a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines.
11.42 “Termination of Service” means the date the Participant ceases to be a Service Provider.
* * * * *
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Exhibit 10.5
Execution Version
Certain portions of this Exhibit have been redacted pursuant to Item 601(b)(10) of Regulation S-K and, where applicable, have been marked with “[***]” to indicate where redactions have been made.
SEPARATION AGREEMENT
by and between
HARLEY-DAVIDSON, INC.
AND
LIVEWIRE EV, LLC
Dated as of September 26, 2022
TABLE OF CONTENTS
| ARTICLE I. SEPARATION |
1 | |||||
| 1.1 |
Transfers of Assets and Assumptions of Liabilities; LiveWire Assets; HD Assets | 1 | ||||
| 1.2 |
Consents; Nonassignable Assets | 6 | ||||
| 1.3 |
Termination of Intercompany Agreements | 6 | ||||
| 1.4 |
Treatment of Shared Contracts | 7 | ||||
| 1.5 |
Treatment of Shared Permits | 7 | ||||
| 1.6 |
Treatment of ZEV Environmental Attributes | 8 | ||||
| 1.7 |
Bank Accounts; Cash Balances; Misdirected Payments | 8 | ||||
| 1.8 |
Misallocated Assets and Liabilities | 10 | ||||
| 1.9 |
Disclaimer of Representations and Warranties | 10 | ||||
| 1.10 |
Certain Other Matters | 10 | ||||
| ARTICLE II. MUTUAL RELEASES; INDEMNIFICATION; COOPERATION; INSURANCE |
11 | |||||
| 2.1 |
Release of Claims | 11 | ||||
| 2.2 |
Indemnification by LiveWire | 12 | ||||
| 2.3 |
Indemnification by HD | 12 | ||||
| 2.4 |
Procedures for Defense; Settlement and Indemnification of Third-Party Claims | 12 | ||||
| 2.5 |
Insurance Proceeds | 13 | ||||
| 2.6 |
Survival of Indemnities | 13 | ||||
| 2.7 |
Insurance Matters | 14 | ||||
| 2.8 |
Guarantees, Letters of Credit and Other Obligations | 15 | ||||
| ARTICLE III. EXCHANGE OF INFORMATION; CONFIDENTIALITY |
16 | |||||
| 3.1 |
Agreement for Exchange of Information | 16 | ||||
| 3.2 |
Ownership of Information | 16 | ||||
| 3.3 |
Compensation for Providing Information | 16 | ||||
| 3.4 |
Record Retention | 16 | ||||
| 3.5 |
[Reserved] | 17 | ||||
| 3.6 |
Other Agreements Providing for Exchange of Information | 17 | ||||
| 3.7 |
Auditors and Audits | 17 | ||||
| 3.8 |
Privileged Matters | 17 | ||||
| 3.9 |
Confidentiality | 19 | ||||
| 3.10 |
Protective Arrangements | 20 | ||||
| ARTICLE IV. FURTHER ASSURANCES AND ADDITIONAL COVENANTS |
20 | |||||
| 4.1 |
Further Assurances | 20 | ||||
| 4.2 |
Performance | 21 | ||||
| 4.3 |
Mail Forwarding | 21 | ||||
| 4.4 |
Order of Precedence | 21 | ||||
| 4.5 |
HD Specified Marks | 21 | ||||
| 4.6 |
Non-Solicitation | 22 | ||||
| 4.7 |
Ancillary Agreements | 22 | ||||
| ARTICLE V. TERMINATION |
22 | |||||
| 5.1 |
Termination | 22 | ||||
| 5.2 |
Effect of Termination | 23 | ||||
| ARTICLE VI. MISCELLANEOUS |
23 | |||||
| 6.1 |
Corporate Power | 23 | ||||
i
| 6.2 |
Tax Matters | 23 | ||||
| 6.3 |
Modification or Amendments | 25 | ||||
| 6.4 |
Waivers of Default | 25 | ||||
| 6.5 |
Counterparts | 25 | ||||
| 6.6 |
Governing Law | 25 | ||||
| 6.7 |
Notices | 25 | ||||
| 6.8 |
Entire Agreement | 26 | ||||
| 6.9 |
No Third-Party Beneficiaries | 26 | ||||
| 6.10 |
Severability | 26 | ||||
| 6.11 |
Interpretation | 26 | ||||
| 6.12 |
Defined Terms | 27 | ||||
| 6.13 |
Assignment | 27 | ||||
| 6.14 |
Specific Performance | 27 | ||||
| 6.15 |
Expenses | 27 | ||||
| 6.16 |
Survival of Covenants | 27 | ||||
| 6.17 |
Construction | 27 | ||||
| 6.18 |
Performance | 28 | ||||
| 6.19 |
No Admission of Liability | 28 | ||||
| 6.20 |
Limited Liability of Shareholders | 28 | ||||
| 6.21 |
Limitations of Liability | 28 | ||||
| 6.22 |
Consent to Jurisdiction | 28 |
Exhibits
Exhibit A Trademark License Agreement
Exhibit B Employee Matters Agreement
ii
SEPARATION AGREEMENT
This SEPARATION AGREEMENT is entered into effective as of September 26, 2022 (this “Agreement”) by and between Harley-Davidson, Inc., a Wisconsin corporation (“HD”) and LiveWire EV, LLC, a Delaware limited liability company (“LiveWire”). HD and LiveWire are each a “Party” and are sometimes referred to herein collectively as the “Parties.”
RECITALS
WHEREAS, HD, acting together with its Subsidiaries, currently conducts the Harley Business (as defined below) and the LiveWire Business (as defined below);
WHEREAS, the board of directors of HD (the “HD Board”) determined on careful review and consideration that the separation of LiveWire from the rest of HD and the establishment of LiveWire as a separate company to operate the LiveWire Business is in the best interests of HD;
WHEREAS, the sole member of LiveWire determined on careful review and consideration that the separation of LiveWire from the rest of HD and the establishment of LiveWire as a separate, publicly traded company to operate the LiveWire Business is in the best interests of LiveWire;
WHEREAS, in furtherance of the foregoing, the HD Board has determined that it is appropriate and desirable to separate the LiveWire Business from the Harley Business in accordance with the terms and conditions of this Agreement and the SPAC Business Combination Agreement (the “Separation”);
WHEREAS, immediately following the consummation of the Separation and pursuant to the terms of that Business Combination Agreement, dated as of December 12, 2021 (as such agreement may be modified, restated, waived or amended from time to time in accordance with its terms, the “SPAC Business Combination Agreement”), among other things, (a) HoldCo will become the sole stockholder of SPAC, as the result of Merger Sub merging with and into SPAC with SPAC surviving, (b) HD will contribute, or cause to be contributed, LiveWire to HoldCo and (c) SPAC will become the sole equityholder and managing member of LiveWire (the “Business Combination” and, together with the Separation, the “Transactions”);
WHEREAS, each of HD and LiveWire intend that the Transactions qualify for the Intended Tax Treatment (as defined in the SPAC Business Combination Agreement); and
WHEREAS, each of HD and LiveWire has determined that it is appropriate and desirable to set forth in this Agreement certain agreements that will govern certain matters relating to the Transactions and the relationship of HD, LiveWire and the members of the HD Group and the LiveWire Group following the Separation Time.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements, provisions and covenants contained in this Agreement, the Parties hereby agree as follows:
ARTICLE I.
SEPARATION
1.1 Transfers of Assets and Assumptions of Liabilities; LiveWire Assets; HD Assets.
(a) Subject to the terms and conditions set forth in this Agreement, the effective time and date of the Separation will be 12:01 a.m. Central Time on the date that is designated as the closing date (the “Separation Time”, and such date, the “Closing Date”) under the SPAC Business Combination Agreement (the “Closing”).
1
At or before the Separation Time, the Parties shall take all actions necessary to cause, and shall cause the members of their respective Group to take all actions necessary to cause, (i) the LiveWire Group to own, lease, license or have the right to use all, to the extent they do not already own, lease, license or have the right to use all, of the LiveWire Assets and none of the HD Assets, and (ii) the LiveWire Group to be liable for, to the extent they are not already liable for, all of the LiveWire Liabilities and none of the HD Liabilities; provided, that any transfers, assignments, conveyances or deliveries of the LiveWire Assets or LiveWire Liabilities prior to the Separation Time shall for all purposes of this Agreement be deemed as occurring at the Separation Time. The LiveWire Assets shall be free and clear of all Liens (other than Permitted Liens) at the Separation Time. Without limiting the generality of the foregoing, at or prior to the Separation Time, the Parties shall execute and deliver to each other, or cause to be executed and delivered to each other, the Transfer Documents, in form and substance reasonably satisfactory to SPAC.
(b) For purposes of this Agreement, “LiveWire Assets” shall mean:
(i) the following Assets listed in subsections (A) through (U) below:
(A) all current assets to the extent related to the LiveWire Business, including all accounts receivable (net), lease assets, inventory assets, and other prepaid assets to the extent related to the LiveWire Business; for the avoidance of doubt, the foregoing shall include, working capital or reserves related to or held for the benefit of the LiveWire Business;
(B) all issued and outstanding capital stock or other equity securities of (i) any Subsidiary of Livewire and (ii) the Persons described on Schedule 1.1(b)(i)(B)(ii) that are owned by either Party or a member of its respective Group as of the Separation Time;
(C) (i) any cash contributed or paid to LiveWire in connection with the Closing by (1) the SPAC or HoldCo, (2) by any private placement, (3) Company Equityholder PIPE Investment, (4) the HD Backstop Amount and (ii) cash, cash equivalents and marketable securities on hand or in banks to the extent maintained for the purpose of the LiveWire Business and not withdrawn prior to the Separation Time (collectively the “LiveWire Cash”), including for the avoidance of doubt any cash received from any customer or dealer of the LiveWire Business with respect to a bike that has not been delivered;
(D) all LiveWire Contracts and all rights, interests, claims and benefits of either Party or any member of its respective Group thereunder as of the Separation Time;
(E) all LiveWire Intellectual Property and all rights, interests, and claims of either Party or any member of its respective Group thereunder as of the Separation Time;
(F) all LiveWire Leases and all rights, interests, claims and benefits of either Party or any member of its respective Group thereunder as of the Separation Time;
(G) all LiveWire Permits and all rights, interests, claims and benefits of either Party or any member of its respective Group thereunder as of the Separation Time;
(H) all LiveWire Properties, together with all buildings, fixtures and improvements erected thereon;
(I) all rights, claims, demands, causes of Action (including counterclaims), judgments, decrees and rights to indemnity or contribution, whether absolute or contingent, contractual or otherwise in favor of HD or any of its Subsidiaries, to the extent primarily related to the LiveWire Business, including the right to sue, recover and retain such recoveries and the right to continue in the name of LiveWire and its Subsidiaries any pending Actions relating to the foregoing, and to recover and retain any damages therefrom;
(J) all Business Records to the extent related to the LiveWire Business (the “LiveWire Business Records”), together with (i) all records and data in any form relating to the LiveWire Employees (as defined in the Employee Matters Agreement), and (ii) Information to the extent related to the LiveWire Business, in each case, to the extent permitted by applicable Law;
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(K) all rights, interests, claims and benefits in the insurance claims relating to the LiveWire Business, including those set forth on Schedule 1.1(b)(i)(K);
(L) all raw materials, components, parts and accessories exclusively related to the LiveWire Business, and all rights, interests, and claims of either Party or any member of its respective Group thereunder as of the Separation Time;
(M) (1) the machinery, tools and equipment set forth on Schedule 1.1(b)(i)(M), (2) all tooling, including related jigs, dies, gauges, fixtures, molds, patterns and similar accessories exclusively (x) related to the LiveWire Business or (y) used to manufacture products for the LiveWire Business, and (3) all office equipment and supplies and other items of tangible personal property (including any furniture, furnishings, fixtures, laptops, tablets and smartphones) primarily related to the LiveWire Business or otherwise to the extent used primarily by a LiveWire Employee (as defined in the Employee Matters Agreement);
(N) all rights with respect to third-party warranties and guaranties that are, in each case, related primarily to the LiveWire Business and all related claims, credits, rights of recovery and other similar rights as to such third parties;
(O) all Assets of either Party or any member of its respective Group as of the Separation Time that are expressly provided by this Agreement as Assets to be transferred to any member of the LiveWire Group;
(P) all Insurance Proceeds received from and after the date hereof under the HD’s or any HD Group’s insurance policies or programs to the extent related to the LiveWire Business;
(Q) the goodwill to the extent related to the LiveWire Business;
(R) all rights in connection with, the assets associated with and the sponsorship of, all LiveWire Benefit Plans (as defined in the Employee Matters Agreement);
(S) any and all rights to enforce confidentiality restrictions (to the extent related to confidential information of the LiveWire Business) and noncompetition and non-disparagement covenants (each as applied to the LiveWire Business), in each case, contained in any restrictive covenant agreements or other Contracts with any LiveWire Employees (as defined in the Employee Matters Agreement);
(T) subject to the Tax Matters Agreement, any refunds of, credits attributable to, loss carry forwards with respect to, or similar Tax assets in respect of any member of the LiveWire Group, the LiveWire Assets or the LiveWire Business other than any HD Tax Asset;
(U) any and all other Assets (other than HD Assets) not listed above that (i) are listed on the Closing Company Financial Statements (as defined in the SPAC Business Combination Agreement) and remain on the LiveWire balance sheet as of the Closing or (ii) are exclusively related to or exclusively held for use with, the LiveWire Business; and
(ii) all assets set forth on Schedule 1.1(b)(ii).
Notwithstanding the foregoing, the LiveWire Assets shall not in any event include any Asset referred to in Section 1.1(c).
(c) For purposes of this Agreement, “HD Assets” shall mean:
(i) all Assets of either Party or the members of its Group as of the Separation Time, other than the LiveWire Assets, including:
(A) all Contracts of either Party or any member of its respective Group and all rights, interests, claims and benefits of either Party or any member of its respective Group thereunder as of the Separation Time other than the LiveWire Contracts;
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(B) all rights in connection with, the assets associated with and the sponsorship of, all HD Benefit Plans (as defined in the Employee Matters Agreement);
(C) all HD Intellectual Property;
(D) all HD Permits;
(E) any Contract related to the leasing or subleasing of real property and all rights, interests, claims and benefits of either Party or any member of its respective Group thereunder as of the Separation Time other than the LiveWire Leases;
(F) all cash, cash equivalents and marketable securities on hand or in banks, other than the LiveWire Cash;
(G) all rights, interests, claims and benefits in insurance claims, other than those that are a LiveWire Asset;
(H) all Business Records other than the LiveWire Business Records and otherwise described under Section 1.1(b)(i)(J);
(I) any refunds of, credits attributable to, loss carryforwards with respect to, or similar Tax assets in respect of any HD Tax (an “HD Tax Asset”);
(J) all Assets of either Party or any member of its respective Group as of the Separation Time that are expressly contemplated by this Agreement as Assets to be retained by any member of the HD Group;
(K) all Assets of either Party or any member of its respective Group related to the electric two-wheel bikes that are co-branded by HD and LiveWire manufactured prior to the Separation Time (the “Co-branded Bikes”); and
(ii) all assets set forth on Schedule 1.1(c)(ii).
(d) For the purposes of this Agreement, “LiveWire Liabilities” shall mean:
(i) all Liabilities relating to, arising out of or resulting from the actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to, at or after the Separation Time (whether or not such Liabilities cease being contingent, mature, become known, are asserted or foreseen, or accrue, in each case before, at or after the Separation Time), in each case, to the extent that (x) such Liabilities are primarily related to the LiveWire Business or (y) arise out of or are related to a LiveWire Asset, including the immediately following clauses (A) through (H). Notwithstanding the generality of the foregoing, LiveWire Liabilities shall also include, and LiveWire shall retain and remain responsible for and satisfy, discharge and perform when due, and the HD Group shall have no obligation with respect to:
(A) all Liabilities that are expressly provided by this Agreement or the Employee Matters Agreement as Liabilities to be assumed or retained by LiveWire or any other member of the LiveWire Group, and all agreements, obligations and Liabilities of any member of the LiveWire Group under this Agreement or the Employee Matters Agreement;
(B) all current liabilities that are exclusively related to the LiveWire Business, including accounts payable Liabilities, notes payable Liabilities;
(C) accrued payroll, employee benefit and incentive compensation Liabilities (as provided in the Employees Matters Agreements), deferred revenue Liabilities, warranty Liabilities (except as separately described on Schedule 1.1(e)(ii)) and distributor deposits Liabilities, in each case, to the extent related to the LiveWire Business;
(D) all Liabilities based upon, relating to or arising from the LiveWire Contracts;
(E) all Liabilities arising out of any LiveWire Action;
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(F) subject to the Tax Matters Agreement, all Liabilities for or on account of any Taxes imposed on the LiveWire Group, the LiveWire Assets or the LiveWire Business other than any HD Tax (including all Liabilities for Property Taxes allocated to the LiveWire Group pursuant to Section 6.2);
(G) the LiveWire Specified Indebtedness;
(H) any and all other Liabilities (other than HD Liabilities) not listed above that set forth on the Closing Company Financial Statements and that remain on the LiveWire balance sheet as of the Closing; and
(ii) all Liabilities set forth on Schedule 1.1(d)(ii).
Notwithstanding the foregoing, the LiveWire Liabilities shall not in any event include any Liability referred to in Section 1.1(e).
(e) For the purposes of this Agreement, “HD Liabilities” shall mean:
(i) all Liabilities relating to, arising out of or resulting from the actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to, at or after the Separation Time (whether or not such Liabilities cease being contingent, mature, become known, are asserted or foreseen, or accrue, in each case before, at or after the Separation Time), in each case, to the extent that such Liabilities are not LiveWire Liabilities, or relate to, arise out of or result from the Harley Business or a HD Asset, including Liabilities of either Party or the members of its respective Group, in each case, to the extent that such Liabilities relate to, arise out of or result from the Harley Business or a HD Asset, including the immediately following clauses (A) through (I). Notwithstanding the generality of the foregoing, HD Liabilities shall also include, and HD shall retain and remain responsible for and satisfy, discharge and perform when due, and the LiveWire Group shall have no obligation with respect to the HD Liabilities.
(A) all Liabilities that are expressly provided by this Agreement or the Employee Matters Agreement as Liabilities to be assumed or retained by HD or any other member of the HD Group, and all agreements, obligations and Liabilities of any member of the HD Group under this Agreement or Employee Matters Agreement;
(B) all Liabilities to the extent based upon, relating to or arising from the operation or conduct of the Harley Business, arising at, prior to or after the Separation Time, but excluding in all circumstances the LiveWire Liabilities;
(C) all Liabilities to the extent based upon, relating to or arising from the HD Assets;
(D) all Liabilities and Actions arising out of or relating to the Co-branded Bikes;
(E) all Liabilities arising out of or relating to the manufacturing of products for the Harley Business or the LiveWire Business at any time prior to the Separation Time;
(F) all Liabilities arising out of any HD Action;
(G) all Liabilities arising out of claims made by any Third Party (including HD’s, LiveWire’s or any of their respective Subsidiaries’ respective directors, officers, shareholders, current and former employees and agents) against any member of the HD Group or the LiveWire Group to the extent relating to, arising out of or resulting from the Harley Business or the HD Assets or the HD Liabilities (whether such claims arise, in each case before, at or after the Separation Time);
(H) all Liabilities for or on account of any HD Tax, and all Liabilities for Property Taxes allocated to the HD Group pursuant to Section 6.2;
(I) the HD Specified Indebtedness; and
(ii) all Liabilities set forth on Schedule 1.1(e)(ii).
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1.2 Consents; Nonassignable Assets.
(a) If any provision of this Agreement is dependent on the prior consent, approval, permission, or waiver (as applicable, “Consent”) of any third party (including any Governmental Entity), the Parties hereto shall use their commercially reasonable efforts to obtain such Consent prior to the Separation Time, and if such Consent is not obtained prior to the Separation Time, consummate the Separation in accordance with the terms of the this Agreement, subject to the limitations set forth in Section 1.2(b).
(b) Notwithstanding anything to the contrary contained herein, this Agreement shall not constitute an agreement to assign any Asset if an transfer, assignment, conveyance or delivery or attempted transfer, assignment, conveyance or delivery of the same (x) without the Consent of another Person would constitute a breach thereof, or in any way impair the rights of a Party thereunder or give to any third party any rights with respect thereto or (y) be prohibited by applicable Law (a “Non-Assignable Asset”). If any such Consent is not obtained prior to the Separation Time or if an attempted transfer, assignment, conveyance or delivery of the Non-Assignable Asset would be ineffective or would impair such Party’s rights under such Non-Assignable Asset so that the Party entitled to the benefits and responsibilities of such purported transfer, assignment, conveyance or delivery (the “Intended Transferee”) would not receive all such rights and benefits, then (a) the applicable Party shall, and cause their applicable Affiliates to use commercially reasonable efforts to obtain such Consents required to transfer, assign, convey or delivery such Non-Assignable Asset, (b) the Party purporting to make such transfer, assignment, conveyance or delivery of such Non-Assignable Asset (the “Intended Transferor”) shall use commercially reasonable efforts to provide or cause to be provided to the Intended Transferee, to the extent permitted by Law, the benefits of any such Non-Assignable Asset and the Intended Transferor shall promptly pay or cause to be paid to the Intended Transferee when received all income, proceeds and other moneys received by the Intended Transferor with respect to any such Non-Assignable Asset and (c) in consideration thereof the Intended Transferee shall pay, perform and discharge on behalf of the Intended Transferor all of the Intended Transferor’s Liabilities thereunder in a timely manner and in accordance with the terms thereof which it may do without breach and, at the Intended Transferor’s request, the Intended Transferee shall promptly reimburse or prepay (at the Intended Transferor’s election) the Intended Transferor for all amounts actually paid or due by the Intended Transferor on behalf of the Intended Transferee with respect to such Non-Assignable Assets. In addition, the Intended Transferor and the Intended Transferee shall each take such other commercially reasonable actions as may be reasonably requested by the other Party in order to place the other Party, insofar as reasonably possible, in the same position as if such Non-Assignable Asset had been transferred as contemplated hereby and so all the benefits and burdens relating thereto, including possession, use, risk of loss, Liability, potential for gain and dominion, control and command, shall inure to the Intended Transferee. If and when any such Consent is obtained, the transfer, assignment, conveyance or delivery of such Non-Assignable Asset shall be effected in accordance with the terms of this Agreement.
1.3 Termination of Intercompany Agreements.
(a) Except for the Contracts and other arrangements set forth in Section 1.3(b), in furtherance of the releases and other provisions set forth in Article II, HD and each member of the HD Group, on the one hand, and LiveWire and each member of the LiveWire Group, on the other hand, hereby terminate any and all (i) Intercompany balances and accounts whether or not in writing, between or among HD or any member of the HD Group, on the one hand, and LiveWire or any other member of the LiveWire Group, on the other hand, effective as of the Separation Time, such that, to the extent practicable, all such Intercompany balances and accounts shall be fully settled and no Party or any member of its Group shall have any continuing obligation with respect thereto and otherwise in such a manner as the Parties shall determine in good faith (including by means of dividends, distributions, contribution, the creation or repayment of intercompany debt, increasing or decreasing of cash pool balances or otherwise), and (ii) all Intercompany agreements, arrangements, commitments or understandings, including all obligations to provide goods, services or other benefits, whether or not in writing, between or among HD or any member of the HD Group, on the one hand, and LiveWire or any member of the LiveWire Group, on the other hand (other than as set forth in Section 1.3(b)), without further
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payment or performance such that no party thereto shall have any further obligations therefor or thereunder. No such terminated balance, account, agreement, arrangement, commitment or understanding (including any provision thereof which purports to survive termination) shall be of any further force or effect after the Separation Time. Each Party shall, at the reasonable request of any other Party, take, or cause to be taken, such other actions as may be necessary to effect the foregoing.
(b) The provisions of Section 1.3(a) shall not apply to any of the following agreements, arrangements, commitments or understandings (or to any of the provisions thereof): (i) this Agreement and any of the Ancillary Agreements (and each other agreement or instrument expressly contemplated by this Agreement or any Ancillary Agreement to be entered into by any of the Parties or any of the members of their respective Group); (ii) the agreements, arrangements, commitments or understandings listed or described on Schedule 1.3(b)(ii); and (iii) any Shared Contract or Shared Permit.
1.4 Treatment of Shared Contracts. Except as otherwise agreed by the Parties in writing or as otherwise expressly provided in this Agreement or access to such Contracts is provided pursuant to and subject to the express terms of one or more Ancillary Agreement, and subject to applicable Law, the Parties shall use commercially reasonable efforts to separate any Contract entered into by a member of the HD Group or the LiveWire Group with a third party that is not a LiveWire Asset, but pursuant to which a member of the LiveWire Group, as of the Separation Time, has been provided certain revenues or other benefits or incurred any Liability, including those set forth on Schedule 1.4 (a “Shared Contract”) into separate Contracts effective as of the Separation Time so that from and after such time, the LiveWire Group will be entitled to rights and benefits and shall assume the related portion of Liabilities with respect to each Shared Contract (other than to the extent exclusively related to or arising out of any breach or other violation of such Shared Contract prior to the Separation Time), to the extent related to the LiveWire Business and the HD Group will have the rights and benefits and shall assume the related portion of Liabilities (other than to the extent exclusively related to or arising out of any breach or other violation of such Shared Contract prior to the Separation Time), with respect to each Shared Contract to the extent related to the Harley Business. Upon such separation of a Shared Contract, the separated Contract will be a LiveWire Asset or an HD Asset, as applicable. Any such Shared Contract that has not been separated prior to the Separation Time shall not be assigned in relevant part to the applicable members of the LiveWire Group nor amended, unless permitted without the consent of the counterparty, to give the relevant members of the LiveWire Group any entitlement to such rights and benefits thereunder; provided, however, that the Parties shall, and shall cause each of the members of their respective Group to, for twelve (12) months following the Separation Time, take such other reasonable and permissible actions to cause to the extent permitted under applicable Law: (i) the relevant member of the LiveWire Group to receive the rights and benefits previously provided in the ordinary course of business, consistent with past practice, pursuant to such Shared Contract; (ii) the relevant member of the LiveWire Group to bear the burden of the applicable Liabilities previously borne in the ordinary course of business, consistent with past practice, under such Shared Contract and (iii) cooperate, upon request (and at the requesting party’s expense), with the party not holding the Shared Contract to enter into a new Contract. Notwithstanding the foregoing, subject to the provisions of Schedule 1.4 and the express terms of any Ancillary Agreement, no member of the LiveWire Group shall have any approval or other rights with respect to any amendment or other modification of any Shared Contract; provided, however, that the applicable member of the HD Group shall provide the LiveWire Group with reasonable advance notice of any such amendment or modification and shall consider in good faith any reasonable objections or comments, as applicable, by the LiveWire Group prior to taking such actions. Notwithstanding the foregoing, subject to the provisions of Schedule 1.4 and as expressly set forth in any Ancillary Agreement, HD or LiveWire, as applicable, shall be responsible for any or all Liabilities arising from its (or its Affiliates’) breach of any Shared Contract and from and after the Closing, except as required by applicable Law or with the prior written consent of LiveWire, HD may not waive any material benefit or right under any Shared Contract to the extent related to the LiveWire Business.
1.5 Treatment of Shared Permits. Subject to applicable Law and except as otherwise provided in any Ancillary Agreement, and without limiting the generality of the obligations set forth in Section 1.1, unless the
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Parties otherwise agree or the benefits of any Permit described in this Section 1.5 are expressly conveyed to the applicable Party pursuant to this Agreement, any Permit used in connection with both the Harley Business and the LiveWire Business, including those listed on Schedule 1.5 (any such permit, a “Shared Permit”), shall remain with the member of the HD Group or LiveWire Group, as applicable, in possession of such Shared Permit at the Separation Time; provided however, that the Parties shall, and shall cause each of the members of their respective Group to, take such other reasonable and permissible actions to cause to the extent permitted under applicable Law: (i) the relevant member of the HD Group or LiveWire Group that is not in possession of such Shared Permit, to receive the rights and benefits previously provided in the ordinary course of business, consistent with past practice, pursuant to such Shared Permit; (ii) such member of the HD Group or LiveWire Group to bear the burden of the Liabilities under such Shared Permit to the extent arising out of such use and (iii) cooperate, upon request (and at the requesting party’s expense), with the party not holding the Shared Permit to obtain a replacement Permit. Notwithstanding the foregoing, subject to the provisions of Schedule 1.5 and the express terms of any Ancillary Agreement, no member of the LiveWire Group or HD Group, as applicable, shall have any approval or other rights with respect to any amendment or modification of any Shared Permit; provided, however, that the applicable member of the HD Group or LiveWire Group, as applicable, shall provide the LiveWire Group or HD Group (as applicable) with reasonable advance notice of any such amendment or modification and shall consider in good faith any reasonable objections or comments, as applicable, by the LiveWire Group prior to taking such actions. Notwithstanding the foregoing, subject to the provisions of Schedule 1.5 and as expressly set forth in any Ancillary Agreement, HD or LiveWire, as applicable, shall be responsible for any or all Liabilities arising from its (or its Affiliates’) breach of any Shared Permit and from and after the Closing, except as required by applicable Law or (x) with the prior written consent of LiveWire, HD, may not waive any material benefit or right under any Shared Permit to the extent related to the LiveWire Business or (y) with the prior written consent of HD, LiveWire may not waive any material benefit or right under any Shared Permit to the extent related to the Harley Business.
1.6 Treatment of ZEV Environmental Attributes. To the extent that, after Closing, any member of the LiveWire Group receives or accrues ZEV Environmental Attributes, certain of those ZEV Environmental Attributes may be sold to HD as follows:
(a) If any member of the HD Group is or becomes subject to a ZEV Program that requires such member to submit, surrender, or retire ZEV Environmental Attributes, then to the extent any member of the LiveWire Group receives or accrues ZEV Environmental Attributes and all members of the LiveWire Group have fully satisfied their aggregate compliance obligations under any applicable ZEV Program for the applicable compliance period, all members of the LiveWire Group will offer for sale to HD at fair market value such ZEV Environmental Attributes received by any member of the LiveWire Group in excess of such aggregate compliance obligations for the applicable compliance period. HD shall have thirty (30) days to accept such offer of sale and in the event of HD’s acceptance of such offer, HD shall pay fair market value to the applicable member of the LiveWire Group and such member of the LiveWire Group shall transfer such ZEV Environmental Attributes to HD or a member of the HD Group designated by HD, up to the aggregate compliance obligation of all HD Group members under the applicable compliance period of the ZEV Program. Consistent with the terms of this Section 1.6, each member of the LiveWire Group will transfer the ZEV Environmental Attributes to the designated member of the HD Group in advance of the compliance deadline applicable to the HD Group to the extent such timing of transfer is commercially reasonable for all members of the LiveWire Group.
(b) Upon becoming aware that any member of the LiveWire Group becomes eligible to generate ZEV Environmental Attributes, LiveWire will notify HD in writing of such event within thirty (30) days. Upon becoming aware that any member of the HD Group will become subject to a ZEV Program, HD will notify LiveWire in writing of such event within thirty (30) days.
1.7 Bank Accounts; Cash Balances; Misdirected Payments.
(a) Each Party agrees to take, or cause the applicable members of its respective Group to take, at the Separation Time (or such earlier time as the Parties may agree), all actions necessary to amend all Contracts
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governing each bank and brokerage account, owned by HD or any other member of the HD Group (collectively, the “HD Accounts”) so that such HD Accounts, if currently linked (whether by automatic withdrawal, automatic deposit or any other authorization to transfer funds from or to, hereinafter “linked”) to any bank or brokerage account, owned by any member of the LiveWire Group (collectively, the “LiveWire Accounts”) are de-linked from the LiveWire Accounts.
(b) Each Party agrees to take, or cause the applicable members of its respective Group to take, at the Separation Time (or such earlier time as the Parties may agree), all actions necessary to amend all Contracts governing the LiveWire Accounts so that such LiveWire Accounts, if currently linked to an HD Account, are de-linked from the HD Accounts.
(c) With respect to any outstanding checks issued or payments initiated by HD, LiveWire or any of their respective Group members prior to the Separation Time, such outstanding checks and payments shall be honored following the Separation Time by the Person or Group owning the account on which the check is drawn or from which the payment was initiated. In addition, any outstanding checks or payments issued, other wire transfers and drafts deposited or available for deposit or received that have not yet cleared (including those in transit), by a third party for the benefit of HD, LiveWire or any of their respective Group members prior to the Separation Time shall be honored following the Separation Time and payment shall be made to the party to whom the check or payment was issued.
(d) Except as expressly contemplated by any Ancillary Agreement, with respect to the payments described in Section 1.7(c), in the event that:
(i) LiveWire or one of its Group members initiates a payment prior to the Separation Time that is honored following the Separation Time, and to the extent such payment relates to the Harley Business, then HD shall reimburse LiveWire for such payment as soon as reasonably practicable and in no event later than ten (10) days after such payment is honored; or
(ii) HD or one of its Group members initiates a payment prior to the Separation Time that is honored following the Separation Time, and to the extent such payment relates to the LiveWire Business, then LiveWire shall reimburse HD for such payment as soon as reasonably practicable and in no event later than ten (10) days after such payment is honored.
(e) Prior to or concurrently with the Separation Time, (i) HD shall cause all HD employees to be removed as authorized signatories on all bank accounts maintained by the LiveWire Group and (ii) LiveWire shall cause all LiveWire Employees to be removed as authorized signatories on all bank accounts maintained by the HD Group; provided that, in the case of clause (i), HD shall maintain signatories in connection with the services provided pursuant to express terms of the Transition Services Agreement.
(f) As between HD and LiveWire (and the members of their respective Group), all payments made to and reimbursements received by either Party (or any member of its Group), in each case after the Separation Time, that relate to a business, Asset or Liability of the other Party (or any member of such other Party’s Group) (each, a “Misdirected Payment”), shall be held in trust by the recipient Party for the use and benefit of the other Party (or member of such other Party’s Group entitled thereto) (at the expense of the party entitled thereto). Each Party shall maintain an accounting of any such Misdirected Payments received by such Party or any member of its Group, and the Parties shall have a weekly reconciliation, whereby all such Misdirected Payments received by each Party are calculated and the net amount owed to the other Party (or members of the other Party’s Group) shall be paid over to the other Party (for further distribution to the applicable members of such other Party’s Group). Notwithstanding the foregoing, neither Party (nor any of the members of its Group) shall act as collection agent for the other Party (or any of the members of its Group), nor shall either Party (or any members of its Group) act as surety or endorser with respect to non-sufficient funds checks, or funds to be returned in a bankruptcy or fraudulent conveyance action.
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1.8 Misallocated Assets and Liabilities.
(a) Subject to Section 1.2, Section 1.3 and Section 1.4, in the event that, at any time from and after the Separation Time, either Party becomes aware that (i) it or another member of its Group is the record or beneficial owner of, receives or otherwise comes to possess or benefit from a LiveWire Asset that should have been allocated to a member of the HD Group as an HD Asset pursuant to this Agreement or (ii) it or another member of its Group is the record or beneficial owner of, receives or otherwise comes to possess or benefit from an HD Asset that should have been allocated to a member of the LiveWire Group as a LiveWire Asset, then pursuant to this Agreement, such Party shall promptly notify the other Party, then the Parties shall thereafter reasonably cooperate to, as promptly as practicable (but in no case later than within thirty (30) days of such Party becoming aware of such misallocated Asset), transfer, assign, convey or deliver, or cause to be transferred, assigned, conveyed or delivered, such Asset to such member of the other Group, and such member of the other Group shall accept such Asset for no further consideration other than that set forth in this Agreement. Prior to any such transfer, assignment, conveyance or delivery, such Asset shall be held in accordance with Section 1.2.
(b) Subject to Section 1.2, Section 1.3 and Section 1.4, in the event that, at any time from and after the Separation Time, either Party becomes aware that (i) it or another member of its Group has not assumed a LiveWire Liability that should have been allocated to a member of the LiveWire Group as a LiveWire Liability pursuant to this Agreement or the Employee Matters Agreement or (ii) it or another member of its Group has not assumed an HD Liability that should have been allocated to a member of the HD Group as an HD Liability pursuant to this Agreement or the Employee Matters Agreement, then pursuant to this Agreement, such Party shall as promptly as practicable (but in no case later than within thirty (30) days of such Party becoming aware of such misallocated Liability), transfer, assign, convey or delivery, or cause to be transferred, assigned, conveyed or delivered, such Liability to such member of the other Group and such member of the other Group shall assume such Liability for no further consideration than that set forth in this Agreement. Prior to any such assumption, such Liabilities shall be held in accordance with Section 1.2. To the extent either Party makes any payment or incurs any obligations relating to a misallocated Liability as set forth in this Section 1.7(b), upon discovery by the Parties that such Liability was misallocated, the Party to which such Liability should have been allocated shall reimburse the other Party for any payment made or obligations incurred with respect to such misallocated Liability.
1.9 Disclaimer of Representations and Warranties. EACH OF HD (ON BEHALF OF ITSELF AND EACH MEMBER OF THE HD GROUP) AND LIVEWIRE (ON BEHALF OF ITSELF AND EACH MEMBER OF THE LIVEWIRE GROUP) UNDERSTANDS AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN ANY ANCILLARY AGREEMENT, NO PARTY TO THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT CONTEMPLATED BY THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR OTHERWISE, IS REPRESENTING OR WARRANTING IN ANY WAY AS TO THE ASSETS, BUSINESSES OR LIABILITIES TRANSFERRED, ASSUMED OR LICENSED AS CONTEMPLATED HEREBY OR THEREBY (INCLUDING ANY ASSETS, BUSINESSES OR LIABILITIES TRANSFERRED, ASSUMED OR LICENSED UNDER THIS ARTICLE I AND SECTION 4.5), AS TO WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR ANY OTHER MATTER CONCERNING, ANY ASSETS OF SUCH PARTY, AS TO, IN THE CASE OF INTELLECTUAL PROPERTY, NON-INFRINGEMENT OR ANY WARRANTY THAT ANY SUCH INTELLECTUAL PROPERTY IS “ERROR FREE,” OR AS TO THE ABSENCE OF ANY DEFENSES OR RIGHT OF SET-OFF OR FREEDOM FROM COUNTERCLAIM WITH RESPECT TO ANY CLAIM OR OTHER ASSET. EXCEPT AS MAY EXPRESSLY BE SET FORTH HEREIN OR IN ANY ANCILLARY AGREEMENT, ALL SUCH ASSETS ARE BEING TRANSFERRED OR LICENSED, AS APPLICABLE, ON AN “AS IS,” “WHERE IS” BASIS.
1.10 Certain Other Matters. HD will use commercially reasonable efforts to make the modification(s) set forth on Schedule 1.10 (to the extent applicable), and keep SPAC reasonably informed of any material developments in connection therewith.
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ARTICLE II.
MUTUAL RELEASES; INDEMNIFICATION; COOPERATION; INSURANCE
2.1 Release of Claims.
(a) Except as provided in Section 2.1(c) and as otherwise set forth in the Employee Matters Agreement, effective as of the Separation Time, HD does hereby, for itself and each other member of the HD Group, their respective Affiliates, successors and assigns, and, to the extent permitted by Law, all Persons who at any time prior to the Separation Time have been shareholders, directors, officers, agents or employees of any member of the HD Group (in each case, in their respective capacities as such), surrender, relinquish, release and forever discharge (i) LiveWire, the respective members of the LiveWire Group, their respective Affiliates, successors and assigns, and (ii) all Persons who at any time prior to the Separation Time have been shareholders, directors, officers, agents or employees of any member of the LiveWire Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, in each case from (A) all HD Liabilities whatsoever, (B) all Liabilities arising from, or in connection with, the transactions and all other activities to implement the Transactions and (C) all Liabilities arising from or in connection with actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to the Separation Time (whether or not such Liabilities cease being contingent, mature, become known, are asserted or foreseen, or accrue, in each case before, at or after the Separation Time) in each case of this clause (C) to the extent relating to, arising out of or resulting from the Harley Business, the HD Assets or HD Liabilities.
(b) Except as provided in Section 2.1(c) and as otherwise set forth in the Employee Matters Agreement, effective as of the Separation Time, LiveWire does hereby, for itself and each other member of the LiveWire Group, their respective Affiliates, successors and assigns, and, to the extent permitted by Law, all Persons who at any time prior to the Separation Time have been shareholders, directors, officers, agents or employees of any member of the LiveWire Group (in each case, in their respective capacities as such), surrender, relinquish, release and forever discharge (i) HD, the respective members of the HD Group, their respective Affiliates (other than any member of the LiveWire Group), successors and assigns, and (ii) all Persons who at any time prior to the Separation Time have been shareholders, directors, officers, agents or employees of any member of the HD Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, in each case from all LiveWire Liabilities.
(c) Nothing contained in Section 2.1(a) or (b) shall impair any right of any Person to enforce this Agreement. In addition, nothing contained in Section 2.1(a) or (b) shall release any Person from:
(i) any Liability provided in or resulting from any agreement among any members of the HD Group or the LiveWire Group that is specified in Section 1.3(b) as not to terminate as of the Separation Time, or any other Liability specified in such Section 1.3(b) as not to terminate as of the Separation Time;
(ii) any Liability provided in or resulting from (1) any Ancillary Agreement or (2) Contract or understanding that is entered into after the Separation Time between any member of the HD Group, on the one hand, and any member of the LiveWire Group, on the other hand;
(iii) any Liability, contingent or otherwise, assumed, transferred, assigned or allocated to the Group of which such Person is a member in accordance with this Agreement (including any HD Liability and any LiveWire Liability, as applicable);
(iv) any Liability that the Parties may have with respect to indemnification or contribution pursuant to this Agreement or otherwise for claims brought against the Parties by third Persons, which Liability shall be governed by the provisions of this Article II and Article III and any other applicable provisions of this Agreement; or
(v) any Liability the release of which would result in the release of any Person other than a Person released pursuant to Sections 2.1(a) or (b).
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(d) In addition, nothing contained in Sections 2.1(a) or (b) shall release HD from its obligations, existing as of immediately prior to or after the Separation Time, to indemnify or to advance expenses to any person who was a director, officer or employee of a member of the HD Group or the LiveWire Group on or prior to the Separation Time; it being understood that, if the underlying actions or conduct giving rise to a claim for indemnification or advancement of expenses is related to or arises from a LiveWire Liability, LiveWire shall indemnify HD’s costs to indemnify and advance expenses to the director, officer or employee in accordance with the provisions set forth in this Article II.
(e) HD shall not make, and shall not permit any member of the HD Group to make, any claim or demand, or commence any Action asserting any claim or demand, against LiveWire or any member of the LiveWire Group, or any other Person released pursuant to Section 2.1(a), with respect to any Liabilities released pursuant to Section 2.1(a). LiveWire shall not make, and shall not permit any member of the LiveWire Group to make, any claim or demand, or commence any Action asserting any claim or demand, against HD or any member of the HD Group, or any other Person released pursuant to Section 2.1(b), with respect to any Liabilities released pursuant to Section 2.1(b).
2.2 Indemnification by LiveWire. Without limiting or otherwise affecting the indemnity provisions of the Ancillary Agreements, from and after the Separation Time, LiveWire, and each member of the LiveWire Group, will, on a joint and several basis, indemnify, defend (or, where applicable, pay the defense costs for) and hold harmless the HD Indemnitees from and against, and will reimburse such HD Indemnitees with respect to, any and all Losses (whether arising from a Third-Party Claim or otherwise) that such HD Indemnitee may suffer or incur, or become subject to, arising out of or resulting from:
(a) any LiveWire Liabilities; and
(b) any Liabilities of the LiveWire Group relating to or arising from the operations of the LiveWire Business from and after the Separation Time.
2.3 Indemnification by HD. Without limiting or otherwise affecting the indemnity provisions of the Ancillary Agreements, from and after the Separation Time, HD, and each member of the HD Group, will, on a joint and several basis, indemnify, defend (or, where applicable, pay the defense costs for) and hold harmless the LiveWire Indemnitees from and against, and will reimburse such LiveWire Indemnitee with respect to, any and all Losses (whether arising from a Third-Party Claim or otherwise) that such HD Indemnitee may suffer or incur, or become subject to, arising out of or resulting from:
(a) any HD Liabilities; and
(b) any Liabilities of the HD Group relating to or arising from the operations of the Harley Business from and after the Separation Time.
2.4 Procedures for Defense; Settlement and Indemnification of Third-Party Claims.
(a) Direct Claims. Any claim on account of indemnifiable Losses that does not involve a Third-Party Claim will be asserted by reasonably prompt written notice given by the Indemnitee to the Indemnifying Party from whom such indemnification is sought. The failure by any Indemnitee so to give notice as provided in this Section 2.4(a) will not relieve the Indemnifying Party of its obligations under this Article II, except to the extent that the Indemnifying Party has been actually prejudiced by such failure to give notice.
(b) Third-Party Claims.
(i) Notice of Claims. If an Indemnitee receives notice or otherwise learns of the assertion by a Person (including any Governmental Entity) who is not a member of the HD Group or LiveWire Group or any of their respective Affiliates of any claim or of the commencement by any such Person of any Action with respect to which an Indemnifying Party may be obligated to provide indemnification (collectively, a “Third-
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Party Claim”), such Indemnitee will give such Indemnifying Party prompt written notice (a “Claims Notice”) thereof but in any event within 20 calendar days after becoming aware of such Third-Party Claim. Any such notice will describe the Third-Party Claim in reasonable detail and include copies of all notices and documents (including court papers) received by the Indemnitee relating to the Third-Party Claim. Notwithstanding the foregoing, the delay or failure of any Indemnitee or other Person to give notice as provided in this Section 2.5(b)(i) will not relieve the Indemnifying Party of its obligations under this Article II, except to the extent that such Indemnifying Party is actually prejudiced by such delay or failure to give notice.
(ii) Opportunity to Defend. The Indemnifying Party has the right, exercisable by written notice to the Indemnitee within 30 days after receipt of a Claims Notice from the Indemnitee of the commencement or assertion of any Third-Party Claim in respect of which indemnity may be sought under this Article II, to assume and conduct the defense of such Third-Party Claim in accordance with the limits set forth in this Agreement with counsel selected by the Indemnifying Party and reasonably acceptable to the Indemnitee; provided, however, that the Indemnifying Party may only assume such defense if (A) the defense of such Third-Party Claim by the Indemnifying Party will not, in the reasonable judgment of the Indemnitee, (1) if HD is the Indemnifying Party, affect LiveWire or any of its controlled Affiliates (including after the Business Combination, any member of the LiveWire Group) in an adverse manner or otherwise result in an actual or potential conflict of interest and (2) if LiveWire is the Indemnifying Party, affect HD or any of its controlled Affiliates in an adverse manner, or otherwise result in an actual or potential conflict of interest; (B) the Third-Party Claim solely seeks (and continues to seek) monetary damages, and (C) the Third-Party Claim is not made by a Governmental Entity with regulatory authority over the Indemnitee or any of its material Assets (the conditions set forth in clauses (A), (B) and (C) are, collectively, the “Litigation Conditions”). If the Indemnifying Party does not assume the defense of a Third-Party Claim in accordance with this Section 2.5(b), the Indemnitee may continue to defend the Third-Party Claim. If the Indemnifying Party has assumed the defense of a Third-Party Claim as provided in this Section 2.5(b), the Indemnifying Party will not be liable for any legal expenses subsequently incurred by the Indemnitee in connection with the defense of the Third-Party Claim; provided, however, that if (x) either of the Litigation Conditions ceases to be met or (y) the Indemnifying Party fails to take reasonable steps necessary to defend diligently such Third-Party Claim, the Indemnitee may assume its own defense, and the Indemnifying Party will be liable for all reasonable costs or expenses paid or incurred in connection with such defense. The Indemnifying Party or the Indemnitee, as the case may be, has the right to participate in (but, subject to the prior sentence, not control), at its own expense, the defense of any Third-Party Claim that the other is defending as provided in this Agreement. The Indemnifying Party, if it has assumed the defense of any Third-Party Claim as provided in this Agreement, may not, without the prior written consent of the Indemnitee, consent to a settlement of, or the entry of any judgment arising from, any such Third-Party Claim that (I) does not include as an unconditional term thereof the giving by the claimant or the plaintiff to the Indemnitee of a complete release from all liability in respect of such Third-Party Claim, (II) provides for injunctive or other nonmonetary relief affecting the Indemnitee or any of its Affiliates, or (III) in the reasonable opinion of the Indemnitee, would otherwise adversely affect the Indemnitee or any of its Affiliates. The Indemnitee may settle any Third-Party Claim, the defense of which has not been assumed by the Indemnifying Party, only with the prior written consent of the Indemnifying Party, not to be unreasonably withheld.
2.5 Insurance Proceeds. The amount that any Indemnifying Party is or may be required to provide indemnification to or on behalf of any Indemnitee pursuant to Section 2.2 or Section 2.3, as applicable, will be reduced by any Insurance Proceeds or other amounts actually recovered from third parties by or on behalf of such Indemnitee in respect of the related Loss incurred by such Indemnitee in connection with seeking to collect and collecting such amounts.
2.6 Survival of Indemnities. The rights and obligations of each of HD and LiveWire and their respective Indemnitees under this Article II will survive the Separation Time indefinitely, unless a specific survival or other applicable period is expressly set forth herein.
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2.7 Insurance Matters.
(a) Except as otherwise expressly provided in this Section 2.7 or any Ancillary Agreement, the Parties acknowledge and agree that from and after the Separation Time, LiveWire, and each other member of the LiveWire Group, shall cease to be an insured, and shall not have access to or any rights under, any insurance policies or self-insured programs or related policies or agreements of HD and each other member of the HD Group, regardless of whether such policies were applicable to the LiveWire Group prior to the Separation Time. Notwithstanding the foregoing, with respect to events, circumstances or occurrence relating to the LiveWire Group that occurred or existed prior to the Separation Time that are covered by insurance policies of the HD Group under which LiveWire and each other member of the LiveWire Group were insured on or prior to the Separation Time (the “Shared Policies”), LiveWire shall have the right to make claims, in each case, subject to the terms and conditions thereof; provided that LiveWire shall bear, and neither HD nor any other member of the HD Group, shall have any obligation to repay or reimburse LiveWire for, the amount of any deductibles, self-insured retentions and other out-of-pocket expenses incurred in connection with such claims under such occurrence-based policies with respect to any “pre claim” deductible. HD agrees, at LiveWire’s request, to reasonably cooperate with LiveWire in the pursuit of such claims under the Shared Policies, in each case, at LiveWire’s sole cost and expense.
(b) Except as otherwise expressly provided in this Agreement or any Ancillary Agreement, from and after the Separation Time, LiveWire will acquire its own insurance policies covering the LiveWire Group and each of their respective directors, officers and employees.
(c) The provisions of this Agreement are not intended to and shall not relieve any insurer of any Liability under any policy.
(d) No member of the HD Group or any of its Affiliates will have any Liability whatsoever as a result of or in relation to the insurance policies, including the Shared Policies including as a result of (i) the level or scope of any insurance, (ii) the creditworthiness of any insurance carrier, (iii) the terms and conditions of any policy, (iv) the adequacy or timeliness of any notice to any insurance carrier with respect to any claim or potential claim; (v) the administration, pursuit, or collection with respect to any claim; or (vi) the unavailability or denial of coverage for any other reason.
(e) HD and the members of the HD Group, as applicable, will continue to own all insurance policies, insurance Contracts, and other related insurance agreements of HD and members of the HD Group which are or were in effect at any time prior to the Separation Time, including the Shared Policies.
(f) This Agreement shall not be considered as an attempted assignment of any policy of insurance or as a Contract of insurance and shall not be construed to waive any right or remedy of any members of the HD Group in respect of any insurance policy or any other Contract or policy of insurance.
(g) To the extent that any insurance policy provides for the reinstatement of policy limits, and both HD and LiveWire desire to reinstate such limits, the cost of reinstatement will be shared by HD and LiveWire as the Parties may agree. If either Party reasonably and in good faith determines that such reinstatement would not be beneficial, that Party shall not contribute to the cost of reinstatement.
(h) For purposes of this Agreement, “Covered Matter” shall mean any matter with respect to which any member of the LiveWire Group (or its Affiliates) is entitled to pursue coverage under any Shared Policy pursuant to Section 2.7(a). If LiveWire receives notice or otherwise learns of any Covered Matter, LiveWire shall promptly give HD written notice thereof. Any such notice shall describe the Covered Matter in reasonable detail. With respect to each Covered Matter and any Joint Claim, LiveWire shall have sole responsibility for reporting the claim to the insurance carrier and will provide a copy of such report to HD.
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(i) Each of LiveWire and HD will share such information as is reasonably necessary in order to permit the other Party to manage and conduct its insurance matters in an orderly fashion and provide the other Party with any assistance that is reasonably necessary or beneficial in connection with such Party’s insurance matters.
2.8 Guarantees, Letters of Credit and Other Obligations.
(a) Prior to the Separation Time, HD shall (with the reasonable cooperation of the applicable members of the HD Group) use its commercially reasonable efforts to, effective as of the Separation Time, have the applicable members of the LiveWire Group removed as guarantor of or obligor for the HD Liabilities arising after the Separation Time. Prior to the Separation Time, LiveWire shall (with the reasonable cooperation of the applicable members of the LiveWire Group) use its commercially reasonable efforts to, effective as of the Separation Time, have the applicable members of the HD Group removed as guarantor of or obligor for the LiveWire Liabilities arising after the Separation Time.
(b) At or prior to the Separation Time, (i) to the extent required to obtain a release from a guarantee, letter of credit or other obligation of the applicable member of the LiveWire Group with respect to the HD Liabilities arising after the Separation Time, HD shall execute a substitute document in the form of any such existing guarantee or letter of credit, as applicable, or such other form as is agreed to by the relevant parties to such guarantee agreement, letter of credit or other obligation, except to the extent that such existing guarantee contains representations, covenants or other terms or provisions either (A) with which HD would be reasonably unable to comply or (B) which would be reasonably expected to be breached and (ii) to the extent required to obtain a release from a guarantee, letter of credit or other obligation of any member of the HD Group with respect to the LiveWire Liabilities arising after the Separation Time, LiveWire shall execute a substitute document in the form of any such existing guarantee or letter of credit, as applicable, or such other form as is agreed to by the relevant parties to such guarantee agreement, letter of credit or other obligation, except to the extent that such existing guarantee contains representations, covenants or other terms or provisions either (A) with which LiveWire would be reasonably unable to comply or (B) which would be reasonably expected to be breached.
(c) If the Parties are unable to obtain, or to cause to be obtained, any such required removal as set forth in clauses (a) and (b) of this Section 2.8 prior to the Separation Time, (i) (x) HD shall (with the reasonable cooperation of the applicable members of the HD Group) use its commercially reasonable efforts to have the applicable members of the LiveWire Group removed as guarantor of or obligor for the HD Liabilities arising after the Separation Time and (y) LiveWire shall (with the reasonable cooperation of the applicable members of the LiveWire Group) use its commercially reasonable efforts to have the applicable members of the HD Group removed as guarantor of or obligor for the LiveWire Liabilities arising after the Separation Time (ii) with respect to the HD Liabilities, until such required removal, (A) HD shall, and shall cause the other members of the HD Group to, indemnify, defend and hold harmless each member of the LiveWire Group from and against any Liability arising from or relating to such guarantee, letter of credit or other obligation, as applicable, and shall, as agent or subcontractor for the applicable LiveWire Group guarantor or obligor, pay, perform and discharge fully all of the obligations or other Liabilities of such guarantor or obligor thereunder, and (B) HD shall not, and shall cause the other members of the HD Group not to, agree to renew or extend the term of, increase any obligations under, or transfer to a third Person, any loan, guarantee, letter of credit, lease, contract or other obligation for which a member of the LiveWire Group is or may be liable unless all obligations of the members of the LiveWire Group with respect thereto are thereupon terminated by documentation satisfactory in form and substance to LiveWire in its sole and absolute discretion and (iii) with respect to the LiveWire Liabilities until such required removal, (A) LiveWire shall, and shall cause the other members of the LiveWire Group to, indemnify, defend and hold harmless each member of the HD Group for any Liability arising from or relating to such guarantee, letter of credit or other obligation, as applicable, and shall, as agent or subcontractor for the applicable HD Group guarantor or obligor, pay, perform and discharge fully all of the obligations or other Liabilities of such guarantor or obligor thereunder, and (B) except as it relates to a Shared Contract or a Shared Permit, LiveWire shall not, and shall cause the other members of the LiveWire Group not to, agree to renew or extend the term of, increase any obligations under, or transfer to a third Person, any loan, guarantee, letter of
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credit, lease, contract or other obligation for which a member of the HD Group is or may be liable unless all obligations of the members of the HD Group with respect thereto are thereupon terminated by documentation satisfactory in form and substance to HD in its sole and absolute discretion.
ARTICLE III.
EXCHANGE OF INFORMATION; CONFIDENTIALITY
3.1 Agreement for Exchange of Information. Except as otherwise provided in any Ancillary Agreement, each of HD and LiveWire, on behalf of itself and the members of its respective Group, shall use commercially reasonable efforts to provide or make available, or cause to be provided or made available, to the other Party, at any time before or after the Separation Time, as soon as reasonably practicable but in no event later than thirty (30) days after written request therefor, any Information (or a copy thereof) in the possession or under the control of either Party or any of the members of its Group to the extent that: (i) such Information relates to the LiveWire Business or any LiveWire Asset or LiveWire Liability, if LiveWire is the requesting party, or to the Harley Business or any HD Asset or HD Liability, if HD is the requesting party; (ii) such Information is required by the requesting party to comply with its obligations under this Agreement or any Ancillary Agreement; or (iii) such Information is required by the requesting party to comply with any obligation imposed by any Governmental Entity; provided, however, that, in the event that the Party to whom the request has been made determines that any such provision of Information could be commercially detrimental, violate any Law or agreement or waive any attorney-client privilege, then the Parties shall use commercially reasonable efforts to permit compliance with such obligations to the extent and in a manner that avoids any such harm or consequence. The Party providing Information pursuant to this Section 3.1 shall only be obligated to provide such Information in the form, condition and format in which it then exists and in no event shall such Party be required to perform any improvement, modification, conversion, updating or reformatting of any such Information, and nothing in this Section 3.1 shall expand the obligations of the Parties under Section 3.4. All Information provided pursuant to this Section 3.1 shall be subject to the obligations set forth In Section 3.9.
3.2 Ownership of Information. Any Information owned by one Group that is provided to a requesting Party pursuant to Section 3.1 or 3.7 shall remain the property of the providing Party. Unless specifically set forth herein, nothing contained in this Agreement shall be construed as granting or conferring rights of license or otherwise in any such Information.
3.3 Compensation for Providing Information. The Party requesting Information agrees to reimburse the other Party for the reasonable and documented out-of-pocket costs, if any, of gathering, copying, transporting and otherwise complying with the request with respect to such Information (including any reasonable and documented out-of-pocket costs and expenses incurred in any review of Information for purposes of protecting the privileged Information of the providing Party or in connection with the restoration of backup media for purposes of providing the requested Information).
3.4 Record Retention.
(a) The Parties agree and acknowledge that following the Separation Time, it is likely that each Party will have some of the Tangible Information of the other Party stored at its facilities or at Third Party records storage locations arranged for by such Party (each, a “Records Facility”) and the cost of any Third Party Records Facility where Tangible Information belonging to both members of the HD Group, on the one hand, and members of the LiveWire Group, on the other hand, is stored shall be split proportionally between the HD Group and the LiveWire Group.
(b) For a period of seven (7) years following the Separation Time, each Party shall use the same degree of care (but no less than a reasonable degree of care) as it takes to preserve confidentiality for its own similar Information: (i) to maintain the Stored Records at its Record Facility in accordance with its regular records
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retention policies and procedures and the terms of this Section 3.4; and (ii) to comply with the requirements of any “litigation hold” that relates to Stored Records at its Record Facility that relates to (x) any Action that is pending as of the Separation Time or (y) any Action that arises or becomes threatened or reasonably anticipated after the Separation Time as to which the Party storing such Stored Records has received a written notice of the applicable “litigation hold” from the other Party; provided, that such other Party shall be obligated to provide the Party storing such Stored Records with timely notice of the termination of such “litigation hold.”
3.5 [Reserved].
3.6 Other Agreements Providing for Exchange of Information.
(a) The rights and obligations granted under this Article III are subject to any specific limitations, qualifications or additional provisions on the sharing, exchange, retention or confidential treatment of Information set forth herein or any Ancillary Agreement.
(b) Either Party that receives, pursuant to a request for Information in accordance with this Article III, Tangible Information that is not relevant to its request shall (i) return it to the providing Party or, at the providing Party’s request, destroy such Tangible Information and (ii) deliver to the providing Party a certificate certifying that such Tangible Information was returned or destroyed, as the case may be, which certificate shall be signed by an authorized Representative of the requesting Party.
(c) When any Tangible Information provided by one Party to the other Party (other than Tangible Information provided pursuant to Section 3.4) is no longer needed for the purposes contemplated by this Agreement or any Ancillary Agreement or is no longer required to be retained by applicable Law, the receiving Party shall promptly, after request of the other Party, either return to the other Party all Tangible Information in the form in which it was originally provided (including all copies thereof and all notes, extracts or summaries based thereon) or, if the providing Party has requested that the other Party destroy such Tangible Information or the receiving Party has chosen to destroy such Tangible Information, certify to the other Party that it has destroyed such Tangible Information (and such copies thereof and such notes, extracts or summaries based thereon); provided, that this obligation to return or destroy such Tangible Information shall not apply to any Tangible Information solely related to the receiving Party’s business, Assets, Liabilities, operations or activities.
3.7 Auditors and Audits. From and after the Separation Time, each Party shall provide or provide access to the other Party on a timely basis, all information reasonably required to meet its schedule for the preparation, printing, filing, and public dissemination of its annual financial statements and for management’s assessment of the effectiveness of its disclosure controls and procedures and its internal control over financial reporting in accordance with, as applicable, Items 307 and 308, respectively, of Regulation S-K promulgated by the SEC and, to the extent applicable to such Party, its auditor’s audit of its internal control over financial reporting and management’s assessment thereof in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 and the SEC’s and Public Company Accounting Oversight Board’s rules and auditing standards thereunder.
3.8 Privileged Matters.
(a) The Parties recognize that legal and other professional services that have been and shall be provided prior to the Separation Time have been and shall be rendered for the collective benefit of each of the members of the HD Group and the LiveWire Group, and that each of the members of the HD Group and the LiveWire Group should be deemed to be the client with respect to such services for the purposes of asserting all privileges and immunities that may be asserted under applicable Law in connection therewith. The Parties recognize that legal and other professional services will be provided after the Separation Time, which services will be rendered solely for the benefit of the HD Group or the LiveWire Group, as the case may be.
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(b) The Parties agree as follows:
(i) HD shall be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with any Privileged Information, other than such Privileged Information that primarily relates to the LiveWire Business or LiveWire Liabilities, whether or not the Privileged Information is in the possession or under the control of a member of the HD Group or the LiveWire Group, and LiveWire Group agrees not to disclose any such Privileged Information to any Third Party;
(ii) LiveWire shall be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with any Privileged Information that primarily relates to the LiveWire Business or the LiveWire Liabilities, whether or not the Privileged Information is in the possession or under the control of a member of the HD Group or the LiveWire Group, and the HD Group agrees not to disclose any such Privileged Information to any Third Party; and
(iii) If the Parties do not agree as to whether certain information is Privileged Information, then such information shall be treated as Privileged Information, and the Party that believes that such information is Privileged Information shall be entitled to control the assertion or waiver of all privileges and immunities in connection with any such information until such time as it is finally judicially determined that such information is not Privileged Information or unless the Parties otherwise agree.
(c) [Reserved].
(d) Upon receipt by any member of the LiveWire Group of any subpoena, discovery or other request that would reasonably be expected to result in the production or disclosure of Information subject to a shared privilege or immunity or as to which HD or any of its Subsidiaries has the sole right hereunder to assert a privilege or immunity, or if LiveWire obtains knowledge that any of its, or any member of the LiveWire Group’s, current or former directors, officers, agents or employees have received any subpoena, discovery or other requests that would reasonably be expected to result in the production or disclosure of such Privileged Information, LiveWire shall promptly provide written notice to HD of the existence of the request (which notice shall be delivered to HD no later than five (5) Business Days following the receipt of any such subpoena, discovery or other request) and shall provide HD a reasonable opportunity to review the Information and to assert any rights it or they may have, including under this Section 3.8 or otherwise, to prevent the production or disclosure of such Privileged Information.
(e) Upon receipt by any member of the HD Group of any subpoena, discovery or other request that would reasonably be expected to result in the production or disclosure of Information subject to a shared privilege or immunity or as to which LiveWire or any member of the LiveWire Group has the sole right hereunder to assert a privilege or immunity, or if HD obtains knowledge that any of its, or any member of the HD Group’s, current or former directors, officers, agents or employees have received any subpoena, discovery or other requests that would reasonably be expected to result in the production or disclosure of such Privileged Information, HD shall promptly provide written notice to LiveWire of the existence of the request (which notice shall be delivered to LiveWire no later than five (5) Business Days following the receipt of any such subpoena, discovery or other request) and shall provide LiveWire a reasonable opportunity to review the Information and to assert any rights it or they may have, including under this Section 3.8 or otherwise, to prevent the production or disclosure of such Privileged Information.
(f) Any furnishing of, or access to, Information pursuant to this Agreement and the transfer of the Assets and retention of the LiveWire Assets by LiveWire are made and done in reliance on the agreement of the Parties set forth in this Section 3.8 and in Section 3.9 to maintain the confidentiality of Privileged Information and to assert and maintain all applicable privileges and immunities. The Parties agree that their respective rights to any access to information, witnesses and other Persons, the furnishing of notices and documents and other cooperative efforts between the Parties contemplated by this Agreement, and the transfer of Privileged Information between the Parties and members of their respective Group pursuant to this Agreement, shall not be
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deemed a waiver of any privilege that has been or may be asserted under this Agreement or otherwise. The Parties further agree that: (i) the inadvertent exchange or retention by one Party to the other Party of any Privileged Information shall not be deemed to constitute a waiver of any privilege or immunity that has been or may be asserted under this Agreement or otherwise with respect to such Privileged Information; and (ii) the Party receiving or retaining such Privileged Information shall promptly return or transfer, as the case may be, such Privileged Information to the Party who has the right to assert the privilege or immunity.
(g) In furtherance of, and without limitation to, the Parties’ agreement under this Section 3.8, HD and LiveWire shall, and shall cause their applicable Subsidiaries to, use reasonable efforts to maintain their respective separate and joint privileges and immunities.
3.9 Confidentiality.
(a) Confidentiality. From and after the Separation Time, subject to Section 3.10 and except as contemplated by or otherwise provided in this Agreement or any Ancillary Agreement, HD, on behalf of itself and each of its Subsidiaries, and LiveWire, on behalf of itself and each of its Subsidiaries, agrees to hold, and to cause its respective Representatives to hold, in strict confidence, with at least the same degree of care that applies to HD’s confidential and proprietary information pursuant to policies in effect as of the Separation Time, all confidential or proprietary Information concerning the other Party (or its business) and the other Party’s Subsidiaries (or their respective businesses) that is either in its possession (including confidential or proprietary Information in its possession prior to the Separation Time) or furnished by the other Party or the other Party’s Subsidiaries or their respective Representatives at any time pursuant to this Agreement or any Ancillary Agreement, and shall not use any such confidential or proprietary Information other than for such purposes as may be expressly permitted hereunder or thereunder, except, in each case, to the extent that such confidential or proprietary Information has been: (i) in the public domain or generally available to the public, other than as a result of a disclosure by such Party or any of its Subsidiaries or any of their respective Representatives in violation of this Agreement, (ii) later lawfully acquired from other sources by such Party or any of its Subsidiaries, which sources are not themselves bound by a confidentiality obligation or other contractual, legal or fiduciary obligation of confidentiality with respect to such confidential or proprietary Information or (iii) independently developed or generated without reference to or use of the respective proprietary or confidential Information of the other Party or any of its Subsidiaries. The foregoing restrictions shall not apply in connection with the enforcement of any right or remedy relating to this Agreement or the Ancillary Agreements or the transactions contemplated hereby or thereby. If any confidential or proprietary Information of one Party or any of its Subsidiaries is disclosed to another Party or any of its Subsidiaries in connection with providing services to such first Party or any of its Subsidiaries under this Agreement or any Ancillary Agreement, then such disclosed confidential or proprietary Information shall be used only as required to perform such services.
(b) No Release; Return or Destruction. Each Party agrees not to release or disclose, or permit to be released or disclosed, any confidential or proprietary Information of the other Party addressed in Section 3.9(a) to any other Person, except its Representatives who need to know such Information in their capacities as such (who shall be advised of their obligations hereunder with respect to such Information), and except in compliance with Section 3.10. Without limiting the foregoing, when any Information furnished by the other Party after the Separation Time pursuant to this Agreement or any Ancillary Agreement is no longer needed for the purposes contemplated by this Agreement or any Ancillary Agreement, each Party shall, at its option, promptly after receiving a written notice from the disclosing Party, either return to the disclosing Party all such Information in a tangible form (including all copies thereof and all notes, extracts or summaries based thereon) or certify to the disclosing Party that it has destroyed such Information (and such copies thereof and such notes, extracts or summaries based thereon); provided, however, that a Party shall not be required to destroy or return any such Information to the extent that (i) the Party is required to retain the Information in order to comply with any applicable Law, (ii) the Information has been backed up electronically pursuant to the Party’s standard document retention policies and will be managed and ultimately destroyed consistent with such policies or (iii) it is kept in the Party’s legal files for purposes of resolving any dispute that may arise under this Agreement or any Ancillary Agreement.
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(c) Third-Party Information; Privacy or Data Protection Laws. Each Party acknowledges that it and its respective Subsidiaries may presently have and, after the Separation Time, may gain access to or possession of confidential or proprietary Information of, or personal Information relating to, Third Parties: (i) that was received under confidentiality or non-disclosure agreements entered into between such Third Parties, on the one hand, and the other Party or the other Party’s Subsidiaries, on the other hand, prior to the Separation Time or (ii) that, as between the two parties, was originally collected by the other Party or the other Party’s Subsidiaries and that may be subject to and protected by privacy, data protection or other applicable Laws. Each Party agrees that it shall hold, protect and use, and shall cause its Subsidiaries and its and their respective Representatives to hold, protect and use, in strict confidence the confidential and proprietary Information of, or personal Information relating to, Third Parties in accordance with privacy, data protection or other applicable Laws and the terms of any agreements that were either entered into before the Separation Time or affirmative commitments or representations that were made before the Separation Time by, between or among the other Party or the other Party’s Subsidiaries, on the one hand, and such Third Parties, on the other hand.
(d) Nothing in this Section 3.9 shall prevent or limit the ability of LiveWire to use or disclose the LiveWire Business Records and other confidential or proprietary information primarily related to the LiveWire Business from and after the Separation Time. Nothing in this Section 3.9 shall prevent or limit the ability of HD to use or disclose confidential or proprietary information exclusively related to the Harley Business.
3.10 Protective Arrangements. In the event that either Party or any of its Subsidiaries is requested or required (by oral question, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process) by any Governmental Entity or pursuant to applicable Law or the rules of any stock exchange on which the shares of the Party or any member of its Group are traded to disclose or provide any confidential or proprietary Information of the other Party (other than with respect to any such Information furnished pursuant to the provisions of Section 3.1 or 3.7, as applicable) that is subject to the confidentiality provisions hereof, such Party shall provide the other Party with written notice of such request or demand (to the extent legally permitted) as promptly as practicable under the circumstances so that such other Party shall have an opportunity to seek an appropriate protective order, at such other Party’s own cost and expense. In the event that such other Party fails to receive such appropriate protective order in a timely manner and the Party receiving the request or demand reasonably determines that its failure to disclose or provide such Information shall actually prejudice the Party receiving the request or demand, then the Party that received such request or demand may thereafter disclose or provide Information to the extent required by such Law (as so advised by its counsel) or by lawful process or such Governmental Entity, and the disclosing Party shall promptly provide the other Party with a copy of the information so disclosed, in the same form and format so disclosed, together with a list of all Persons to whom such information was disclosed, in each case to the extent legally permitted.
ARTICLE IV.
FURTHER ASSURANCES AND ADDITIONAL COVENANTS
4.1 Further Assurances.
(a) In addition to the actions specifically provided for elsewhere in this Agreement, each of the Parties hereto shall use its commercially reasonable efforts, prior to, on and after the Separation Time, to take, or cause to be taken, all actions, and to do, or cause to be done, all things reasonably necessary, proper or advisable on its part under applicable Laws, regulations and agreements, to consummate and make effective the Transactions.
(b) Without limiting the foregoing, prior to, on and after the Separation Time, each Party hereto shall cooperate with each other Party hereto, and without any further consideration, but at the expense of the requesting Party, to execute and deliver, or use its commercially reasonable efforts to cause to be executed and delivered, all instruments, including instruments of conveyance, assignment and transfer, and to make all filings with, and to obtain or make any Approvals or Notifications of, any Governmental Entity or any other Person
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under any permit, license, agreement, indenture or other instrument (including any Third Party consents or Governmental Approvals), and to take all such other actions as such Party may reasonably be requested to take by any other Party hereto from time to time, consistent with the terms of this Agreement, in order to effectuate the provisions and purposes of this Agreement and the transfers of the LiveWire Assets and the assignment and assumption of the LiveWire Liabilities and the other transactions contemplated hereby and thereby. Without limiting the foregoing, each Party shall, at the reasonable request, cost and expense of any other Party, take such other actions as may be reasonably necessary to vest in such other Party all of the transferring Party’s right, title and interest to the Assets allocated to such Party by this Agreement, in each case, if and to the extent it is practicable to do so.
(c) On or prior to the Separation Time, HD and LiveWire in their respective capacities as direct and indirect shareholders of their respective Subsidiaries, shall each ratify any actions that are reasonably necessary or desirable to be taken by any Subsidiary of HD or Subsidiary of LiveWire, as the case may be, to effectuate the Transactions.
4.2 Performance. HD shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement to be performed by any member of the HD Group. LiveWire shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement to be performed by any member of the LiveWire Group. Each Party (including its permitted successors and assigns) further agrees that it shall cause all of the other members of its Group not to take, or omit to take, any action which action or omission would violate or cause such Party to violate this Agreement or materially impair such Party’s ability to consummate the transactions contemplated hereby or thereby.
4.3 Mail Forwarding. HD agrees that following the Separation Time it shall use its commercially reasonable efforts to promptly forward to LiveWire any correspondence relating to the LiveWire Business (or a copy thereof to the extent such correspondence relates to both the Harley Business and the LiveWire Business) that is delivered to HD and LiveWire agrees that following the Separation Time it shall use its commercially reasonable efforts to promptly forward to HD any correspondence relating to the Harley Business (or a copy thereof to the extent such correspondence relates to both the Harley Business and the LiveWire Business) that is delivered to LiveWire.
4.4 Order of Precedence. The Parties acknowledge and confirm that, notwithstanding anything to the contrary in the Transfer Documents, (i) to the extent that any provision of the Transfer Documents conflicts with this Agreement, this Agreement shall be deemed to control with respect to the subject matter thereof and (ii) the Transfer Documents shall not be deemed in any way to amend, expand, restrict or otherwise modify such parties’ rights and obligations set forth in this Agreement. Further, except as expressly provided in this Agreement, to the extent there is any inconsistency between this Agreement and the Employee Matters Agreement and such inconsistency relates to the allocation between HD and LiveWire (among them or their subsidiaries) of Assets or Liabilities, the terms of the Employee Matters Agreement shall prevail.
4.5 HD Specified Marks.
(a) Notwithstanding any inference or prior course of conduct to the contrary and except as provided in this Section 4.5 or in the Trademark License Agreement:
(i) LiveWire acknowledges and agrees that the HD Specified Marks are owned solely by the HD Group, and that none of the LiveWire Group shall have any right, title or interest in and to the HD Specified Marks; and
(ii) following the Separation, the LiveWire Group shall not: (A) use any of the HD Specified Marks; (B) seek to register any HD Specified Marks, (C) challenge any rights of the HD Group in any HD Specified Marks or their rights to register the same; (D) challenge the validity or enforceability of any of the HD Specified Marks; or (E) assist any third party in connection with any of the foregoing.
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(b) In furtherance of LiveWire’s obligations in Section 4.5(a) above, except as provided in the Trademark License Agreement, as soon as possible following the Separation but not later than 180 days thereafter, the LiveWire Group shall remove and change signage, change and substitute promotional or advertising material in whatever medium, change stationery and packaging and take all such other steps as may be required or appropriate to cease all use of the HD Specified Marks; provided, however, that the LiveWire Group shall not be in violation of this Section 4.5 by reason of:
(i) the appearance of the HD Specified Marks in or on any tools, dies, equipment, engineering/manufacturing drawings, manuals, work sheets, operating procedures, other written materials or other LiveWire Assets that are used for internal purposes only in connection with the LiveWire Business; provided that LiveWire reasonably endeavors to remove such appearances of the HD Specified Marks in the ordinary course of the operation of the LiveWire Business;
(ii) the appearance of the HD Specified Marks in or on any third party’s publications, marketing materials, brochures, instruction sheets, equipment or products that were distributed in the ordinary course of business or pursuant to a Contract prior to the Separation, and that generally are in the public domain, or any other similar uses by any such third party over which none of the LiveWire Group have control; or
(iii) the use by the LiveWire Group of the HD Specified Marks in a non-trademark manner for purposes of notifying customers or the general public of the Separation.
4.6 Non-Solicitation. For a period of three (3) years after the Separation Time, HD shall not (without the prior written consent of LiveWire), and shall cause its controlled Affiliates not to, directly or indirectly, hire or intentionally induce or encourage any Person who is employed by LiveWire or any of its Subsidiaries or engaged as an independent contractor by LiveWire or any of its Subsidiaries as of the Separation Time, to terminate such Person’s employment or engagement with LiveWire or any of its Subsidiaries. For a period of three (3) years after the Separation Time, LiveWire shall not (without the prior written consent of HD), and shall cause its controlled Affiliates not to, directly or indirectly, hire or intentionally induce or encourage any Person who is employed by HD or any of its Subsidiaries or engaged as an independent contractor by HD or any of its Subsidiaries as of the Separation Time, to terminate such Person’s employment or engagement with HD or any of its Subsidiaries. For the avoidance of doubt and notwithstanding the foregoing, as of the Separation Time, Jochen Zeitz is anticipated to serve as the co-Chief Executive Officer of HD and LiveWire, and the Parties expressly intend and agree that at any time following the Separation Time, the hiring of Mr. Zeitz by HD or LiveWire as the sole Chief Executive Officer of HD or LiveWire, respectively, and the termination of his employment with the other Party in connection therewith, shall not be subject to the restrictions set forth in this Section 4.6.
4.7 Ancillary Agreements. The Parties acknowledge and agree that concurrently with the Closing of the Transactions, (a) the Parties and certain of their Affiliates will enter into one or more of the Ancillary Agreements that will be effective from and after the Closing, and (b) nothing in this Agreement shall be deemed to conflict with or otherwise impair, limit or otherwise diminish the benefits provided under such Ancillary Agreements or otherwise limit a Party’s remedies under such Ancillary Agreements.
ARTICLE V.
TERMINATION
5.1 Termination. This Agreement may be terminated at any time prior to the Separation Time by the HD Board with the prior written consent of the SPAC; provided, that, in the event the SPAC Business Combination Agreement is validly terminated, this Agreement shall automatically terminate without further action by the Parties. In the event that this Agreement is terminated, subject to Section 12.2 of the SPAC Business Combination Agreement, this Agreement shall become null and void and no Party, nor any Party’s directors, officers or employees, shall have any Liability of any kind to any Person by reason of this Agreement. After the Separation Time, this Agreement may not be terminated except by an agreement in writing signed by HD and LiveWire.
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5.2 Effect of Termination. In the event of any termination of this Agreement prior to the Separation Time, no Party (nor any of its directors, officers or employees) shall have any Liability or further obligation to the other Party by reason of this Agreement; provided, that the foregoing provisions shall not affect or otherwise limit any Liability that expressly survives the termination of the SPAC Business Combination Agreement (in accordance with the express terms of the SPAC Business Combination Agreement).
ARTICLE VI.
MISCELLANEOUS
6.1 Corporate Power.
(a) HD represents on behalf of itself and each other member of the HD Group, and LiveWire represents on behalf of itself and each other member of the LiveWire Group, as follows:
(i) each such Person has the requisite corporate or other applicable power and authority and has taken all corporate or other applicable action necessary in order to execute, deliver and perform this Agreement and each Ancillary Agreement to which it is a party and to consummate the transactions contemplated hereby; and
(ii) this Agreement and each Ancillary Agreement to which it is a party has been or will be duly executed and delivered by it and constitutes or will constitute a valid and binding agreement of it enforceable in accordance with the terms thereof.
(b) Each Party acknowledges that it and the other Party may execute this Agreement by .pdf, electronic, facsimile, stamp or mechanical signature. Each Party expressly adopts and confirms each such .pdf, electronic, facsimile, stamp or mechanical signature made in its respective name as if it were a manual signature, agrees that it shall not assert that any such signature is not adequate to bind such Party to the same extent as if it were signed manually and agrees that at the reasonable request of the other Party at any time it shall as promptly as reasonably practicable cause this Agreement to be manually executed (any such execution to be as of the date of the initial date thereof).
6.2 Tax Matters.
(a) Property Taxes.
(i) The HD Group shall be responsible for and shall promptly pay when due all Property Taxes levied with respect to the LiveWire Assets or the LiveWire Business attributable to any Pre-Separation Time Tax Period, and the LiveWire Group shall be responsible for and shall promptly pay when due all Property Taxes levied with respect to the LiveWire Assets or the LiveWire Business attributable to any Post-Separation Time Tax Period.
(ii) All Property Taxes levied with respect to the LiveWire Assets for a Straddle Period shall be apportioned between the HD Group and the LiveWire Group based on the number of days of such Straddle Period included in the Pre-Separation Time Tax Period and the number of days of such Straddle Period included in the Post-Separation Time Tax Period. The HD Group shall be responsible for the proportionate amount of such Property Taxes that is attributable to the Pre-Separation Time Tax Period, and the LiveWire Group shall be liable for the proportionate amount of such Property Taxes that is attributable to the Post-Separation Time Tax Period.
(iii) Upon receipt of any bill for such Property Taxes, HD or LiveWire, as applicable, shall present a statement to the other setting forth the amount of reimbursement to which each is entitled under this Section 6.2 together with such supporting evidence as is reasonably necessary to calculate the proration amount. The proration amount shall be paid by the Party owing it to the other within ten (10) days after
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delivery of such statement. In the event that a member of the HD Group or the LiveWire Group makes any payment for which it is entitled to reimbursement under this Section 6.2, the applicable Party shall make such reimbursement promptly but in no event later than ten (10) days after the presentation of a statement setting forth the amount of reimbursement to which the presenting Party is entitled along with such supporting evidence as is reasonably necessary to calculate the amount of reimbursement.
(iv) LiveWire shall be entitled to any refund (and any interest thereon received from the applicable Tax authority) of Property Taxes for which LiveWire is liable hereunder, and HD shall be entitled to any refund (and any interest thereon received from the applicable Governmental Entity) of Property Taxes for which HD is liable hereunder. The applicable Party receiving a refund to which another Party is entitled hereunder shall pay over such refund to such other Party within ten (10) days after such refund is received.
(b) Straddle Periods. For purposes of this Agreement, Taxes (or related refunds or similar assets) for any Straddle Period shall be allocated (1) in the case of any Taxes based on or measured by income, receipts, sales, or any other transaction-based Taxes, on an interim closing of the books basis as of the end of the Closing Date (and, for such purpose, assuming that the taxable period of any of the LiveWire Group entities that is a partnership or other pass-through entity for Tax purposes terminates at such time, and allocating any periodic items on a daily pro rata basis) and (2) the amount of any other Taxes in a manner consistent with the principles of Section 6.2(a)(ii).
(c) Intended Tax Treatment. The parties hereto intend that the Transactions, any private placement, any portion of the HD Backstop Amount contributed and any other contributions to HoldCo in connection with the Transactions shall be treated as part of a single integrated plan for U.S. federal (and applicable state and local Tax purposes). The parties shall report the Transactions in a manner consistent with the Intended Tax Treatment, and shall take no position before any taxing authority or any other Person that is inconsistent with the Intended Tax Treatment unless otherwise required by a “determination” that is final within the meaning of Section 1313 of the Code; provided, however, that neither Party shall be unreasonably impeded in its ability and discretion to negotiate, compromise and/or settle any Tax audit, claim or similar proceedings in connection with the Intended Tax Treatment.
(d) Transfer Taxes. All transfer, documentary, sales, use, real property, stamp duty, stamp duty reserve tax, registration and other similar Taxes, fees and costs (including any associated penalties and interest) incurred in connection with the Separation (“Transfer Taxes”) shall be borne by HD and paid when due. Each of the Parties shall (i) cooperate to obtain any additional confirmations from any relevant Governmental Entity in relation to Transfer Taxes that they consider (acting reasonably) to be necessary in connection with the Separation and (ii) cooperate and file, at the expense of HD, all necessary Tax Returns with respect to all such Transfer Taxes.
(e) Tax Returns. To the extent reasonably requested by any other party, the parties agree to furnish or cause to be furnished to each other, upon request and as promptly as reasonably practicable, such information and assistance as is reasonably necessary for the filing of any Tax Return, or the conduct of any audit or dispute with any taxing authority for Pre-Separation Time Tax Periods (a “Tax Proceeding”), and the parties shall reasonably cooperate with each other in the conduct of any such Tax Proceeding. Notwithstanding anything herein to the contrary, but subject to the terms of the Tax Matters Agreement, (i) in no event will HD be required to provide the LiveWire Group with any Tax Returns of HD, its Affiliates (other than a member of the LiveWire Group), or any combined, unitary, or consolidated group of which any of the foregoing is or was a member and (ii) in no event will Holdco or any member of the LiveWire Group be required to provide HD with any Tax Returns of any member of the LiveWire Group (or any consolidated, combined or unitary group consisting only of member of the LiveWire Group) for any Tax period beginning after the Closing Date.
(f) All tax sharing or similar agreements to which any member of the LiveWire Group is party (other than customary commercial contracts, the principal purpose of which is not the allocation or sharing of any Tax and the Tax Matters Agreement) shall be terminated as of the Separation Time.
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(g) In the event of any conflict between the provisions of this Agreement and the Tax Matters Agreement, the provisions of the Tax Matters Agreement shall control for the period during which the Tax Matters Agreement is in effect.
6.3 Modification or Amendments. Subject to the provisions of applicable Law, and except as otherwise provided in this Agreement, this Agreement may be amended, modified or supplemented only by written instrument signed by the authorized representative of the Party against whom it sought to enforce such waiver, amendment, supplement or modification is sought to be enforced. In addition, until the earlier of (i) the termination of the SPAC Business Combination Agreement in accordance with its terms and (ii) the Closing, no such amendment, modification or supplement that shall be effective without the prior written consent of the SPAC.
6.4 Waivers of Default. Waiver by a Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the other Party. No failure or delay by a Party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall a single or partial exercise thereof prejudice any other or further exercise thereof or the exercise of any other right, power or privilege. In addition, until the earlier of (i) the termination of the SPAC Business Combination Agreement in accordance with its terms and (ii) the Closing, no such waiver shall be effective without the prior written consent of the SPAC.
6.5 Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. The exchange of a fully executed Agreement (in counterparts or otherwise) by facsimile or by electronic delivery in .pdf format shall be sufficient to bind the parties to the terms and conditions of this Agreement.
6.6 Governing Law. This Agreement (and any claims or disputes arising out of or related hereto or to the transactions contemplated hereby or to the inducement of any Party to enter herein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the Laws of the State of Delaware, irrespective of the choice of laws principles of the State of Delaware, including all matters of validity, construction, effect, enforceability, performance and remedies.
6.7 Notices. Any notice, request, instruction or other document to be given hereunder by any party to the others shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid or by prepaid overnight courier (providing written proof of delivery), or by electronic mail (with confirmed receipt), addressed as follows:
If to HD, to:
3700 W. Juneau
Milwaukee, WI 53217
Attention: Chief Legal Officer
Email: Paul.Krause@harley-davidson.com and H-
DGeneralCounsel@harley-davidson.com
with a copy (which shall not constitute notice) to:
Latham & Watkins LLP
330 North Wabash Avenue, Suite 2800
Chicago, IL 60611
Attention: Ryan Maierson
Email: ryan.maierson@lw.com
Attention: Jason Morelli
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Email: jason.morelli@lw.com
If to LiveWire, to:
If to LiveWire, to:
LiveWire
3700 W. Juneau
Milwaukee, WI 53217
Attention: Chief Legal Officer
Email: Paul.Krause@harley-davidson.com and H-
DGeneralCounsel@harley-davidson.com
with a copy (which shall not constitute notice) to:
Latham & Watkins LLP
330 North Wabash Avenue, Suite 2800
Chicago, IL 60611
Attention: Ryan Maierson
Email: ryan.maierson@lw.com
Attention: Jason Morelli
Email: jason.morelli@lw.com
or to such other persons or addresses as may be designated in writing by the party to receive such notice as provided above.
6.8 Entire Agreement. This Agreement (including any exhibits hereto), the SPAC Business Combination Agreement (and any exhibits, schedules or other ancillary documents thereto), and the other Ancillary Agreement constitute the entire agreement, and supersede all other prior agreements, understandings, representations and warranties both written and oral, among the Parties, with respect to the subject matter hereof.
6.9 No Third-Party Beneficiaries. Except for as otherwise provided in Section 2.1: (a) the provisions of this Agreement are solely for the benefit of the Parties and are not intended to confer upon any Person (including any shareholders of HD or shareholders of LiveWire) except the Parties hereto any rights or remedies hereunder; and (b) there are no third-party beneficiaries of this Agreement and this Agreement shall not provide any third Person (including any shareholders of HD or shareholders of LiveWire) with any remedy, claim, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement. Notwithstanding the foregoing, the SPAC shall be a third-party beneficiary of the rights of LiveWire to enforce the Separation pursuant to Section 7.6 of the SPAC Business Combination Agreement and under this Agreement where expressly provided such right in Sections 5.1, 6.3, 6.4 and 6.13.
6.10 Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability or the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.
6.11 Interpretation. The table of contents and headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. Where a reference in this Agreement is made to a Section, Schedule or Exhibit, such reference shall be to a Section of, Schedule to or Exhibit to this Agreement unless otherwise indicated. Whenever the words
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“include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” For purposes of this Agreement, whenever the context requires the singular number shall include the plural, and vice versa. All references in this Agreement to “$” are intended to refer to United States dollars. Any reference to a particular Law means such Law as amended, modified or supplemented (including all rules and regulations promulgated thereunder) and, unless otherwise provided, as in effect from time to time.
6.12 Defined Terms. Capitalized terms used and not otherwise defined herein shall have the meanings specified or referred to in Annex I.
6.13 Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by either Party without the prior written consent of the other Party, provided that any permitted assignment will not relieve any Party of its obligations under this Agreement; provided, further, that until the earlier of the (i) the termination of the SPAC Business Combination Agreement in accordance with its terms and (ii) the Closing, no assignment shall be permitted without the prior written consent of the SPAC. Any attempted or purported assignment in violation of the preceding sentence shall be null and void and of no effect whatsoever. Subject to the preceding two sentences, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the Parties and their respective successors and assigns.
6.14 Specific Performance.
(a) Subject to Article IV, the Parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the specific terms hereof or were otherwise breached. It is accordingly agreed that prior to the termination of this Agreement in accordance with Article V, the Parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement (without necessity of posting bond or other security (any requirements therefor being expressly waived)), this being in addition to any other remedy to which they are entitled at Law or in equity.
(b) Each of the Parties agrees that it will not oppose the granting of an injunction, specific performance or other equitable relief as provided herein on the basis that (i) the other Party has an adequate remedy at Law or (ii) an award of specific performance is not an appropriate remedy for any reason at Law or equity. Any Party seeking an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement shall not be required to provide any bond or other security in connection with any such order or injunction.
6.15 Expenses. Except as otherwise provided in this Agreement, the expenses and costs incurred in connection with this Agreement and the Separation shall be borne by HD and treated as a Transaction Expense (as defined in the SPAC Business Combination Agreement) in accordance with the SPAC Business Combination Agreement.
6.16 Survival of Covenants. Except as expressly set forth in this Agreement the covenants, representations and warranties contained in this Agreement, and liability for the breach of any obligations contained herein or therein, shall survive the Separation Time and shall remain in full force and effect in accordance with their terms.
6.17 Construction. This Agreement shall be construed as if jointly drafted by the Parties and no rule of construction or strict interpretation shall be applied against either Party. The Parties represent that this Agreement is entered into with full consideration of any and all rights which the Parties may have. The Parties have conducted such investigations they thought appropriate, and have consulted with such advisors as they deemed appropriate regarding this Agreement and their rights and asserted rights in connection therewith. The Parties are not relying upon any representations or statements made by the other Party, or such other Party’s employees, agents, representatives or attorneys, regarding this Agreement, except to the extent such representations are
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expressly set forth or incorporated in this Agreement. The Parties are not relying upon a legal duty, if one exists, on the part of the other Party (or such other Party’s employees, agents, representatives or attorneys) to disclose any information in connection with the execution of this Agreement or their preparation, it being expressly understood that neither Party shall ever assert any failure to disclose information on the part of the other Party as a ground for challenging this Agreement.
6.18 Performance. Subject to Section 4.2, each Party shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary or Affiliate of such Party.
6.19 No Admission of Liability. The allocation of Assets and Liabilities herein is solely for the purpose of allocating such Assets and Liabilities between HD and LiveWire and is not intended as an admission of liability or responsibility for any alleged liabilities vis-à-vis any Third Party, including with respect to the liabilities of any non-wholly owned subsidiary of HD or LiveWire.
6.20 Limited Liability of Shareholders. Notwithstanding any other provision of this Agreement, no individual who is a shareholder, director, employee, officer, agent or representative of HD or LiveWire, in such individual’s capacity as such, shall have any liability in respect of or relating to the covenants or obligations of HD or LiveWire, as applicable, under this Agreement or in respect of any certificate delivered with respect hereto, to the fullest extent legally permissible, each of HD or LiveWire, for itself and its respective Subsidiaries and its and their respective shareholders, directors, employees and officers, waives and agrees not to seek to assert or enforce any such liability that any such Person otherwise might have pursuant to applicable Law.
6.21 Limitations of Liability. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, NEITHER HD NOR ITS AFFILIATES, ON THE ONE HAND, NOR LIVEWIRE NOR ITS AFFILIATES, ON THE OTHER HAND, SHALL BE LIABLE UNDER THIS AGREEMENT TO THE OTHER FOR ANY INCIDENTAL CONSEQUENTIAL, SPECIAL, INDIRECT, PUNITIVE, EXEMPLARY, REMOTE, SPECULATIVE OR SIMILAR DAMAGES IN EXCESS OF COMPENSATORY DAMAGES OF THE OTHER ARISING IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (OTHER THAN ANY SUCH LIABILITY WITH RESPECT TO INDEMNIFICATION OF SUCH DAMAGES PAID BY AN INDEMNITEE IN RESPECT OF A THIRD PARTY CLAIM).
6.22 Consent to Jurisdiction; WAIVER OF JURY TRIAL.
(a) This Agreement, together with any Action, dispute, remedy or other proceeding arising from or relating to this Agreement or the transactions contemplated hereby or any relief or remedies sought by any Parties hereto (whether in contract, tort or statute), and the rights and obligations of the parties hereunder, shall be governed by and construed in accordance with the laws of the State of Delaware for contracts made and to be fully performed in such state, without giving effect to any conflicts of laws rules, principles or regulations that would require the application of the laws of another jurisdiction. The state and federal courts located within the State of Delaware (the “Chosen Courts”) shall have exclusive jurisdiction over any and all disputes between the parties hereto, whether in law or in equity, arising out of or relating to this Agreement and the agreements, instruments and documents contemplated hereby and the parties hereto consent to and agree to subject to the exclusive jurisdiction of such Chosen Courts.
(b) THE PARTIES HEREBY WAIVE TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, AND SHALL NOT ASSERT IN ANY SUCH DISPUTE, ANY CLAIM THAT: (A) SUCH PARTY IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS; (B) SUCH PARTY AND SUCH PARTY’S PROPERTY IS IMMUNE FROM ANY LEGAL PROCESS ISSUED BY SUCH COURTS; OR (C) ANY ACTION OR OTHER PROCEEDING COMMENCED IN SUCH COURTS IS BROUGHT IN AN INCONVENIENT FORUM. THE MAILING OF PROCESS OF OTHER PAPERS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED IN SECTION 6.7 (OR IN SUCH
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OTHER MANNER AS MAY BE PERMITTED BY LAW) SHALL BE VALID AND SUFFICIENT SERVICE THEREOF AND HEREBY WAIVE ANY OBJECTIONS TO SERVICE ACCOMPLISHED IN THE MANNER PROVIDED HEREIN. THE PARTIES HEREBY IRREVOCABLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY.
[Signature Page Follows.]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives.
| HARLEY-DAVIDSON, INC. | ||
| By: | /s/ Paul J. Krause | |
| Name: | Paul J. Krause | |
| Title: | Authorized Signatory | |
[Signature Page to Separation Agreement]
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives.
| LIVEWIRE EV, LLC | ||
| By: | /s/ Amanda Parker | |
| Name: | Amanda Parker | |
| Title: | Chief Legal Officer | |
[Signature Page to Separation Agreement]
ANNEX I:
Defined Terms
“Action” means any demand, action, claim, complaint, dispute, suit, countersuit, arbitration, inquiry, subpoena, proceeding, audit or investigation of any nature (whether criminal, civil, legislative, administrative, regulatory, prosecutorial or otherwise) by or before any Governmental Entity or in any arbitration or mediation.
“Affiliate” means, when used with respect to a specified Person, a Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such specified Person. For the purpose of this definition, “control” (including with correlative meanings, “controlled by” and “under common control with”), when used with respect to any specified Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other interests, by contract, agreement, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment, undertaking or otherwise. It is expressly agreed that for purposes of this Agreement, from and after the Separation Time, (i) no member of the HD Group shall be deemed to be an Affiliate of any member of the LiveWire Group, (ii) no member of the LiveWire Group shall be deemed to be an Affiliate of any member of the HD Group and (iii) no joint venture formed after the Separation Time solely between one or more members of the HD Group, on the one hand, and one or more members of the LiveWire Group, on the other hand, shall be deemed to be an Affiliate of, or owned or controlled by, any member of the HD Group or the LiveWire Group for the purposes of this Agreement.
“Ancillary Agreements” means all Contracts entered into by the Parties or the members of their respective Group (but to which no Third Party is a party) in connection with the Separation and the other Transactions, including, the SPAC Business Combination Agreement, the Employee Matters Agreement, the Trademark License Agreement, the Tax Matters Agreement, the Intellectual Property License Agreement, the Contract Manufacturing Agreement, the Joint Development Agreement, the Transfer Documents, the Transition Services Agreement and the Master Services Agreement.
“Approvals or Notifications” means any consents, waivers, approvals, permits or authorizations to be obtained from, notices, registrations or reports to be submitted to, or other filings to be made with, any third Person, including any Governmental Entity.
“Assets” means assets, properties, claims and rights (including goodwill), wherever located (including in the possession of vendors or other third parties or elsewhere), of every kind, character and description, whether real, personal or mixed, tangible, intangible or contingent, in each case, whether or not recorded or reflected or required to be recorded or reflected on the books and records or financial statements of the applicable Person, including rights and benefits pursuant to any contract, license, permit, indenture, note, bond, mortgage, agreement, concession, franchise, instrument, undertaking, commitment, understanding or other arrangement.
“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for general business in New York, New York.
“Business Records” means all files, documents, instruments, papers, books, studies, reports, records, tapes, microfilms, photographs, letters, ledgers, journals, financial statements, technical documentation (design specifications, functional requirements, operating instructions, logic manuals, flow charts, etc.), user documentation (installation guides, user manuals, training materials, release notes, working papers, etc.), correspondence, lists (including customer and supplier lists and information), regulatory records associated with any Governmental Entity, promotional, marketing, and advertising materials, employee records (to the extent permitted by applicable Law), corporate records, Tax Returns, other Tax work papers and files and other documents in whatever form, physical, electronic (including email) or otherwise.
“Contract” means, with respect to any Person, any legally binding agreement, indenture, loan agreement, undertaking, note or other debt instrument, contract, lease, mortgage, deed of trust, permit, license, understanding, arrangement, commitment or other obligation, written or oral, to which such Person or any of its Subsidiaries is a party or by which any of them may be bound or to which any of their properties may be subject.
“Contract Manufacturing Agreement” means that certain Contract Manufacturing Agreement to be entered into between Harley-Davidson Motor Company Group, LLC and LiveWire at the Closing, as such agreement may be modified or amended from time to time in accordance with its terms.
“Employee Matters Agreement” means that certain Employee Matters Agreement to be entered into between HD and LiveWire at the Closing in substantially the form of Exhibit B attached hereto, as such agreement may be modified or amended from time to time in accordance with its terms.
“Environmental Law” means any Law relating to pollution, protection or restoration of or prevention of harm to the environment or natural resources, including the use, handling, production, registration, transportation, treatment, storage, disposal, Release or discharge of, or exposure to, Hazardous Materials, or the protection of or prevention of harm to human health and safety.
“Excluded Intellectual Property” means the Intellectual Property licensed pursuant to Shared Contracts, HD Specified Marks and any Intellectual Property listed on Schedule I.A.
“Governmental Approvals” means any notices or reports to be submitted to, or other filings to be made with, or any consents, registrations, approvals, permits, licenses, certificates or authorizations to be obtained from, any Governmental Entity.
“Governmental Entity” means any governmental or regulatory authority, agency, commission, body or other governmental or regulatory entity (including any court or arbitral body (public or private)), United States or non-United States, national or supra-national, state or local, including the SEC and the other Regulatory Authorities.
“Group” means either the HD Group or the LiveWire Group, as the context requires.
“Harley Business” means all businesses and operations (whether or not such businesses or operations are or have been terminated, divested or discontinued) conducted or proposed to be conducted by HD and its Subsidiaries prior to the Separation Time that are not included in the LiveWire Business.
“Hazardous Materials” means any chemical, material, substance, waste, pollutant, emission, discharge, release or contaminant that could result in liability under, or that is prohibited, limited or regulated by or pursuant to, any Environmental Law, and any natural or artificial substance (whether solid, liquid or gas, noise, ion, vapor or electromagnetic) that alone or in combination could cause harm to human health or the environment, including but not limited to petroleum, petroleum products and byproducts, asbestos and asbestos-containing materials, urea formaldehyde foam insulation, electronic, medical or infectious wastes, polychlorinated biphenyls, radon gas, radioactive substances, chlorofluorocarbons and all other ozone-depleting substances or per- or polyfluoroalkyl substances.
“HD Actions” means (a) those Actions set forth on Schedule I.I or (b) any Action primarily relating to, arising out of or resulting from the Harley Business or a HD Asset as of the Separation Time not listed on Schedule I.I or Schedule I.B.
“HD Backstop Amount” has the meaning set forth in the SPAC Business Combination Agreement.
“HD-Formative Marks” means (a) all Trademarks and domain names set forth on Schedule I.J and (b) all Trademarks and domain names owned by HD or any of its Subsidiaries that contain the “Harley-Davidson” name, either alone or in combination with other words or elements as of the Separation Time not listed on Schedule I.J or Schedule I.H.
“HD Group” means, immediately from and after the Separation Time, (a) HD and (b) each Subsidiary of HD (other than Holdco, LiveWire or any of their Subsidiaries).
“HD Indemnitees” means HD, each member of the HD Group, and all Persons who are or have been shareholders, stockholders, directors, partners, managers, managing members, officers, agents or employees of any member of the HD Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns.
“HD Intellectual Property” means (a) all Intellectual Property owned by either Party or any member of its respective Group thereunder as of the Separation Time other than the LiveWire Intellectual Property, (b) all rights to sue or otherwise recover for any past, present, or future infringement, misappropriation, dilution, or other violations of the foregoing; and (c) all Intellectual Property rights licensed to HD or any its Affiliates, other than Intellectual Property licensed pursuant to LiveWire Contracts and included in the LiveWire Intellectual Property.
“HD Permits” means any Permit of either Party other than the LiveWire Permits.
“HD Properties” means (a) the real property set forth on Schedule I.N under the heading “HD Properties” and (b) any real property to the extent used in connection with the Harley Business as of or prior to the Separation Time not listed on Schedule I.G or Schedule I.N.
“HD Specified Indebtedness” means all Indebtedness of any member of the HD Group or the LiveWire Group as of the Separation Time, other than LiveWire Specified Indebtedness or any LiveWire Liability.
“HD Specified Marks” means (a) all HD-Formative Marks, (b) any other Trademarks and domain names of HD or any of its Subsidiaries and (c) all Trademarks and domain names confusingly similar to or embodying any of the foregoing either alone or in combination with other words or elements, together with the goodwill associated with any of the foregoing, in each case of (a)-(c), other than LiveWire Specified Marks.
“HD Tax” means, without duplication, (i) any Tax of HD or any of its Affiliates (other than a member of the LiveWire Group) for any period, including any such Tax arising from or related to the Transactions (other than any Property Tax allocated to LiveWire under Section 6.2(a)), (ii) any Taxes imposed on or with respect to the LiveWire Group and any Taxes imposed or levied on or with respect to the LiveWire Assets or the LiveWire Business, in each case, for any Pre-Separation Time Tax Period, determined in accordance with Section 6.2(b) (other than any Property Tax allocated to LiveWire under Section 6.2(a)), (iii) any Tax of any Person (excluding (A) Taxes of any member of the LiveWire Group and any Taxes for which the LiveWire Group is responsible pursuant to the Tax Matters Agreement and (B) any Property Tax allocated to LiveWire under Section 6.2(a)) for which a member of the LiveWire Group is or becomes liable (x) pursuant to Treasury Regulation Section 1.1502-6 (or any analogous provision under state, local, or non-U.S. Law) resulting from being a member of a combined, affiliated, consolidated, unitary, integrated or similar Tax group with such Person prior to the Closing, (y) as a transferee or successor to such Person under Law as a result of an event or a transaction occurring prior to the Closing Date, or (z) by Contract (other than customary commercial contracts not primarily related to Taxes entered into in the ordinary course of business that are LiveWire Contracts) entered into prior to the Closing.
“HoldCo” means LiveWire Group, Inc. (formerly known as LW EV Holdings, Inc.), a Delaware corporation.
“Indebtedness” means (a) all obligations of such specified Person for borrowed money or arising out of any extension of credit to or for the account of such specified Person (including reimbursement or payment obligations with respect to surety bonds, letters of credit, bankers’ acceptances and similar instruments or amounts by reason of overdrafts), (b) all obligations of such specified Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such specified Person upon which interest charges are customarily paid, (d) all obligations of such specified Person under conditional sale or other title retention agreements relating to Assets purchased by such specified Person, (e) all obligations of such specified Person issued or assumed as the deferred purchase price of property, assets or services, including “earn-outs” and “seller notes”, (f) all liabilities secured by (or for which any Person to which any such liability is owed has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge or other encumbrance on property
owned or acquired by such specified Person (or upon any revenues, income or profits of such specified Person therefrom), whether or not the obligations secured thereby have been assumed by the specified Person or otherwise become liabilities of the specified Person, (g) all capital lease obligations of such specified Person, (h) reimbursement and other obligations with respect to letters of credit, bank guarantees, bankers’ acceptance or other similar instruments, (i) derivative, hedging, swap, foreign exchange or similar arrangements, including swaps, caps, collars, hedges or similar arrangements, (j) all securities or other similar instruments convertible or exchangeable into any of the foregoing, and (k) any liability of others of a type described in any of the preceding clauses (a) through (j) in respect of which the specified Person has guaranteed or secured by any asset of such specified Person, whether or not such liability has been assumed by the specified Person: provided, however, that (i) with respect to HD, any liabilities or obligations of a type described in the preceding clauses (a) through (k) shall exclude the LiveWire Specified Indebtedness and (ii) with respect to LiveWire, any liabilities or obligations of a type described in the preceding clauses (a) through (k) shall exclude the HD Specified Indebtedness.
“Indemnifying Party” means any Party which may be obligated to provide indemnification to an Indemnitee pursuant to Article II hereof or any other section of this Agreement.
“Indemnitee” means any Person which may be entitled to indemnification from an Indemnifying Party pursuant to Article II hereof or any other section of this Agreement.
“Information” means information, whether or not patentable or copyrightable, in written, oral, electronic or other tangible or intangible forms, stored in any medium and regardless of location, including (a) Technology and (b) to the extent not described by clause (a), technical, financial, employee or business information or data, studies, reports, records, books, Contracts, instruments, surveys, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, computer programs or other software, marketing plans, customer names and records, supplier names and records, customer and supplier lists, customer and vendor data or correspondence, communications by or to attorneys (including attorney-client privileged communications), memos and other materials prepared by attorneys or under their direction (including attorney work product), and other financial employee or business information or data, files, papers, tapes, keys, correspondence, plans, invoices, forms, product data and literature, promotional and advertising materials, operating manuals, instructional documents, quality records and regulatory and compliance records.
“Insurance Proceeds” means those monies: (a) received by an insured Person from any insurer, insurance underwriter, mutual protection and indemnity club or other risk collective; or (b) paid on behalf of an insured Person by any insurer, insurance underwriter, mutual protection and indemnity club or other risk collective, on behalf of the insured, in either such case net of any costs or expenses incurred in the collection thereof; provided, however, that with respect to a captive insurance arrangement, Insurance Proceeds shall only include net amounts received by the captive insurer from a Third Party in respect of any captive reinsurance arrangement.
“Intellectual Property” means all intellectual property and industrial property in any and all jurisdictions throughout the world, including all: (a) patents, patent applications (including patents issued thereon) and statutory invention registrations, including reissues, divisions, continuations, continuations in part, substitutions, renewals, extensions and reexaminations of any of the foregoing, and all rights in any of the foregoing provided by international treaties or conventions, (b) Trademarks, (c) Internet domain names, (d) copyrights, mask works, database rights and design rights, whether or not registered, and all registrations and applications for registration of any of the foregoing, and all rights in and to any of the foregoing provided by international treaties or conventions, (e) any intellectual property rights in unpatented technology, and inventions (whether or not patentable and whether or not reduced to practice), invention disclosures, ideas, formulas, compositions, inventor’s notes, discoveries and improvements, manufacturing and production processes and techniques, testing information, research and development information, drawings, specifications, designs, plans, proposals and technical data, trade secrets, confidential information, data, know-how, product designs and development, methods and processes, testing tools and materials, customer information, marketing materials and market surveys and (f) intellectual property rights arising from or in respect of any Software or technology.
“Intellectual Property License Agreement” means that certain Intellectual Property License Agreement to be entered into between HD and LiveWire at the Closing, as such agreement may be modified or amended from time to time in accordance with its terms.
“Intercompany” means, with respect to any Contract, balance, arrangement or other legal or financial relationship, established at or prior to the Separation Time, that such Contract, balance, arrangement or other legal or financial relationship is (a) between or among one or more members of the HD Group and one or more members of the LiveWire Group, as applicable, or (b) between or among the Harley Business and the LiveWire Business, even if within the same legal entity (in which case the applicable Contract, balance, arrangement or other legal or financial relationship shall be deemed to be binding as if it was between separate legal entities).
“Joint Claims” means any claim or series of related claims under any insurance policy that results or could reasonably be expected to result in the payment of Insurance Proceeds to or for the benefit of both one or more members of the HD Group and one or more members of the LiveWire Group.
“Joint Development Agreement” means that certain Joint Development Agreement to be entered into between HD and LiveWire at the Closing, as such agreement may be modified or amended from time to time in accordance with its terms.
“Law” means any supranational, federal, state, local or provincial, municipal, foreign or common law, act, code, statute, treaty, ordinance, rule, regulation, order, judgment, injunction, award, decree, agency requirement, writ, franchise, variance, exemption, approval, certificate, notice, bylaw, standard, policy guidance, license, permit or other binding requirements, policies or instruments of any relevant jurisdiction, including in the United States or elsewhere issued, promulgated, adopted or entered into by or with any Governmental Entity or any Self-Regulatory Organization.
“Liabilities” means any and all indebtedness, guarantees, assurances, commitments, liabilities, obligations, responsibilities, Losses, remediation, deficiencies, reimbursement obligations in respect of letters of credit, damages, payments, fines, penalties, claims, settlements, judgments, sanctions, costs, expenses, interest and obligations of any nature or kind, whether accrued or fixed, absolute or contingent, matured or unmatured, accrued or not accrued, asserted or unasserted, liquidated or unliquidated, foreseen or unforeseen, known or unknown, reserved or unreserved, reflected on a balance sheet or otherwise, or determined or determinable, including those arising under any Law, claim, demand, Action, or order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Entity or arbitration tribunal, and those arising under any Contract, agreement, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment or undertaking or terms of employment, whether imposed or sought to be imposed by a Governmental Entity, another third Person, or a Party, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, or otherwise, in each case, including all costs, expenses, interest, attorneys’ fees, disbursements and expenses of counsel, expert and consulting fees and costs related thereto or to the investigation or defense thereof, in each case including any fines, damages or equitable relief that is imposed in connection therewith.
“Lien” has the meaning set forth in the SPAC Business Combination Agreement.
“LiveWire Actions” means (a) those Actions set forth set forth on Schedule I.B or (b) any Action primarily relating to, arising out of or resulting from the LiveWire Business or a LiveWire Asset not listed on Schedule I.B or Schedule I.I.
“LiveWire Business” means the design, development, marketing, sale or distribution of (a) two-, three- or four-wheeled electric vehicles (including two-wheeled electric vehicles for children of a type designed, developed, marketed, sold or distributed by Stacyc, Inc.) or modular platforms for use in such electric vehicles, (b) part and accessories exclusively related to electric vehicles, and (c) electric vehicle systems (including batteries, power electronics, motors or electric vehicle system software), in each case, as conducted by HD and its Subsidiaries (including LiveWire) as of the Closing.
“LiveWire Contracts” means any Contract to which either Party or any member of its Group is a party or by which it or any member of its Group or any of their respective Assets is bound, whether or not in writing, primarily used or held for use in the conduct of the LiveWire Business; provided that LiveWire Contracts shall not include any Contract that is contemplated to be retained by HD or any member of the HD Group from and after the Separation Time pursuant to Section 1.1(c).
“LiveWire Group” means, immediately from and after the Separation Time, HoldCo and each Subsidiary of HoldCo.
“LiveWire Indemnitees” means LiveWire, each member of the LiveWire Group, and all Persons who are or have been shareholders, stockholders, directors, partners, managers, managing members, officers, agents or employees of any member of the LiveWire Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns.
“LiveWire Intellectual Property” means (a)(i) the Intellectual Property set forth on Schedule I.D, (ii) the LiveWire Specified Marks, (iii) any Intellectual Property (other than Trademarks) owned by HD or any of its Affiliates immediately prior to the Separation that is exclusively used or held for use in connection with (A) the LiveWire Business or (B) the manufacture of products for the LiveWire Business, in each case of (A) and (B), as of the Separation Time not listed on Schedule I.D or Schedule I.K, and (v) all rights to sue or otherwise recover for any past, present, or future infringement, misappropriation, dilution, or other violations of the foregoing; and (b) subject to Section 1.2, the Intellectual Property rights licensed to HD or any its Affiliates pursuant to LiveWire Contracts; but excluding in all cases the Excluded Intellectual Property.
“LiveWire Leases” means (a) the Contracts related to the leasing or subleasing of real property set forth on Schedule I.E and (b) any Contracts related to the leasing or subleasing of real property primarily relating to, held for use or primarily used in connection with the LiveWire Business and not listed on Schedule I.E or Schedule I.L, in the case of both clause (a) and (b) including all rights, interests, claims, benefits and claims of either Party or any member of its respective Group thereunder as of the Separation Time.
“LiveWire Permits” means (a) any Permit set forth on Schedule I.F and (b) any Permit primarily relating to, primarily held for use with or primarily used in connection with the LiveWire Business and not listed on Schedule I.F or Schedule I.M that is required for the ownership or use of the LiveWire Assets or the operation or conduct of the LiveWire Business.
“LiveWire Properties” means the real property set forth on Schedule I.G under the heading “LiveWire Properties”.
“LiveWire Specified Indebtedness” means the Indebtedness listed on Schedule 1.1(d)(i)(G).
“LiveWire Specified Marks” means (a) the Trademarks and domain names set forth on Schedule I.H and (b) the Trademarks and domain names that are owned by HD or any of its Subsidiaries and that are primarily used (or, if the subject of an intent-to-use application, intended to be primarily used) in connection with the goods or services included in the LiveWire Business immediately prior to the Separation Time not set forth on Schedule I.H or Schedule I.J.
“Losses” means any and all damages, losses (including diminution in value), deficiencies, Liabilities, obligations, penalties, judgments, settlements, claims, payments, interest costs, Taxes, fines and expenses (including the costs and expenses of any and all Actions and demands, assessments, judgments, settlements and compromises relating thereto and attorneys’, accountants’, consultants’ and other professionals’ fees and expenses incurred in the investigation or defense thereof or the enforcement rights hereunder), whether or not involving a Third Party Action, subject to Section 6.21.
“Master Services Agreement” means that certain Master Services Agreement to be entered into between HD and LiveWire at the Closing, as such agreement may be modified or amended from time to time in accordance with its terms
“Merger Sub” means LW EV Merger Sub, Inc., a Delaware corporation.
“NYSE” means the New York Stock Exchange.
“Parties” or “Party” shall have the meaning set forth in the Preamble.
“Permit” means all permits, licenses, franchises, authorizations, concessions, certificates, allowances, credits, consents, exemptions, approvals, variances, registrations, or similar authorizations from any Governmental Entity.
“Permitted Liens” shall have the meaning set forth in the SPAC Business Combination Agreement.
“Person” means any individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture (including with respect to any vessel), estate, trust, association, organization, Governmental Entity or other entity of any kind or nature.
“Post-Separation Time Tax Period” means any Tax period beginning after the Closing Date and that portion of a Straddle Period beginning after the Closing Date.
“Pre-Separation Time Tax Period” means any Tax period ending on or before the Closing Date and that portion of any Straddle Period ending at the end of the Closing Date.
“Privileged Information” means any information, in written, oral, electronic or other tangible or intangible forms, including any communications by or to attorneys (including attorney-client privileged communications), memoranda and other materials prepared by attorneys or under their direction (including attorney work product), as to which a party or its respective Subsidiaries would be entitled to assert or have a privilege, including the attorney-client and attorney work product privileges.
“Property Taxes” means all real property Taxes, personal property Taxes and similar ad valorem Taxes.
“Regulatory Authority” means any and all relevant regulatory agencies or authorities of the United States and other foreign regulatory agencies or authorities, in each case only to the extent that such agency or authority has authority and jurisdiction in the particular context.
“Release” means any release, spill, emission, discharge, leaking, pumping, pouring, dumping, injection, deposit, disposal, dispersal, leaching or migration of Hazardous Materials into or through the environment (including ambient air, surface water, groundwater and surface or subsurface strata).
“Representatives” means, with respect to any Person, any of such Person’s directors, officers, employees, agents, consultants, advisors, accountants, attorneys or other representatives.
“SEC” means the U.S. Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.
“Self-Regulatory Organization” means any United States or non-United States commission, board, agency or body that is not a Governmental Entity but is charged with the supervision or regulation of brokers, dealers, securities underwriting or trading, stock exchanges, commodities exchanges, electronic communication networks, insurance group or agents, investment group or investment advisers, including the NYSE.
“Software” means any and all (a) computer programs, including any and all software implementation of algorithms, models and methodologies, whether in source code, object code, human readable form or other form, (b) databases and compilations, including any and all data and collections of data, whether machine-readable or otherwise, (c) descriptions, flow charts and other work products used to design, plan, organize and develop any of the foregoing, (d) screens, user interfaces, report formats, firmware, development tools, templates, menus, buttons and icons and (e) documentation, including user manuals and other training documentation, relating to any of the foregoing.
“SPAC” means AEA-Bridges Impact Corp., an exempted company incorporated in the Cayman Islands.
“Stored Records” means Tangible Information held in a Records Facility maintained or arranged for by the party other than the party that owns such Tangible Information.
“Straddle Period” means any Tax period beginning on or before and ending after the Closing Date.
“Subsidiary” means, with respect to any Person, any entity, whether incorporated or unincorporated, of which at least a majority of the securities or ownership interests having by their terms voting power to elect a majority of the board of directors or other Persons performing similar functions is directly or indirectly owned or controlled by such Person or by one or more of its respective Subsidiaries. It is expressly agreed that for purposes of this Agreement, from and after the Separation Time, no member of the LiveWire Group shall be deemed to be a Subsidiary of any member of the HD Group.
“Tangible Information” means Information that is contained in written, electronic or other tangible forms.
“Taxes” means any federal, state, local or foreign income, gross receipts, branch profits, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, escheat, environmental, customs duties, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, registration, ad valorem, value added, alternative or add-on minimum or estimated tax or other tax of any kind whatsoever, including any interest, penalty or addition thereto, whether disputed or not and including any obligation to indemnify or otherwise assume or succeed to the tax liability of any other Person by Law, by contract or otherwise.
“Tax Matters Agreement” means that certain Tax Matters Agreement to be entered into by and among HD and HoldCo and any other parties thereto, substantially in the form to the SPAC Business Combination Agreement.
“Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
“Technology” means all technology, designs, formulae, algorithms, procedures, methods, discoveries, processes, techniques, ideas, know-how, research and development, technical data, tools, materials, specifications, processes, inventions (whether patentable or unpatentable and whether or not reduced to practice), apparatus, creations, improvements, works of authorship in any media, confidential, proprietary or nonpublic information, and other similar materials, all customized applications, completely developed applications and modifications to commercial applications, and all recordings, graphs, drawings, reports, analyses and other writings, and other tangible embodiments of the foregoing in any form, in each case, other than Software.
“Third Party” means any Person that is not a member of the HD Group or LiveWire Group.
“Trademark License Agreement” means that certain Trademark License Agreement substantially in the form attached hereto as Exhibit A to be entered into between HD and LiveWire at the Closing, as such agreement may be modified or amended from time to time in accordance with its terms.
“Trademarks” means all trademarks, service marks, trade names, trade dress, logos and other source or business identifiers, including all goodwill associated with any of the foregoing and any and all common law
rights in and to any of the foregoing, registrations and applications for registration of any of the foregoing, all rights in and to any of the foregoing provided by international treaties or conventions, and all reissues, extensions and renewals of any of the foregoing.
“Transfer” means any direct or indirect transfer, donation, sale, assignment, pledge, hypothecation, grant of a security interest in or other disposal or attempted disposal of all or any portion of a security, any interest or rights in a security, or any rights under this Agreement.
“Transfer Documents” means transfer, contribution, distribution or other similar agreements, bills of sale, special warranty deeds, stock powers, certificates of title, assignments of Contracts and other instruments of transfer, conveyance and assignment entered into, as of or prior to the Separation Time, between one or more members of the HD Group, on the one hand, and one or more members of the LiveWire Group, on the other hand, as and to the extent necessary to evidence: (a) the transfer, conveyance and assignment of all of such Party’s and the applicable members of its Group’s right, title and interest in and to the Assets to the other Party and the applicable members of its Group in accordance with Section 1.1(a); and (b) the valid and effective assumption of the Liabilities by such Party or the applicable members of its Group in accordance with Section 1.1(a).
“Transition Services Agreement” means that certain Transition Services Agreement to be entered into between HD and LiveWire at the Closing, as such agreement may be modified or amended from time to time in accordance with its terms.
“Zero Emission Vehicle” or “ZEV” means a vehicle that produces zero exhaust emissions of any criteria pollutant (or precursor pollutant) or greenhouse gas under any possible operational modes or conditions.
“ZEV Environmental Attribute” means any right, aspect, claim, characteristic, attribute or benefit, however so entitled, credit, allowance, emissions reduction or similar entitlement, whether created under Law or otherwise, resulting from the sale, production or leasing of Zero Emissions Vehicles, including, for the avoidance of doubt, any credit, allowance, emissions reduction or similar entitlement that is generated by the sale, production or leasing of ZEVs produced by LiveWire, arising out of any present or future Environmental Law; provided, however, that ZEV Environmental Attributes will not include any such right, aspect, claim, characteristic, attribute or benefit, credit, allowance, emissions reduction or any subsidies or other payments accruing to LiveWire under Laws (including Environmental Laws) in effect as of the date of this Agreement.
“ZEV Program” means (a) any environmental program, whether a mandatory program created under Environmental Law or a voluntary program pursuant to which the sale, production or leasing of ZEVs result in any ZEV Environmental Attribute, including without limitation a Zero Emission Vehicles program, a cap-and-trade program, a voluntary program such as the Verified Carbon Standard of VERRA, a renewable fuels program, or a low carbon fuel standard program or (b) any program created under Environmental Law which requires a member of the HD Group to acquire, submit, surrender or retire any ZEV Environmental Attribute, or requires any payment from a member of the HD Group unless such member submits, surrenders or retires ZEV Environmental Attributes, in each case in respect of such HD Group member’s sale, production or leasing on non-ZEV vehicles, or which requires a payment from such member of the HD Group on the basis of the ratio of ZEVs to non-ZEVs or low-emission vehicles sold, produced or leased by such member of the HD Group.
Exhibit A
Trademark License Agreement
[Intentionally Omitted]
Exhibit B
Employee Matters Agreement
[Intentionally Omitted]
Exhibit 10.6
Execution Version
TAX MATTERS AGREEMENT
by and between
Harley-Davidson, Inc.
and
LiveWire Group, Inc.
Dated September 26, 2022
TAX MATTERS AGREEMENT
This Tax Matters Agreement, dated September 26, 2022 (the “Agreement”), is by and between Harley-Davidson, Inc. (“H-D”) and LiveWire Group, Inc. (formerly known as LW EV Holdings, Inc.) (“LiveWire”). H-D and LiveWire are sometimes referred to herein as the “Parties” and each a “Party.”
RECITALS
WHEREAS, H-D is the common parent corporation of an affiliated group of corporations within the meaning of Section 1504(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and income, gain, loss and deduction of certain former, present and future members of the LiveWire Group (defined below) has been or may be included in Consolidated Returns (defined below);
WHEREAS, H-D and LiveWire may become members of a consolidated, combined, unitary, and other similar groups as defined under similar laws of U.S. state or local jurisdictions (or may have their income, gain, loss and deduction included in the Tax Returns of such groups), including both an H-D Affiliate and a LiveWire Affiliate and, accordingly, certain members of the LiveWire Group may file Combined Returns (defined below) covering United States state and local Income Taxes (defined below) with members of the H-D Group (defined below);
WHEREAS, pursuant to that certain Business Combination Agreement and Plan of Merger by and among AEA-Bridges Impact Corp., LW EV Merger Sub, Inc., LiveWire EV, LLC, H-D and LiveWire (the “BCA” and the transactions contemplated under the BCA, the “Business Combination”), H-D will contribute LiveWire EV, LLC to LiveWire in exchange for a certain number of the issued and outstanding shares of common stock of LiveWire, par value of $0.0001 per share as may be adjusted, as further described therein (“LiveWire Common Stock”);
WHEREAS, in the event that H-D’s ownership of LiveWire following the Business Combination equals or is greater than 80.0 percent of the voting power (as determined for applicable Tax purposes) and value of the LiveWire Common Stock (or other applicable minimum threshold for state or local Income Tax purposes), the Parties wish to set forth how certain Tax (defined below) matters would be handled;
WHEREAS, in the event that a Deconsolidation Event (as defined below) occurs, the Parties wish to set forth how certain Tax matters would be handled; and
WHEREAS, it is appropriate and desirable to set forth the principles and responsibilities of the Parties regarding the allocation of Taxes and other related liabilities and adjustments with respect to Taxes, preparation of Tax Returns, Tax audits, and certain other Tax matters that affect the H-D Group and the LiveWire Group.
NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein and intending to be legally bound hereby, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the following meanings:
“Affiliate” means any Legal Entity that is Controlled by the Person in question. “LiveWire Affiliate” means an Affiliate of LiveWire. “H-D Affiliate” means an Affiliate of H-D other than LiveWire and any LiveWire Affiliate.
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“Affiliation Year” means with respect to any applicable Tax, each taxable year, or portion thereof, commencing on the Initial Consolidation Date with respect to which a Consolidated Return or Combined Return is or will be filed. For any taxable year in which (i) the Initial Consolidation Date occurs, with respect to LiveWire, Affiliation Year shall include only the portion of the taxable year beginning the day after the Initial Consolidation Date and (ii) a Deconsolidation Date occurs, with respect to LiveWire, Affiliation Year shall include only the portion of the taxable year ending on the Deconsolidation Date.
“After Tax Amount” means any additional amount necessary to reflect the hypothetical Tax consequences of the receipt or accrual of any payment required to be made under this Agreement (including the receipt or payment of an additional amount or amounts hereunder and the effect of the deductions available for interest paid or accrued and for Taxes such as state and local Income Taxes) determined by using the highest marginal corporate Tax rate (or rates, in the case of an item that affects more than one Tax) for the relevant taxable period (or portion thereof).
“Agreement” has the meaning set forth in the introductory paragraph of this Agreement.
“Audit” includes any audit, investigation, assessment of Taxes, pre-filing agreement, other examination by any Taxing Authority, proceeding, or appeal of such a proceeding relating to Taxes, whether administrative or judicial.
“BCA” has the meaning set forth in the Recitals of this Agreement.
“Business Combination” has the meaning set forth in the Recitals of this Agreement.
“Business Combination Date” means the date of closing of the Business Combination.
“Business Day” means Monday through Friday, excluding days on which the New York Stock Exchange is regularly closed for business.
“Closing Date” has the meaning set forth in the BCA.
“Code” has the meaning set forth in the Recitals of this Agreement.
“Combined Return” means any Tax Return with respect to Income Taxes (other than with respect to United States federal Income Taxes or any Income Tax imposed by a jurisdiction that is not the United States, any state thereof or locality therein, or the District of Columbia) filed on a consolidated, combined (including nexus combination, worldwide combination, domestic combination, line of business combination or any other form of combination) or unitary basis wherein LiveWire or one or more LiveWire Affiliates join in the filing of such Tax Return (for any taxable period) with H-D or one or more H-D Affiliates.
“Consolidated Return” means any Tax Return with respect to United States federal Income Taxes filed on a consolidated basis wherein one or more members of the LiveWire Group join in the filing of such Tax Return (for any taxable period or portion thereof) with H-D or the H-D Affiliated Group.
“Control” or “Controlled” means the ownership of stock or other ownership interests, directly or indirectly, possessing at least 50 percent of the total combined voting power of all classes of stock or other ownership interest entitled to vote.
“Controlling Party” has the meaning set forth in Section 7.01 of this Agreement.
“Credit” or “Credits” means any credit or credits against United States federal Income Tax or, as applicable, against United States state or local Tax. Credits include, but are not limited to, foreign Tax credits, research credits, research and development credits, minimum Tax credits, low-income housing credits, investment Tax credits, and targeted job credits.
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“Deconsolidation Date” means the date on which a Deconsolidation Event occurs.
“Deconsolidation Event” means, with respect to LiveWire and/or any LiveWire Affiliate, following the Initial Consolidation Date, any event or transaction that causes LiveWire and/or one or more LiveWire Affiliates to no longer be eligible to join with H-D or one or more H-D Affiliates in the filing of a Consolidated Return or a Combined Return.
“Estimated Tax Installment Date” means, with respect to United States federal Income Taxes, the estimated Tax installment due dates prescribed in Section 6655(c) of the Code and, in the case of any other Tax, means any other date on which an installment payment of an estimated amount of such Tax is required to be made under the laws with respect to such Tax.
“Final Determination” means the final resolution of liability for any Tax for any taxable period, by or as a result of: (a) a final and unappealable decision, judgment, decree or other order by any court of competent jurisdiction; (b) a final settlement with the IRS, a closing agreement or accepted offer in compromise under Sections 7121 or 7122 of the Code, or a comparable agreement under the laws of other jurisdictions, which resolves the entire Tax liability for any taxable period; (c) any allowance of a Refund or Credit in respect of an overpayment of Tax, but only after the expiration of all periods during which such Refund or Credit may be recovered by the jurisdiction imposing the Tax; or (d) any other final disposition, including by reason of the expiration of the applicable statute of limitations.
“GAAP” means generally accepted accounting principles in the United States as in effect from time to time.
“Group” means the LiveWire Group or the H-D Group, as the context requires.
“H-D” has the meaning set forth in the introductory paragraph to this Agreement.
“H-D Affiliate” has the meaning set forth under “Affiliate”.
“H-D Affiliated Group” means the affiliated group (as that term is defined in Section 1504 of the Code and Treasury Regulations promulgated thereunder) of which H-D is the common parent.
“H-D Business” means all of the businesses and operations conducted by H-D and H-D Affiliates, excluding the LiveWire Business, at any time, whether prior to or after the Business Combination Date.
“H-D Group” means H-D and all H-D Affiliates that are or have been members of the H-D Affiliated Group at any time on or prior to a Deconsolidation Event but, for the avoidance of doubt, does not include any member of the LiveWire Group.
“Income Tax” or “Income Taxes” means any Taxes imposed on or determined by reference to gross or net income or profits or any other measure of income or profits. For the avoidance of doubt, Income Taxes shall include Taxes with multiple bases (including corporate franchise, doing business, or occupation Taxes) if one or more of the bases upon which such Tax may be based, by which it may be measured, or with respect to which it may be calculated is income or profits (including any capital gains, gross receipts, value added, or minimum Tax).
“Income Tax Return” means any Tax Return relating to Income Taxes.
“Independent Entity” has the meaning set forth in Section 9.04 of this Agreement.
“Initial Consolidation Date” means, with respect to any applicable Tax, the initial date upon which H-D’s ownership of LiveWire has met the applicable minimum threshold required to file either a Combined Return or Consolidated Return.
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“IRS” means the United States Internal Revenue Service.
“Joint Responsibility Item” means any Tax Item for which the non-Controlling Party’s could be adversely affected, including as a result of payment responsibility under this Agreement, in an amount that could exceed two hundred fifty thousand dollars ($250,000), but not a Sole Responsibility Item.
“Law” has the meaning set forth in the BCA.
“Legal Entity” means a corporation, partnership, limited liability company, or other entity under state or other applicable organizational law.
“LiveWire Business” means the business and operations conducted by LiveWire and LiveWire Affiliates as such business and operations will continue after the Business Combination Date.
“LiveWire Group” means LiveWire and any LiveWire Affiliate, but, for the avoidance of doubt, does not include the H-D Group.
“LiveWire Separate Federal Tax Liability” means an amount equal to the Tax liability that LiveWire and each LiveWire Affiliate would have incurred if they had filed a Tax Return with respect to United States federal Income Taxes filed on a consolidated basis (with LiveWire as the common parent corporation) separate from the members of the H-D Group, for the relevant Tax period, and such amount shall be computed by H-D (a) in a manner consistent with (i) general Tax accounting principles, (ii) the Code and the Treasury regulations promulgated thereunder and in a manner otherwise consistent with determining the H-D Group’s consolidated U.S. federal Income Tax liability, and (iii) to the extent allowed by applicable law, past practice, if any, and (b) taking into account any (i) Tax Asset attributable to LiveWire or any LiveWire Affiliate to the extent not previously taken into account to reduce LiveWire’s or any LiveWire Affiliate’s taxable income for purposes of this definition, (ii) which is attributable to or first arose in a taxable period of LiveWire or any LiveWire Affiliate that is an Affiliation Year and (iii) has been utilized by H-D or will be utilized by H-D in the current Tax period to offset the H-D Affiliated Group’s consolidated United Stated federal Income Tax liability. For simplicity, in the case of any limitations on the use of net operating losses, Credits, or other tax attributes which, in the related Consolidated Return, are determined on a consolidated basis (such as the foreign tax credit limitation) or by taking into account items related to Persons other than the member which generated such tax attribute (such as the limitation on the deductibility of interest expense under Section 163(j) or Section 861 of the Code), the LiveWire Separate Federal Tax Liability shall be determined based on the actual amount of such limitations in the related Consolidated Return, and not by recalculating such limitations as though a separate United States federal consolidated return was filed.
“LiveWire Separate Other Tax Liability” means an amount equal to any and all Income Taxes of any state or locality of the United States and the District of Columbia for a relevant Tax period with respect to or as a result of, assets or activities of LiveWire and the LiveWire Affiliates, determined for each relevant jurisdiction for which a Combined Return is filed using principles analogous to the principles used to compute the LiveWire Separate Federal Tax Liability.
“Losses” means collectively, any and all claims, damages, losses, judgments, liabilities, costs, and expenses (including reasonable expenses of investigation and reasonable attorneys’ fees and expenses in connection with any action, suit, or proceeding).
“Non-Income Tax Return” means any Tax Return relating to any Tax other than an Income Tax.
“Owed Party” has the meaning set forth in Section 6.05(a) of this Agreement.
“Owing Party” has the meaning set forth in Section 6.05(a) of this Agreement.
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“Party” or “Parties” has the meaning set forth in the preamble of this Agreement.
“Payment Period” has the meaning set forth in Section 6.05(e) of this Agreement.
“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or a governmental entity or any department, agency, or political subdivision thereof, without regard to whether any entity is treated as disregarded for United States federal income tax purposes.
“Post-Affiliation Period” means, for any period beginning after the Initial Consolidation Date, (a) a taxable period that begins after the Deconsolidation Date, and (b) with respect to any taxable period that includes (but does not end on) the Deconsolidation Date, the portion of such taxable period beginning after the Deconsolidation Date.
“Pre-Deconsolidation Period” means, for any period beginning after the Initial Consolidation Date, (a) a taxable period that ends on or before the Deconsolidation Date, and (ii) with respect to any taxable period that includes (but does not end on) the Deconsolidation Date, the portion of such taxable period beginning before the Deconsolidation Date and ending at the end of the Deconsolidation Date.
“Refund” means any refund of Taxes, including any reductions of Taxes paid or payable by means of Credits, offsets, or otherwise.
“Securities Laws” means the Exchange Act and the Securities Act (as each is defined under the BCA).
“Separation Agreement” means that certain Separation Agreement by and between H-D and LiveWire EV, LLC, dated as of September 26, 2022.
“Sole Responsibility Item” means any Tax Item for which the non-Controlling Party has the entire economic liability or responsibility under applicable law or this Agreement.
“Tax” or “Taxes” means any federal, state, foreign, or local income, gross receipts, branch profits, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, registration, ad valorem, value added, alternative or add-on minimum, estimated, or other tax of any kind imposed whatsoever, including any interest, penalty, or addition thereto, whether disputed or not.
“Tax Asset” means any Tax Item that has accrued for Tax purposes, but has not been realized or utilized during the taxable period in which it has accrued, and that could reduce a Tax in another taxable period, including a net operating loss, net capital loss, charitable deduction carryforward and Credits.
“Taxing Authority” means any federal, state, local, or foreign jurisdiction (including any subdivision and any revenue agency of such a jurisdiction) imposing Taxes and the agency, if any, charged with the collection of such Taxes for such authority.
“Tax Item” means any item of income, gain, loss, deduction, or Credit, or other similar attribute that may have the effect of increasing or decreasing any Tax paid or payable in any taxable period.
“Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto and including any amendment thereof.
“Treasury Regulations” mean the final and temporary (but not proposed) United States Treasury regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).
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ARTICLE II
PREPARATION AND FILING OF TAX RETURNS
Section 2.01 H-D’s Responsibility
Subject to the other applicable provisions of this Agreement, H-D shall have sole and exclusive responsibility (at its own expense) for the preparation and filing of:
(a) all Consolidated Returns and Combined Returns for any taxable period;
(b) all Income Tax Returns (other than Consolidated Returns and Combined Returns) with respect to H-D, any H-D Affiliate or the H-D Business for any taxable period; and
(c) for the avoidance of doubt, all Non-Income Tax Returns with respect to H-D, any H-D Affiliate or the H-D Business or any part thereof for any taxable period.
Section 2.02 LiveWire’s Responsibility
Subject to the other applicable provisions of this Agreement, LiveWire shall have the responsibility for the preparation and filing (at its own expense) of:
(a) all Income Tax Returns (other than Consolidated Returns and Combined Returns) with respect to LiveWire, any LiveWire Affiliate or the LiveWire Business for any taxable period beginning after the Closing Date; and
(b) for the avoidance of doubt, all Non-Income Tax Returns with respect to LiveWire, any LiveWire Affiliate or the LiveWire Business or any part thereof for any taxable period beginning after the Closing Date.
Section 2.03 Manner of Tax Return Preparation
(a) Preparation. Subject to the terms and conditions of this Agreement, H-D shall have the exclusive right, in its reasonable discretion, with respect to any Tax Return described in Section 2.01 to determine all relevant matters, including (i) the manner in which such Tax Return shall be prepared and filed, including the elections, methods of accounting, positions, conventions, and principles of taxation to be used and the manner in which any Tax Asset or Tax-related matter regarding such Tax Return shall be reported, (ii) whether any extensions may be requested, (iii) subject to Section 2.03(b) and Section 2.03(c), the elections that will be made by H-D, any H-D Affiliate, LiveWire, or any LiveWire Affiliate on such Tax Return, (iv) whether any amendment(s) to any such Tax Return shall be filed, (v) whether any claim(s) for Refund shall be made in respect of Taxes shown on any such Tax Return, (vi) whether any such Refund shall be received by way of refund in cash or credited against any liability for the related Tax, and (vii) whether to retain outside firms to prepare or review such Tax Returns; provided that in the case of clauses (i) and (iii) such determinations will be made in a manner consistent with the definition of LiveWire Separate Federal Tax Liability.
(b) LiveWire Separate Tax Liability. Without limiting the information required to be provided in Section 2.04, in the case of any Consolidated Return or Combined Return that includes LiveWire Tax Items that in the aggregate are gross revenue or expenses in excess of five million dollars ($5,000,000), H-D shall provide to LiveWire a pro forma draft of the portion of such Tax Return that reflects the LiveWire Separate Federal Tax Liability or LiveWire Separate Other Tax Liability, as applicable, and a statement showing in reasonable detail H-D’s calculation of the LiveWire Separate Federal Tax Liability or LiveWire Separate Other Tax Liability, as applicable (including copies of all worksheets and other materials used in preparation thereof) at least thirty (30) days prior to the due date (with applicable extensions) for the filing of such Tax Return for LiveWire’s review and comment. LiveWire shall provide its comments in writing to H-D at least ten (10) days prior to the due date (with applicable extensions) for the filing of such Tax Return, and H-D shall, in preparing the relevant
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Consolidated Return or Combined Return, consider in good faith any such comments reasonably made by LiveWire that relate solely to LiveWire Tax Items. LiveWire shall (i) promptly reimburse H-D for its reasonable, documented out-of-pocket incremental expenses incurred in preparing any such pro forma draft, and (ii) bear its own expenses in reviewing and commenting on any such draft.
(c) LiveWire Elections. If reasonably requested by H-D, LiveWire and the appropriate members of the LiveWire Group shall make or give their consent to such elections or other matters relating to the LiveWire Group as H-D determines are necessary or advisable in connection with the filing of any such Tax Returns described in Section 2.01; provided that no member of the LiveWire Group shall be required to make or give consent to any election or other matter that (i) would disproportionately and adversely affect LiveWire as compared to H-D (provided, however, that H-D’s utilization of a Tax Asset shall not be considered an action that disproportionately and adversely affects LiveWire), or (ii) such member of the LiveWire Group is not legally able to make or give. In addition, no member of the LiveWire Group may elect to be considered as not having been a member of the H-D Affiliated Group for United States federal Income Tax purposes for any Affiliation Year, and no LiveWire Affiliate may elect to be considered as not having been a member of a Combined Return for any Affiliation Year, without the prior written consent of H-D or unless required under Section 1503(a)(3) of the Code (or similar or analogous provision of state or local law).
Section 2.04 Information
(a) LiveWire shall use commercially reasonable efforts to timely provide, in accordance with H-D’s internal tax return calendar, which will be provided to LiveWire on a rolling one-year schedule, all information that H-D shall reasonably request, in such form as H-D shall reasonably request, in each case in writing in order to enable H-D to prepare the Tax Returns that it is required to prepare under this Agreement and compute all estimated Tax payments (for purposes of Section 6.01 of this Agreement).
(b) Promptly after finalizing any final Consolidated Return or final Combined Return for a relevant taxable period, H-D shall provide LiveWire with a written calculation in reasonable detail (including, upon reasonable request, copies of all work sheets and other materials used in preparation thereof) setting forth the amount of any LiveWire Separate Federal Tax Liability or LiveWire Separate Other Tax Liability. No later than three (3) Business Days prior to the date on which any estimated LiveWire Separate Federal Tax Liability or estimated LiveWire Separate Other Tax Liability (for purposes of Section 6.01 of this Agreement) is due, H-D shall provide LiveWire with a written calculation in reasonable detail (including, upon reasonable request, copies of all work sheets and other materials used in preparation thereof) setting forth such estimated amounts. Such computations shall include an accounting of the amount of any losses or credit carryforwards attributable to LiveWire or any member of the LiveWire Group that are available to be utilized to reduce the LiveWire Separate Federal Tax Liability or LiveWire Separate Other Tax Liability in the current period and any future taxable years and any limitations thereon. Without limiting the foregoing, H-D and LiveWire shall each use commercially reasonable efforts to provide by January 15th of each year that is an Affiliation Year, in accordance with the other Party’s reasonable written request, all information in respect of Tax matters hereunder reasonably required by such Party in order to prepare its audited financial statements in accordance with GAAP and to make any filings required by applicable Securities Laws.
Section 2.05 Agent
With respect to any Affiliation Year, LiveWire hereby irrevocably designates, and agrees to cause each LiveWire Affiliate to so designate, H-D as its sole and exclusive agent and attorney-in-fact and agrees to take such action and to cause each LiveWire Affiliate to take such action (including execution of powers of attorney and other documents) as H-D may reasonably request in connection with any matter relating to Taxes.
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ARTICLE III
LIABILITY FOR TAXES
Section 3.01 LiveWire’s Liability for Taxes
LiveWire and each LiveWire Affiliate shall be jointly and severally liable for the following Taxes, and shall be entitled to receive and retain all Refunds of Taxes previously incurred by LiveWire, any LiveWire Affiliate, or the LiveWire Business with respect to such Taxes:
(a) all Taxes with respect to Tax Returns described in Section 2.01(a) of this Agreement to the extent that such Taxes are related to (i) the LiveWire Separate Federal Tax Liability for any Affiliation Year, (ii) the LiveWire Separate Other Tax Liability for any Affiliation Year, or (iii) the LiveWire Business, for any taxable period beginning after the Closing Date;
(b) all Taxes with respect to Tax Returns described in Section 2.02 of this Agreement; and
(c) all Taxes imposed by any Taxing Authority with respect to the LiveWire Business, LiveWire or any LiveWire Affiliate (other than in connection with the required filing of a Tax Return described in Section 2.01(a) or Section 2.02 of this Agreement) for any taxable period beginning after the Closing Date; provided that LiveWire shall not be responsible or liable for any such Taxes (i) that are interest imposed by a Taxing Authority as a result of the failure of H-D to file any Tax Return for which it is responsible by the due date of such Tax Return (including automatic extensions), unless such failure is caused by LiveWire failing to provide to H-D the information required by Section 2.04(a) in a timely manner, or (ii) for the avoidance of doubt that relate to any Tax Asset that has been previously utilized by H-D to reduce income of the H-D Group and which Tax Asset has not been applied to reduce the amount of any LiveWire Separate Federal Tax Liability or LiveWire Separate Other Tax Liability.
Section 3.02 H-D’s Liability for Taxes
H-D and each H-D Affiliate shall be jointly and severally liable for the following Taxes, and shall be entitled to receive and retain all Refunds of Taxes previously incurred by H-D, any H-D Affiliate, or the H-D Business with respect to such Taxes:
(a) except as provided in Section 3.01(a) of this Agreement, all Taxes with respect to Tax Returns described in Section 2.01(a) of this Agreement;
(b) all Taxes with respect to Tax Returns described in Section 2.01(b) or Section 2.01(c) of this Agreement; and
(c) all Taxes imposed by any Taxing Authority with respect to H-D, any H-D Affiliate, or the H-D Business (other than in connection with the required filing of a Tax Return described in Section 2.01(a) or Section 2.01(b) of this Agreement) for any taxable period.
Section 3.03 Taxes, Refunds and Credits
Notwithstanding in Section 3.01 and Section 3.02 of this Agreement, (a) H-D and each H-D Affiliate shall be jointly and severally liable for all Taxes incurred by any Person with respect to the H-D Business for all taxable periods and shall be entitled to all Refunds and Credits of Taxes previously incurred by any Person with respect to such Taxes, and (b) LiveWire and each LiveWire Affiliate shall be jointly and severally liable for all Taxes incurred by any Person with respect to the LiveWire Business for all taxable periods and shall be entitled to all Refunds and Credits of Taxes previously incurred by any Person with respect to such Taxes.
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Section 3.04 Payment of Tax Liability
If one Party is liable or responsible for Taxes, under Section 3.01 through Section 3.03 of this Agreement with respect to Tax Returns for which another Party is responsible for filing, or with respect to Taxes that are paid by another Party, or receives any Refund or Credit of Taxes for which another Party is entitled to receive pursuant to this Agreement, then the liable or responsible Party shall pay the Taxes (or a reimbursement of such Taxes) or such Refund or the amount of such Credit to the other Party pursuant to Section 6.05 of this Agreement.
Section 3.05 Computation
H-D shall perform all computations hereunder in good faith and with due care.
ARTICLE IV
DECONSOLIDATION EVENTS
Section 4.01 Tax Allocations
(a) Allocation of Tax Items. In the case of a Deconsolidation Event, all Tax computations for (i) any Pre-Deconsolidation Periods ending on the date of the Deconsolidation Date and (ii) the immediately following taxable period of LiveWire or any LiveWire Affiliate, shall be made pursuant to the principles of Treasury Regulation Section 1.1502-76(b) (or of a corresponding provision under the laws of other jurisdictions), as reasonably determined by H-D applying, to the greatest extent permissible, the “end of the day” rule contained in Treasury Regulation Section 1.1502-76(b)(1)(ii) and without any “ratable allocation” election without the prior written consent of LiveWire, not to be unreasonably withheld, conditioned or delayed.
(b) Allocation of Tax Assets. In the case of a Deconsolidation Event, H-D and LiveWire shall reasonably cooperate in determining the allocation of any Tax Assets among H-D, each H-D Affiliate, LiveWire, and each LiveWire Affiliate, which allocation shall be performed in a manner consistent with the Code, the Treasury Regulations thereunder, and any other applicable legal authorities. The Parties hereby agree that in the absence of controlling legal authority or unless otherwise provided under this Agreement, Tax Assets shall be allocated to the legal entity that is required under Article III of this Agreement to bear the liability for the Tax associated with such Tax Asset, or in the case where no Party is required hereunder to bear such liability, the Party that incurred the cost or burden associated with the creation of such Tax Asset.
Section 4.02 Carrybacks
(a) Net Operating Losses. In the case of a Deconsolidation Event, notwithstanding any other provision of this Agreement, LiveWire shall elect to the extent permissible under applicable law to relinquish any right to carry back net operating losses to any Pre-Deconsolidation Periods of H-D (and LiveWire shall not be entitled to any payment or reimbursement from H-D by reason of such carrybacks).
(b) Other. If, following a Deconsolidation Event, a member of the LiveWire Group has a net operating loss, a net capital loss, or is entitled to credits against tax which such member of the LiveWire Group, under applicable provisions of the Code or applicable Treasury Regulations, is required to carry back to a taxable period or taxable periods of the Group during which such member of the LiveWire Group was a member of the H-D Affiliated Group, H-D shall have no obligation to pay to such member of the LiveWire Group the amount of any Refund or Credit of federal income tax that H-D may receive as a result of the carryback by such member of the LiveWire Group of any such losses or credits.
Section 4.03 Continuing Covenants
Unless otherwise required by applicable law, each of H-D (for itself and each H-D Affiliate) and LiveWire (for itself and each LiveWire Affiliate) agrees (a) not to take any action reasonably expected to result in an
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increased Tax liability to the other, a reduction in a Tax Asset of the other or an increased liability to the other under this Agreement, in each case, except as agreed in writing with the other Party or expressly provided for in this Agreement, (b) to take any action reasonably requested by the other that would reasonably be expected to result in a Tax benefit or avoid a Tax detriment to the other, provided, in either such case, that the taking or refraining to take such action does not result in any additional cost or liability not fully compensated for by the other Party or any other adverse effect to such Party, and (c) to use their commercially reasonable efforts to enter into any other agreements necessary to carry out the intent of this Section 4.03. The Parties hereby acknowledge that the preceding sentence is not intended to limit, and therefore shall not apply to, the rights of the Parties with respect to matters otherwise covered by this Agreement.
ARTICLE V
INDEMNIFICATION
Section 5.01 In General
H-D and each member of the H-D Group shall jointly and severally indemnify LiveWire, each LiveWire Affiliate, and their respective directors, officers and employees, and hold them harmless from and against any and all Taxes for which H-D or any H-D Affiliate is liable under this Agreement and any losses, costs, damages or expenses, including reasonable attorneys’ fees and out-of-pocket costs, that are attributable to, or result from, the failure of H-D, any H-D Affiliate or any director, officer or employee to make any payment required to be made under this Agreement. LiveWire and each member of the LiveWire Group shall jointly and severally indemnify H-D, each H-D Affiliate, and their respective directors, officers and employees, and hold them harmless from and against any and all Taxes for which LiveWire or any LiveWire Affiliate is liable under this Agreement and any losses, costs, damages or expenses, including reasonable attorneys’ fees and out-of-pocket costs, that are attributable to, or result from, the failure of LiveWire, any LiveWire Affiliate or any director, officer or employee to make any payment required to be made under this Agreement. For the avoidance of doubt, nothing in this Section 5.01 shall imply that the indemnification above must be increased for Taxes owing with respect to such payments and payments hereunder shall not be required to be so increased unless explicitly provided in this Agreement.
Section 5.02 Inaccurate or Incomplete Information
H-D and each member of the H-D Group shall jointly and severally indemnify LiveWire, each LiveWire Affiliate, and their respective directors, officers and employees, and hold them harmless from and against any cost, fine, penalty, or other documented expense of any kind attributable to the failure of H-D or any H-D Affiliate in supplying LiveWire or any LiveWire Affiliate with inaccurate or incomplete information, in connection with the preparation of any Tax Return. LiveWire and each member of the LiveWire Group shall jointly and severally indemnify H-D, each H-D Affiliate, and their respective directors, officers and employees, and hold them harmless from and against any cost, fine, penalty, or other documented expense of any kind attributable to the failure of LiveWire or any LiveWire Affiliate in supplying H-D or any H-D Affiliate with inaccurate or incomplete information, in connection with the preparation of any Tax Return.
Section 5.03 No Indemnification for Tax Items
Nothing in this Agreement shall be construed as a guarantee of the existence or amount of any loss, credit, carryforward, basis or other Tax Item, whether past, present or future, of H-D, any H-D Affiliate, LiveWire or any LiveWire Affiliate. In addition, for the avoidance of doubt, for purposes of determining any amount owed between the Parties hereto, all such determinations shall be made without regard to any financial accounting tax asset or liability or other financial accounting items.
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ARTICLE VI
PAYMENTS
Section 6.01 Estimated Payments
Not later than three (3) Business Days prior to each Estimated Tax Installment Date with respect to a Taxable period for which a Consolidated Return or a Combined Return will be filed, H-D shall provide LiveWire with (a) a written notice setting forth the amount payable by LiveWire in respect of any estimated LiveWire Separate Federal Tax Liability or estimated LiveWire Separate Other Tax Liability, as applicable, that LiveWire otherwise would have been required to pay to a Taxing Authority on such Estimated Tax Installment Date and (b) a written computation of such amount, together with reasonable supporting information. LiveWire shall pay to H-D on behalf of the LiveWire Group an amount equal to the amount of any such estimated LiveWire Separate Federal Tax Liability or estimated LiveWire Separate Other Tax Liability, as applicable, in accordance with Section 6.05 of this Agreement. The calculations of estimated LiveWire Separate Federal Tax Liability and estimated LiveWire Separate Other Tax Liability shall be determined in a manner consistent with the manner in which H-D computes the estimated Income Tax Liability with respect to the H-D Group and this Agreement.
Section 6.02 True-Up Payments
Not later than ten (10) Business Days after receipt of any LiveWire Separate Federal Tax Liability or LiveWire Separate Other Tax Liability computation pursuant to Section 2.04(b) of this Agreement with respect to an entire taxable period, LiveWire shall pay to H-D, or H-D shall pay to LiveWire, as appropriate, an amount equal to the difference, if any, between the LiveWire Separate Federal Tax Liability or the LiveWire Separate Other Tax Liability, as applicable, and the aggregate amount paid by LiveWire with respect to such period under Section 6.01 of this Agreement.
Section 6.03 Redetermination Amounts
In the event of a redetermination of any Tax Item reflected on any Consolidated Return or Combined Return, as a result of a refund of Taxes paid, a Final Determination or any settlement or compromise with any Taxing Authority which in any such case would affect the LiveWire Separate Federal Tax Liability or LiveWire Separate Other Tax Liability, H-D shall prepare a revised pro forma Tax Return in accordance with Section 2.03 of this Agreement but at H-D’s expense for the relevant taxable period reflecting the redetermination of such Tax Item as a result of such refund, Final Determination, settlement or compromise. LiveWire shall pay to H-D, or H-D shall pay to LiveWire, as appropriate, an amount equal to the difference, if any, between the LiveWire Separate Federal Tax Liability or LiveWire Separate Other Tax Liability, as applicable, reflected on such revised pro forma Tax Return and the LiveWire Separate Federal Tax Liability or the LiveWire Separate Other Tax Liability, as applicable, for such period as originally computed pursuant to this Agreement, provided that such amounts shall be equitably adjusted to account for (i) any Tax Asset of LiveWire that has been previously utilized by H-D to reduce income of the H-D Group and which Tax Asset has not been applied to reduce the amount of any LiveWire Separate Federal Tax Liability or LiveWire Separate Other Tax Liability and (ii) any Tax Asset of LiveWire that has been applied to reduce LiveWire Separate Federal Tax Liability or LiveWire Separate Other Tax Liability.
Section 6.04 Payments of Refunds, Credits and Reimbursements
If one Party receives a Refund or Credit of any Tax to which the other Party is entitled pursuant to Section 3.03 of this Agreement, the Party receiving such Refund or Credit shall pay to the other Party the amount of such Refund or Credit pursuant to Section 6.05 of this Agreement. If one Party pays a Tax with respect to which the other Party is liable of responsible pursuant to Section 3.01 through Section 3.03 of this Agreement, then the liable or responsible Party shall pay to the other Party the amount of such Tax pursuant to Section 6.05 of this Agreement.
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Section 6.05 Payments Under This Agreement
(a) In General. In the event that one Party (the “Owing Party”) is required to make a payment to another Party (the “Owed Party”) pursuant to this Agreement, then such payments shall be made according to this Section 6.05. All payments shall be made to the Owed Party or to the appropriate Taxing Authority as specified by the Owed Party within the time prescribed for payment in this Agreement, or if no period is prescribed, within twenty (20) Business Days after delivery of written notice of payment owing together with a computation of the amounts due.
(b) Treatment of Payments. Unless otherwise required by any Final Determination, the Parties agree that any payments made by one Party to another Party pursuant to this Agreement (other than (i) payments for the LiveWire Group Separate Federal Tax Liability or LiveWire Separate Other Tax Liability for any Post-Affiliation Period, (ii) payments of interest pursuant to Section 6.05(e) of this Agreement, (iii) payments of After Tax Amounts pursuant to Section 6.05(d) of this Agreement) shall be treated for all Tax and financial accounting purposes as nontaxable payments (dividend distributions or capital contributions, as the case may be) made immediately prior to the Deconsolidation Event and, accordingly, as not includible in the taxable income of the recipient or as deductible by the payor.
(c) Prompt Performance. All actions required to be taken (including payments) by any Party under this Agreement shall be performed within the time prescribed for performance in this Agreement, or if no period is prescribed, such actions shall be performed promptly. In the event any of the time periods for performance herein are determined to be insufficient to comply with relevant Tax and other filing obligations while providing the Parties a commercially reasonable period of time to review materials that they are otherwise entitled to review hereunder, then the Parties shall mutually agree to an adjustment to the applicable time periods to permit such compliance and commercially reasonable period of review.
(d) After Tax Amounts. If pursuant to a Final Determination it is determined that the receipt or accrual of any payment made under this Agreement (other than payments of interest pursuant to Section 6.05(e) of this Agreement) is subject to any Tax, the Party making such payment shall be liable for (i) the After Tax Amount with respect to such payment and (ii) interest at the rate described in Section 6.05(e) of this Agreement on the amount of such Tax from the date such Tax accrues through the date of payment of such After Tax Amount. A Party making a demand for a payment pursuant to this Agreement and for a payment of an After Tax Amount with respect to such payment shall separately specify and compute such After Tax Amount. However, a Party may choose not to specify an After Tax Amount in a demand for payment pursuant to this Agreement without thereby being deemed to have waived its right subsequently to demand an After Tax Amount with respect to such payment.
(e) Interest. Payments pursuant to this Agreement that are not made within the period prescribed in this Agreement (the “Payment Period”) shall bear interest for the period from and including the date immediately following the last date of the Payment Period through and including the date of payment at a per annum rate equal to the prime rate as published in The Wall Street Journal on the last day of such Payment Period. Such interest will be payable at the same time as the payment to which it relates and shall be calculated on the basis of a year of three hundred sixty-five (365) days and the actual number of days for which due.
ARTICLE VII
TAX PROCEEDINGS
Section 7.01 In General
Except as otherwise provided in this Agreement, (a) with respect to Tax Returns described in Section 2.01 of this Agreement, H-D and (b) with respect to Tax Returns described in Section 2.02 of this Agreement, LiveWire (in either case, the “Controlling Party”), shall have the exclusive right, in its sole discretion, to control, contest, and represent the interests of H-D, any H-D Affiliate, LiveWire, and/or any LiveWire Affiliate in any
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Audit relating to such Tax Return and to resolve, settle or agree to any deficiency, claim or adjustment proposed, asserted or assessed in connection with or as a result of any such Audit. The Controlling Party’s rights shall extend to any matter pertaining to the management and control of an Audit, including execution of waivers, choice of forum, scheduling of conferences and the resolution of any Tax Item. Any costs incurred in handling, settling, or contesting an Audit shall be borne by the Controlling Party.
Section 7.02 Participation of Non-Controlling Party
The non-Controlling Party shall have control over decisions to resolve, settle or otherwise agree to any deficiency, claim or adjustment with respect to any Sole Responsibility Item. The Controlling Party and the non-Controlling Party shall have joint control over decisions to resolve, settle or otherwise agree to any deficiency, claim or adjustment with respect to any Joint Responsibility Item. The Controlling Party shall not settle any Audit it controls concerning a Tax Item on a basis that would reasonably be expected to adversely affect the non-Controlling Party by at least two hundred fifty thousand dollars ($250,000) without obtaining such non-Controlling Party’s consent, which consent shall not be unreasonably withheld, conditioned or delayed.
Section 7.03 Notice
Within ten (10) Business Days after a Party becomes aware of the existence of a Tax issue that may give rise to an indemnification obligation under this Agreement, such Party shall give prompt notice to the other Party of such issue (such notice shall contain factual information, to the extent known, describing any asserted tax liability in reasonable detail), and shall promptly forward to the other Party copies of all notices and material communications with any Taxing Authority relating to such issue. Notwithstanding any provision in Section 9.08 of this Agreement to the contrary, if a Party to this Agreement fails to provide the other Party notice as required by this Section 7.03, and the failure results in a detriment to the other Party then any amount which the other Party is otherwise required to pay pursuant to this Agreement shall be reduced by the amount of such detriment.
ARTICLE VIII
BOOKS AND RECORDS
Section 8.01 Retention Period
In the event of a Deconsolidation Event, each of the Parties agrees that it shall retain all Tax Returns, related schedules and work papers, and all other material records and other documents as required under Section 6001 of the Code and the Treasury Regulations promulgated thereunder existing on the date hereof, or created through the Deconsolidation Date until the later of: (a) the expiration of the appropriate statutes of limitations (including any extensions to the extent such Party has notice of such extension) plus ninety (90) days, or (b) a Final Determination of any payments which may be required in respect of such years under this Agreement, Each Party shall make available to the other Party copies of any such documentation or information, as reasonably requested by the other Party. Without limiting the foregoing, LiveWire shall cooperate with H-D in identifying such books, records, or information that reasonably may be relevant to an Audit with respect to any Affiliation Year and shall provide copies of any such books, records, or information to H-D within 180 days after the Deconsolidation Date. Any information obtained pursuant to this Agreement, or any other information obtained by H-D or LiveWire relating to a Tax position of either Party shall be kept confidential by the Parties hereto, except if otherwise required by a Taxing Authority or applicable Securities Laws.
Section 8.02 Tax Attributes
Each of LiveWire and H-D shall maintain for the period specified in Section 8.01 and provide to the other Party upon request information that will enable such other Party to determine, clarify, or verify the adjusted Tax bases of the LiveWire stock held by H-D, LiveWire’s assets, both tangible and intangible, including the stock of
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all directly and indirectly owned subsidiaries of LiveWire which were members of the H-D Group or the LiveWire Group at any time during Affiliation Years; and the adjusted Tax bases of all assets, both tangible and intangible, of such subsidiaries during such Affiliation Years. In addition, (i) LiveWire shall provide to H-D, calculated as of the Initial Consolidation Date, and (ii) H-D shall provide to LiveWire as of any Deconsolidation Date upon written request all relevant information required for the determination of earnings and profits of any members of the LiveWire Group (on a standalone basis), calculated in accordance with applicable provisions of the Code and the Treasury Regulations thereunder.
ARTICLE IX
GENERAL PROVISIONS
Section 9.01 Term; Effective Date
This Agreement shall apply as of the Initial Consolidation Date and shall remain in effect unless the Parties agree in writing to terminate this Agreement. Notwithstanding any termination of this Agreement, this Agreement shall continue in effect with respect to any payment or indemnification due for all taxable periods prior to the termination during which this Agreement was in effect.
Section 9.02 Reserved.
Section 9.03 Notices
Any notice, request, instruction or other document to be given hereunder by any Party to the others shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid or by prepaid overnight courier (providing written proof of delivery), or by electronic mail (with confirmed receipt), addressed as follows:
if to LiveWire, to:
c/o HoldCo
3700 West Juneau Avenue
Milwaukee, WI 53208
Attention: Chief Legal Officer
Email:Paul.Krause@harley-davidson.com and
H-DGeneralCounsel@harley-davidson.com
with a copy to (which shall not constitute notice):
Latham & Watkins LLP
330 North Wabash Avenue, Suite 2800
Chicago, IL 60611
Attention: Ryan Maierson
Email: ryan.maierson@lw.com
Attention: Jason Morelli
Email: jason.morelli@lw.com
if to H-D to:
c/o Harley-Davidson, Inc.
3700 West Juneau Avenue
Milwaukee, WI 53208
Attention: Chief Legal Officer
Email:Paul.Krause@harley-davidson.com and
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H-DGeneralCounsel@harley-davidson.com
with a copy to (which shall not constitute notice):
Latham & Watkins LLP
330 North Wabash Avenue, Suite 2800
Chicago, IL 60611
Attention: Ryan Maierson
Email: ryan.maierson@lw.com
Attention: Jason Morelli
Email: jason.morelli@lw.com
Section 9.04 Dispute Resolution.
In the event that H-D or any member of the H-D Group, as the case may be, on the one hand, and LiveWire or any member of the LiveWire Group, as the case may be, on the other hand, disagree as to the amount or calculation of any payment to be made under this Agreement, or the interpretation or application of any provision under this Agreement, the Chief Financial Officer of H-D and the Chief Financial Officer of LiveWire shall attempt in good faith to resolve such dispute. If such dispute is not resolved within sixty (60) Business Days following the commencement of the dispute, H-D and LiveWire shall jointly retain a tax attorney practicing with a nationally recognized law firm or independent public accounting firm, which firm is independent of both Parties, or a retired Federal judge experienced in matters involving Taxes (the “Independent Entity”), to resolve the dispute. If the Parties are unable to agree on an Independent Entity, then each Party shall appoint a Person who would qualify as an Independent Entity (but for the approval of the other Party), and such Persons shall then appoint a Person who meets the above description as the Independent Entity and who shall serve as the Independent Entity. The Independent Entity shall act as an arbitrator to resolve all points of disagreement and its decision shall be final and binding upon all Parties involved. Unless the Parties agree to a later time in writing, the Independent Entity shall reach its decision within sixty (60) Business Days after the Independent Entity is appointed. Following the decision of the Independent Entity, H-D, and members of the H-D Group, and LiveWire and members of the LiveWire Group, shall each take or cause to be taken any action necessary to implement the decision of the Independent Entity. The fees and expenses relating to the Independent Entity shall be borne equally by H-D and LiveWire.
Section 9.05 Interpretation.
When a reference is made in this Agreement to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. References in this Agreement to any gender include references to all genders, and references to the singular include references to the plural and vice versa. Whenever the words “include,” “includes,” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” This Agreement is intended to calculate, allocate, and assign certain Tax responsibilities, liabilities, and benefits among the Parties to this Agreement, and any situation or circumstance concerning such calculation, allocation, and assignment that is not specifically contemplated hereby or provided for herein shall be determined in a manner consistent with the underlying principles of calculation, allocation, and assignment in this Agreement.
Section 9.06 Severability; No Presumption Against Drafter
The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability or the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this
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Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.
Section 9.07 Counterparts
This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. The exchange of a fully executed Agreement (in counterparts or otherwise) by facsimile or by electronic delivery in .pdf format shall be sufficient to bind the parties to the terms and conditions of this Agreement.
Section 9.08 No Third-Party Beneficiaries
This Agreement is not intended to confer any rights or remedies upon any Person other than (a) the Parties hereto and their respective successors and assigns and (b) the H-D Affiliates and the LiveWire Affiliates and their respective successors and assigns.
Section 9.09 Prior Tax Sharing Agreements
As of the date specified in the introductory paragraph of this Agreement, this Agreement supersedes and terminates all prior agreements as to the allocation of tax liabilities between the any member of the H-D Group, on the one hand, and any member of the LiveWire Group on the other; provided that this Agreement shall not supersede or terminate the provisions of the Separation Agreement with respect to Taxes that arise in or relate to a taxable period or portion therof ending on or prior to the Closing Date. For the avoidance of doubt, the Separation Agreement, and not this Tax Matters Agreement, shall apply with respect to Tax matters for taxable periods prior to the Closing Date.
Section 9.10 Entire Agreement; Amendments.
This Agreement embodies the entire understanding among the Parties relating to its subject matter. Any and all prior correspondence, conversations, and memoranda are merged herein and shall be without effect hereon. No promises, covenants, or representations of any kind, other than those expressly stated herein, have been made to induce either Party to enter into this Agreement. Unless mutually agreed to by the Parties, this Agreement shall not be amended, supplemented, modified, or terminated except by a writing duly signed by each of the Parties hereto, and no waiver of any provisions of this Agreement shall be effective unless in a writing duly signed by the Party sought to be bound; provided, however, (i) in the event H-D distributes LiveWire in a transaction pursuant to Section 355 of the Code, or (ii) non-United States Income Taxes become relevant, the Parties shall cooperate in good faith to amend this Agreement to address any issues associated therewith.
Section 9.11 Successors
This Agreement shall be binding upon and inure only to the benefit of the Parties, the H-D Affiliates and the LiveWire Affiliates (and their respective successors and assigns, whether by merger, acquisition of assets or otherwise); provided that, except as set forth in this Agreement, no Party may assign, delegate, or otherwise transfer any of its rights or obligations under this Agreement without the prior written consent of the other Party hereto.
Section 9.12 Confidentiality
Each Party to this Agreement shall hold, and cause its officers, employees, agents, consultants, and advisors to hold, in strict confidence, unless compelled to disclose by judicial or administrative process or, in the opinion
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of its counsel, by other requirements of law, all information that it or any of its officers, employees, agents, consultants, and advisors may acquire pursuant to, or in the course of performing its obligations under, any provision of this Agreement.
Section 9.13 Performance
H-D agrees and acknowledges that H-D shall be responsible for the performance, and guarantee the obligations, of each H-D Affiliate under this Agreement. LiveWire agrees and acknowledges that LiveWire shall be responsible for the performance, and guarantee the obligations, of each LiveWire Affiliate under this Agreement.
Section 9.14 Specific Performance
The Parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that each of the Parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to specific enforcement of the terms and provisions of this Agreement, in addition to any other remedy to which such Party is entitled at law or in equity. In the event that any Action shall be brought in equity to enforce the provisions of this Agreement, no Party shall allege, and each Party hereby waives the defense, that there is an adequate remedy at law, and each Party agrees to waive any requirement for the securing or posting of any bond in connection therewith
Section 9.15 Governing Law; Consent to Jurisdiction
(a) This Agreement (and any claims or disputes arising out of or related hereto or to the transactions contemplated hereby or to the inducement of any Party to enter herein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the laws of the State of Delaware, irrespective of the choice of laws principles of the State of Delaware, including all matters of validity, construction, effect, enforceability, performance and remedies.
(b) The state and federal courts located within the State of Delaware (the “Chosen Courts”) shall have exclusive jurisdiction over any and all disputes between the Parties hereto, whether in law or in equity, arising out of or relating to this Agreement and the agreements, instruments and documents contemplated hereby and the Parties hereto consent to and agree to subject to the exclusive jurisdiction of such Chosen Courts.
[The next page is the signature page.]
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be duly executed as of the day and year first above written.
| LIVEWIRE GROUP, INC. | ||
| By: | /s/ John Garcia | |
| Name: |
John Garcia | |
| Title: | President, Secretary and Treasurer | |
| HARLEY-DAVIDSON, INC. | ||
| By: | /s/ Paul J. Krause | |
| Name: | Paul J. Krause | |
| Title: | Authorized Signatory | |
Exhibit 10.7
Execution Version
Certain portions of this Exhibit have been redacted pursuant to Item 601(b)(10) of Regulation S-K and, where applicable, have been marked with “[***]” to indicate where redactions have been made.
CONTRACT MANUFACTURING AGREEMENT
This CONTRACT MANUFACTURING AGREEMENT (this “Agreement”) is made as of September 26, 2022 (the “Effective Date”), by and between Harley-Davidson Motor Company Group, LLC, a limited liability company formed in Wisconsin, United States of America (“HD”), and LiveWire EV, LLC, a Delaware limited liability company (“LiveWire”). HD and LiveWire are each a “Party” and are sometimes referred to herein collectively as the “Parties.”
RECITALS
WHEREAS, Parties have entered into that certain Separation Agreement effective as of the date hereof (the “Separation Agreement”), pursuant to which the LiveWire Business has been separated from the Harley Business and transferred to LiveWire; and
WHEREAS, in connection with the Separation, LiveWire desires to obtain from HD, and HD desires to provide to LiveWire, contract manufacturing and procurement services in relation to the LiveWire Platforms and products identified in Exhibit A (the “Products”), in accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing, the covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 For purposes of this Agreement, capitalized terms shall have the meaning set forth in the body of this Agreement or as set forth below in this ARTICLE 1. To the extent any capitalized terms are not defined herein, they shall have the meanings set forth in the Separation Agreement.
(a) “Actual Cost” means, with respect to the manufacture and delivery of a Product, HD’s actual direct costs, without mark-up, to manufacture and deliver such product, plus a reasonable allocation of overhead and, with respect to third-party providers, a reasonable allocation of the amounts paid to such providers that is proportionate to usage of services by or on behalf of LiveWire; provided that, subject to Section 12.2(b), HD shall not increase LiveWire’s fixed cost allocations because of adverse changes in HD’s production volumes, and HD shall not be required to increase its own fixed cost allocations because of adverse changes in LiveWire’s production volumes.
(b) “Change of Control Event” means (i) the sale of all or substantially all of the assets of a Party, or (ii) a sale of equity interests, merger, consolidation, recapitalization or reorganization of a Party, unless the Control of such a Party after such sale of equity interests, merger, consolidation, recapitalization or reorganization are beneficially owned, directly or indirectly, by the persons who beneficially owned such Party’s Control prior to such transaction.
(c) “Confidential Information” means (i) non-public information and material of a Party or its Affiliates (and of companies with which such Party has entered into confidentiality agreements) that the other Party obtains
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knowledge of or access to in connection with this Agreement; (ii) non-public Intellectual Property of the Disclosing Party; and (iii) business and financial information of the Disclosing Party, including pricing, business plans, forecasts, revenues, expenses, earnings projections, sales data and any and all other non-public financial information; provided, however, “Confidential Information” does not include information that: (A) is or becomes public knowledge without any action by, or involvement of, the Recipient or its Affiliates or contractors; (B) is independently developed by the Recipient without reference or access to the Confidential Information of the Disclosing Party; (C) is already in the Recipient’s possession on a non-confidential basis at the time of disclosure thereof; or (D) is obtained by the receiving Party without restrictions on use or disclosure from a third party who did not receive it, directly or indirectly, from the Disclosing Party; provided that the exceptions set forth in clauses (B), (C) and (D) above shall not apply with respect to Confidential Information of LiveWire, to the extent the applicability of either exception is due to HD owning and or operating the LiveWire Business prior to the Separation.
(d) “Contractual Expiration Date” means, with respect to each Product, the date specified in Exhibit A as the “Contractual Expiration Date” for such Product, after which HD will have no obligation to continue manufacturing such Product and LiveWire shall have no obligation to continue purchasing such Product (other than under any Orders submitted prior to such date or following such date pursuant to Section 2.14).
(e) “Control” means ownership of fifty percent (50%) or more of the share capital or voting stock of a company, enterprise or other legal entity or the power to appoint the majority of board members, the general manager, factory chief or other principal person in charge of a company, enterprise or other legal entity, or the power to direct otherwise the management or policies of a company, enterprise or other legal entity.
(f) “EV Manufacturing Processes” means proprietary processes relating to the fabrication and assembly of EV powertrain systems and components, as well as final EV vehicle assembly (including appropriate sub assembly actions and painting of appropriate components).
(g) “Exclusive LSS Vehicle” means all two-wheeled vehicles and all three-wheeled vehicles (other than 2:1 trikes), in each case that utilize an LSS Platform.
(h) “HD’s Facility” means HD’s manufacturing facility or storage facility (or the applicable facility of an HD supplier) designated by HD for the manufacture or storage of Products hereunder.
(i) “HD Production Assets” means all Production Assets other than LiveWire Production Assets.
(j) “Improvements” means all modifications, enhancements, derivative works and improvements of Intellectual Property.
(k) “Intellectual Property” means all intellectual property rights in any and all jurisdictions throughout the world, including domestic and foreign patents, copyrights, mask works, designs, trade secrets, and any other intellectual property rights in technologies, software, know-how, inventions, data, methods, processes and other confidential or proprietary information, but excluding any Trademarks.
(l) “Joint Development Agreement” means that certain Joint Development Agreement, effective as of the date hereof entered into by and between the Parties.
(m) “Lead Time” means, with respect to a Product, the period of time preceding the scheduled delivery date of such Product that is specified in Exhibit A.
(n) “LiveWire Distribution Center” means the distribution center used by LiveWire for distribution of Products.
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(o) “LiveWire Platform” means the Platform currently manufactured and utilized in the “LiveWire One” vehicle.
(p) “LiveWire Production Assets” means the Production Assets used exclusively for the production of Products.
(q) “LiveWire Production Materials” means all Production Materials other than Shared Production Materials.
(r) “Losses” means any and all liability, loss, cost, expense, debt or obligation of any kind, character or description, and whether known or unknown, accrued, absolute, contingent or otherwise, and regardless of when asserted or by whom.
(s) “LSS Platforms” means the LiveWire Platform, the Speed Platform, and the SpeedWire Platform.
(t) “Minimum Order Quantity” means, with respect to a Product, the minimum number of units that LiveWire must order when it places an Order for such Product, as specified in Exhibit A and as may be modified by mutual agreement of the Parties in good faith from time to time.
(u) “Minimum Annual Volume Commitment” means, with respect to a Product, the annual volume of such Product required to be purchased by LiveWire from HD as specified in Exhibit A.
(v) “Order” means a written or electronic firm purchase request for Products issued by LiveWire to HD and accepted by HD after the Effective Date of this Agreement. Orders may be placed as discrete purchases or as part of an ongoing delivery schedule and will be placed utilizing the SD&I Process.
(w) “Order Deficit Impact Fee” means the sum of (i) the Product Price of the Product Order Deficit less the Actual Cost of such Products, and (ii) the allocation of overhead included in the Actual Cost of such Products.
(x) “Personal Information” means all information received by either Party in any tangible or intangible form that relates to or personally identifies or makes identifiable the other Party’s employees, customers, agents, end-users, suppliers, contacts or representatives. Examples of Personal Information may include, but are not limited to, individual names, addresses, phone numbers, email addresses, purchase history, employment information, financial information, medical information, credit card numbers, social security numbers, and product service history.
(y) “Platform” means, with respect to a vehicle, the battery, motor and power electronics that deliver the performance for such vehicle.
(z) “Product Order Deficit” means, with respect to a Product, the amount (if any) by which the Minimum Annual Volume Commitment for such Product exceeds the actual quantity of such Product ordered by LiveWire during any applicable year.
(aa) “Product Price” means, with respect to a Product, the price that is specified for such Product on Exhibit A, which shall represent HD’s Actual Cost for manufacturing such Product plus a markup of six percent (6%).
(bb) “Production Assets” means the machinery and equipment (and related gauges and fixtures used for assembly) that are used for the production of Products hereunder, excluding Tooling.
(cc) “Production Materials” means raw materials, components, subassemblies, parts, other supplies and any industrial services required for the manufacturing of Products hereunder.
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(dd) “Project” has the meaning set forth in the Joint Development Agreement.
(ee) “SD&I Process” means the Supply, Demand and Inventory (SD&I) process to be mutually agreed by the Parties.
(ff) “Shared Production Materials” means Production Materials that are used in both HD products and Products, with the exception of any such materials that LiveWire determines to procure for itself in accordance with Section 5.3.
(gg) “Specifications” means LiveWire’s written functional and performance criteria, visual inspection criteria, electrical test and electrical parameters, dimensional and structural requirements, test methods and other specifications for each Product, which are provided to HD in writing.
(hh) “Speed Platform” means any vehicle Platform with a peak power (10 seconds) of 36kW through 74kW.
(ii) “SpeedWire Platform” means any vehicle Platform with a peak power (10 seconds) of 75kW through 120kW.
(jj) “Termination Charges” means, without duplication, with respect to a Product, all expenditures, accruals or cost allocations arising from, relating to or incurred in connection with HD’s end of production of such Product earlier than the end of the first Renewal Term for such Product, including all those relating to: (i) the termination or cancellation of procurement of materials, goods and services, including supplier compensation payments, cancellation penalties, payments for obsolescence of material, work-in-progress and finished goods (whether sold at a loss or scrapped) or life-time buys of materials or goods from suppliers and all applicable premiums that were approved by LiveWire; (ii) the termination of employees or contract employees, including any wages, salaries and benefits through the earlier of the end of the first Renewal Term for the relevant Product and the date the obligation to pay such wages, salary and benefits expires, severance costs (to the extent such severance costs are consistent with HD’s standard severance plan or any applicable collective bargaining agreement then in place), relocation costs, outplacement services, training costs and other termination-related payments; (iii) any overtime charges incurred in connection with last-time buys or building of a bank of materials that were approved by LiveWire; (iv) the disposal or scrapping of materials, work-in-progress or finished goods; (v) machinery and equipment, including related tooling, jigs, dies, gauges, fixtures, molds, patterns and other accessories, whether incurred as a result of the reconfiguration, relocation, disposal or scrapping thereof, an adjustment in the allocable share of depreciation and amortization or otherwise; (vi) any outstanding incremental capital investment made by HD with respect to such Product (including related costs of capital); (vii) the surrender or vacation of unused manufacturing space dedicated to the relevant Product, including rental and leasehold payments, an allocable share of depreciation and amortization taxes and insurance premiums through the end of the first Renewal Term for the relevant Product; and (viii) the write-off of net book value of HD Production Assets that are disposed of or destroyed in connection with the end of production of the relevant Product, in each case, regardless of whether such cash expenditures, accruals and cost allocations are incurred or disbursed prior or after the end of production of the relevant Product. For the avoidance of doubt, to the extent an expenditure, accrual or cost allocation, has been satisfied or paid by LiveWire in accordance the other provisions of this Agreement such amount shall be excluded from the calculation of Termination Charges. For the avoidance of doubt, the end of the first Renewal Term for the LiveWire Platform is 10 years from the Effective Date.
(kk) “Tooling” means all tooling, including related jigs, dies, gauges, fixtures, molds, patterns and similar accessories, required for the manufacturing of Products hereunder.
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1.2 Each of the following terms is defined in the Section set forth opposite such term:
| Term |
Article / Section | |
| Agreement |
Preamble | |
| Chosen Courts |
14.6 | |
| Dispute |
12.4 | |
| Dispute Committee |
12.4 | |
| Effective Date |
Preamble | |
| Force Majeure Event |
ARTICLE 11 | |
| Forecasts |
2.4 | |
| HD |
Preamble | |
| HD Data |
8.3 | |
| Initial Term |
13.1 | |
| LiveWire |
Preamble | |
| LiveWire Data |
8.3 | |
| LiveWire’s Recall Obligations |
6.3 | |
| Operational Committee |
12.1 | |
| Parties |
Preamble | |
| Party |
Preamble | |
| Privacy and Security Requirements |
Exhibit B | |
| Products |
Recitals | |
| Quarterly True-Up Report |
3.2 | |
| Recall |
6.1 | |
| Renewal Term |
13.1 | |
| Separation Agreement |
Recitals | |
| Technical Manufacturing Documents |
ARTICLE 7 | |
| Term |
13.1 | |
| Warranty Period |
4.2 |
ARTICLE 2
MANUFACTURING SERVICES
2.1 Manufacturing Services. LiveWire hereby appoints HD as LiveWire’s exclusive manufacturer for each LSS Platform and all Exclusive LSS Vehicles utilizing any such LSS Platform for a period that begins on the date that HD begins manufacturing such Platform and ends five (5) years thereafter (provided that the exclusivity of the LiveWire Platform shall expire five (5) years following the Effective Date). As LiveWire introduces new products as part of an LSS Platform, the Parties will revise Exhibit A to include such new products as Products hereunder. LiveWire may also request HD to manufacture other products from time to time, and if HD agrees to manufacture such products, the Parties will revise Exhibit A to include such products. HD hereby accepts the appointment and agrees to manufacture and supply to LiveWire the Products in accordance with the Specifications from the Effective Date until the Contractual Expiration Date of each Product, in accordance with the terms of this Agreement, subject to the early termination of this Agreement in accordance with Article 13. HD will perform its manufacturing services (a) in a professional and workmanlike manner and in accordance with good industry practice and applicable law, and (b) with at least the same (and no less than reasonable) standard of service (including with respect to quality, skill and diligence) that HD provides to its own other businesses.
2.2 Contractors. HD may subcontract its obligations hereunder, provided that, during the exclusivity period for a Platform, HD may not engage subcontractors to manufacture Products included in such Platform without LiveWire’s prior written consent (which shall not be unreasonably withheld, conditioned or delayed), except that
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LiveWire’s consent shall not be needed for HD to subcontract to (a) HD’s Affiliates, (b) subcontractors that HD used prior to the Effective Date or (c) subcontractors that HD engages during the Term to perform similar work for HD’s own businesses. HD shall be and remain responsible for each subcontractor’s compliance with this Agreement to the same extent HD would be responsible for its own compliance with this Agreement.
2.3 Minimum Annual Volume Commitments; Annual Review. LiveWire agrees to order, each year during the term, an amount of each Product that meets or exceeds the Minimum Annual Volume Commitment for such Product. If at the end of each year during the Term, there is a Product Order Deficit, then HD will issue LiveWire an invoice for the Order Deficit Impact Fee, and LiveWire may elect, in its sole discretion, to order and take receipt of the amount of Product necessary to meet the Minimum Annual Volume Commitment for such Product, or pay the Order Deficit Impact Fee within sixty (60) days of receipt of the invoice; provided that, at LiveWire’s option, LiveWire shall be relieved of its obligation to pay the Order Deficit Impact Fee to the extent that the Product Order Deficit is the result of HD’s failure to fulfill Orders placed in accordance with this Agreement (except to the extent HD’s failure to fulfill Orders was caused, directly or indirectly, by LiveWire). The Operational Committee will review the Minimum Annual Volume Commitments on an annual basis as set forth in Section 12.2.
2.4 Forecasts. LiveWire shall provide HD, on a monthly basis in accordance with the SD&I Process, a rolling forecast indicating LiveWire’s monthly Product requirements for the following twelve (12) months (“Forecasts”). The Forecast for a given year shall be within twenty percent (20%) of the Minimum Annual Volume Commitment for such year. The quantity of Products forecasted for the first ninety (90) days of each Forecast shall be firm and binding and LiveWire shall be obligated to submit an Order for and purchase the quantities of Products set forth in such binding portion of each Forecast, including the Minimum Order Quantity.
2.5 Orders. LiveWire shall issue Orders for Products in accordance with the Lead Time for each Product. Each Order shall include, at minimum:
(a) LiveWire’s internal order reference;
(b) an adequate description of the Products being ordered (e.g. a part number);
(c) the price to be paid for the Products ordered;
(d) the Product quantity and time of delivery;
(e) the place or places of delivery;
(f) any special packaging requirements; and
(g) any special packing and shipping requirements.
2.6 Acceptance of Orders; Fair Share.
(a) Within five (5) Business Days of HD’s receipt of an Order, HD shall expressly acknowledge receipt and, if applicable, acceptance of the Order by sending an email to LiveWire (or such other method of communication agreed to by the Parties from time to time). HD shall accept all Orders that comply with the Lead Time and the Minimum Order Quantity, that are consistent with the Forecast, and that comply with the other terms and conditions of this Agreement and shall consider in good faith whether to accept Orders outside of the foregoing parameters. Notwithstanding the foregoing, HD shall be relieved from any obligation to fulfill LiveWire’s Orders for a Product to the extent that: (i) the quantities of Production Materials delivered to HD’s Facility are insufficient to fulfill LiveWire’s Order for Products; or (ii) the Products ordered exceed HD’s maximum production capacity for such Products; provided, that, if the quantities of any Shared Production Materials are insufficient to meet the Parties’ aggregate requirements for the manufacture of Products hereunder
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and HD’s requirements for its own products, then any such Production Materials acquired by the Parties shall be apportioned between the Parties on a pro rata basis based on the applicable production schedules so that each Party’s requirements are covered proportionately.
(b) HD shall: (i) maintain sufficient manufacturing capacity to meet the forecasted volumes for each Product; (ii) maintain a dedicated production line for electric vehicles; and (iii) maintain business continuity and risk mitigation strategies substantially similar to those that HD provides to its own other businesses.
2.7 Lead Times. The Parties may mutually agree to change the Lead Time applicable to a Product in good faith and neither Party will unreasonably withhold, condition, or delay consent to a requested change to a Lead Time modification proposed by the other Party.
2.8 Delivery; Incoterms. All Products will be delivered by HD to LiveWire Ex Works (LiveWire Distribution Center) Incoterms 2020. Except as otherwise provided hereunder, the terms, conditions and obligations of Ex Works (Incoterms 2020) are incorporated herein by reference.
2.9 Discrepancies. If LiveWire discovers any discrepancy between: (i) the quantity or type of Products ordered by LiveWire and that received by LiveWire; or (ii) the quantity or type of Products invoiced by HD and that received by LiveWire, LiveWire will promptly notify HD thereof, and in any event in less than thirty (30) days from such discovery.
2.10 Shortages. If the discrepancy is a shortage and HD invoiced LiveWire for the full amount of Products ordered, HD shall, at LiveWire’s option: (i) adjust the invoice; (ii) refund LiveWire for amounts paid for such Products to adjust for such shortage; or (iii) as quickly as commercially and reasonably practicable, at HD’s cost and expense, supply the number of units in such shortage to LiveWire provided LiveWire has paid or commits to pay HD in full for such units. HD shall be entitled to any insurance proceeds paid to LiveWire in respect of a shortage for which it replaces units or compensates LiveWire.
2.11 Overages. In case of an unintentional overage in any shipment, irrespective of when and by which Party discovered, LiveWire shall keep such quantity and pay the amount invoiced or the amount to be invoiced if the invoice did not include such overage, provided that HD has taken commercially reasonable actions to try to prevent such overages from occurring. LiveWire shall have the right to adjust any Forecasts to account for such overages.
2.12 Verification. For purposes of verifying and substantiating any claim(s) for compensation made by LiveWire under this Agreement, LiveWire shall provide to HD reasonable access to LiveWire’s premises and such information as HD shall reasonably request. Access to such books and records shall only be provided to the extent permitted by applicable Law.
2.13 Notice Requirement. HD shall not be obligated to make cash refunds or provide additional products for shortages when the notice of the shortage is not delivered within thirty (30) days of the discovery thereof as provided in Section 2.9 above.
2.14 Contractual Expiration Date. LiveWire must submit any Order with respect to a Product with sufficient Lead Time so that the Product can be delivered before the Contractual Expiration Date, and HD will have no obligation to continue manufacturing any Product after the Contractual Expiration Date for such Product and LiveWire will have no obligation to continue purchasing such Product from HD after the Contractual Expiration Date for such Product (other than under any Orders submitted prior to such date or following such date pursuant to this Section 2.14); provided, that, HD may, in its sole discretion, accept Orders that would require manufacturing after the applicable Contractual Expiration Date and, if HD chooses to accept any such Order, such Order will be subject to the terms of this Agreement.
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2.15 Dealer and Customer Responsibilities. LiveWire shall have sole responsibility for its dealer and customer relationships related to Products, including dealer and customer satisfaction, warranty (but without limiting any rights or remedies LiveWire may have hereunder with respect to non-conforming Products) and other dealer and customer obligations. HD shall have no contractual relationship with, and no responsibility to, the dealer or end customers of the Products with respect to the Products.
ARTICLE 3
PAYMENT
3.1 Invoices. HD will issue an invoice for the Product Price for all Products delivered hereunder, at or promptly following delivery. HD will issue an invoice for any Termination Charges and any other costs, fees, expenses or charges hereunder (except as noted in the foregoing or elsewhere in this Agreement) within a reasonable time of incurring and/or determining such costs, fees, expenses or charges.
3.2 Quarterly True-Up. Within one month following the end of each calendar quarter during the Term, HD shall conduct an analysis to determine whether the direct costs incurred by HD in connection with the manufacture and delivery of Products during such quarter differed from the direct cost component of the Product Price, and whether the allocation of overhead for such calendar quarter should be adjusted from the allocation of overhead in the Product Price, based on the relative manufacture of HD products and Products during such calendar quarter; provided that, subject to Section 12.2(b), HD shall not increase LiveWire’s fixed cost allocations because of adverse changes in HD’s production volumes, and HD shall not be required to increase its own fixed cost allocations because of adverse changes in LiveWire’s production volumes. Upon conclusion of such analysis, HD will deliver a report to LiveWire which specifies the results of the analysis (the “Quarterly True-Up Report”). If the sum of the direct costs and allocated overhead for such calendar quarter are less than the direct costs and overhead components included in the Product Price for the Products delivered during such calendar quarter, then HD shall pay the difference to LiveWire within sixty (60) days after delivering the Quarterly True-Up Report to LiveWire, and if the sum of such direct costs and allocated overhead are more than the direct costs and overhead components included in the Product Price, then HD shall issue LiveWire an invoice for the difference, which shall be payable by LiveWire as specified in Section 3.3 below; provided that, subject to Section 12.2(b), HD shall not increase LiveWire’s fixed cost allocations because of adverse changes in HD’s production volumes, and HD shall not be required to increase its own fixed cost allocations because of adverse changes in LiveWire’s production volumes.
3.3 Payment; Taxes. LiveWire shall pay invoices (other than amounts disputed in good faith) within sixty (60) days after the receipt date of such invoice, provided that, notwithstanding anything to the contrary in this Agreement, disputed amounts withheld by LiveWire shall not exceed twenty percent (20%) of any invoice; provided that payment of any amounts shall not be deemed to be a waiver of LiveWire’s right to dispute or recover such amounts. All payments will be made in United States Dollars. In the event that either LiveWire fails to make a payment as prescribed above, following written notification to LiveWire by HD, HD may withhold further delivery of Product(s) to LiveWire until such delinquent payment is received. If LiveWire fails to pay all or any portion of any such invoiced amount by the required date, LiveWire will be obligated to pay to HD, in addition to the amount due, interest at an interest rate of one-half of one percent (0.5%) per month, accruing continuously from the date the payment was due through the date of actual payment. LiveWire shall be responsible for all sales, use and goods and services, value-added, and any other similar Taxes, duties and charges (“Indirect Taxes”) imposed by any federal, state or local government entity on any amounts payable by LiveWire hereunder, provided that HD will be solely responsible for the payment of its income Taxes, franchise or similar Taxes, its employee’s salaries, unemployment insurance, workers’ compensation, employee benefits and other employment-related costs, charges and deductions. Each invoice provided under Section 3.1 shall properly reflect all Indirect Taxes payable by LiveWire, and if applicable, such information reasonably required for LiveWire to obtain a refund, credit or offset of such Indirect Taxes in accordance with applicable Law. Livewire and HD shall make reasonable efforts to cooperate to the extent necessary to obtain any exemption
8
relating to, or reduced rate of, any such Indirect Tax, including by providing exemption certificates or other information reasonable required to establish an exemption. The parties will reasonably cooperate to minimize any deduction or withholding for or on account of Tax, including making applicable double taxation treaty clearance applications. If any Taxes are required to be deducted or withheld from any payments made by one Party (the “Payor”) to another Party hereunder, then such Payor shall withhold or deduct the required amount and promptly pay such Taxes to the applicable Tax authority and any such amounts shall be deemed to have been paid hereunder.
3.4 Quarterly Pricing Review; Changes in Product Prices. The Operational Committee will review the Product Prices every three (3) months from the Effective Date as set forth in Section 12.2. For the avoidance of doubt, HD may adjust the Product Prices on a quarterly basis upon notice to LiveWire to reflect changes in the Actual Cost.
3.5 Audit. Once per year with prior written notice of at least ten (10) Business Days to HD, LiveWire may (at LiveWire’s sole cost and expense) carry out an audit of HD’s relevant books and records to confirm that the Product Prices were determined in accordance with the terms of this Agreement. After receipt of a valid notice of such audit, HD shall grant reasonable access to HD’s relevant books and records during HD’s regular business hours. Access to such books and records shall only be provided to the extent permitted by applicable Law and applicable confidentiality and contractual obligations and to the extent that such access will not result in the loss of legal privilege.
ARTICLE 4
QUALITY
4.1 Warranty. HD warrants to LiveWire, its successors and assigns for the duration of the Warranty Period that the Products delivered to LiveWire in accordance with the terms and conditions of this Agreement (i) will be free from defects in workmanship and will conform to the Specifications, and (ii) will be free from Liens and encumbrances.
4.2 Warranty Period. The foregoing warranties shall extend from the date of delivery to LiveWire for a period of five (5) years on batteries, and from the date of delivery of the relevant Product to the end customer for a period of two (2) years (unlimited mileage) on motorcycles, and one (1) year on motorcycle parts and accessories (unless such parts and accessories are sold as part of a motorcycle, in which case the warranty period shall be two (2) years for such parts and accessories) (the “Warranty Period”). LiveWire may submit a written request to HD requesting an extension to the Warranty Period for a Product. HD shall consider any such request in good faith, and notify LiveWire of the cost to LiveWire of any such extension, which cost shall be reasonably determined in accordance with typical warranty cost analysis. If the Parties mutually agree on such extension, the Warranty Period for the applicable Product will be so extended (with respect to quantities of such Product supplied by HD following the effective date of the extension), and the Product prices shall be increased to include the cost of the extended Warranty Period.
4.3 Remediation. In the event LiveWire discovers any quality problems with the Products delivered hereunder, LiveWire shall promptly advise HD and the Parties shall seek to remedy any such problems from occurring in the future. If LiveWire can reasonably demonstrate that a Product fails to conform to the warranties set forth in Section 4.1 of this Agreement and provide reasonable supporting evidence for such failure, HD, at its sole option and expense (including any shipping or delivery costs in connection with a repair or replacement), will either repair or replace the non-conforming Products. For the avoidance of doubt, HD shall not be liable for any breach of the warranties set forth in Section 4.1 and LiveWire will have no legal remedy from HD for the relevant non-conforming Products if such breach is caused by materials or items owned or furnished by LiveWire or a failure of a supplier of Production Materials LiveWire Production Assets or Tooling to comply with its obligations under its supply contracts with LiveWire or HD; provided that, for suppliers of Shared Production
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Materials, HD shall use commercially reasonable efforts to work with the applicable supplier to remediate such failure, and shall pass through to LiveWire any refunds or credits it obtains under its agreement with such Production Materials supplier with respect to such non-conforming Products. The Warranty Period for any repaired or replacement Product will be the balance of the Warranty Period for the original non-conforming Product remaining from the date HD was notified of the warranty claim of the Product.
4.4 DISCLAIMER. EXCEPT FOR THE WARRANTIES SET FORTH IN SECTION 4.1, HD EXPRESSLY DISCLAIMS TO THE FULL EXTENT PERMISSIBLE BY LAW ANY WARRANTIES, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AS TO THE NATURE OR STANDARD OF THE SERVICES OR PRODUCTS WHICH HD MAY PROVIDE HEREUNDER, INCLUDING ANY WARRANTIES OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE AND ALL WARRANTIES ARISING FROM ANY COURSE OF DEALING OR USAGE OF TRADE.
4.5 EXCLUSIVE REMEDIES. SECTION 4.3 CONSTITUTES LIVEWIRE’S SOLE AND EXCLUSIVE REMEDIES FOR A BREACH OF THE WARRANTIES SET FORTH IN SECTION 4.1; PROVIDED THAT THE FOREGOING SHALL NOT LIMIT HD’S LIABILITY ELSEWHERE IN THIS AGREEMENT FOR MANUFACTURING DEFECTS. HD WILL HAVE A REASONABLE TIME TO PROVIDE A REMEDY IN ACCORDANCE WITH SECTION 4.3.
ARTICLE 5
PRODUCTION MATERIALS; PRODUCTION ASSETS; PROCUREMENT AGENCY
5.1 Procurement by LiveWire. LiveWire shall be exclusively responsible for procurement of LiveWire Production Materials, LiveWire Production Assets and Tooling (other than their receipt by HD and handling inside of HD’s Facility) as follows:
(a) source-selecting all LiveWire Production Materials, LiveWire Production Assets and Tooling;
(b) procuring all LiveWire Production Assets and Tooling including: (i) negotiating the price and all other terms applicable to the supply of LiveWire Production Assets and Tooling; (ii) placing orders for LiveWire Production Assets and Tooling directly to HD’s Facility with, and issuing forecasts and delivery releases to, the relevant suppliers; (iii) arranging for delivery of LiveWire Production Assets and Tooling directly to HD’s Facility in timely manner and paying for all related logistics and installation costs; and (iv) receiving and settling all supplier invoices for Tooling;
(c) negotiating the price and all other terms applicable to the supply of LiveWire Production Materials and entering into contracts with all applicable suppliers (following which HD shall be responsible, as LiveWire’s agent, for ordering, arranging delivery and settling invoices from such suppliers as set forth in Section 5.2(c));
(d) handling any warranty claims and other claims related to LiveWire Production Materials, LiveWire Production Assets, Tooling, cost recoveries and termination and resourcing processes against the relevant suppliers of the foregoing; and
(e) for avoidance of doubt, source-selecting, procuring, purchasing and arranging for delivery and storage of all service parts and parts and accessories (P&A) relating to the Products (which shall not be considered Production Materials).
5.2 Procurement by HD. With respect to HD Production Assets and Shared Production Materials, HD shall be exclusively responsible for procurement of HD Production Assets as set forth below, and LiveWire shall be ultimately responsible for the procurement of Shared Production Materials to be used in Products; provided that LiveWire appoints HD as its agent, and HD agrees to its appointment as an agent for LiveWire, for the
10
procurement of Shared Production Materials as set forth below. Accordingly, HD shall engage in the following activities:
(a) source-selecting all Shared Production Materials and HD Production Assets;
(b) procuring all Shared Production Materials and HD Production Assets including negotiating the price and all other terms applicable to the supply of Shared Production Materials and HD Production Assets; provided that HD will not agree to changes to contracts for the procurement of Shared Production Materials that would, in HD’s reasonable judgement, have a material adverse impact on LiveWire;
(c) (i) placing orders for Production Materials and HD Production Assets directly to HD’s Facility with, and issuing forecasts and delivery releases to, the relevant suppliers; (ii) arranging for delivery of Production Materials and HD Production Assets directly to HD’s Facility in timely manner; and (iii) receiving and settling all supplier invoices for Production Materials and Production Assets.
5.3 Re-designation of Shared Production Materials. Notwithstanding anything to the contrary herein, if HD, in its sole discretion, determines that it will no longer use any Shared Production Materials in HD products, then HD shall use reasonable efforts to provide LiveWire with sixty (60) days’ prior notice after which HD shall have no obligations to procure such materials and LiveWire shall be required to procure such materials on its own as LiveWire Production Materials in accordance with Section 5.1. Furthermore, LiveWire may, in its sole discretion, decide to use a separate supplier for procurement of any items included in the Shared Production Materials, in which case it shall notify HD, and thereafter LiveWire shall procure such materials on its own as LiveWire Production Materials in accordance with Section 5.1 (provided that HD shall not be required to cancel any pending orders for such Shared Production Materials).
5.4 Supplier Issues. In the event of a conflict, dispute or other issue with a third-party supplier or manufacturer in connection with the foregoing, either Party may submit a description of such issue to the Operational Committee and the Operational Committee will convene within a reasonable time following receipt of such description to address such issue in good faith in accordance with ARTICLE 12.
5.5 Risk of Loss; Ownership.
(a) Tooling and Finished Products; Removal. LiveWire shall own, and insure against and bear the risk of loss, theft and damage of and to, all Tooling and finished Products delivered to LiveWire in accordance with Section 2.8. To inform LiveWire’s procurement of replacement Tooling, HD will provide LiveWire reasonable advance notice of Tooling that is expected to wear out based on its expected life. LiveWire will be responsible for the cost of repairing or replacing the Tooling and finished Products if they are stolen, worn out, damaged or destroyed other than due to HD’s negligence or willful misconduct. Upon termination or expiration of this Agreement, LiveWire may remove the Tooling and remaining LiveWire Production Materials from HD’s Facility, and HD shall provide reasonable support and assistance to LiveWire, at LiveWire’s reasonable cost and expense, with respect thereto.
(b) Production Materials and Production Assets. HD shall own, and insure against and bear the risk of loss, theft and damage of and to, all Production Materials and LiveWire Production Assets. Once Production Materials are incorporated into a finished Product, until such Product is delivered in accordance with Section 2.8, such Product shall be and remain the sole property of HD, and HD shall insure against and bear the risk of loss, theft and damage of and to such Products. HD shall own the HD Production Assets.
(c) Ownership of LiveWire Production Assets on Termination. Upon termination or expiration of this Agreement, HD may, at its option, retain ownership of any and/or all LiveWire Production Assets, provided that the remaining cost of maintenance, retooling and/or disposal of such LiveWire Production Assets shall in such case be excluded from the Termination Charges otherwise payable by LiveWire. If, upon termination or
11
expiration of this Agreement, HD notifies LiveWire that it does not desire to retain ownership of any LiveWire Production Assets, LiveWire will have the option to acquire such LiveWire Production Assets from HD at their book value. If LiveWire does not exercise the option to acquire such LiveWire Production Assets, then the remaining cost of maintenance, retooling and/or disposal of such LiveWire Production Assets shall be included in the Termination Charges. If LiveWire exercises the option and acquires such LiveWire Production Assets at their book value, then the foregoing costs will be excluded from the Termination Charges.
ARTICLE 6
RECALLS
6.1 Recall by HD. In the event of a Product recall, quality action or field campaign (“Recall”) initiated by HD, LiveWire will cooperate fully with HD with respect to such Recall, and will perform all acts reasonably requested by HD with respect to such Recall. LiveWire will consult with HD regarding the content of any public statements regarding the Recall.
6.2 Recall by LiveWire. In the event of a Recall initiated by LiveWire, HD will cooperate fully with LiveWire with respect to such Recall, and will perform all acts reasonably requested by LiveWire with respect to such Recall. HD will consult with LiveWire regarding the content of any public statements regarding the Recall.
6.3 Cost of Recall. If a Recall is initiated because of a breach of HD’s warranty obligations, HD will promptly repair (if practical) or replace the defective Products at no charge to LiveWire, and will be responsible for the following out-of-pocket expenses incurred by LiveWire or by HD as a result of such Recall (directly or through LiveWire’s warranty reimbursements to its dealers and distributors) to correct the defective Product: diagnosis, removal, round-trip shipping, installation, testing and, if applicable, retail profit margin. If a Recall is initiated for any other reason (“LiveWire’s Recall Obligations”), LiveWire will be responsible for all expenses incurred by HD as a result of such Recall, and compensate all damages and losses suffered by HD as a result of such Recall. If a Recall is initiated both because of a breach of HD’s warranty obligations and because of LiveWire’s Recall Obligations, then each Party shall be responsible for a pro rata share of the total expenses incurred in connection with such Recall in proportion to each Party’s respective responsibility for the circumstances giving rise to the Recall as determined in good faith by the Operational Committee.
6.4 Notice. Prior to a Party notifying the government or any regulatory authority of its final determination that a Recall involving one or more Products will be conducted, the Party agrees to deliver written notice to the other Party that a Recall is being considered and to allow the other Party a reasonable opportunity to review the relevant data and offer comments on the possible Recall. However, each Party will decide, in its sole discretion, when to conduct a Recall and the scope of any such Recall.
ARTICLE 7
TECHNICAL DOCUMENTS; INTELLECTUAL PROPERTY RIGHTS
7.1 LiveWire hereby grants to HD, or undertakes to ensure that HD is granted, as the case may be, a non-exclusive, non-transferable right to use all patents, technical information and other forms of intellectual property rights associated with the Products for the purposes of fulfilling its obligations under this Agreement. LiveWire shall from time to time furnish to HD all sub-assembly drawings, specifications, the build book, quality standards and other documentary information (collectively, the “Technical Manufacturing Documents”) which are necessary to provide the service of manufacturing Products pursuant to the terms of this Agreement. As between LiveWire and HD, (i) LiveWire shall own and have full responsibility for the design of Products, including all Technical Manufacturing Documents and (ii) HD shall own and have full responsibility for HD’s manufacturing processes and standard work instructions. Without limiting any rights and remedies LiveWire may
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have for breach of any representation or warranty under the Separation Agreement, LiveWire represents that it has the full right under its license agreements to have HD provide services to it under this Agreement.
7.2 If any Intellectual Property relating to EV Manufacturing Processes is jointly invented by personnel of each of the Parties on an ad hoc basis in connection with the manufacturing of Products by HD in accordance with this Agreement (other than Intellectual Property developed pursuant to formal Projects under the Joint Development Agreement, or Intellectual Property developed in connection with research and development projects that HD consulted with LiveWire about pursuant to Section 2.1 of the Joint Development Agreement, but LiveWire declined to participate in), the ownership and licensing of such Intellectual Property shall be treated as if it were Project IP under the Joint Development. Notwithstanding the foregoing, and notwithstanding anything to the contrary herein, any Improvements to HD’s proprietary manufacturing processes shall be owned exclusively by HD and will not be licensed to LiveWire (unless separately otherwise agreed by the Parties). To the extent LiveWire has any right, title or interest in any such Improvements, LiveWire hereby assigns to HD all of its right, title and interest in, to and under any such Improvements, together with all claims, causes of action and rights to sue for past, present and future infringement, violation or other impairment thereof, and agrees to execute any documents or take any actions reasonably requested by HD in order to evidence or effectuate the foregoing assignment.
ARTICLE 8
CONFIDENTIALITY
8.1 Confidentiality. Each of the Parties agrees that any Confidential Information of the other Party received in the course of performance under this Agreement shall be kept strictly confidential by the Parties, except that HD may disclose LiveWire’s Confidential Information for the sole purpose of providing services pursuant to this Agreement to any Affiliate of HD or to third parties that provide such services in accordance with the terms of this Agreement; provided, that HD shall ensure that any such Affiliate or third party is bound by obligations of confidentiality at least as strict as those contained herein. HD shall be responsible for any such Affiliate or third party keeping confidential such Confidential Information of LiveWire. The Party receiving Confidential Information further agrees (i) not to use the disclosing Party’s Confidential Information except as necessary to perform its obligations under this Agreement, and (ii) to take the same care with the disclosing Party’s Confidential Information as it does with its own, but in no event less than a reasonable degree of care. Upon the termination or expiration of this Agreement, each Party shall return to the other Party or destroy all of such other Party’s Confidential Information. Each of the Parties shall treat the terms of this Agreement as if they were the Confidential Information of the other Party and shall not disclose the terms of this Agreement without the other Party’s prior written consent, except as required by applicable Law, by the rules of any national stock exchange with respect to a Party’s publicly-traded securities or as otherwise permitted under this Agreement.
8.2 Government Order. If the receiving Party is requested to disclose any of the disclosing Party’s Confidential Information pursuant to any judicial or governmental order, the receiving Party, if legally permissible, will promptly notify the disclosing Party of such order so that the disclosing Party, in its sole discretion, may seek an appropriate protective order and/or take any other action to prevent or minimize the breadth of such disclosure.
8.3 Data Privacy and Security. Because the services under the Agreement may require HD to receive, store, transmit or manage data related to the business of LiveWire, or Personal Information of or relating to its employees, customers, manufacturers or contractors (collectively, “LiveWire Data”), or to otherwise access LiveWire’s systems, HD shall comply with the provisions of Exhibit B and otherwise ensure appropriate protection and handling of LiveWire Data. Because the services under the Agreement also may require LiveWire to receive, store, transmit or manage data related to the business of HD, or Personal Information of or relating to its employees, customers, manufacturers or contractors (collectively, “HD Data”), or to otherwise access HD’s systems, LiveWire shall comply with the provisions of Exhibit B and otherwise ensure appropriate protection and handling of HD Data.
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ARTICLE 9
INDEMNIFICATION
9.1 Indemnification by LiveWire. LiveWire shall defend, indemnify and hold HD, its officers, directors, employees and agents harmless from any and all Losses suffered or incurred by HD in connection with any and all third-party claims to the extent arising from or relating to (i) the gross negligence or willful misconduct of LiveWire, (ii) LiveWire’s material breach of this Agreement, (iii) LiveWire’s breach of Sections 8.1 or 8.3, or (iv) actual or alleged infringement, misappropriation or violation of third-party intellectual property rights arising out of the use of or compliance with the Specifications, the Technical Manufacturing Documents or the LiveWire Production Materials, but in all cases excluding claims for which HD has an obligation to indemnify LiveWire pursuant to Section 9.2.
9.2 Indemnification by HD. HD shall defend, indemnify and hold LiveWire, its officers, directors, employees and agents harmless from any and all Losses suffered or incurred by LiveWire in connection with any and all third-party claims to the extent arising from or relating to (i) the gross negligence or willful misconduct of HD, (ii) HD’s material breach of this Agreement, (iii) HD’s breach of Sections 8.1 or 8.3, or (iv) actual or alleged infringement, misappropriation or violation of third-party intellectual property rights resulting from HD’s manufacturing processes or other actions taken by HD in its provision of manufacturing services (other than actions that are taken at LiveWire’s direction), but in all cases excluding claims for which LiveWire has an obligation to indemnify HD pursuant to Section 9.1.
9.3 Indemnification Procedures. The indemnified Party agrees to: (i) promptly notify the indemnifying Party in writing of a claim against which it is indemnified hereunder; (ii) give the indemnifying Party sole control of the defense and all related settlement negotiations (subject to the written approval of the indemnified Party, not to be unreasonably withheld, for any settlements that do not unconditionally release the indemnified Party or that materially affect the terms of the Agreement); and (iii) provide the indemnifying Party, at the indemnifying Party’s expense, with the assistance, information, and authority reasonably necessary to perform the above. The indemnified Party may also participate in the defense of a claim at its option and its own expense.
ARTICLE 10
LIMITATION OF LIABILITY
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, EXCEPT FOR LIABILITY ARISING FROM A PARTY’S GROSS NEGLIGENCE, WILLFUL MISCONDUCT, NON-COMPLIANCE WITH APPLICABLE LAW, RECALL (IN ACCORDANCE WITH SECTION 6.3) OR INDEMNIFICATION OBLIGATIONS HEREUNDER, TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW, (I) NEITHER HD NOR LIVEWIRE SHALL BE LIABLE UNDER THIS AGREEMENT TO THE OTHER FOR ANY CONSEQUENTIAL, SPECIAL, INDIRECT, PUNITIVE, EXEMPLARY, REMOTE, SPECULATIVE OR SIMILAR DAMAGES OR ANY LOST PROFITS OR DAMAGES CALCULATED BASED ON A MULTIPLE OF PROFITS, REVENUE OR ANY OTHER FINANCIAL METRICS IN EXCESS OF COMPENSATORY DAMAGES OF THE OTHER ARISING IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY AND (II) EACH PARTY’S TOTAL LIABILITY IN CONNECTION WITH THIS AGREEMENT OR THE ACTS OR OMISSIONS OF SUCH PARTY, ITS AFFILIATES AND ITS AND THEIR SUPPLIERS, CONTRACTORS AND AGENTS IN CONNECTION WITH THIS AGREEMENT SHALL NOT EXCEED THE TOTAL AMOUNTS PAID OR PAYABLE BY LIVEWIRE HEREUNDER IN THE TWELVE (12) MONTH PERIOD PRECEDING THE CLAIM OR CAUSE OF ACTION GIVING RISE TO LIABILITY.
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ARTICLE 11
FORCE MAJEURE
In case a Party shall be hindered, delayed or prevented from performing its obligations under this Agreement (other than its payment obligation), or if such performance is rendered impossible by reason of fire, explosion, earthquake, storm, flood, drought, embargo, pandemic, epidemic, quarantine, lock-down order, wars or other hostilities, strike, lockout or other labor disturbance, mechanical breakdown, governmental action, or any other event that is beyond the reasonable control of, and not caused by, a Party (a “Force Majeure Event”), then the Party so hindered, delayed or prevented shall not be liable to the other Party for the resulting delay or failure to carry out its obligations hereunder. In any such event, such Party’s affected obligations hereunder shall be postponed for such time as its performance is suspended or delayed on account thereof. The affected Party will promptly notify the other Party, either orally or in writing, upon learning of the occurrence of such Force Majeure Event. If the Force Majeure Event affects the provision of services by HD hereunder, HD shall use commercially reasonable efforts to remove such Force Majeure Event as soon as and to the extent reasonably possible and, in any event, will treat LiveWire the same as any other internal or external recipient of the affected services, if any. Upon the cessation of the Force Majeure Event, the affected Party will use commercially reasonable efforts to resume its performance with the least possible delay.
ARTICLE 12
OPERATIONAL COMMITTEE; DISPUTE COMMITTEE
12.1 Operational Committee. Each Party shall designate their respective employees identified below to conduct the activities described in Section 12.3 (such designated employees, collectively, the “Operational Committee”):
(a) LiveWire’s Head of EV Technology (or equivalent);
(b) LiveWire’s Director of Sales (or equivalent);
(c) HD’s Vice President – Engineering (or equivalent); and
(d) HD’s Vice President – Manufacturing (or equivalent).
Each Party may change from time to time in its discretion its members of the Operational Committee; provided that it shall inform the other Party in writing and shall ensure that the newly appointed member has comparable expertise to the replaced employee. Further, each Party may elect from time to time, upon reasonable prior notice to the other Party, to have employees who are not members of the Operational Committee attend meetings of the Operational Committee to participate in discussions of specific topics scheduled for discussion during such meeting.
12.2 Meetings. The Operational Committee will meet either physically, telephonically or virtually as is acceptable to a majority of the members of the Operational Committee, as follows:
(a) General. Once within each consecutive three (3) month period from the Effective Date, the Operational Committee will meet to discuss outstanding issues within its scope.
(b) Quarterly Product Price Review. Within two (2) weeks following the issuance of each Quarterly True-Up Report, the Operational Committee will meet to review the Product Prices and discuss in good faith any modifications to the Product Prices or the methodology for their determination. Such discussions may include a review of the Parties’ respective cost allocations, and notwithstanding anything to the contrary in Section 1.1(a) and Section 3.2, as part of any such review, the Operational Committee will discuss in good faith any modifications to cost allocations, including modifications resulting from either Party deleveraging. The Parties
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may mutually agree on changes thereto, including any changes to increase or decrease Product Prices or with respect to particular Products. In the event the Parties are unable to mutually agree on such changes within the applicable seven (7) day period following the first meeting of the Operational Committee in each aforementioned period or in the following thirty (30) day Dispute period, if applicable, the Product Prices and/or methodology will remain unchanged.
(c) Annual Volume Commitment and Order Requirement Review. Within the three (3) week period prior to each anniversary of the Effective Date, the Operational Committee will meet to review the Minimum Annual Volume Commitment for each Product, and the permitted deviation between the Minimum Annual Volume Commitment and Forecasts, and discuss in good faith any modifications thereto. The Parties may mutually agree on changes to the Minimum Annual Volume Commitment for any Product and such changes will be effective from the date six (6) months following such mutual agreement. In the event the Parties are unable to mutually agree on such changes within such three (3) week period, the Parties will refer the disagreement for resolution by the Dispute Committee pursuant to Section 12.4.
Each Party shall cause its members of the Operational Committee to participate in the meetings of the Operational Committee in accordance with the schedule set forth above; provided that a Party may elect in its discretion to refer any matter falling within the responsibility of the Operational Committee as set forth in Section 12.3 to the Dispute Committee if the members or designated attendees of the Operational Committee of the other Party with the expertise to address the relevant matters repeatedly fail to be available to discuss such matters in a meeting of the Operational Committee. Furthermore, notwithstanding the foregoing, each Party may at any time elect to convene an ad hoc meeting of the Operational Committee; provided that: (A) it has submitted in writing to the other Party a description of the matters it would like to discuss during such ad hoc meeting; and (B) the other Party agrees these matters should be discussed ahead of the next regularly scheduled meeting of the Operational Committee. The Parties will jointly determine the date and the format of such meeting.
12.3 Responsibilities. The Operational Committee is responsible for the following activities:
(a) reviewing and discussing all matters that require the Parties’ cooperation or consultation with each other hereunder or joint actions from the Parties;
(b) reviewing and discussing appropriate actions with respect to any operational day-to-day matter for the management or resolution of which this Agreement provides no guidance;
(c) reviewing and discussing all claims, issues, disagreements or disputes that may arise from, under or in connection with this Agreement;
(d) reviewing and discussing all matters that a Party elects to refer to the Operational Committee; and
(e) reviewing, discussing and ratifying all proposed changes to Exhibit A (it being understood that no modifications to Exhibit A shall be effective until formally ratified by the Operational Committee).
12.4 Guidelines and Subcommittees. The Operational Committee may develop and establish guidelines and governance rules for management and resolution of matters within its responsibility, and delegate such matters to subcommittees that the Operational Committee appoints from time to time.
12.5 Disputes. Any matter described in Section 12.3 or otherwise referred to the Operational Committee pursuant to this Agreement that the Operational Committee fails to address or resolve to the satisfaction of both Parties within fourteen (14) days after the circumstances leading to the dispute have first been discussed during a meeting of the Operational Committee (a “Dispute”) may be referred by any Party to an appropriate member of HD’s senior leadership team, or such member’s designee, and an appropriate member of LiveWire’s senior leadership team, or such member’s designee (such designated members, the “Dispute Committee”). The Parties
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shall attempt in good faith to resolve the dispute by negotiation between their respective representatives on the Dispute Committee. The Parties agree that the members of the Dispute Committee shall have full and complete authority on behalf of their respective Parties to resolve any Disputes submitted to the Dispute Committee pursuant to this Section 12.4. If the Dispute Committee fails to reach agreement on a satisfactory resolution of the Disputes within thirty (30) days of the date of referral of the relevant Dispute to the Dispute Committee by the Operational Committee, either Party may pursue remedies in accordance with Section 14.6.
ARTICLE 13
TERM AND TERMINATION
13.1 Term. Unless earlier terminated pursuant to the terms and conditions of this Agreement, this Agreement shall commence on the Effective Date and shall remain in force for ten (10) years (“Initial Term”); provided, however, with respect to any Platform, the Initial Term applicable to the manufacturing of Products included in such Platform shall not expire until the five (5) year exclusive manufacturing period for such Platform expires. Following the end of the Initial Term (or, with respect to each Platform, the end of the five (5) year exclusive manufacturing period for such Platform), this Agreement shall automatically renew for successive five (5) year periods (each, a “Renewal Term”), subject to termination in accordance with Section 13.2 or Section 13.3. The Initial Term, together with the Renewal Terms, are collectively referred to hereunder as the “Term”.
13.2 Termination by Either Party. If either Party fails to perform any of its material duties or obligations pursuant to this Agreement and such breach is not cured within thirty (30) days, in the event such breach involves the payment of money, or within ninety (90) days, with respect to any other breach, after notice to such Party specifying the nature of such failure, the other Party may terminate this Agreement in its entirety, or with respect to any or all of the services provided to the defaulting Party, upon further notice to the defaulting Party. Either Party may terminate this Agreement immediately upon the occurrence of any of the following events: the other Party (i) is prevented from performing its obligations by reason of a Force Majeure Event for a period of six (6) months or more; (ii) becomes insolvent; (iii) enters bankruptcy, receivership, liquidation, composition of creditors, dissolution or similar proceeding; or (iv) undergoes a Change of Control Event. In the event that HD terminates this Agreement upon a Change of Control Event of LiveWire, LiveWire shall have a period of up to twenty-four (24) months following such termination to transition the manufacturing services provided hereunder to itself or a third party. HD shall continue to perform any manufacturing services requested by LiveWire with respect to the Products during such period subject to the terms and conditions of this Agreement.
13.3 Termination by LiveWire. Either Party will have the right to terminate this Agreement, with respect to one, several or all Products included in a Platform, by providing written notice of termination to the other Party on or after the date that the exclusive manufacturing period for such Platform expires, which termination will be effective twenty-four (24) months following delivery of such notice. In the event that LiveWire terminates this Agreement pursuant to this Section 13.3, (i) if the applicable termination occurs during the Initial Term or first Renewal Term for the relevant Product(s) (i.e., the five (5) year period following the five (5) year exclusive manufacturing period for such Platform), LiveWire shall be liable for any Termination Charges related to the terminated Product(s); provided that, (1) HD shall attempt to minimize and mitigate any Termination Charges; (2) HD shall make available to LiveWire all assets the cost of which are included in the Termination Charges (e.g., materials, work-in-progress and finished goods, machinery and equipment, including related tooling, jigs, dies, gauges, fixtures, molds, patterns and other accessories), and LiveWire shall bear all removal and logistics costs therefor; (3) HD shall attempt, to the extent practicable in HD’s reasonable business judgment, to repurpose or redeploy, including for other Platforms, any assets the cost of which would be included in the Termination Charges and any such assets that are repurposed or redeployed will be excluded from the Termination Charges, provided that any costs incurred by HD in connection with such repurposing or redeployment shall be included in the Termination Charges; and (4) at LiveWire’s request, HD shall, to the extent practicable in HD’s reasonable business judgment, assign to LiveWire, in whole or in part, those third-party contracts for the procurement of
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materials, goods, and services required for the manufacture of Products hereunder, for which Termination Charges would otherwise have been payable; and (ii) HD may adjust in its reasonable discretion the fee for the non-terminated Products if HD reasonably determines that the termination of the supply of the relevant Product(s) will increase the cost of production of the non-terminated Products.
13.4 Other Rights. The provisions of this Article are without prejudice to any other rights or remedies either Party may have by reason of the default of the other Party.
13.5 Survival. Notwithstanding the foregoing, the provisions of ARTICLE 1, Section 3.1, Section 3.2, Section 3.3, ARTICLE 4, Section 5.5(c), ARTICLE 6, ARTICLE 8, ARTICLE 9, ARTICLE 10, Section 13.4, Section 13.5 and ARTICLE 14 shall survive the expiration or termination of this Agreement by any reason whatsoever.
13.6 Transition and Further Assurances. In the event of a termination for LiveWire’s Change of Control under Section 13.2, HD will discuss with LiveWire in good faith, to the extent applicable, an equitable adjustment to the Minimum Annual Volume Commitment for the year in which HD gave LiveWire notice of such termination. Upon termination of this Agreement, HD shall make available to LiveWire any Technical Manufacturing Documents or written Specifications and Tooling owned by LiveWire that are in HD’s possession or control. Upon termination of this Agreement, HD shall use commercially reasonable efforts to assist, at LiveWire’s cost, with LiveWire’s transition of the manufacture of Products to LiveWire or its designee, it being understood and agreed that HD shall not be required under any circumstances to provide or disclose HD’s proprietary manufacturing processes or know-how to LiveWire or any other Person.
ARTICLE 14
GENERAL PROVISIONS
14.1 Assignment; Successors and Assigns. HD may assign or transfer this Agreement, in whole or in part, (i) to any of its Affiliates provided that HD remains liable for such Affiliates’ performance, obligations, and liabilities hereunder or (ii) in connection with the assignment or other transfer of all or substantially all of the assets used to manufacture one or more of the Products in connection with this Agreement provided that the third party transferee is qualified to manufacture the Products as required under this Agreement. LiveWire shall not assign or transfer this Agreement, in whole or part, without HD’s prior written consent. Notwithstanding the foregoing, LiveWire may (i) assign this Agreement, in whole or in part, to any of its Affiliates, (ii) assign or otherwise transfer this Agreement, in whole but not in part, to any Person in connection with a transfer of all or substantially all of the LiveWire Business to such Person (whether by merger, consolidation, sale of assets, sale or exchange of stock, by operation of law or otherwise and whether in a single or multiple transactions); and provided that, in each of the above cases, such transferee, assignee or successor agrees in writing to be bound by the terms of this Agreement. Any attempted or purported assignment or transfer in violation of the preceding shall be null and void and of no effect whatsoever. Subject to the foregoing, this Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and permitted assigns.
14.2 Modification or Amendments. Subject to the provisions of applicable law, and except as otherwise provided in this Agreement, this Agreement may be amended, modified or supplemented only by written instrument signed by the authorized representative of the Party against whom it sought to enforce such waiver, amendment, supplement or modification is sought to be enforced.
14.3 Waivers of Default. Waiver by a Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the other Party. No failure or delay by a Party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall a single or partial exercise thereof prejudice any other or further exercise thereof or the exercise of any other right, power or privilege.
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14.4 Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. The exchange of a fully executed Agreement (in counterparts or otherwise) by facsimile or by electronic delivery in .pdf format shall be sufficient to bind the Parties to the terms and conditions of this Agreement.
14.5 Governing Law. This Agreement (and any claims or disputes arising out of or related hereto or to the transactions contemplated hereby or to the inducement of either Party to enter herein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the Laws of the State of Delaware, irrespective of the choice of laws principles of the State of Delaware, including all matters of validity, construction, effect, enforceability, performance and remedies.
14.6 Consent to Jurisdiction. This Agreement, together with any Action, dispute, remedy or other proceeding arising from or relating to this Agreement or the transactions contemplated hereby or any relief or remedies sought by any Parties hereto (whether in contract, tort or statute), and the rights and obligations of the Parties hereunder, shall be governed by and construed in accordance with the laws of the State of Delaware for contracts made and to be fully performed in such state, without giving effect to any conflicts of laws rules, principles or regulations that would require the application of the laws of another jurisdiction. The state and federal courts located within the State of Delaware (the “Chosen Courts”) shall have exclusive jurisdiction over any and all disputes between the Parties hereto, whether in law or in equity, arising out of or relating to this Agreement and the agreements, instruments and documents contemplated hereby and the Parties hereto consent to and agree to subject to the exclusive jurisdiction of such Chosen Courts.
14.7 WAIVER OF JURY TRIAL. THE PARTIES HEREBY WAIVE TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, AND SHALL NOT ASSERT IN ANY SUCH DISPUTE, ANY CLAIM THAT: (A) SUCH PARTY IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS; (B) SUCH PARTY AND SUCH PARTY’S PROPERTY IS IMMUNE FROM ANY LEGAL PROCESS ISSUED BY SUCH COURTS; OR (C) ANY ACTION OR OTHER PROCEEDING COMMENCED IN SUCH COURTS IS BROUGHT IN AN INCONVENIENT FORUM. THE MAILING OF PROCESS OF OTHER PAPERS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED IN SECTION 14.8 (OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW) SHALL BE VALID AND SUFFICIENT SERVICE THEREOF AND HEREBY WAIVE ANY OBJECTIONS TO SERVICE ACCOMPLISHED IN THE MANNER PROVIDED HEREIN. THE PARTIES HEREBY IRREVOCABLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY.
14.8 Notices. Any notice, request, instruction or other document to be given hereunder by either Party to the other shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid or by prepaid overnight courier (providing written proof of delivery), or by confirmed facsimile transmission or electronic mail (with confirmed receipt), addressed as follows:
If to HD, to:
Harley-Davidson Motor Company
3700 W. Juneau
Milwaukee, WI 53217
Attention: Chief Legal Officer
Email: Paul.Krause@harley-davidson.com and H-DGeneralCounsel@harley-davidson.com
with copies (which shall not constitute notice) to:
Latham & Watkins LLP
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330 North Wabash Avenue, Suite 2800
Chicago, Illinois 60611
Attention: Ryan Maierson
Email: ryan.maierson@lw.com
Attention: Jason Morelli
Email: jason.morelli@lw.com
if to LiveWire, to:
LiveWire
3700 W. Juneau
Milwaukee, WI 53217 Attention: Chief Legal Officer
Email: Paul.Krause@harley-davidson.com and H-DGeneralCounsel@harley-davidson.com
with a copy (which shall not constitute notice) to:
Latham & Watkins LLP
330 North Wabash Avenue, Suite 2800
Chicago, Illinois 60611
Attention: Ryan Maierson
Email: ryan.maierson@lw.com
Attention: Jason Morelli
Email: jason.morelli@lw.com
or to such other persons or addresses as may be designated in writing by the Party to receive such notice as provided above.
14.9 Entire Agreement. This Agreement, the Separation Agreement, the Orders and the exhibits, annexes and schedules hereto and thereto contain the entire agreement between the Parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter and there are no agreements or understandings between the Parties with respect to such subject matter other than those set forth or referred to herein. Any terms submitted by LiveWire, including on any document or form submitted by LiveWire which are in addition to or inconsistent with those set forth herein, are hereby expressly rejected by HD and shall not apply to LiveWire’s purchase of Products from HD unless agreed to in a writing signed by both Parties. In the event of any inconsistency or conflict between or among the provisions of this Agreement and any Order, the inconsistency shall be resolved by giving precedence to this Agreement.
14.10 No Third-Party Beneficiaries. The provisions of this Agreement are solely for the benefit of the Parties and are not intended to confer upon any Person (including any shareholders of HD or shareholders of LiveWire) except the Parties hereto any rights or remedies hereunder. There are no third-party beneficiaries of this Agreement, and this Agreement shall not provide any third Person (including any shareholders of HD or shareholders of LiveWire) with any remedy, claim, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.
14.11 Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability or the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.
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14.12 Interpretation. The headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. Where a reference in this Agreement is made to an Article, Section, Schedule, Exhibit or Annex, such reference shall be to an Article of, Section of, Schedule to, Exhibit to or Annex to this Agreement unless otherwise indicated. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” For purposes of this Agreement, whenever the context requires the singular number shall include the plural, and vice versa. All references in this Agreement to “$” are intended to refer to United States dollars. Any reference to a particular Law means such Law as amended, modified or supplemented (including all rules and regulations promulgated thereunder) and, unless otherwise provided, as in effect from time to time.
14.13 Expenses. Except as otherwise expressly provided herein, each Party shall pay its own expenses incident to this Agreement and the transactions contemplated herein.
14.14 No Set-Off. The obligations under this Agreement shall not be subject to set-off for non-performance or any monetary or non-monetary claim by any Party or any of their respective Affiliates under any other agreement between the Parties or any of their respective Affiliates.
14.15 Construction. This Agreement shall be construed as if jointly drafted by the Parties and no rule of construction or strict interpretation shall be applied against either Party. The Parties represent that this Agreement is entered into with full consideration of any and all rights which the Parties may have. The Parties have conducted such investigations they thought appropriate, and have consulted with such advisors as they deemed appropriate regarding this Agreement and their rights and asserted rights in connection therewith. The Parties are not relying upon any representations or statements made by the other Party, or such other Party’s employees, agents, representatives or attorneys, regarding this Agreement, except to the extent such representations are expressly set forth or incorporated in this Agreement. The Parties are not relying upon a legal duty, if one exists, on the part of the other Party (or such other Party’s employees, agents, representatives or attorneys) to disclose any information in connection with the execution of this Agreement or their preparation, it being expressly understood that neither Party shall ever assert any failure to disclose information on the part of the other Party as a ground for challenging this Agreement.
14.16 Relationship of the Parties. The relationship of the Parties to one another is that of independent contractors and no Party nor its agents or employees shall be considered employees or agents of another Party, unless specifically provided otherwise herein. This Agreement does not constitute and shall not be construed as constituting a partnership or joint venture or grant of a franchise between HD and LiveWire. Neither Party shall have the right to bind the other Party to any obligations to third parties, unless specifically provided otherwise herein.
14.17 Compliance with Laws. Each Party shall comply, at its own expense, with the provisions of all Laws applicable to the performance of its obligations under this Agreement.
14.18 Other Agreements. Except as expressly set forth herein, this Agreement is not intended to address, and should not be interpreted to address, the matters specifically and expressly covered by the Separation Agreement or the other Ancillary Agreements.
[Signature page follows]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their respective authorized officers as of the Effective Date.
| Harley-Davidson Motor Company Group, LLC | ||
| By: | /s/ Gina Goetter | |
| Name: | Gina Goetter | |
| Title: | Chief Financial Officer | |
| LiveWire EV, LLC | ||
| By: | /s/ Amanda Parker | |
| Name: | Amanda Parker | |
| Title: | Chief Legal Officer | |
EXHIBIT A
PRODUCTS
[***]
EXHIBIT B
DATA PRIVACY AND SECURITY
[***]
Exhibit 10.8
Execution Version
Certain portions of this Exhibit have been redacted pursuant to Item 601(b)(10) of Regulation S-K and, where applicable, have been marked with “[***]” to indicate where redactions have been made.
TRANSITION SERVICES AGREEMENT
This TRANSITION SERVICES AGREEMENT (together with the schedules hereto, this “Agreement”), dated as of September 26, 2022 (“Effective Date”), by and between Harley-Davidson, Inc., a Wisconsin corporation (“Provider”), and LiveWire EV LLC, a Delaware limited liability company (“Recipient”). Each of Recipient and Provider is referred to herein as a “Party” and collectively as the “Parties”.
WITNESSETH
WHEREAS, Provider, acting together with its subsidiaries, currently conducts the Harley Business and the LiveWire Business;
WHEREAS, Provider and Recipient have entered into that certain Separation Agreement, dated as of the date hereof (the “Separation Agreement”), pursuant to which the Separation will be consummated; and
WHEREAS, following the Separation, the Parties have agreed that Provider, either through itself or through its Subsidiaries, will provide to Recipient and its Subsidiaries certain services on a transitional basis to allow Recipient the time to develop the capability to perform such services for itself or to outsource such services to a third-party service provider.
NOW, THEREFORE, in consideration of entering into the Separation Agreement, the covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. For purposes of this Agreement, capitalized terms shall have the meaning set forth in the body of this Agreement or as set forth below in this Section 1.1. To the extent any capitalized terms are not defined herein, they shall have the meanings set forth in the Separation Agreement.
“Confidential Information” means all (i) non-public information and material of or held by a Party that the other Party obtains knowledge of or access to in connection with this Agreement; (ii) non-public Intellectual Property Rights of a Party; and (iii) non-public business and financial information of a Party, including but not limited to pricing, business plans, forecasts, revenues, expenses, earnings projections and sales data; provided, however, “Confidential Information” does not include information that: (a) is or becomes public knowledge without any action by, or involvement of, the receiving Party or its Affiliates or contractors; (b) is independently developed by a Party without reference or access to the Confidential Information of the other Party and is so documented; or (c) is obtained by a Party without restrictions on use or disclosure from a third party who did not receive it, directly or indirectly, from the other Party; provided that the exceptions set forth in clauses (b) and (c) above shall not apply with respect to Confidential Information of Recipient, to the extent the applicability of either exception is due to Provider owning and or operating the LiveWire Business prior to the Separation.
“Stranded Costs” means any direct out-of-pocket costs and expenses resulting from pre-existing obligations to third parties as a result of early termination of a Service by Recipient, to the extent that such costs or expenses (x) relate to the period between the effective date of an early termination of a Service and the date on which such Service had originally been scheduled to terminate, including all pre-existing payment obligations that relate to
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such period that cannot be terminated, and/or (y) relate to any penalties, fees or other costs or expenses paid to third parties which would not have been incurred but for the early termination or partial termination of such Service by Recipient.
“Tax Matters Agreement” means that certain Tax Matters Agreement to be entered into by and among HD and LiveWire Group, Inc. (formerly known as LW EV Holdings, Inc.) and any other parties thereto (as amended, modified or restated from time to time).
ARTICLE 2
SERVICES
2.1 Provision of Services / Service Standards.
(a) Services. Subject to the terms and conditions of this Agreement, Provider agrees to provide, or cause to be provided through one or more of its Affiliates, the services described on Schedule A (each a “Service,” and collectively the “Services”) solely for purposes of the continued operation of the LiveWire Business by Recipient in the ordinary course, consistent with how such business was operated prior to the Effective Date. For the avoidance of doubt, any tasks necessary to accomplish the Services, even if such tasks are not expressly set forth in Schedule A, shall be deemed to be part of the “Services” to be performed by Provider pursuant to this Agreement, provided that such tasks are an inherent part of the Services described on Schedule A.
(b) Subcontractors. Provider may use subcontractors to perform all or any part of a Service hereunder, subject to Recipient’s prior written consent (which shall not be unreasonably withheld, conditioned or delayed). Notwithstanding the foregoing, Recipient’s consent is not required for any subcontractor who (i) is an Affiliate of Provider, (ii) was used by Provider to provide the same or similar services prior to the Effective Date, or (iii) is engaged to provide the same or similar services to both Provider (or any of its Affiliates) and Recipient. Provider will remain fully responsible for the provision of the subcontracted Services in accordance with the terms of this Agreement.
(c) Excluded Services. Notwithstanding anything to the contrary in this Agreement, in no event shall Provider be required to provide any of the services listed on Schedule B (the “Excluded Services”).
(d) Project Managers. Each Party will appoint a project manager, who shall be responsible for all day-to-day matters arising hereunder, and who shall be the primary contact for the other Party for any issues arising hereunder (each a “Project Manager”). The Project Managers shall meet (in person or by telephone) at the request of either Project Manager, in order to ensure the provision of the Services in accordance with the terms hereof, as well as the orderly transition of those Services at the end of the applicable Service Term. Provider’s initial Project Manager shall be Matt Keller (matt.keller@harley-davidson.com) and Recipient’s initial Project Manager shall be Jill Cirillo (jill.cirillo@harley-davidson.com); each Party may change its designated Project Manager upon notice to the other Party’s Project Manager.
(e) Required Consents. Provider shall use commercially reasonable efforts to obtain any third-party consents, approvals or amendments to Provider’s existing third-party agreements that are necessary to allow Provider to provide the Services to Recipient (the “Consents”). Recipient shall pay, or, at Provider’s request, reimburse Provider for, the cost of obtaining the Consents and any fees or charges associated with the Consents, including, but not limited to, any additional license, sublicense, access or transfer fees. Recipient acknowledges that there can be no assurance that Provider will be able to obtain the Consents. In the event that any Consents are not obtained, upon Recipient’s request, each of Provider and Recipient will work together in good faith to identify, and if commercially feasible, implement a work-around or other alternative arrangement for any affected Service(s), provided that (i) Recipient shall be responsible for all fees and costs associated with any such work-around or alternative arrangement, and (ii) Recipient acknowledges that any such work-around or alternative arrangement may adversely impact the Service Standards, and Provider shall not be liable for any
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breach of the Service Standards to the extent that it results from the adoption of any such work-around or alternative arrangement. If no commercially feasible alternative for a Service is available or capable of being reasonably implemented, Provider shall be relieved of its obligations to provide such Service.
(f) Cutover. Recipient shall be responsible for planning and preparing the transition to its own internal organization or other third-party service providers of the provision of each of the Services provided to it hereunder (the “Cutover”), and within thirty (30) days following the Effective Date, Recipient shall prepare a plan to effectuate such transition with sufficient lead time in order to achieve a timely Cutover (“Cutover Plan”). At Recipient’s request, Provider will reasonably assist Recipient with the initial development of the Cutover Plan, and will provide Recipient with all information reasonably requested by it in connection with the development and implementation of the Cutover Plan. The Cutover Plan shall, among other things, include the following: (i) the phases of migration of the Services from Provider to Recipient (or third-party providers); (ii) milestones, (iii) expected involvement of Provider, and (iv) contingencies. The Cutover Plan shall be subject to Provider’s review and approval, which approval shall not be unreasonably withheld, conditioned or delayed. Once the Cutover Plan has been mutually agreed, Recipient shall use commercially reasonable efforts to implement the Cutover Plan in accordance within the timelines therein. Provider shall reasonably cooperate and use commercially reasonable efforts to cause its third-party vendors to reasonably cooperate, at Recipient’s expense, in a timely implementation of the Cutover Plan; provided, however, Recipient shall only be required to reimburse Provider for out-of-pocket costs that Provider incurs in connection with the separation, extraction, and migration of Recipient data.
2.2 Omitted Services, Additional Services and Service Modifications.
(a) Changes. During the Term, the Parties may, in accordance with the procedures specified in this Section 2.2: (i) amend this Agreement to cover services that had been provided by Provider to Recipient in the one (1) year period prior to the Closing, but were omitted from Schedule A and that are not included in the Excluded Services (“Omitted Services”), (ii) amend this Agreement to cover additional services, other than Omitted Services (“Additional Services”), or (iii) amend the terms and conditions relating to the performance of a previously agreed-upon Service in order to reflect, among other things, new procedures or processes for providing such Service (a “Service Modification”); provided, however, notwithstanding anything to the contrary herein, in no event shall Provider be required to provide any Excluded Services.
(b) Omitted Services. In the event that Recipient identifies any Omitted Service that it wishes to have provided hereunder, it shall provide notice to Provider’s Project Manager, and the Project Managers will meet in person or by telephone no later than five (5) Business Days after delivery of the notice to confirm the scope of such Omitted Service, the term for which such Service will be provided, and the applicable Fees. The Parties shall then promptly, and in no event later than five (5) Business Days after the relevant meeting specified in the preceding sentence, negotiate in good faith the scope and duration thereof and the Service Fee therefor (which fees the Parties agree shall be calculated consistent with the same criteria used for determining the fees for the other Services and the historical fees charged or allocated to the LiveWire Business for such service) and amend Schedule A in accordance with Section 12.2 to include a description of the Omitted Service, the term for which such Service will be provided, and the applicable Fees. Such Omitted Service will thereafter be considered a Service hereunder.
(c) Service Modifications. In the event that either of the Parties desires a Service Modification or in the event that the Recipient desires to receive an Additional Service, the Party requesting the Service Modification or Additional Service will deliver a written description of the proposed Service Modification or Additional Service (a “Change Request”) to the other Party as follows: (i) in the case of a Change Request by Provider, to Recipient’s Project Manager; and (ii) in the case of a Change Request by Recipient, to Provider’s Project Manager.
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(d) Meeting of the Parties. Unless the Party receiving the Change Request agrees to implement the Change Request as proposed, the Project Managers will meet in person or by telephone to discuss the Change Request no later than ten (10) Business Days after delivery of the Change Request to the other Party.
(e) Approval of Recipient Change Requests. All Recipient Change Requests must be approved by Provider’s Project Manager in writing before the Service Modification may be implemented or the Additional Service may be provided in accordance with Section 2.2(g) below, such approval not to be unreasonably withheld, conditioned, or delayed. For the purposes of the preceding sentence, the Parties agree that it is not unreasonable to: (i) withhold such consent to the extent that such proposed Service Modification would materially increase the resources required for Provider to provide the Services after giving effect to the Change Request, (ii) withhold such consent if Provider determines that it would have to hire any new resources in order to provide the Services following implementation of the Change, whether due to lack of available personnel, lack of expertise of existing available personnel, or otherwise, or (iii) condition such consent on Recipient agreeing to bear any increases in Provider’s cost of performance (including, if applicable, fully burdened costs of personnel) resulting from such Service Modification.
(f) Approval of Provider Change Requests. All Provider Change Requests must be approved by Recipient’s Project Manager in writing before the Service Modification may be implemented in accordance with Section 2.2(g) below. Such consent will not be unreasonably withheld, conditioned or delayed. For the purposes of the preceding sentence, the Parties agree that it is not unreasonable to: (i) withhold such consent to the extent that such proposed Service Modification would materially adversely affect Provider’s performance of the Services after giving effect to the Change Request, (ii) condition such consent on Provider agreeing not to pass to Recipient any increases in Provider’s cost of performance resulting from such Service Modification, or (iii) condition such consent on Provider agreeing to reimburse Recipient for any costs incurred by Recipient to implement or accommodate such Service Modification in order to continue to receive the Services.
(g) Implementation of Approved Change. If a Change Request is approved in accordance with this Section 2.2, Schedule A will be amended in accordance with Section 12.2 to reflect the implementation of the Change Request and any other agreed-upon terms or conditions relating to the Service Modification or Additional Service.
ARTICLE 3
SERVICE STANDARDS
3.1 Service Quality. Provider shall provide, or cause to be provided, the Services with a degree of care, quality, priority, timeliness, and skill that is substantially consistent with its past practice in performing the Services for itself and/or the LiveWire Business during the one (1) year period prior to the Closing, but if Provider hereafter improves the standard of service for itself and its other businesses, then Provider will provide the Services in a manner that is substantially consistent with such improved standards (the “Service Standards”). For the avoidance of doubt, nothing herein shall be construed to require Provider to maintain the employment of any particular individual(s), or any number of individual(s), and Provider shall be free to hire and terminate its personnel and its contractors in its sole and absolute discretion.
3.2 Maintenance. Notwithstanding anything to the contrary in Section 3.1, Provider shall have the right to shut down its facilities and/or systems used in providing the Services in accordance with scheduled maintenance windows that have been set by Provider and communicated in advance to Recipient’s Project Manager provided, however, that Provider shall not shut down any such facilities and/or systems during critical operating periods. The scheduled maintenance windows shall always be planned to be performed outside customary business hours, or if not possible, be planned so that such shut down shall not materially and adversely affect Recipient’s operations. In the event maintenance is nonscheduled, Provider shall, whenever possible notify Recipient twenty-four (24) hours in advance. Unless not feasible under the circumstances, this notice shall be given in writing or
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by email to Recipient’s Project Manager. Where written notice is not feasible, Provider shall give prompt oral notice, which notice shall be promptly confirmed in writing by Provider. Provider shall be relieved of its obligations to provide Services only for the period of time that its facilities are so shut down but shall use commercially reasonable efforts to minimize each period of shutdown for such purpose and to schedule such shutdown so as not to inconvenience or disrupt the conduct of the LiveWire Business by Recipient.
ARTICLE 4
FEES AND PAYMENT
4.1 Fees. Recipient shall pay to Provider the fees set forth in Schedule A for each Service provided to Recipient hereunder (the “Fees”). In addition, without duplication of any expenses included in the Fees, Recipient shall reimburse Provider for all reasonable out-of-pocket fees, costs and expenses that were incurred by Provider to provide the Services (any shared costs and expenses being reasonably allocated), and without an additional mark-up (“Expenses”).
4.2 Payment Terms.
(a) Invoices and Payment. Except as otherwise set forth in Schedule A with respect to any Service, promptly following the end of each calendar month during the Term, Provider shall deliver to Recipient an invoice setting forth the Fees and Expenses for the Services provided by Provider during the prior month. Subject to Section 4.2(b), Recipient shall pay all invoiced amounts within thirty (30) days of receipt of the invoice. All payments under this Agreement shall be made by electronic funds transfer of immediately available funds to the bank account specified by the Party receiving the payment.
(b) Dispute Resolution. In the event that Recipient disputes in good faith the accuracy of any portion of an invoice, Recipient shall deliver to the Provider Project Manager notice of the dispute (which shall constitute an “Initial Notice” for purposes of the dispute resolution provisions incorporated by reference herein pursuant to ARTICLE 11), along with a reasonably detailed explanation of the basis of the dispute, on or prior to the applicable due date, and shall pay all undisputed portions of the applicable invoice in a timely manner in accordance with Section 4.2(a). The Project Managers shall attempt to resolve the dispute in a prompt manner. If the Project Managers are unable to resolve the dispute within ten (10) days from the date of the Initial Notice, either Party may, upon notice to the other Party, escalate the dispute to their senior executives, and thereafter, the dispute shall be resolved in accordance with ARTICLE 11 hereof. Payment of any amounts not disputed within the timeframe specified in the foregoing will waive Recipient’s right to withhold such amounts from future invoice payments (unless otherwise agreed by the Parties in connection with the resolution of a dispute) but will not constitute a waiver of any right to subsequently dispute an invoice.
(c) Late Payment Charge. Except as expressly provided to the contrary in this Agreement, any amount not paid when due pursuant to this Agreement (and any amount billed or otherwise invoiced or demanded and properly payable that is not paid within thirty (30) days of such bill, invoice or other demand) shall bear interest at a rate per annum equal to the Prime Rate, from time to time in effect, plus two percent (2%), calculated for the actual number of days elapsed, accrued from the date on which such payment was due up to the date of the actual receipt of payment.
4.3 Taxes. All sums payable under this Agreement are exclusive of value added tax, sales taxes and similar taxes (“Indirect Taxes”), that may be levied in any jurisdiction which shall (if and to the extent applicable with respect to a Service and properly invoiced) be payable by Recipient. Each invoice provided under Section 4.2(a) shall properly reflect such Indirect Taxes, and if applicable, such information reasonably required for Recipient to obtain a refund, credit or offset of such Indirect Taxes in accordance with applicable Law. Subject to the Tax Matters Agreement, each of Provider and Recipient shall be liable for its own income taxes, franchise or similar taxes as well as any payroll, national insurance, social security or similar taxes in respect of any service provider.
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If any taxes are required to be deducted or withheld from any payments made by one Party (the “Payor”) to another Party (the “Payee”) hereunder then such Payor shall withhold or deduct the required amount and promptly pay such taxes to the applicable tax authority and any such amounts shall be deemed to have been paid hereunder. Payor and Payee shall make reasonable efforts to cooperate to the extent necessary to obtain any exemption relating to, or reduced rate of, deduction or withholding for or on account of tax, including making applicable double taxation treaty clearance applications.
ARTICLE 5
TERM AND TERMINATION
5.1 Term. This Agreement is effective as of the Effective Date and shall continue until the termination or expiration of all Services (the “Term”).
5.2 Service Terms; Extensions. The term for each Service is specified for that Service on Schedule A (each a “Service Term”). Unless extended pursuant to this Section 5.2, no Service Term shall exceed twelve (12) months. Upon notice from Recipient to Provider at least forty-five (45) days prior to the expiration of a Service Term, Recipient may extend the Service Term for the applicable Service for up to six (6) additional months (or such shorter time as may be set forth on Schedule A); provided that (i) in the event that the Service to be extended is contingent upon the provision of any other Services, all such inter-dependent Services must be extended, and (ii) Recipient shall be required to pay any additional fees or costs (including retention costs, if applicable) identified by Provider within thirty (30) days of Recipient’s request for an extension in order to extend the Service Term for the applicable Service(s), and Recipient shall have five (5) days from receipt of such cost to withdraw its extension request. Any additional extensions of a Service Term shall be subject to the Parties’ mutual written agreement.
5.3 Early Termination. Except as otherwise set forth in Schedule A with respect to any Service, Recipient may terminate this Agreement in respect of any or all of the Services provided to Recipient by Provider by providing a minimum of forty-five (45) days prior written notice to Provider, or such longer period as may be set forth on Schedule A with respect to a particular Service (an “Early Termination Notice”); provided, however, Recipient may not terminate a particular Service if such Service is interdependent with other Services, unless all such interdependent Services are simultaneously terminated. Recipient shall reimburse Provider for all Stranded Costs associated with the early termination of a Service; provided that Provider shall provide a list of interdependent Services and its reasonable best estimate of Stranded Costs with respect to a terminated Service within thirty (30) days of receipt of Recipient’s termination notice for such Service, and Recipient shall have five (5) days from receipt of such list and estimate to withdraw its termination request.
5.4 Termination for Default.
(a) Termination for Non-Payment. Provider may terminate this Agreement, with respect to all or any applicable the Services it provides hereunder, if Recipient fails to pay undisputed amounts due in accordance with ARTICLE 4, and Recipient fails to cure such payment default within thirty (30) days of receipt of notice of the payment default from Provider.
(b) Termination for Material Breach. Recipient may terminate this Agreement, with respect to all or any applicable Services it receives hereunder, if Provider is in material breach of its obligations relating to the provision of Services hereunder, and Provider fails to cure such material breach within thirty (30) days of receipt of notice of such material breach from Recipient.
5.5 Effect of Termination.
(a) Upon the expiration or termination of this Agreement or the termination of the provision of any Services hereunder, Recipient shall pay all costs and other sums owed to Provider for the terminated Services
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prior to termination (together with applicable amounts payable as a result of early termination as specified in Section 5.3, including Stranded Costs, if any) on the payment terms set forth in Section 4.2. Unless Recipient is in default of its payment obligations hereunder, Provider will provide such cooperation as may reasonably be requested by Recipient, in order to transition the terminated Services to Recipient or a third party service provider (“Termination Services”). Recipient will pay Provider Fees for the Termination Services calculated in the same manner as the Fees for other Services, and, without duplication, will reimburse Provider for all Expenses incurred in connection with the Termination Services. Such Expenses will be invoiced and payable in the same manner as set forth for Expenses in Section 4.1 above.
(b) The provisions of ARTICLE 1, ARTICLE 4, Section 5.5, ARTICLE 7, ARTICLE 8, ARTICLE 10 (for two years only), ARTICLE 11 and ARTICLE 12 shall survive the expiration or the termination of this Agreement. The remaining provisions shall survive to the extent such provisions are applicable to any amounts due for Services provided prior to termination or expiration, or are applicable to any Termination Services (including payment therefor).
ARTICLE 6
COOPERATION AND ACCESS
6.1 Cooperation by Recipient. Subject to the terms and conditions set forth in this Agreement, Recipient shall use commercially reasonable efforts to make available, as reasonably requested by Provider, sufficient resources and timely decisions, approvals and acceptances in order that Provider may accomplish its obligations under this Agreement in a timely and efficient manner.
6.2 Access to Premises and Systems. Each Party agrees that it shall, without charge, provide such reasonable access to its premises, personnel and/or computer systems or information stores, and such reasonable assistance, as may be required to the other Party for the other Party to perform their obligations or receive the Services under this Agreement. Unless otherwise agreed to in writing by the Parties, each Party will: (i) use the premises, computer systems and information stores of the other Party solely for the purpose of providing or receiving the Services; (ii) limit such access to those of its representatives with a bona fide need to have such access in connection with the Services and who, if required by the provisions of this Agreement, have been duly approved to have such access, and (iii) comply, and cause its employees, subcontractors and third-party providers to comply, with all policies and procedures governing access to and use of such premises, computer systems and/or information stores made known to such Party in advance. All user identification numbers and passwords disclosed by a Party to the other Party and any information obtained by either Party as a result of such Party’s access to and use of the other Party’s computer systems shall be deemed to be, and treated as, Confidential Information of the disclosing Party hereunder in accordance with the provisions set forth in ARTICLE 10, with the same degree of care as such receiving Party uses for its own information of a similar nature, but in no event a lower standard than a reasonable standard of care. The Parties shall cooperate in the investigation of any apparent unauthorized access to any premises, computer system and/or information stores of any Party. These provisions concerning access to premises, personnel and/or computer systems or information stores shall apply equally to any access and use by a Party of the other Party’s electronic mail system, electronic switched network, either directly or via a direct inward service access or calling card feature, data network or any other property, equipment or service of the other Party, and any software that may be accessible by either Party in connection with this Agreement.
6.3 Compliance with Third Party Vendor Agreements. Recipient shall comply with the terms of all third-party vendor agreements used by Provider in providing the Services, to the extent that Recipient has been notified of the applicable terms.
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ARTICLE 7
INTELLECTUAL PROPERTY
7.1 Ownership of Business Records and Information. Recipient shall own all Business Records and Information to the extent related to LiveWire Business generated under this Agreement to the extent permitted by applicable Law (collectively, “Recipient Data”). Provider, on behalf of its Affiliates, hereby assigns to Recipient all Recipient Data.
7.2 Ownership of Intellectual Property Rights. Except as otherwise expressly set forth herein, as between the Parties, each Party shall each remain the exclusive owner of all right, title and interest throughout the world in and to its Intellectual Property Rights, whether provided to one another in the performance or receipt of the Services, or in any other context given the relationships of the Parties under this Agreement. Without limiting the foregoing and for the avoidance of doubt, ownership of any Intellectual Property Right that is developed or generated after the Effective Date in connection with the provision of any Service will vest, as between the Parties, in Provider; provided that any Intellectual Property Rights (i) that are exclusively used or held for use in connection with the LiveWire Business, or (ii) generated by Recipient’s use of a Service in the ordinary course of operating the LiveWire Business (e.g., copyrights in reports, documents or data generated through Recipient’s use of a Service) will vest, as between the Parties, in Recipient.
7.3 License to Recipient. Provider hereby grants to Recipient a perpetual, worldwide, royalty-free, fully paid-up, non-exclusive license, with a right of sublicense, to use Provider’s Intellectual Property Rights that are developed in Provider’s performance of engineering Services for the purpose of operating the LiveWire Business. The foregoing license is transferable solely to a Person in connection with a transfer of all or substantially all of the LiveWire Business to such Person (whether by merger, consolidation, sale of assets, sale or exchange of stock, by operation of law or otherwise).
7.4 No Implied License. Each Party acknowledges that except as expressly set forth in Section 7.3, no license or conveyance of any rights to any Intellectual Property Rights is granted to the receiving Party by the disclosure of Confidential Information pursuant to this Agreement. Except as otherwise provided in the Separation Agreement or this Agreement, Recipient further acknowledges that it will acquire no right, title or interest (including any license rights or rights of use) in any firmware or software, and the licenses therefor which are owned by Provider by reason of Provider’s provision of the Services provided hereunder.
ARTICLE 8
NO WARRANTIES; LIMITATION OF LIABILITY
8.1 No Warranties. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, BUT WITHOUT LIMITING ANY REPRESENTATIONS OR WARRANTIES IN THE SEPARATION AGREEMENT, (A) ALL SERVICES ARE PROVIDED “AS IS,” AND (B) PROVIDER MAKES NO REPRESENTATION OR WARRANTY IN CONNECTION WITH THE SUBJECT MATTER OF THIS AGREEMENT AND HEREBY DISCLAIMS ANY AND ALL IMPLIED OR STATUTORY WARRANTIES, INCLUDING ALL IMPLIED WARRANTIES OF TITLE, MERCHANTABILITY, NON-INFRINGEMENT AND FITNESS FOR A PARTICULAR PURPOSE REGARDING SUCH SUBJECT MATTER. To the extent that Provider may not as a matter of applicable Law disclaim any implied warranty, the scope and duration of such warranty will be the minimum permitted under such law.
8.2 General Indemnification. Each Party shall indemnify, defend and hold harmless the other Party, its Affiliates and its and their respective officers, directors, employees and representatives (“Indemnitees”) from and against any and all liabilities, losses, costs, damages, fines, assessments, penalties and expenses (including reasonable attorneys’ fees and expenses) incurred by such Indemnitees in connection with any third-party claim (“Claims”) arising from or relating to the indemnifying Party’s fraud, gross negligence or willful misconduct in connection with this Agreement.
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8.3 Indemnity Procedures. If any claim or action is asserted that would entitle an Indemnitee to indemnification pursuant to Section 8.2 (a “Proceeding”), the Party seeking indemnification will give written notice thereof to the Party from which indemnification is sought promptly; provided, however, that the failure of the indemnified Party to give timely notice hereunder will not affect rights to indemnification hereunder, except to the extent that the indemnifying Party demonstrates actual damage caused by such failure. The indemnifying Party may elect to direct the defense or settlement of any Proceeding by giving written notice to the indemnified Party, which election will be effective immediately upon the indemnified Party’s receipt of such written notice. The indemnifying Party will have the right to employ counsel reasonably acceptable to the indemnified Party to defend any Proceeding, or to compromise, settle or otherwise dispose of the same, if the indemnifying Party deems it advisable to do so, all at the expense of the indemnifying Party; provided that the indemnifying Party will not settle, or consent to any entry of judgment in, any Proceeding without obtaining either: (a) an unconditional release of the indemnified Party (and their Affiliates and each of their respective officers, directors, employees and agents) from all liability with respect to all claims underlying such Proceeding; or (b) the prior written consent of the indemnified Party. The indemnified Party will not settle or consent to any entry of judgment, in any Proceeding without obtaining the prior written consent of the indemnifying Party (such consent not to be unreasonably withheld, delayed or conditioned). The Parties will fully cooperate with each other in any Proceeding and will make available to each other any books or records useful for the defense of any such Proceeding.
8.4 Limitation of Liability and Damages. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW, EXCEPT FOR DAMAGES ARISING FROM A PARTY’S FRAUD, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, (A) NEITHER PARTY, NOR ITS AFFILIATES, CONTRACTORS, SUPPLIERS OR AGENTS, SHALL HAVE ANY LIABILITY HEREUNDER FOR, AND DAMAGES SHALL NOT INCLUDE, ANY PUNITIVE, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES, OR DAMAGES CALCULATED BASED UPON LOST PROFITS, LOSS IN VALUE OR MULTIPLE OF EARNINGS, AND ANY CLAIM OR CAUSE OF ACTION REQUESTING OR CLAIMING SUCH DAMAGES IS SPECIFICALLY WAIVED AND BARRED, WHETHER OR NOT SUCH DAMAGES WERE FORESEEABLE OR A PARTY WAS NOTIFIED IN ADVANCE OF THE POSSIBILITY OF SUCH DAMAGES; AND (B) THE AGGREGATE LIABILITY OF HD, ITS AFFILIATES, CONTRACTORS, SUPPLIERS AND AGENTS IN CONNECTION WITH THIS AGREEMENT OR THE SERVICES SHALL NOT EXCEED TWO MILLION DOLLARS ($2,000,000).
ARTICLE 9
FORCE MAJEURE
In case a Party shall be hindered, delayed or prevented from performing its obligations under this Agreement (other than its payment obligation), or if such performance is rendered impossible by reason of fire, explosion, earthquake, storm, flood, drought, embargo, pandemic, epidemic, quarantine, lock-down order, wars or other hostilities, strike, lockout or other labor disturbance, mechanical breakdown, governmental action, or any other event that is beyond the reasonable control of, and not caused by, a Party (a “Force Majeure Event”), then the Party so hindered, delayed or prevented shall not be liable to the other Party for the resulting delay or failure to carry out its obligations hereunder; provided that the affected Party (i) promptly notifies the other Party, either orally or in writing, upon learning of the occurrence of such Force Majeure Event, (ii) uses commercially reasonable efforts to remove such Force Majeure Event as soon as and to the extent reasonably possible and, in any event, will treat the Recipient the same as any other internal or external service recipient of the affected Services, if any, and (iii) will, upon the cessation of the Force Majeure Event, use commercially reasonable efforts to resume its performance with the least possible delay. Notwithstanding the foregoing, and notwithstanding anything to the contrary in this Agreement, Recipient shall not be required to pay for the affected Services during the pendency of a Force Majeure Event. If any Services are interrupted or suspended for more than ten (10) consecutive days, Recipient may immediately terminate the affected Services upon written notice to Provider, without the payment of any Stranded Costs.
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ARTICLE 10
CONFIDENTIALITY
10.1 Confidentiality. Each of the Parties agrees that any Confidential Information of the other Party received in the course of performance under this Agreement shall be kept strictly confidential by the Parties, except that Provider may disclose Recipient’s Confidential Information for the sole purpose of providing Services pursuant to this Agreement to any Affiliate of Provider or to third parties that provide such Services in accordance with the terms of this Agreement; provided, that Provider shall ensure that any such Affiliate or third party is bound by obligations of confidentiality at least as strict as those contained herein. Provider shall be responsible for any such Affiliate or third party keeping confidential such Confidential Information of Recipient. The Party receiving Confidential Information further agrees (i) not to use the disclosing Party’s Confidential Information except as necessary to perform its obligations under this Agreement, and (ii) to take the same care with the disclosing Party’s Confidential Information as it does with its own, but in no event less than a reasonable degree of care. Upon the termination or expiration of this Agreement, each Party shall return to the other Party or destroy all of such other Party’s Confidential Information. Each of the Parties shall treat the terms of this Agreement as if they were the Confidential Information of the other Party and shall not disclose the terms of this Agreement without the other Party’s prior written consent, except as required by applicable Law, by the rules of any national stock exchange with respect to a Party’s publicly-traded securities or as otherwise permitted under this Agreement.
10.2 Government Order. If the receiving Party is requested to disclose any of the disclosing Party’s Confidential Information pursuant to any judicial or governmental order, the receiving Party will promptly notify the disclosing Party of such order so that the disclosing Party, in its sole discretion, may seek an appropriate protective order and/or take any other action to prevent or minimize the breadth of such disclosure.
ARTICLE 11
DISPUTE RESOLUTION
11.1 Consent to Jurisdiction. This Agreement, together with any Action, dispute, remedy or other proceeding arising from or relating to this Agreement or the transactions contemplated hereby or any relief or remedies sought by any Parties hereto (whether in contract, tort or statute), and the rights and obligations of the parties hereunder, shall be governed by and construed in accordance with the laws of the State of Delaware for contracts made and to be fully performed in such state, without giving effect to any conflicts of laws rules, principles or regulations that would require the application of the laws of another jurisdiction. The state and federal courts located within the State of Delaware (the “Chosen Courts”) shall have exclusive jurisdiction over any and all disputes between the parties hereto, whether in law or in equity, arising out of or relating to this Agreement and the agreements, instruments and documents contemplated hereby and the parties hereto consent to and agree to subject to the exclusive jurisdiction of such Chosen Courts.
11.2 WAIVER OF JURY TRIAL. THE PARTIES HEREBY WAIVE TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, AND SHALL NOT ASSERT IN ANY SUCH DISPUTE, ANY CLAIM THAT: (A) SUCH PARTY IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS; (B) SUCH PARTY AND SUCH PARTY’S PROPERTY IS IMMUNE FROM ANY LEGAL PROCESS ISSUED BY SUCH COURTS; OR (C) ANY ACTION OR OTHER PROCEEDING COMMENCED IN SUCH COURTS IS BROUGHT IN AN INCONVENIENT FORUM. THE MAILING OF PROCESS OF OTHER PAPERS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED IN SECTION 12.6 (OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW) SHALL BE VALID AND SUFFICIENT SERVICE THEREOF AND HEREBY WAIVE ANY OBJECTIONS TO SERVICE ACCOMPLISHED IN THE MANNER PROVIDED HEREIN. THE PARTIES HEREBY IRREVOCABLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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ARTICLE 12
MISCELLANEOUS PROVISIONS
12.1 Corporate Power.
(a) Provider represents on behalf of itself and its Affiliates, and Recipient represents on behalf of itself and each other member of its Affiliates, as follows:
(i) each such Person has the requisite public limited company, public limited liability company or other power and authority and has taken all public limited company, public limited liability company or other action necessary in order to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby; and
(ii) this Agreement has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with the terms hereof.
(b) Each Party acknowledges that it and each other Party may execute this Agreement by facsimile, stamp or mechanical signature. Each Party expressly adopts and confirms each such facsimile, stamp or mechanical signature made in its respective name as if it were a manual signature, agrees that it shall not assert that any such signature is not adequate to bind such Party to the same extent as if it were signed manually and agrees that at the reasonable request of any other Party at any time it shall as promptly as reasonably practicable cause this Agreement to be manually executed (any such execution to be as of the date of the initial date thereof).
12.2 Modification or Amendments. Subject to the provisions of applicable Law, and except as otherwise provided in this Agreement, this Agreement may be amended, modified or supplemented only by written instrument signed by the authorized representative of the Party against whom it sought to enforce such waiver, amendment, supplement or modification is sought to be enforced.
12.3 Waivers of Default. Waiver by a Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the other Party. No failure or delay by a Party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall a single or partial exercise thereof prejudice any other or further exercise thereof or the exercise of any other right, power or privilege.
12.4 Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. The exchange of a fully executed Agreement (in counterparts or otherwise) by facsimile or by electronic delivery in .pdf format shall be sufficient to bind the parties to the terms and conditions of this Agreement.
12.5 Governing Law. This Agreement (and any claims or disputes arising out of or related hereto or to the transactions contemplated hereby or to the inducement of any Party to enter herein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the Laws of the State of Delaware, irrespective of the choice of laws principles of the State of Delaware, including all matters of validity, construction, effect, enforceability, performance and remedies.
12.6 Notices. Any notice, request, instruction or other document to be given hereunder by any party to the others shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid or by prepaid overnight courier (providing written proof of delivery), or by confirmed facsimile transmission or electronic mail (with confirmed receipt), addressed as follows:
Any notices to be delivered to
| (a) | Provider shall be addressed as follows: |
c/o Harley-Davidson
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3700 West Juneau Avenue
Milwaukee, WI 53208
Attention: Paul Krause
Email: paul.krause@harley-davidson.com;
H-DGeneralCounsel@harley-davidson.com
with a copy to (for information purposes only):
Latham & Watkins LLP
330 North Wabash Avenue, Suite 2800
Chicago, IL 60611
Attention: Ryan Maierson
Email: ryan.maierson@lw.com
Attention: Jason Morelli
Email: jason.morelli@lw.com
| (b) | Recipient shall be addressed as follows: |
LiveWire
3700 West Juneau Avenue
Milwaukee, WI 53208
Attention: Paul Krause
Email: paul.krause@harley-davidson.com;
H-DGeneralCounsel@harley-davidson.com
with a copy to (for information purposes only):
Latham & Watkins LLP
330 North Wabash Avenue, Suite 2800
Chicago, IL 60611
Attention: Ryan Maierson
Email: ryan.maierson@lw.com
Attention: Jason Morelli
Email: jason.morelli@lw.com
or to such other persons or addresses as may be designated in writing by the Party to receive such notice as provided above.
12.7 Entire Agreement. This Agreement (including any annexes hereto), together with the Separation Agreement and the other Ancillary Agreements constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties both written and oral, among the Parties, with respect to the subject matter hereof. From and after the effective date of the Tax Matters Agreement, in the event of any conflict between the provisions of this Agreement and the Tax Matters Agreement, the provisions of the Tax Matters Agreement shall control.
12.8 No Third-Party Beneficiaries. The provisions of this Agreement are solely for the benefit of the Parties and are not intended to confer upon any Person (including, without limitation, any shareholders of Provider or shareholders of Recipient) except the Parties hereto any rights or remedies hereunder. There are no third-party beneficiaries of this Agreement, and this Agreement shall not provide any third Person (including, without limitation, any shareholders of Provider or shareholders of Recipient) with any remedy, claim, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.
12.9 Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability or the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or any circumstance, is invalid or
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unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.
12.10 Interpretation. The table of contents and headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. Where a reference in this Agreement is made to a Section, Schedule, Exhibit or Annex, such reference shall be to a Section of, Schedule to, Exhibit to or Annex to this Agreement unless otherwise indicated. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” For purposes of this Agreement, whenever the context requires the singular number shall include the plural, and vice versa. All references in this Agreement to “$” are intended to refer to United States dollars and all references to “EUR” are to the lawful currency of the European Union. Any reference to a particular Law means such Law as amended, modified or supplemented (including all rules and regulations promulgated thereunder) and, unless otherwise provided, as in effect from time to time.
12.11 Expenses. Except as otherwise expressly provided herein, each Party shall pay its own expenses incident to this Agreement and the transactions contemplated herein.
12.12 No Set-Off. The obligations under this Agreement shall not be subject to set-off for non-performance or any monetary or non-monetary claim by any Party or any of their respective Affiliates under any other agreement between the Parties or any of their respective Affiliates.
12.13 Specific Performance; Other Equitable Relief. Subject to ARTICLE 11, the Parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the specific terms hereof or were otherwise breached. It is accordingly agreed that the Parties shall be entitled to seek an injunction or injunctions or other equitable relief to remedy breaches or prevent anticipated breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement (without necessity of posting bond or other security (any requirements therefor being expressly waived)), this being in addition to any other remedy to which they are entitled at Law or in equity.
12.14 Construction. This Agreement shall be construed as if jointly drafted by the Parties and no rule of construction or strict interpretation shall be applied against either Party. The Parties represent that this Agreement is entered into with full consideration of any and all rights which the Parties may have. The Parties have conducted such investigations they thought appropriate, and have consulted with such advisors as they deemed appropriate regarding this Agreement and their rights and asserted rights in connection therewith. The Parties are not relying upon any representations or statements made by the other Party, or such other Party’s employees, agents, representatives or attorneys, regarding this Agreement, except to the extent such representations are expressly set forth or incorporated in this Agreement. The Parties are not relying upon a legal duty, if one exists, on the part of the other Party (or such other Party’s employees, agents, representatives or attorneys) to disclose any information in connection with the execution of this Agreement or their preparation, it being expressly understood that neither Party shall ever assert any failure to disclose information on the part of the other Party as a ground for challenging this Agreement.
12.15 Assignment; Successors and Assigns. Neither this Agreement nor the rights or obligations hereunder shall be assignable by either Party, by operation of law or otherwise, without the prior written consent of the other Party, and any purported assignment or delegation in violation of this paragraph shall be null and void; provided, however, that (a) either Party may, without the consent of any other Party, assign any or all of its rights and interests, and delegate any or all of its obligations, to an Affiliate, provided that no such assignment or delegation shall relieve the assigning or delegating Party of its obligation to ensure performance by such Affiliate of its delegated obligations, (b) nothing in this Section 12.15 will restrict Provider from subcontracting the
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provision of Services to an Affiliate or to any third parties to the extent such third parties are used to provide such Services or similar services to other businesses of Provider and its Affiliates, and (c) a Party may assign, in whole or in part, its applicable rights, obligations and interests to a third party hereunder in conjunction with (i) the change in control of such Party, (ii) the sale of all or substantially all of the assets of such Party, or (iii) the sale or divestiture of any of the product lines, operating units, subsidiaries or business divisions of such Party, provided that (x) such assigning Party shall remain responsible for all liability of such Party accrued hereunder as of the date of such assignment, (y) the assignee agrees in writing to assume all applicable obligations of the assigning Party accruing hereunder after such assignment (whereupon the assigning Party will be relieved of all liability and obligations hereunder to the extent accruing after such assignment), and (z) as of the date of such assignment, such assignee has commercially reasonably financial wherewithal to assume all applicable obligations. Subject to the foregoing, this Agreement shall inure to the benefit of and be binding upon the Parties hereto and their respective successors and assigns.
12.16 Conflict. In case of conflict between the terms and conditions of the body of this Agreement and any schedule hereto, unless such schedule explicitly states the Parties’ intention to deviate from the terms and conditions of the body of this Agreement, the terms and conditions of the body Agreement shall control and govern.
12.17 Relationship of the Parties. The relationship of the Parties to each other is that of independent contractors and neither Party nor its agents or employees shall be considered employees or agents of the other Party. This Agreement does not constitute and shall not be construed as constituting a partnership or joint venture or grant of a franchise between the Parties. Neither Party shall have the right to bind the other Party to any obligations to third parties.
12.18 Performance. Each Party shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary or Affiliate of such Party.
12.19 Compliance with Laws. Each Party shall comply, at its own expense, with the provisions of all Laws applicable to the performance of its obligations under this Agreement.
12.20 Other Agreements. Except as expressly set forth herein, this Agreement is not intended to address, and should not be interpreted to address, the matters specifically and expressly covered by the Separation Agreement or the other Ancillary Agreements.
[Signature page follows.]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their respective authorized officers as of the Effective Date.
| PROVIDER: | ||
| Harley-Davidson, Inc. | ||
| By: | /s/ Paul J. Krause | |
| Name: Paul J. Krause | ||
| Title: Authorized Signatory | ||
| RECIPIENT: | ||
| LiveWire EV LLC | ||
| By: | /s/ Amanda Parker | |
| Name: Amanda Parker | ||
| Title: Chief Legal Officer | ||
[Signature Page to Transition Services Agreement]
SCHEDULE A
Services
[***]
SCHEDULE B
Excluded Services
Legal services
Tax-related advice services
Exhibit 10.9
Execution Version
Certain portions of this Exhibit have been redacted pursuant to Item 601(b)(10) of Regulation S-K and, where applicable, have been marked with “[***]” to indicate where redactions have been made.
MASTER SERVICES AGREEMENT
This Master Services Agreement (together with the Exhibits and Statements of Work hereto, the “Agreement”), effective as of September 26, 2022 (the “Effective Date”), is entered by and between Harley-Davidson, Inc., a Wisconsin corporation (“HD”), and LiveWire EV, LLC, a Delaware limited liability company (“LiveWire”). Each of HD and LiveWire is referred to herein individually as a “Party” and together as the “Parties.”
RECITALS
WHEREAS, HD, acting together with its subsidiaries, historically conducted the Harley Business and the LiveWire Business;
WHEREAS, the Parties entered into that certain Separation Agreement effective as of the date hereof (the “Separation Agreement”), pursuant to which the LiveWire Business was separated from the Harley Business and transferred to LiveWire; and
WHEREAS, following the Separation Time, and subject to the terms and conditions of this Agreement, LiveWire wishes, from time to time, to engage HD to provide certain services, including, but not exclusive of, testing services, virtual test and development services, product regulatory support services, color, materials, finishes and graphics services, engineering paint implementation services, technical publication services, laptop support, application support and maintenance services, service desk support services, warehousing support services, product development services, safety investigation services, and marketing vehicle and fleet center services as further set forth in this Agreement, and HD wishes to provide such services to LiveWire, each on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
Section 1.1 Definitions. As used in this Agreement, capitalized terms shall have the meaning set forth in this Section 1.1 or elsewhere in the body of this Agreement. To the extent any capitalized terms are not defined herein, they shall have the meanings set forth in the Separation Agreement.
“Affiliate” means any entity that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such legal entity. For the purpose of this definition, “control” (including with correlative meanings, “controlled by” and “under common control with”), when used with respect to any legal entity, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such legal entity, whether through the ownership of voting securities or other interests, by contract, agreement, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment, undertaking or otherwise. It is expressly agreed that for purposes of this Agreement, from and after the Separation Time, (a) no member of the HD Group shall be deemed to be an Affiliate of any member of the LiveWire Group, (b) no member of the LiveWire Group shall be deemed to be an Affiliate of any member of the HD Group and (c) no joint venture formed after the Separation Time solely between one or more members of the HD Group, on the one hand, and one or more members of the LiveWire Group, on the other hand, shall be deemed to be an Affiliate of, or owned or controlled by, any member of the HD Group or the LiveWire Group for the purposes of this Agreement.
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“Background IP” means, with respect to a Party, Intellectual Property (a) owned by such Party as of the Effective Date, or (b) that such Party acquires ownership of following the Effective Date and that either (i) is conceived, developed, discovered or authored solely by such Party, or (ii) is acquired by such Party from a third-party, in each case independently of this Agreement.
“Change of Control Event” means (a) the sale of all or substantially all of the assets of LiveWire, or (b) a sale of equity interests, merger, consolidation, recapitalization or reorganization of LiveWire, unless the Control of LiveWire after such sale of equity interests, merger, consolidation, recapitalization or reorganization are beneficially owned, directly or indirectly, by the persons who beneficially owned LiveWire’s Control prior to such transaction.
“Confidential Information” means (a) non-public information and material of a Party or its Affiliates (and of companies with which such Party has entered into confidentiality agreements) that the other Party obtains knowledge of or access to in connection with this Agreement; (b) non-public Intellectual Property of a Party; and (c) business and financial information of a Party, including but not limited to pricing, business plans, forecasts, revenues, expenses, earnings projections, sales data and any and all other non-public financial information; provided, however, “Confidential Information” does not include information that: (i) is or becomes public knowledge without any action by, or involvement of, the a Party or its Affiliates or contractors; (ii) is independently developed by a Party without reference or access to the Confidential Information of the other Party and is so documented; or (iii) is already in the Recipient’s possession on a non-confidential basis at the time of disclosure thereof; provided that the exceptions set forth in clauses (ii) and (iii) above shall not apply with respect to Confidential Information of LiveWire, to the extent the applicability of either exception is due to HD owning and or operating the LiveWire Business prior to the Separation Time.
“Control” means ownership of fifty percent (50%) or more of the share capital or voting stock of a company, enterprise or other legal entity or the power to appoint the majority of board members, the general manager, factory chief or other principal person in charge of a company, enterprise or other legal entity, or the power to direct otherwise the management or policies of a company, enterprise or other legal entity.
“Deliverables” means the items, including without limitation any and all finished or draft documents, works in progress, reports, analyses, test results, files, process maps, field data, notes, plans, metrics, designs, drawings, specifications, commercial goods or equipment, computer data and computer programming (including all source code), any other data, inventions, discoveries, improvements, customizations, configurations, interfaces, enhancements, modifications, patentable subject matter, writings, works of authorship, copyrightable subject matter, ideas, concepts, information, techniques, know-how and show-how, whether or not patentable, copyrightable or otherwise legally protectable, specified in a Statement of Work as required to result from the applicable Service, together with all Intellectual Property rights therein.
“HD Personnel” means all employees and third party contractors engaged by HD to provide the Services from time to time.
“Improvements” means all modifications, enhancements, derivative works and improvements of Intellectual Property.
“Intellectual Property” means all intellectual property rights in any and all jurisdictions throughout the world, including without limitation domestic and foreign patents, copyrights, mask works, designs, trade secrets, and any other intellectual property rights in technologies, software, know-how, inventions, data, methods, processes and other confidential or proprietary information.
“Product Plan” means a written plan setting forth the scheduled, planned and evaluated projects for LiveWire products and the specific timelines for segments of each such project, as may be periodically updated by LiveWire and reviewed by HD in accordance with each Statement of Work.
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“Specifications” means any functional, technical and/or design specifications for the Deliverables or Services as set forth in, or provided by LiveWire to HD in writing pursuant to the terms of, the applicable Statement of Work.
“Tax Matters Agreement” means that certain Tax Matters Agreement to be entered into by and among HD and LiveWire Group, Inc. (formerly known as LW EV Holdings, Inc.) and any other parties thereto (as amended, modified or restated from time to time).
Section 1.2 Interpretation. The headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. Where a reference in this Agreement is made to a Section or Exhibit, such reference shall be to a Section of or Exhibit to this Agreement unless otherwise indicated. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” For purposes of this Agreement, whenever the context requires the singular number shall include the plural, and vice versa. All references in this Agreement to “$” are intended to refer to United States dollars. Any reference to a particular law means such law as amended, modified or supplemented (including all rules and regulations promulgated thereunder) and, unless otherwise provided, as in effect from time to time.
ARTICLE II
SERVICES
Section 2.1 Services. Subject to the terms of this Agreement, HD shall provide to LiveWire (a) the system component and full vehicle testing services as further described and under the terms and conditions set forth on Exhibit A attached hereto (“Testing Services”), (b) the virtual testing and development services as further described and under the terms and conditions set forth on Exhibit B attached hereto (“Virtual Testing Services”), (c) the product regulatory support services as further described and under the terms and conditions set forth on Exhibit C attached hereto (“Product Regulatory Support Services”), (d) the color materials, finishes and graphics services as further described and under the terms and conditions set forth on Exhibit D attached hereto (“CMF&G Services”), (e) the engineering paint implementation services as further described under the terms and conditions set forth on Exhibit E attached hereto (“Engineering Paint Implementation Services”), (f) the technical publication services as further described under the terms and conditions set forth on Exhibit F attached hereto (“Technical Publication Services”), (g) the laptop support, application support and maintenance services as further described under the terms and conditions set forth on Exhibit G attached hereto (“Laptop Support, Application Support and Maintenance Services”), (h) the service desk support services as further described under the terms and conditions set forth on Exhibit H attached hereto (“Service Desk Support Services”), (i) the warehousing support services as further described and under the terms and conditions set forth on Exhibit I attached hereto (“Warehousing Support Services”), (j) the product development services as further described and under the terms and conditions set forth on Exhibit J attached hereto (“Product Development Services”), (k) the safety investigation services as further described under the terms and conditions set forth on Exhibit K attached hereto (“Safety Investigation Services”), and (l) the marketing vehicle and fleet center services as further described under the terms and conditions set forth on Exhibit L attached hereto (“Marketing Vehicle and Fleet Center Services”); together with the Testing Services, Virtual Testing Services, Product Regulatory Support Services, CMF&G Services, Technical Publication Services, Laptop Support, Application Support and Maintenance Services, Service Desk Support Services, Warehousing Support Services, Product Development Services, and Safety Investigation Services, collectively, the “Services”; and each of Exhibits A to L, a “Statement of Work”). The Parties may revise a Statement of Work upon mutual written agreement, by executing an amendment to this Agreement in accordance with Section 9.3, adopting such revised Statement of Work. The Parties may from time to time agree in writing on additional Statements of Work for additional Services, which will be subject to the terms and conditions of this Agreement and will be considered part of this Agreement. It is expressly agreed and understood that the Services provided hereunder are provided on a non-exclusive basis, and nothing in this Agreement is intended to restrict HD’s right to provide to any other Person any services that are the same or similar to any Services. HD will perform the Services (a) in a professional and workmanlike manner and in accordance with good industry practice and applicable law, and (b) with at least the same (and no less than reasonable) standard of service (including with respect to quality, skill and diligence) that HD provides to its own other businesses.
Section 2.2 Requests; Performance of Services. LiveWire shall submit requests for the Services in accordance with the request procedures as set forth in the applicable Statement of Work. HD will use commercially reasonable efforts to complete the Services in accordance with the applicable Specifications and deliver any applicable Deliverables in accordance with and subject to the terms and conditions of this Agreement and the applicable Statement of Work. HD may, with the prior consent of LiveWire (not to be unreasonably withheld, conditioned or delayed), engage any Person that is not an employee of HD to perform any Services or create any Deliverables (or any portion thereof) hereunder, except that LiveWire’s consent shall not be needed for HD to subcontract to (a) HD’s Affiliates, (b) subcontractors that HD used prior to the Effective Date or (c) subcontractors that HD engages during the Term to perform similar work for HD’s own businesses; provided,
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that HD agrees that it shall remain responsible for the provision of the Services performed and Deliverables created by such Person in accordance with this Agreement and shall be responsible for such Persons’ compliance with this Agreement with respect thereto.
Section 2.3 Acceptance. Except as otherwise set forth in an applicable Statement of Work, the acceptance procedures applicable to this Agreement shall be as follows:
(a) HD will notify LiveWire in writing that a Deliverable or Service is complete and meets the applicable Specifications.
(b) LiveWire will have thirty (30) calendar days following the delivery of such written notice to test the Deliverable or Service to determine whether such Deliverable or Service meets the terms of this Agreement, the Specifications, and any other acceptance criteria set forth in the applicable Statement of Work or agreed upon by the Parties thereunder (“Acceptance Criteria”). If LiveWire determines in good faith that a Deliverable or Service does not meet the Acceptance Criteria to LiveWire’s reasonable satisfaction, LiveWire will so notify HD in writing and will describe, in reasonable detail, its reasons for such determination (“Deficiency Notice”). Acceptance shall be deemed to have occurred if LiveWire fails to deliver any Deficiency Notice to HD within such 30-day period. HD will use commercially reasonable efforts to make such necessary corrections and modifications regarding the non-conforming Deliverable or Service and to cause the Deliverable or Service to successfully meet the Acceptance Criteria, within a reasonable period not to exceed fifteen (15) business days from the date of the Deficiency Notice, and upon HD’s correction of any nonconformities, HD will resubmit the modified Deliverable or Service to LiveWire for further testing and evaluation. Such process shall repeat three times or until the Deliverable or Service has been accepted by LiveWire, whichever occurs first, and in the event the Deliverable or Service is not accepted by LiveWire following three attempts by HD, LiveWire shall, as its sole and exclusive remedy for any failure by HD to meet the Acceptance Criteria, have the right to elect to receive a refund of the amounts paid for such Deliverable or Service or to permit HD one or more additional opportunities to correct the Deliverable or Service, in each case in LiveWire’s sole discretion. If the Parties are unable to agree on whether a Deliverable meets the Acceptance Criteria, either Party may escalate the matter to the Joint Steering Committee for resolution. Each Party shall bear its own costs in connection with any acceptance tests.
Section 2.4 Cooperation. LiveWire will (a) upon reasonable notice, provide access to LiveWire’s materials, facilities, personnel, equipment, approvals, information and instructions as reasonably requested by HD to enable HD to perform the Services and deliver the Deliverables; and (b) take all steps reasonably necessary, including obtaining any required licenses or consents, to prevent LiveWire-caused delays in HD’s provision of the Services. All information provided by LiveWire to HD hereunder shall be true, complete and accurate in all material respects, and shall not omit any information material to the operations of LiveWire that is relevant to the Services to be performed or Deliverables to be created by HD. HD shall be entitled to rely, without independent verification, on the accuracy and completeness of any such information as well as on all decisions and approvals by LiveWire hereunder without liability to LiveWire or any third party; provided that if HD believes any such information to be inaccurate or incomplete, it shall promptly provide notice to LiveWire of the same.
Section 2.5 Joint Steering Committee.
(a) Promptly following the Effective Date, the Parties shall form a committee which shall be composed of senior executives and/or designees from each of HD and LiveWire for the management and administration of this Agreement (the “Joint Steering Committee”). Each Party shall have sole discretion in selecting its representatives for the Joint Steering Committee, and may replace any of such representatives from time to time upon written notice to the other Party.
(b) The Joint Steering Committee shall meet (by phone, video or in person) promptly following the Effective Date, and at the beginning of each calendar year thereafter, to discuss and formulate a forecast and plan
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for LiveWire’s anticipated needs for Services in the then-current year (“Annual Plan”). It shall be the responsibility of the Joint Steering Committee to act as liaisons with the other Party and to coordinate the activities of the Parties under this Agreement by, among other things overseeing the progress of the Services and facilitating updates to the then-current Annual Plan. In addition to such annual meeting, the Joint Steering Committee shall meet as frequently as the Parties mutually agree is necessary or beneficial for the administration of this Agreement.
(c) In the event that a dispute arises in connection with this Agreement, either Party may, by providing written notice to the other Party, request a special session of the Joint Steering Committee or a subset thereof, as necessary to address said dispute. In the event that any dispute between the Parties in connection with this Agreement is not resolved by the Joint Steering Committee within ten (10) business days after receipt of notice of such dispute, the dispute shall be referred to one (1) member of senior management of LiveWire, on the one hand, and one (1) member of senior management of HD, on the other hand. The executives will meet (by phone, video or in person) during the next ten (10) business days and attempt to resolve such dispute in good faith, and if the executives are unable to resolve the dispute within such ten (10) business day period, either Party may submit the matter to a court of competent jurisdiction in accordance with Section 9.7.
ARTICLE III
COMPENSATION
Section 3.1 Fees, Invoices and Payment. In consideration of the Services performed hereunder, LiveWire will pay to HD the fees as specified in each applicable Statement of Work (“Fees”), in accordance with this Article III. Except as otherwise set forth in a Statement of Work, the Services shall be provided on a time and materials basis, and shall be calculated in accordance with HD’s daily or hourly fee rates for the HD Personnel set forth in the applicable Statement of Work; provided that such daily or hourly fees rates for the HD Personnel shall be set at HD’s actual cost plus a markup of eight percent (8%) (for the avoidance of doubt, HD’s actual cost for the HD Personnel shall include any taxes and direct expenses payable by HD with respect to HD’s Personnel’s salaries, including unemployment insurance, workers’ compensation, employee benefits and other employment-related costs). In addition, LiveWire shall reimburse HD for all out-of-pocket expenses incurred by HD in connection with the provision of Services, provided that LiveWire shall have the right to approve in advance any such expenses that exceed $1,000 under a particular Statement of Work. Unless otherwise specified in the applicable Statement of Work, HD will invoice LiveWire monthly in arrears for each of the Services and LiveWire will pay all amounts that are not disputed in good faith under each invoice within thirty (30) days of receipt; provided that, notwithstanding anything to the contrary in this Agreement, disputed amounts withheld by LiveWire shall not at any time exceed one million dollars ($1,000,000) in the aggregate. All payments will be made in U.S. dollars, unless otherwise stated in the applicable Statement of Work.
Section 3.2 Late Fees. Without limiting any of HD’s remedies for non-payment or late payment of invoices, past due amounts shall accrue interest at a rate per annum equal to the Prime Rate, from time to time in effect, plus three percent (3%), calculated for the actual number of days elapsed, accrued from the date on which such payment was due up to the date of the actual receipt of payment, or the maximum allowed by law, if lower. LiveWire shall also reimburse HD for all costs in collecting any late payments, including, without limitation, attorney’s fees. In addition to all other remedies available under this Agreement or at law (which HD does not waive by the exercise of any rights hereunder), HD will be entitled to suspend the provision of any Services if LiveWire fails to pay any amounts (other than, subject to Section 3.1, amounts disputed in good faith) when due hereunder and such failure continues for fifteen (15) days following LiveWire’s receipt of written notice thereof.
Section 3.3 Taxes. LiveWire shall be responsible for all sales, use and goods and services, value-added, and any other similar Taxes, duties and charges (“Indirect Taxes”) imposed by any federal, state or local government entity on any amounts payable by LiveWire hereunder, provided that, subject to the Tax Matters Agreement, HD
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will be solely responsible for the payment of its income taxes, franchise or similar taxes, and except as provided in Section 3.1, its employee’s salaries, unemployment insurance, workers’ compensation, employee benefits and other employment-related costs, charges and deductions. Each invoice provided under Section 3.1 shall properly reflect all Indirect Taxes payable by LiveWire, and if applicable, such information reasonably required for LiveWire to obtain a refund, credit or offset of such Indirect Taxes in accordance with applicable Law. Livewire and HD shall make reasonable efforts to cooperate to the extent necessary to obtain any exemption relating to, or reduced rate of, any such Indirect Tax, including by providing exemption certificates or other information reasonable required to establish an exemption. The parties will reasonably cooperate to minimize any deduction or withholding for or on account of tax, including making applicable double taxation treaty clearance applications. If any taxes are required to be deducted or withheld from any payments made by one Party (the “Payor”) to another Party hereunder, then such Payor shall withhold or deduct the required amount and promptly pay such taxes to the applicable tax authority and any such amounts shall be deemed to have been paid hereunder.
ARTICLE IV
INTELLECTUAL PROPERTY
Section 4.1 Ownership.
(a) Each Party shall retain all right, title and interest in and to its Background IP, including all Improvements thereof.
(b) Unless otherwise stated in the applicable Statement of Work, subject to LiveWire’s payment of Fees for Services rendered, as between the Parties, LiveWire is and will be the sole and exclusive owner of all Intellectual Property rights in and to the Deliverables created for LiveWire based on the Specifications under the applicable Statement of Work, but excluding, for the avoidance of doubt, any Background IP of HD (“LiveWire IP”). In furtherance of the foregoing, the Parties agree that to the extent any LiveWire IP would otherwise vest in HD or any of its Affiliates, HD hereby irrevocably assigns to LiveWire all right, title and interest in and to such LiveWire IP. HD will not assert, and to the extent permitted by applicable Law, otherwise waives, any moral rights in LiveWire IP. HD will, and will cause all of its Affiliates to, take all appropriate action and execute and deliver all documents necessary or reasonably requested by LiveWire to effectuate any of the foregoing provisions of this Section 4.1(b), or otherwise as may be necessary for LiveWire to prosecute, register, perfect, evidence or records its rights in and to any LiveWire IP, at LiveWire’s reasonable expense.
(c) Unless otherwise stated in the applicable Statement of Work, as between the Parties, HD is and will be the sole and exclusive owner of all Intellectual Property conceived, made, developed or prepared by or on behalf of HD during its performance of the Services except for LiveWire IP (such Intellectual Property, “HD IP”). In furtherance of the foregoing, the Parties agree that to the extent any HD IP would otherwise vest in LiveWire or any of its Affiliates, LiveWire hereby irrevocably assigns to HD all right, title and interest in and to such HD IP. LiveWire will not assert, and to the extent permitted by applicable Law, otherwise waives, any moral rights in HD IP. LiveWire will, and will cause all of its Affiliates to, take all appropriate action and execute and deliver all documents necessary or reasonably requested by HD to effectuate any of the foregoing provisions of this Section 4.1(c), or otherwise as may be necessary for HD to prosecute, register, perfect, evidence or record its rights in and to any HD IP, at HD’s reasonable expense.
Section 4.2 Licenses.
(a) If HD incorporates or includes any of HD’s Background IP or HD IP (including any Improvement to HD’s Background IP) in a Deliverable, HD hereby grants and agrees to grant to LiveWire a worldwide, royalty-free, fully paid-up, non-exclusive, non-sublicensable (except to third parties providing services to
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LiveWire), non-transferable (except in connection with a permitted assignment pursuant to Section 9.1), perpetual license to use and exploit such Background IP or HD IP, as applicable, solely to the extent necessary to use or exploit LiveWire’s rights in such Deliverable and for no other purpose.
(b) LiveWire hereby grants and agrees to grant HD a worldwide, royalty-free, fully paid-up, non-exclusive, non-sublicensable (except as set forth below), non-transferable (except in connection with a permitted assignment pursuant to Section 9.1) license to use and exploit LiveWire’s Background IP solely to the extent necessary or useful for HD’s performance of the Services. The foregoing license shall be sublicensable to third parties solely in connection with the provision of Services to LiveWire, and not, for the avoidance of doubt, for use by any third party for such third party’s own brands or benefit.
ARTICLE V
CONFIDENTIALITY
Section 5.1 Obligation of Confidentiality. Each Party wishes to ensure that the Confidential Information provided to Recipient under this Agreement is retained in strict confidence by Recipient. For purposes of this Agreement, “Disclosing Party” refers to a Party and/or one or more of its Affiliates whenever it is disclosing information to another Party and/or one or more of its Affiliates, and “Recipient” refers to a Party and/or one or more of its Affiliates whenever it is receiving information from another Party and/or one or more of its Affiliates. Recipient agrees to keep all Confidential Information of Disclosing Party obtained hereunder (whether written or oral, and whether or not explicitly designated as confidential) as well as all knowledge derived therefrom (including all notes, memoranda, summaries, reports, analyses, compilations, studies or other similar materials) in strict confidence and further agrees not to disclose, directly or indirectly to any third party, nor to use, copy, evaluate or incorporate, within or outside of its business, any of such Confidential Information for any purpose other than for the purposes of provision of the Services. Recipient shall allow access to and disclose such Confidential Information only to those of its employees, directors, and officers who need to have access to such Confidential Information for the purposes of provision or receipt of the Services. As a condition of such disclosure, Recipient will inform such persons of the confidential nature of such Confidential Information and will be responsible for any failure by such persons to comply with the obligations of this Agreement. Without in any way limiting or abridging Recipient’s obligation hereunder to keep all Confidential Information of Disclosing Party in strict confidence, Recipient agrees to protect such Confidential Information by using the same degree of care, but no less than a reasonable degree of care, to prevent the unauthorized use, dissemination or publication of such Confidential Information as Recipient uses to protect its own confidential information of a like nature.
Section 5.2 Compelled Disclosure. If Recipient is required by legal or administrative authority to disclose any Confidential Information of Disclosing Party, Recipient will notify Disclosing Party in writing of such requirement as soon as practicable so that Disclosing Party may seek an appropriate protective order or other relief or waive compliance with the provisions of this Agreement, and Recipient will cooperate with, and take reasonable actions requested by, Disclosing Party in seeking such protective order or other relief. If, in the absence of a protective order or other relief or the receipt of a waiver from Disclosing Party, Recipient is nevertheless legally required to disclose any Confidential Information of Disclosing Party or else stand liable for contempt or other legal penalty, Recipient may disclose Confidential Information of Disclosing Party in accordance with such requirement, provided that Recipient (a) may disclose only that portion of such Confidential Information that is required by law to be disclosed, (b) must use its reasonable efforts to ensure that such Confidential Information so disclosed is treated confidentially, and (c) must notify Disclosing Party in writing as soon as practicable of the items of such Confidential Information so disclosed.
Section 5.3 Property of Disclosing Party. Confidential Information of Disclosing Party provided or disclosed hereunder shall remain the exclusive property of Disclosing Party, and providing or disclosing such Confidential
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Information does not create a right, license, interest or privilege of any kind or nature whatsoever with respect to any such Confidential Information.
Section 5.4 No Representations. Disclosure of Confidential Information is made without any express or implied representation or warranty as to the accuracy or the completeness thereof. Disclosing Party explicitly disclaims any liability relating to its Confidential Information or arising from its use, including as may arise from errors or omissions therefrom. However, Disclosing Party does represent and warrant that it has the right to disclose its Confidential Information hereunder, and that such disclosure will not violate any agreement or other obligation by which Disclosing Party is bound.
Section 5.5 Term of Obligation. The obligations of this Article V shall come into force on the Effective Date and remain in force until the expiration or termination of this Agreement and for a period of five (5) years thereafter (“Confidentiality Term”); provided, however, that for all Confidential Information disclosed prior to the expiration of the Confidentiality Term, the obligations of the Recipient pursuant to this Agreement shall remain valid until either (a) the Confidentiality Term elapses, or (b) a period of five (5) years from the date of disclosure elapses, whichever is later. Notwithstanding the foregoing, any Confidential Information constituting a trade secret shall be maintained as such until such information no longer constitutes a trade secret under applicable law.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES; DISCLAIMER
Section 6.1 Mutual Warranties. Each Party represents and warrants to the other Party that: (a) it is duly organized, validly existing and in good standing under the laws of the jurisdictions in which it is organized; (b) it has the requisite power and authority and the legal right to enter into this Agreement and perform its obligations under this Agreement in accordance with its terms; (c) this Agreement constitutes a legal, valid and binding agreement of such Party, enforceable against such Party in accordance with its terms; (d) it will comply with all applicable laws and regulations in the exercise and performance of its rights and obligations under this Agreement; and (e) its execution, delivery and performance of this Agreement throughout its duration do not conflict with or violate any requirement of applicable laws regulations or order of governmental bodies, and do not conflict with, or constitute a default under any contractual obligation of such Party.
Section 6.2 DISCLAIMER. EXCEPT AS EXPRESSLY PROVIDED HEREIN, NEITHER PARTY MAKES, AND, TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW, SPECIFICALLY DISCLAIMS, ANY REPRESENTATION OR WARRANTY OF ANY KIND, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF CONDITION OF TITLE, MERCHANTABILITY, VALIDITY, NON-INFRINGEMENT OF THIRD-PARTY RIGHTS, OR FITNESS FOR A PARTICULAR PURPOSE. WITHOUT LIMITING THE FOREGOING, HD MAKES NO REPRESENTATION OR WARRANTY THAT THE SERVICES WILL RESULT IN A PROFIT TO LIVEWIRE’S BUSINESS.
ARTICLE VII
INDEMNIFICATION AND LIMITATIONS OF LIABILITY
Section 7.1 General Indemnification. Each Party shall indemnify, defend and hold harmless the other Party, its Affiliates and its and their respective officers, directors, employees and representatives (“Indemnitees”) from and against any and all liabilities, losses, costs, damages, fines, assessments, penalties and expenses (including reasonable attorneys’ fees and expenses) incurred by such Indemnitees in connection with any third-party claim
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(“Claims”) arising from or relating to: (a) the indemnifying Party’s breach of this Agreement; (b) the death or bodily injury of any agent, employee, customer, business invitee or other person caused by the negligent or tortious conduct of the indemnifying Party; (c) the damage, loss or destruction of any real or tangible personal property for which the indemnifying Party is legally liable or responsible; or (d) the indemnifying Party’s violation of applicable law in connection with this Agreement.
Section 7.2 Intellectual Property Indemnification. HD will indemnify, defend and hold harmless LiveWire and its Indemnitees from any and all Claims alleging that the Indemnitee’s use of the HD’s Background IP or HD IP in accordance with this Agreement violates any copyright, trade secret or U.S. patent of any third party (a “HD IP Claim”), and LiveWire will indemnify, defend and hold harmless HD and its Indemnitees from any and all Claims alleging that the Indemnitee’s use of any Specifications, designs, technology or other information or materials provided by LiveWire to HD in connection with this Agreement infringes, misappropriates or violates any copyright, trade secret or U.S. patent of any third party. Notwithstanding the foregoing, HD will not have any indemnification obligation if any HD IP Claim is based on, and would not exist but for the Indemnitee’s (a) combination, operation or use of a Deliverable with products, services, information, materials, technologies, business methods or processes not furnished by HD, (b) modification to the Deliverable (other than by HD), or (c) use or exploitation of a Deliverable in violation of this Agreement.
Section 7.3 Intellectual Property Remedy. In response to any HD IP Claim (and without limiting any other rights and remedies of LiveWire under Section 7.2), HD may, at its option either: (a) procure the right for LiveWire to continue using the Deliverables; or (b) require LiveWire to cease use of any allegedly infringing Deliverables, provided that HD either (i) makes such alterations, modifications or adjustments to the Deliverables so that they become non-infringing without incurring a material diminution in function or value; (ii) replaces the Deliverables at no cost to LiveWire with non-infringing substitutes provided that the substitutes do not entail a material diminution in function or value; or (iii) issues a refund of the Fees paid by LiveWire for the infringing Deliverables.
Section 7.4 Indemnity Procedures. If any claim or action is asserted that would entitle an Indemnitee to indemnification pursuant to Section 7.1 and Section 7.2 above (a “Proceeding”), the Party seeking indemnification will give written notice thereof to the Party from which indemnification is sought promptly; provided, however, that the failure of the indemnified Party to give timely notice hereunder will not affect rights to indemnification hereunder, except to the extent that the indemnifying Party demonstrates actual damage caused by such failure. The indemnifying Party may elect to direct the defense or settlement of any Proceeding by giving written notice to the indemnified Party, which election will be effective immediately upon the indemnified Party’s receipt of such written notice. The indemnifying Party will have the right to employ counsel reasonably acceptable to the indemnified Party to defend any Proceeding, or to compromise, settle or otherwise dispose of the same, if the indemnifying Party deems it advisable to do so, all at the expense of the indemnifying Party; provided that the indemnifying Party will not settle, or consent to any entry of judgment in, any Proceeding without obtaining either: (a) an unconditional release of the indemnified Party (and their Affiliates and each of their respective officers, directors, employees and agents) from all liability with respect to all claims underlying such Proceeding; or (b) the prior written consent of the indemnified Party. The indemnified Party will not settle or consent to any entry of judgment, in any Proceeding without obtaining the prior written consent of the indemnifying Party (such consent not to be unreasonably withheld, delayed or conditioned). The Parties will fully cooperate with each other in any Proceeding and will make available to each other any books or records useful for the defense of any such Proceeding.
Section 7.6 Limitation of Liability. WITHOUT LIMITING THE PARTIES’ INDEMNIFICATION OBLIGATIONS UNDER THE SEPARATION AGREEMENT OR THE BUSINESS COMBINATION AGREEMENT, AND NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW, EXCEPT FOR THE PARTIES’ INDEMNIFICATION OBLIGATIONS UNDER THIS AGREEMENT AND LIABILITY ARISING FROM A PARTY’S FRAUD, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, IN NO
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EVENT SHALL EITHER PARTY OR ITS AFFILIATES BE LIABLE FOR, OR BEAR ANY OBLIGATION IN RESPECT OF, ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES OF ANY KIND OR CHARACTER, OR ANY DAMAGES RELATING TO OR ARISING OUT OF LOST PROFITS, LOSS OF DATA, LOSS IN VALUE, LOSS OF GOODWILL, LOSS OF OPPORTUNITY, HOWEVER CAUSED AND UNDER ANY THEORY OF LIABILITY, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, WHETHER OR NOT THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. EXCEPT FOR LIABILITY ARISING FROM A PARTY’S FRAUD, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, IN NO EVENT WILL EITHER PARTY’S AGGREGATE LIABILITY ARISING OUT OF OR RELATING TO ANY STATEMENT OF WORK EXCEED THE TOTAL AMOUNT OF FEES PAID OR PAYABLE TO HD BY LIVEWIRE FOR THE SERVICES UNDER SUCH STATEMENT OF WORK DURING THE TWELVE (12) MONTH PERIOD PRECEDING THE CLAIM GIVING RISE TO LIABILITY.
ARTICLE VIII
TERM AND TERMINATION
Section 8.1 Term. This Agreement shall be effective on the Effective Date and shall remain in force for seven (7) years after the Effective Date (the “Initial Term”), unless terminated earlier as set forth below. This Agreement will expire at the end of the Initial Term, unless the Parties each in their respective discretion mutually agree in writing to extend this Agreement for one or more renewal term(s) of mutually agreed duration (each, a “Renewal Term”). If the Parties agree to one or more Renewal Terms, this Agreement will expire at the end of the last Renewal Term to which the Parties have agreed in writing unless terminated earlier as set forth below. The Initial Term, together with any and all Renewal Terms, is referred to herein as the “Term”.
Section 8.2 Service Terms; Extensions. Unless otherwise specified in the applicable Statement of Work, the term for each Service shall commence on the effective date of such Statement of Work and expire at the end of the Initial Term, or at the end of the applicable Renewal Term, if such Statement of Work is entered into during a Renewal Term (each a “Service Term”). The Parties may mutually agree in writing to extend any Service Term; provided that no Service Term shall exceed the Term.
Section 8.3 Termination for Cause.
(a) Either Party may terminate this Agreement or any applicable Statement of Work, by written notice, effective immediately, if the other Party has committed a material breach of this Agreement and fails to cure such breach within thirty (30) days of its receipt of written notice of such breach.
(b) HD may terminate this Agreement or any applicable Statement of Work, by written notice, effective immediately, (i) if LiveWire fails to make any payment due hereunder that is not disputed in good faith and does not cure such failure within fifteen (15) days of its receipt of written notice of such nonpayment; or (ii) if LiveWire undergoes a Change of Control Event.
(c) HD may terminate this Agreement or any Statement of Work upon one hundred eighty (180) days’ prior written notice to LiveWire, such notice to be provided promptly following the end of any calendar year (but no later than the last day of February) in the event that LiveWire did not engage HD to manufacture at least forty percent (40%) of LiveWire’s production during such calendar year.
Section 8.4 Termination for Convenience. LiveWire may terminate this Agreement or any applicable Statement of Work for convenience upon ninety (90) days’ prior written notice to HD; provided that all amounts then owed are paid as of the termination date, and provided that LiveWire reimburses HD, as of the termination date, any other costs or expenses incurred by HD and for which HD has not otherwise been remunerated.
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Section 8.5 Effect of Termination. Expiration or termination of this Agreement shall not relieve the Parties of any obligations accruing prior to the effective date of termination. Upon termination or expiration of this Agreement for any reason, each Party shall return to the other Party or provide such other Party with written certification of the destruction of, at such other Party’s sole option, all Confidential Information of such other Party (including all copies thereof in any type of media) that are in the Recipient’s possession or control (other than Confidential Information that HD is required to hold for regulatory or other legal compliance), and LiveWire will be responsible for paying HD for all Services provided and expenses incurred up to the date of such termination in accordance with the terms of each applicable Statement of Work pursuant to Article III.
Section 8.6 Survival. The provisions of Article I (Definitions; Interpretation), Article IV (Intellectual Property), Article V (Confidential Information), Article VII (Indemnification and Limitation of Liability), Section 8.5 (Effect of Termination), Section 8.6 (Survival) and Article IX (General Provisions) shall survive the termination or expiration of this Agreement.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Assignment. This Agreement and the rights and obligations hereunder may not be assigned or transferred by either Party, in whole or in part, without the express written consent of the other Party, which shall not unreasonably be withheld, conditioned or delayed. Notwithstanding the foregoing, either Party may (i) assign this Agreement, in whole or in part, to any of its Affiliates, or (ii) assign or otherwise transfer this Agreement, in whole but not in part, to any Person in connection with a transfer of all or substantially all of the business of such Party (whether by merger, consolidation, sale of assets, sale or exchange of stock, by operation of law or otherwise and whether in a single or multiple transactions); provided that, in each of the above cases, such transferee, assignee or successor agrees in writing to be bound by the applicable terms of this Agreement. Further, each Party may collaterally assign its rights under this Agreement to its lenders or other financing sources, provided that, upon foreclosure, any assignee or transferee agrees to be bound by the terms of this Agreement. Any attempted or purported assignment or transfer in violation of the preceding shall be null and void and of no effect whatsoever. Subject to the foregoing, this Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and permitted assigns.
Section 9.2 Entire Agreement; Conflicts. This Agreement, including the Statements of Work, represents the entire agreement and supersedes all prior negotiations, understandings, representations, warranties or agreements either written or oral between the Parties with respect to the subject matter hereof. In the event of any conflict between the terms and conditions contained in this Agreement and the terms and conditions in any Statement of Work, the terms and conditions contained in the Statement of Work will prevail. From and after the effective date of the Tax Matters Agreement, in the event of any conflict between the provisions of this Agreement and the Tax Matters Agreement, the provisions of the Tax Matters Agreement shall control.
Section 9.3 Modification. Subject to the provisions of applicable law, and except as otherwise provided in this Agreement, no amendment or modification of this Agreement shall be binding upon the Parties unless made in writing and duly executed by the authorized representatives of the Parties.
Section 9.4 Severability, Waiver. If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall remain in full force and effect and the provision found invalid or unenforceable shall be replaced by a valid and enforceable provision corresponding as closely as possible to the invalid or unenforceable provision in its economic effect. No waiver of any provisions of this Agreement will be valid unless the same is in writing and signed by the Party against whom such waiver is sought to be enforced. A waiver or consent given by either Party on any one occasion is effective only in that instance and will not be construed as a bar to or waiver of any right on any other occasion.
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Section 9.5 Notices. All notices and other communications between the Parties shall be in writing and shall be deemed to have been duly given (a) when delivered in person, (b) when delivered by FedEx or other nationally recognized overnight delivery service; or (c) when delivered by email (in each case in this clause (c), solely if receipt is confirmed), addressed as follows:
if to HD:
c/o Harley-Davidson
3700 West Juneau Avenue
Milwaukee, WI 53208
Attention: Paul Krause
Email: paul.krause@harley-davidson.com;
H-DGeneralCounsel@harley-davidson.com
with copies (which shall not constitute notice) to:
Latham & Watkins LLP
330 North Wabash Avenue, Suite 2800
Chicago, IL 60611
Attention: Ryan Maierson
Email: ryan.maierson@lw.com
Attention: Jason Morelli
Email: jason.morelli@lw.com
if to LiveWire:
c/o LiveWire
3700 West Juneau Avenue
Milwaukee, WI 53208
Attention: Paul Krause
Email: paul.krause@harley-davidson.com;
H-DGeneralCounsel@harley-davidson.com
with copies (which shall not constitute notice) to:
Latham & Watkins LLP
330 North Wabash Avenue, Suite 2800
Chicago, IL 60611
Attention: Ryan Maierson
Email: ryan.maierson@lw.com
Attention: Jason Morelli
Email: jason.morelli@lw.com
Section 9.6 Governing Law. This Agreement (and any claims or disputes arising out of or related hereto or to the transactions contemplated hereby or to the inducement of either Party to enter herein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the Laws of the State of Delaware, irrespective of the choice of laws principles of the State of Delaware, including all matters of validity, construction, effect, enforceability, performance and remedies.
Section 9.7 Consent to Jurisdiction. The state and federal courts located within the State of Delaware (the “Chosen Courts”) shall have exclusive jurisdiction over any and all disputes between the parties hereto, whether in law or in equity, arising out of or relating to this Agreement and the agreements, instruments and documents contemplated hereby and the parties hereto consent to and agree to subject to the exclusive jurisdiction of such Chosen Courts.
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Section 9.8 Waiver of Jury Trial. THE PARTIES HEREBY WAIVE TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, AND SHALL NOT ASSERT IN ANY SUCH DISPUTE, ANY CLAIM THAT: (A) SUCH PARTY IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS; (B) SUCH PARTY AND SUCH PARTY’S PROPERTY IS IMMUNE FROM ANY LEGAL PROCESS ISSUED BY SUCH COURTS; OR (C) ANY ACTION OR OTHER PROCEEDING COMMENCED IN SUCH COURTS IS BROUGHT IN AN INCONVENIENT FORUM. THE MAILING OF PROCESS OF OTHER PAPERS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED IN Section 9.5 (OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW) SHALL BE VALID AND SUFFICIENT SERVICE THEREOF AND HEREBY WAIVE ANY OBJECTIONS TO SERVICE ACCOMPLISHED IN THE MANNER PROVIDED HEREIN. THE PARTIES HEREBY IRREVOCABLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 9.9 Counterparts. This Agreement may be executed in one or more counterparts, and by the Parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. The exchange of a fully executed Agreement (in counterparts or otherwise) by electronic delivery in .pdf format shall be sufficient to bind the Parties to the terms and conditions of this Agreement.
Section 9.10 No Third-Party Beneficiaries. Except as otherwise specifically provided in this Agreement, (a) the provisions of this Agreement are solely for the benefit of the Parties and are not intended to confer upon any person or entity except the Parties any rights or remedies hereunder; and (b) there are no third-party beneficiaries of this Agreement and this Agreement shall not provide any third party with any remedy, claim, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
| Harley-Davidson, Inc. | ||
| By: | /s/ Paul J. Krause | |
| Name: | Paul J. Krause | |
| Title: | Authorized Signatory | |
| LiveWire EV, LLC | ||
| By: | /s/ Amanda Parker | |
| Name: | Amanda Parker | |
| Title: | Chief Legal Officer | |
Exhibit A
Statement of Work: Testing Services
[***]
Exhibit B
Statement of Work: Virtual Testing Services
[***]
Exhibit C
Statement of Work: Product Regulatory Support Services
[***]
Exhibit D
Statement of Work: CMF&G Services
[***]
Exhibit E
Statement of Work: Engineering Paint Implementation Services
[***]
Exhibit F
Statement of Work: Technical Publication Services
[***]
.
Exhibit G
Statement of Work: Laptop Support, Application Support and Maintenance Services
[***]
Exhibit H
Statement of Work: Service Desk Support Services
[***]
Exhibit I
Statement of Work: Warehousing Support Services
[***]
Exhibit J
Statement of Work: Product Development Services
[***]
Exhibit K
Statement of Work: Safety Investigation Services
[***]
Exhibit L
Statement of Work: Marketing Vehicle and Fleet Center Services
[***]
Exhibit 10.10
Execution Version
Certain portions of this Exhibit have been redacted pursuant to Item 601(b)(10) of Regulation S-K and, where applicable, have been marked with “[***]” to indicate where redactions have been made.
INTELLECTUAL PROPERTY LICENSE AGREEMENT
by and between
Harley-Davidson, Inc.
and
LiveWire EV, LLC
Dated September 26, 2022
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This Intellectual Property License Agreement (this “Agreement”) is entered into as of September 26, 2022, by and between Harley-Davidson, Inc., a Wisconsin corporation (“HD”), and LiveWire EV, LLC, a Delaware limited liability company (“LiveWire”). HD and LiveWire are each referred to herein as a “Party” and collectively as the “Parties.” Capitalized terms used but not defined herein shall have the meaning set forth in the Separation Agreement (as defined below).
RECITALS
WHEREAS, HD, acting together with its Subsidiaries, currently conducts the Harley Business and the LiveWire Business;
WHEREAS, the Parties have entered into that certain Separation Agreement dated as of the date hereof (the “Separation Agreement”), pursuant to which the LiveWire Business has been separated from the Harley Business and transferred to LiveWire; and
WHEREAS, in connection with the Separation, HD is willing to grant to LiveWire, and LiveWire is willing to accept, a license to the HD Licensed Intellectual Property (as defined below), and LiveWire is willing to grant to HD, and HD is willing to accept, a license to the LiveWire Licensed Intellectual Property (as defined below), on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, capitalized terms shall have the meaning set forth in this Article I or elsewhere in the body of this Agreement, or if not defined herein, in the Separation Agreement.
“Affiliate” means, when used with respect to a specified Person, a Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such specified Person. For the purpose of this definition, “control” (including with correlative meanings, “controlled by” and “under common control with”), when used with respect to any specified Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other interests, by contract, agreement, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment, undertaking or otherwise. It is expressly agreed that for purposes of this Agreement, from and after the Separation Time, (i) no member of the HD Group shall be deemed to be an Affiliate of any member of the LiveWire Group, (ii) no member of the LiveWire Group shall be deemed to be an Affiliate of any member of the HD Group and (iii) no joint venture formed after the Separation Time solely between one or more members of the HD Group, on the one hand, and one or more members of the LiveWire Group, on the other hand, shall be deemed to be an Affiliate of, or owned or controlled by, any member of the HD Group or the LiveWire Group for the purposes of this Agreement.
“HD Licensed Intellectual Property” means (i) all Intellectual Property owned by HD or its Affiliates and used or held for use in the LiveWire Business as of the Separation Time, (ii) without limiting the foregoing, the Intellectual Property that is owned by HD or its Affiliates and listed on Schedule A attached hereto, together with all foreign counterparts thereof, and (iii) HD Improvements, but excluding, in each case of (i) and (iii), Intellectual Property related to motorcycle riding apparel and related general merchandise and, for the avoidance of doubt, proprietary manufacturing technology.
“HD Products” means all original equipment, parts, accessories, goods and services manufactured, sold or offered for sale by HD or its Subsidiaries.
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“HD Segments” means the Large Cruiser, Touring and Adventure Touring markets, as currently understood within the motorcycle industry.
“Improvements” means all modifications, enhancements, derivative works and improvements of Intellectual Property.
“Intellectual Property” means all intellectual property rights in any and all jurisdictions throughout the world, including all patents, copyrights, mask works, trade secrets, and any other intellectual property rights in know-how, inventions, data, designs, methods, processes and other confidential or proprietary information; but excluding any Trademarks or Software.
“Joint Development Agreement” means that certain Joint Development Agreement dated as of the date hereof, by and between HD and Livewire.
“LiveWire Licensed Intellectual Property” means (i) all Intellectual Property owned by LiveWire or its Affiliates as of the Separation Time, and (ii) LW Improvements.
“LiveWire Products” means all original equipment, parts, accessories, goods and services manufactured, sold or offered for sale by LiveWire or its Subsidiaries within the field of the LiveWire Business.
“Next Generation Vehicle” means a completely new vehicle model or a “redesigned” vehicle model, but not a “carryover” or “model refresh,” as such terms are generally understood in the automotive industry.
“Subsidiary” means, with respect to any Person, any entity, whether incorporated or unincorporated, of which at least a majority of the securities or ownership interests having by their terms voting power to elect a majority of the board of directors or other Persons performing similar functions is directly or indirectly owned or controlled by such Person or by one or more of its respective Subsidiaries. It is expressly agreed that for purposes of this Agreement, from and after the Separation Time, (i) no member of the HD Group shall be deemed to be a Subsidiary of any member of the LiveWire Group, (ii) no member of the LiveWire Group shall be deemed to be a Subsidiary of any member of the HD Group and (iii) no joint venture formed after the Separation Time solely between one or more members of the HD Group, on the one hand, and one or more members of the LiveWire Group, on the other hand, shall be deemed to be a Subsidiary of, or owned or controlled by, any member of the HD Group or the LiveWire Group for the purposes of this Agreement.
ARTICLE II
INTELLECTUAL PROPERTY LICENSES AND OWNERSHIP
Section 2.1 HD Licensed Intellectual Property. Effective as of the Separation Time, on the terms and conditions set forth herein, HD hereby grants to LiveWire and its Subsidiaries a perpetual, worldwide, royalty-free (except as provided in Section 2.4(d)), fully paid up, non-exclusive, non-sublicensable (except as set forth below), non-transferable (except in connection with a permitted assignment pursuant to Section 6.2) license to the HD Licensed Intellectual Property for the purpose of making, having made, using, selling, offering for sale and importing LiveWire Products. The foregoing license includes the right to reproduce, publish, display, transmit, copy, and otherwise use and exploit the HD Licensed Intellectual Property, in connection with and in support of the foregoing. The foregoing license shall also be sublicensable to third parties solely in connection with the provision of services to LiveWire, and not, for the avoidance of doubt, for use by any third party for such third party’s own brands or benefit. LiveWire shall require such permitted sublicensees in writing to comply with the limited scope of any such sublicense, and with the confidentiality obligations set forth in Article IV. LiveWire shall be liable for any noncompliance of its permitted sublicensees with this Agreement. Upon HD’s request from time to time, LiveWire shall provide HD a list of all of its then-current sublicensees.
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Section 2.2 LiveWire Licensed Intellectual Property.
(a) Effective as of the Separation Time, on the terms and conditions set forth herein, LiveWire hereby grants to HD and its Subsidiaries a perpetual, worldwide, royalty-free (except as provided in Section 2.2(b) or Section 2.4(d)), fully paid up, non-exclusive, non-sublicensable (except as set forth below), non-transferable (except in connection with a permitted assignment pursuant to Section 6.2) license to the LiveWire Licensed Intellectual Property for the purpose of making, having made, using, selling, offering for sale and importing HD Products. The foregoing license includes the right to reproduce, publish, display, transmit, copy, and otherwise use and exploit the LiveWire Licensed Intellectual Property, in connection with and in support of the foregoing. The foregoing license shall also be sublicensable to third parties solely in connection with the provision of services to HD, and not, for the avoidance of doubt, for use by any third party for such third party’s own brands or benefit. HD shall require such permitted sublicensees in writing to comply with the limited scope of any such sublicense, and with the confidentiality obligations set forth in Article IV. HD shall be liable for any non-compliance of its permitted sublicensees with this Agreement. Upon LiveWire’s request from time to time, HD shall provide LiveWire a list of all of its then-current sublicensees.
(b) If HD desires to sell any HD Products that incorporate LiveWire Licensed Intellectual Property outside of the HD Segments during the seven (7) year period following the Separation Time then HD shall notify LiveWire and the Parties shall negotiate in good faith on a reasonable royalty to be paid by HD on such sales; provided that no such royalty shall be payable on HD’s sale, service or maintenance of LiveWire branded HD motorcycles or related LiveWire parts and accessories.
Section 2.3 Ownership; Reservation of Rights.
(a) HD hereby acknowledges and agrees that, as between the Parties, LiveWire is the sole and exclusive owner of all right, title and interest in and to the LiveWire Licensed Intellectual Property. Nothing in this Agreement grants HD or its Subsidiaries any right, title or interest in or to the LiveWire Licensed Intellectual Property other than pursuant to the license granted herein, nor does anything in this Agreement restrict or prevent LiveWire or its Affiliates from using the LiveWire Licensed Intellectual Property for any purpose in any field. All rights in and to the LiveWire Licensed Intellectual Property that are not expressly granted to HD hereunder are reserved by LiveWire and its Affiliates.
(b) LiveWire hereby acknowledges and agrees that, as between the Parties, HD is the sole and exclusive owner of all right, title and interest in and to the HD Licensed Intellectual Property. Nothing in this Agreement grants LiveWire or its Subsidiaries any right, title or interest in or to the HD Licensed Intellectual Property other than pursuant to the license granted herein. Nothing in this Agreement restricts or prevents HD or its Affiliates from using the HD Licensed Intellectual Property for any purpose in any field. All rights in and to the HD Licensed Intellectual Property that are not expressly granted to LiveWire hereunder are reserved by HD and its Affiliates.
Section 2.4 Improvements.
(a) If at any time HD or any of its Subsidiaries creates (directly or indirectly) any Improvements to the HD Licensed Intellectual Property, then as between the Parties, all right, title and interest, including all Intellectual Property rights, in and to such Improvements shall be owned exclusively by HD (“HD Improvements”).
(b) If at any time LiveWire or any of its Subsidiaries creates (directly or indirectly) any Improvements to the LiveWire Licensed Intellectual Property, then as between the Parties, all right, title and interest, including all Intellectual Property rights, in and to such Improvements shall be owned exclusively by LiveWire (“LW Improvements”).
(c) HD shall have the right to make Improvements to the LiveWire Licensed Intellectual Property, and LiveWire shall have the right to make Improvements to the HD Licensed Intellectual Property. Any such
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Improvements shall be owned jointly by the Parties, without right of accounting (“Jointly-Owned Improvements”). For the avoidance of doubt (i) each Party shall have the right to grant licenses under its interest in the Jointly-Owned Improvements as it deems appropriate without the consent of, or any obligation to, the other Party, including any duty to account and (ii) the creation of Jointly-Owned Improvements shall confer no additional right, title or interest in or to the underlying Intellectual Property to either Party. Each Party will notify the other on a periodic basis at a frequency to be mutually agreed by the Parties from time to time of any Jointly-Owned Improvements created by such Party. Each Party shall keep contemporaneously prepared written records sufficient to document the conception of Jointly-Owned Improvements that it creates, and will provide such documentation to the other Party on such periodic basis. Notwithstanding the foregoing, in the case of any Improvements arising in connection with the Joint Development Agreement, the provisions of the Joint Development Agreement with respect to ownership of such Improvements shall apply.
(d) If any Improvements are exclusively introduced by a Party in a Next Generation Vehicle, and the other Party desires to sell products that incorporate such Improvements, then the licensee Party shall notify the licensor Party, and the Parties shall negotiate in good faith on a reasonable royalty (if any) to be paid by the licensee Party for the use of such Improvements in the relevant products.
Section 2.5 Determination of Royalties. Promptly following delivery of a notice pursuant to Section 2.2(b) or Section 2.4(d), HD’s Head of Engineering and LiveWire’s Head of EV Technology (or such other persons as determined by the Parties) shall meet in person, or by telephone or video, and shall use reasonable efforts, acting in good faith, to determine a reasonable royalty for the use of the applicable technology. In determining a reasonable royalty, the following factors will be considered, to the extent applicable: (a) the royalties that are paid for licensing similar technology in the relevant industry (adjusted for differences in license scope, etc.), (b) the royalties received by the licensor from third parties for licensing the same or similar technology (adjusted for differences in license scope, etc.), (c) the financial impact that the use of the licensed technology by the licensee is reasonably expected to have on the licensor, (d) any applicable royalty-stacking issues, and (f) all other relevant factors. In determining a reasonable royalty with respect to any Improvement, in addition to the foregoing, the following factors will be considered: (x) the extent to which the Improvement is an advancement over the pre-existing technology owned or used by the licensee, (y) how much the features of the Improvement increase the value of the relevant vehicle, and (z) how much consumers care about the features of the Improvement. In the event that the Parties’ representatives cannot, despite good faith efforts, agree on a reasonable royalty within fourteen (14) days after the date of such notice (a “Dispute”), the Dispute may be referred by either Party to an appropriate member of HD’s senior leadership team, or such member’s designee, and an appropriate member of LiveWire’s senior leadership team, or such member’s designee (such designated members, the “Dispute Committee”). The Parties shall attempt in good faith to resolve the Dispute by negotiation between their respective representatives on the Dispute Committee. The Parties agree that the members of the Dispute Committee shall have full and complete authority on behalf of their respective Parties to resolve the Dispute. If the Dispute Committee fails to reach agreement on a reasonable royalty within thirty (30) days of the date of referral of the Dispute to the Dispute Committee, either Party may seek to resolve the Dispute by bringing an action in the Chosen Courts pursuant to Section 6.13.
Section 2.6 Acknowledgements and Covenants.
(a) Each Party hereby acknowledges and agrees that it shall not at any time claim ownership or challenge the validity of the Intellectual Property licensed to it hereunder anywhere in the world.
(b) Each Party hereby acknowledges and agrees that, except as expressly set forth in this Agreement, the Separation Agreement, the Transition Services Agreement or any other Ancillary Agreement, the other Party has no obligation whatsoever to provide support, maintenance, advice, services or any other assistance or any documentation or technical information of any kind in connection with the Intellectual Property licensed by such Party hereunder.
(c) Each Party hereby acknowledges and agrees that, except as expressly set forth in this Agreement, the other Party shall have no responsibility with respect to the past, present or future validity, subsistence,
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enforceability, application and/or registration of any of the Intellectual Property licensed by such Party hereunder and may make decisions with respect to the prosecution, maintenance, abandonment, or lapse of all such Intellectual Property in its sole and absolute discretion.
(d) HD, on behalf of itself and its Affiliates, hereby covenants to LiveWire that none of HD or its Affiliates shall bring any Action against LiveWire or its Affiliates that alleges that the sale of (i) LiveWire Products as they exist as of the Separation Time, or (ii) any LiveWire Products supplied to LiveWire by HD, infringes or violates any trade dress rights owned by HD or its Affiliates.
ARTICLE III
INTELLECTUAL PROPERTY PROTECTION
Section 3.1 Prosecution.
(a) HD shall have the first right to pursue and obtain patents, or register any other intellectual property rights for Jointly-Owned Improvements to HD Licensed Intellectual Property, jointly in the name of both Parties, in HD’s sole discretion and at its expense, including but not limited to preparing, filing, prosecuting and maintaining patent applications and patents claiming inventions related to such Jointly-Owned Improvements and conducting any interferences, re-examinations, inter partes reviews, reissues, oppositions or requests for patent term extension or governmental equivalents thereto. In the event that HD does not seek to file, prosecute or maintain any such Intellectual Property protection, then LiveWire shall have the option at its discretion and expense to seek such protection, but without affecting the ownership and license provisions set forth in Article II.
(b) LiveWire shall have the first right to pursue and obtain patents or register any other intellectual property rights for Jointly-Owned Improvements to LiveWire Licensed Intellectual Property, jointly in the name of both Parties, in LiveWire’s sole discretion and at its expense, including preparing, filing, prosecuting and maintaining patent applications and patents claiming inventions related to such Jointly-Owned Improvements and conducting any interferences, re-examinations, inter partes reviews, reissues, oppositions or requests for patent term extension or governmental equivalents thereto. In the event that LiveWire does not seek to file, prosecute or maintain any such Intellectual Property protection, then HD shall have the option at its discretion and expense to seek such protection, but without affecting the ownership and license provisions set forth in Article II.
(c) Each Party shall, at its own expense, reasonably cooperate with and assist the other Party in connection with the Intellectual Property prosecution process concerning Jointly-Owned Improvements, at the other Party’s request, including by making inventors available as reasonably necessary, and by executing any documents or instruments, or performing such other acts, as reasonably requested by the other Party. The prosecuting Party will provide the non-prosecuting Party the opportunity to review and comment on documents to be filed in connection with the prosecution process a reasonable time in advance of applicable filing dates and prosecution deadlines, and will provide the non-prosecuting Party with copies of any substantive documents received in connection with the prosecution if the non-prosecuting Party requests such documents. To the extent necessary to carry out the process of obtaining any patent rights in the Jointly-Owned Improvements as set forth in this Agreement, the Parties consent to disclosure to the United States Patent and Trademark Office (“USPTO”) of information necessary to fulfill the requirements of 35 U.S.C. §103(c) including a declaration that: (A) the claimed invention was made by or on behalf of the Parties to this Agreement; (B) the claimed invention was made as a result of activities subject to this Agreement; and (C) the claimed invention is owned or is subject to an Q-obligation of assignment as set forth in this Agreement. The Parties also agree to disclose to the USPTO the names of the Parties to this Agreement.
Section 3.2 Enforcement.
(a) In the event that either Party becomes aware of any actual or potential third-party infringement, misappropriation or other violation (an “Infringement”) of any HD Licensed Intellectual Property, LiveWire
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Licensed Intellectual Property or Jointly-Owned Improvements, it shall promptly notify the other Party. HD will have the sole right, but not the obligation to commence, prosecute and fully control any action or proceeding against any Person with respect to any Infringement (an “Enforcement Action”) of any HD Licensed Intellectual Property, and LiveWire will have the sole right, but not the obligation to commence, prosecute and fully control any Enforcement Action with respect to the LiveWire Licensed Intellectual Property.
(b) HD will have the first right, but not the obligation, to commence, prosecute and fully control any Enforcement Action against any Person with respect to any Infringement of any Jointly-Owned Improvements to HD Licensed Intellectual Property, in each case, at its expense, by counsel of its choice and in the country/forum of its choice; provided that, if HD does not either commence such Enforcement Action or persuade the alleged infringer to desist within a period of one-hundred-twenty (120) days after first learning of such Infringement, then LiveWire shall have the right to commence, prosecute and control, at its expense, any such Enforcement Action by counsel of its choice and in the country/forum of its choice.
(c) LiveWire will have the first right, but not the obligation, to commence, prosecute and fully control any Enforcement Action against any Person with respect to any Infringement of any Jointly-Owned Improvements to LiveWire Licensed Intellectual Property, in each case, at its expense, by counsel of its choice and in the country/forum of its choice; provided that, if LiveWire does not either commence such Enforcement Action or persuade the alleged infringer to desist within a period of one-hundred-twenty (120) days after first learning of such Infringement, then HD shall have the right to commence, prosecute and control, at its expense, any such Enforcement Action by counsel of its choice and in the country/forum of its choice.
(d) The Party commencing an Enforcement Action with respect to Jointly-Owned Intellectual Property (the “Prosecuting Party”) shall have the right to enter into a settlement, consent judgment or other voluntary final disposition of any such Enforcement Action. The Prosecuting Party may join the non-Prosecuting Party as a party plaintiff in any such Enforcement Action, provided that the non-Prosecuting Party is represented in such Enforcement Action at the Prosecuting Party’s expense. The non-Prosecuting Party shall give the Prosecuting Party reasonable assistance and authority to file and to prosecute such Enforcement Action on its behalf at the Prosecuting Party’s expense. The Prosecuting Party shall indemnify and defend the non-Prosecuting Party from and against any and all counterclaims brought by the defendant in the Enforcement Action that relate to the Intellectual Property rights subject to Infringement (including counterclaims that such Intellectual Property rights are invalid or unenforceable, or that the enforcement of such Intellectual Property rights are an antitrust violation). Unless otherwise agreed by the Parties, any damages or other monetary awards recovered in such Enforcement Action shall be distributed as follows: (i) the proceeds shall first be used to reimburse the Parties equally for their out-of-pocket costs and expenses (including reasonable attorney’s fees) of such Enforcement Action, until at least one of the Parties has fully recovered such out-of-pocket costs and expenses; (ii) the proceeds shall then be used to reimburse any remaining out-of-pocket costs and expenses of the other Party, if any; and (iii) any remaining balance shall be distributed to the Prosecuting Party.
ARTICLE IV
CONFIDENTIALITY
Section 4.1 Confidentiality. Except as expressly permitted under this Agreement, each Party, on behalf of itself and its Subsidiaries, agrees not to disclose, and to restrict its employees, agents, representatives, vendors and suppliers from disclosing, to any third party the Intellectual Property licensed to it hereunder (except for public information related to any patent or published patent application included in such licensed Intellectual Property), treating such licensed Intellectual Property in the same manner (but in no event using less than a commercially reasonable degree of care) as such Party treats other similarly sensitive Intellectual Property owned by such Party; provided that the confidentiality obligation hereunder shall not apply to information that: (a) is already in the licensee Party’s possession on a non-confidential basis at the time of disclosure thereof; (b) is or subsequently becomes part of the public domain through no action of the licensee Party; (c) is subsequently
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received by the licensee Party from a third party which has no obligation of confidentiality to the Party disclosing the licensed Intellectual Property; or (d) is developed by the licensee Party or any of its Affiliates apart from and without access or reference to the non-public licensed Intellectual Property; provided that the exceptions set forth in clauses (a), (c) and (d) above shall not apply with respect to LiveWire Licensed Intellectual Property, to the extent the applicability of either exception is due to HD owning and or operating the LiveWire Business prior to the Separation Time.
Section 4.2 Government Order. Notwithstanding Section 4.1, licensed Intellectual Property may be disclosed by the licensee Party: (a) to such licensee Party’s directors, officers, employees, agents, auditors, consultants, financial advisers and permitted sublicensees, provided that such Party requires that such Persons comply in writing with this Article IV; and (b) as required by Law, provided that, if permitted by Law, written notice of such requirement shall be given promptly to the licensor Party so that it may take reasonable actions to avoid and minimize the extent of such disclosure, and the licensee Party shall cooperate with the licensor Party as reasonably requested by the licensor Party in connection with such actions.
ARTICLE V
DISCLAIMER OF WARRANTIES; LIABILITY
Section 5.1 No Warranties. WITHOUT LIMITING THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THE SEPARATION AGREEMENT, ALL OF THE RIGHTS PROVIDED HEREUNDER ARE PROVIDED “AS IS” AND “WHERE IS”, WITHOUT WARRANTY OR CONDITION OF ANY KIND, WHETHER EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, INCLUDING ANY WARRANTIES OF CONDITION OF TITLE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY, OR NON-INFRINGEMENT OF THIRD-PARTY RIGHTS, ALL OF WHICH ARE HEREBY DISCLAIMED.
Section 5.2 Limitation of Liability.
(a) NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW, WITH THE EXCEPTION OF LIABILITY ARISING FROM A PARTY’S GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR BREACH OF ITS OBLIGATIONS UNDER ARTICLE Article IV, NEITHER PARTY NOR ITS AFFILIATES, CONTRACTORS, SUPPLIERS OR AGENTS SHALL BE LIABLE FOR, OR BEAR ANY OBLIGATION IN RESPECT OF, ANY PUNITIVE, INCIDENTAL, INDIRECT, SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES OF ANY KIND OR CHARACTER OR ANY DAMAGES RELATING TO, OR ARISING OUT OF, LOST PROFITS, LOST OF DATA, LOSS IN VALUE OR LIMITATIONS OR RESTRICTIONS ON BUSINESS PRACTICES ARISING OUT OF OR IN CONNECTION WITH THE USE OF ANY HD LICENSED INTELLECTUAL PROPERTY, LIVEWIRE LICENSED INTELLECTUAL PROPERTY OR JOINTLY-OWNED IMPROVEMENTS, OR ANY OTHER RIGHTS OR OBLIGATIONS UNDER THIS AGREEMENT, EVEN IF A PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
(b) FOR THE AVOIDANCE OF DOUBT, ANY CLAIM BASED ON ANY PROVISION OF THE SEPARATION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE OTHER TERMS AND CONDITIONS OF THE SEPARATION AGREEMENT, INCLUDING THOSE TERMS AND CONDITIONS REGARDING SURVIVAL OF SUCH WARRANTIES, LIMITATIONS OF LIABILITY AND LIMITATIONS OF DAMAGES, AND NOTHING HEREIN SHALL BE DEEMED TO EXTEND, EXPAND, LIMIT OR OTHERWISE AFFECT SUCH TERMS AND CONDITIONS.
ARTICLE VI
GENERAL PROVISIONS
Section 6.1 Injunctive Relief. Each Party acknowledges and agrees that a breach of this Agreement would result in irreparable harm to the other Party. It is accordingly agreed that each Party shall be entitled to seek an
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injunction or other equitable relief to prevent breaches or threatened breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of competent jurisdiction, in addition to any other remedy to which it is entitled at law or in equity, and shall not be required to provide any bond or other security in connection with any such injunction, order or other relief.
Section 6.2 Assignment. Nothing herein shall restrict a Party from assigning or transferring to any Person any Intellectual Property it owns and licenses to the other Party hereunder; provided that any such assignment or transfer shall have no effect on the licenses granted hereunder, and the assigned or transferred Intellectual Property shall remain subject to this Agreement. Without limiting the foregoing, neither Party may assign or transfer this Agreement, in whole or part, to any Person and any attempt to do so shall be void, except that either Party may, without the other Party’s consent, (i) assign or transfer all or part of their respective rights and obligations under this Agreement, or sublicense any of the licenses granted hereunder to their respective Affiliates; or (ii) assign or transfer all or part of their respective rights under this Agreement to any third party in connection with an acquisition of the licensee Party (whether by merger, consolidation, sale of assets, sale or exchange of stock, or otherwise), provided that the rights and licenses granted to the licensee Party under this Agreement shall not extend beyond the business, business unit or division being sold; and provided that, in each of the above cases, such transferee, assignee or successor agrees in writing to be bound by the terms of this Agreement. Further, each Party may collaterally assign its rights under this Agreement to its lenders or other financing sources, provided that, upon foreclosure, any assignee or transferee agrees to be bound by the terms of this Agreement. This Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors (whether by operation of law or otherwise) and permitted assigns.
Section 6.3 Modification or Amendments. Subject to the provisions of applicable Law, and except as otherwise provided in this Agreement, this Agreement may be amended, modified or supplemented only by written instrument signed by the authorized representative of the Party against whom it sought to enforce such waiver, amendment, supplement or modification is sought to be enforced.
Section 6.4 Waivers of Default. Waiver by a Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the other Party. No failure or delay by a Party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall a single or partial exercise thereof prejudice any other or further exercise thereof or the exercise of any other right, power or privilege.
Section 6.5 Counterparts. This Agreement may be executed in one or more counterparts, and by the different Parties in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. The exchange of a fully executed Agreement (in counterparts or otherwise) by electronic delivery in .pdf format shall be sufficient to bind the Parties to the terms and conditions of this Agreement.
Section 6.6 Governing Law. This Agreement (and any claims or disputes arising out of or related hereto or to the transactions contemplated hereby or to the inducement of either Party to enter herein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the Laws of the State of Delaware, irrespective of the choice of laws principles of the State of Delaware, including all matters of validity, construction, effect, enforceability, performance and remedies.
Section 6.7 Notices. All notices and other communications between the Parties shall be in writing and shall be deemed to have been duly given (a) when delivered in person, (b) when delivered by FedEx or other nationally recognized overnight delivery service; or (c) when delivered by email (in each case in this clause (c), solely if receipt is confirmed), addressed as follows:
(a) if to HD:
3700 W. Juneau
9
Milwaukee, WI 53217
Attention: Chief Legal Officer
Email: H-DGeneralCounsel@harley-davidson.com; and
paul.krause@harley-davidson.com
with copies (which shall not constitute notice) to:
Latham & Watkins LLP
330 North Wabash Avenue, Suite 2800
Chicago, IL 60611
Attention: Ryan Maierson
Email: ryan.maierson@lw.com
Attention: Jason Morelli
Email: jason.morelli@lw.com
(b) if to LiveWire:
LiveWire
3700 W. Juneau
Milwaukee, WI 53217
Attention: Chief Legal Officer
Email: Paul.Krause@harley-davidson.com; and
H-DGeneralCounsel@harley-davidson.com
with a copy (which shall not constitute notice) to:
Latham & Watkins LLP
330 North Wabash Avenue, Suite 2800
Chicago, IL 60611
Attention: Ryan Maierson
Email: ryan.maierson@lw.com
Attention: Jason Morelli
Email: jason.morelli@lw.com
or to such other persons or addresses as may be designated in writing by the Party to receive such notice as provided above.
Section 6.8 Entire Agreement. This Agreement (including any exhibits hereto), together with the Separation Agreement and the other Ancillary Agreements, constitute the entire agreement, and supersede all other prior agreements, understandings, representations and warranties both written and oral, among the parties, with respect to the subject matter hereof.
Section 6.9 No Third-Party Beneficiaries. Except as otherwise specifically provided in this Agreement, (a) the provisions of this Agreement are solely for the benefit of the Parties and are not intended to confer upon any Person except the Parties any rights or remedies hereunder; and (b) there are no third-party beneficiaries of this Agreement and this Agreement shall not provide any third Person with any remedy, claim, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.
Section 6.10 Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability or the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.
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Section 6.11 Interpretation. The table of contents and headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. Where a reference in this Agreement is made to a Section or Exhibit, such reference shall be to a Section of or Exhibit to this Agreement unless otherwise indicated. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” For purposes of this Agreement, whenever the context requires the singular number shall include the plural, and vice versa. All references in this Agreement to “$” are intended to refer to United States dollars. Any reference to a particular Law means such Law as amended, modified or supplemented (including all rules and regulations promulgated thereunder) and, unless otherwise provided, as in effect from time to time.
Section 6.12 Construction. This Agreement shall be construed as if jointly drafted by the Parties and no rule of construction or strict interpretation shall be applied against either Party. The Parties represent that this Agreement is entered into with full consideration of any and all rights which the Parties may have. The Parties have conducted such investigations they thought appropriate, and have consulted with such advisors as they deemed appropriate regarding this Agreement and their rights and asserted rights in connection therewith. The Parties are not relying upon any representations or statements made by the other Party, or such other Party’s employees, agents, representatives or attorneys, regarding this Agreement, except to the extent such representations are expressly set forth or incorporated in this Agreement. The Parties are not relying upon a legal duty, if one exists, on the part of the other Party (or such other Party’s employees, agents, representatives or attorneys) to disclose any information in connection with the execution of this Agreement or their preparation, it being expressly understood that neither Party shall ever assert any failure to disclose information on the part of the other Party as a ground for challenging this Agreement.
Section 6.13 Consent to Jurisdiction; WAIVER OF JURY TRIAL.
(a) The state and federal courts located within the State of Delaware (the “Chosen Courts”) shall have exclusive jurisdiction over any and all disputes between the Parties, whether in law or in equity, arising out of or relating to this Agreement and the agreements, instruments and documents contemplated hereby and the Parties consent to and agree to subject to the exclusive jurisdiction of such Chosen Courts.
(b) THE PARTIES HEREBY WAIVE TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, AND SHALL NOT ASSERT IN ANY SUCH DISPUTE, ANY CLAIM THAT: (I) SUCH PARTY IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS; (II) SUCH PARTY AND SUCH PARTY’S PROPERTY IS IMMUNE FROM ANY LEGAL PROCESS ISSUED BY SUCH COURTS; OR (III) ANY ACTION OR OTHER PROCEEDING COMMENCED IN SUCH COURTS IS BROUGHT IN AN INCONVENIENT FORUM. THE MAILING OF PROCESS OF OTHER PAPERS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED IN SECTION 6.7 (OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW) SHALL BE VALID AND SUFFICIENT SERVICE THEREOF AND HEREBY WAIVE ANY OBJECTIONS TO SERVICE ACCOMPLISHED IN THE MANNER PROVIDED HEREIN. THE PARTIES HEREBY IRREVOCABLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 6.15 Fees and Expenses. Each Party shall bear its own expenses incurred in connection with this Agreement and the transactions contemplated hereby, whether or not such transactions shall be consummated, including all fees of its legal counsel, financial advisers and accountants.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
| Harley-Davidson, Inc. | ||
| By: | /s/ Paul J. Krause | |
| Name: | Paul J. Krause | |
| Title: | Authorized Signatory | |
| LiveWire EV, LLC | ||
| By: | /s/ Amanda Parker | |
| Name: | Amanda Parker | |
| Title: | Chief Legal Officer | |
Schedule A
HD Licensed Intellectual Property
[***]
Exhibit 10.11
Execution Version
Certain portions of this Exhibit have been redacted pursuant to Item 601(b)(10) of Regulation S-K and, where applicable, have been marked with “[***]” to indicate where redactions have been made.
TRADEMARK LICENSE AGREEMENT
This Trademark License Agreement (“Agreement”) is entered into as of September 26, 2022 (“Effective Date”) by and between Harley-Davidson, Inc., a Delaware corporation (“Licensor”) and LiveWire EV, LLC, a Delaware limited liability company (“Licensee”). Capitalized terms used but not defined herein shall have the meaning set forth in the Separation Agreement.
WHEREAS, Licensor, acting together with its subsidiaries, currently conducts the Harley Business and the LiveWire Business;
WHEREAS, Licensor and Licensee entered into that certain Separation Agreement, effective as of the date hereof (the “Separation Agreement”), pursuant to which the LiveWire Business has been separated from the Harley Business and transferred to Licensee;
WHEREAS, in connection with the Separation, Licensor has agreed to grant a license to Licensee to use the marks set forth on Exhibit A (the “Licensed Marks”) on the terms and conditions provided herein;
WHEREAS, H-D U.S.A., LLC, a Wisconsin limited liability company with its principal place of business at 3700 West Juneau Avenue, Milwaukee, Wisconsin 53208, is the owner of the Licensed Marks, and has granted to Licensor the nonexclusive right to use and to sublicense the Licensed Marks; and
WHEREAS, the parties have agreed to enter into this Agreement, effective as of the Separation Time.
NOW, THEREFORE, in consideration of the foregoing, the covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. LICENSE GRANT
1.1 License Grant. Subject to the terms and conditions of this Agreement, Licensor hereby grants to Licensee and its Affiliates, during the Term, a royalty-free, fully paid-up, non-exclusive, non-transferable (except as permitted under Section 6.2), sublicensable (only as set forth below) license to use the Licensed Marks; provided that each Licensed Mark shall be used solely as specified in writing by Licensor or in an applicable Addendum, and solely with respect to the products identified in the applicable Addendum (the “Licensed Products”). Except as otherwise provided in the applicable Addendum, Licensee shall have the right to sublicense the foregoing rights to its Affiliates and to third-party distributors, provided that all Affiliates and other sublicensees shall be required to comply with the terms of this Agreement, all third-party sublicensees shall be required to execute written sublicenses with Licensee consistent with the terms hereof, and Licensee shall be primarily liable for the failure by any of its Affiliates or other sublicensees to comply with the terms of this Agreement.
1.2 Approval Process.
(a) In the event that Licensee desires to use a Licensed Mark, Licensee shall submit to Licensor a written request for such use in accordance with the approval process set forth in this Section 1.2. Licensee shall submit all written requests for approval to Licensor by e-mail at eric.bublitz@harley-davidson.com, with the subject line containing a description of the category or categories for which approval is sought. Licensor shall facilitate the routing of such written requests for approval to the applicable Designated Approvers set forth in Section 1.2(b) and will provide Licensee a single written confirmation reflecting approval by all applicable Designated Approvers. Licensor agrees that an approval in e-mail or in other writing to Licensee from one of the Designated Approvers listed in Section 1.2(b) for the respective categories constitutes an approval from all
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Designated Approvers for that category. Unless otherwise agreed to by the parties in writing, Licensee will submit all Concept Materials or Packaging that cannot be provided in e-mail format, Pre-Production Samples and Production Samples of Licensed Products or any other items required or permitted to be submitted to Licensor for approval in accordance with reasonable instructions provided by Licensor. Licensor may modify the foregoing procedures or instructions upon written notification to Licensee of not less than thirty (30) calendar days, and Licensee will thereafter comply with this approval process, as so modified. Licensor may grant or withhold approval for any such request in its sole discretion. Upon Licensor’s approval of any such request, an addendum identifying the Licensor mark and reflecting the approved scope of use and any other relevant terms and conditions may be attached hereto and constitute part of this Agreement (each, an “Addendum” and collectively, the “Addenda”). Certain pre-approved uses of Licensed Marks are set forth in the Addenda set forth in Exhibit B and attached hereto as of the Effective Date.
(b) Written approval for each use of a Licensed Mark must be obtained for each category from the approvers set forth in the chart below (the “Designated Approvers”) in accordance with the approval procedure set forth in Section 1.2(a). Licensor may modify the Designated Approvers in its sole discretion by providing not less than seven (7) days’ prior written notice to Licensee of such modifications.
| Category |
Designated Approvers | |
| Concepts, artwork, and three-dimensional models which are to be used on or in connection with the Licensed Products (“Concept Materials”) | VP Styling and Design (as of the Effective Date, Brad Richards) H-D Trademark Team | |
| Pre-production/pre-release samples of any Licensed Product (“Pre-Production Samples”) or samples of the production versions of Licensed Products (“Production Samples”) | VP Styling and Design (as of the Effective Date, Brad Richards) H-D Trademark Team | |
| Packaging for the Licensed Products (“Packaging”) | VP Styling and Design (as of the Effective Date, Brad Richards) H-D Trademark Team | |
| Materials for promoting and advertising the Licensed Products (including for use on Digital Media) | VP Marketing (as of the Effective Date, Theo Keetell) H-D Trademark Team | |
| Methods of promoting and advertising the Licensed Products | VP Marketing (as of the Effective Date, Theo Keetell) VP Marketing | |
1.3 No Exclusivity. Licensee agrees and acknowledges that the license granted in Section 1.1 is non-exclusive and that nothing in this Agreement shall restrict either Licensor’s or any of its other licensees’ usage of the Licensed Marks anywhere in the world.
1.4 Acknowledgement of Ownership. Licensee acknowledges that H-D U.S.A., LLC is the sole and exclusive owner of all right, title and interest in and to the Licensed Marks and any rights related thereto. Any and all goodwill arising from Licensee’s use of the Licensed Marks, including any derivative marks, shall inure solely to the benefit of Licensor. Licensee agrees that, upon the expiration or termination of this Agreement, all goodwill in the Licensed Marks that may be held by Licensee notwithstanding the foregoing hereby is assigned to Licensor, without the need for any further action by any person. Licensee agrees that nothing in this Agreement shall give Licensee any right, title, or interest in the Licensed Marks other than the right to use the Licensed Marks in accordance with this Agreement.
1.5 No Inconsistent Action. Licensee shall not knowingly or intentionally: (a) assert any claim of ownership of the Licensed Marks, contest the validity or enforceability of the Licensed Marks or challenge
2
Licensor’s right, title, interest in, or ownership of, the Licensed Marks, its registrations therefor or Licensor’s right to license the same; (b) interfere with, oppose or challenge any of Licensor’s applications for or registrations of the Licensed Marks (including Licensor’s use of the Licensed Marks as or as part of a registered Internet domain name) or interfere with, oppose or challenge the exploitation of the Licensed Marks by or on behalf of Licensor; (c) apply for, or participate with or cause any other entity to apply for, the registration of any logo, symbol, trademark, service mark, company or corporate name, product name, domain name or commercial slogan that is confusingly similar to the Licensed Marks; or (d) take any action that would negatively impact, in any material respect, the value, reputation or goodwill of the Licensed Marks or tarnish the Licensed Marks or materially harm Licensor’s valuable goodwill in the Licensed Marks.
1.6 Reservation of Rights. Except as expressly stated in this Agreement, no rights, ownership interest or licenses, express or implied, are granted to Licensee in respect of the Licensed Marks, either directly or by implication, estoppel or otherwise.
1.7 Form of Use of Licensed Marks. Licensee shall use each Licensed Mark only in the form and manner approved by Licensor in writing and/or set forth in the applicable Addendum, and shall, at its sole cost and expense, meet and comply with Licensor’s branding guidelines, and all quality specifications for color, style, typeface, size and all other artistic or reproduction requirements for Licensee’s use of the Licensed Marks, in each case as may be provided to Licensee from time to time by Licensor in writing (the “Branding Guidelines”), the current version of which are attached hereto as Exhibit C. Licensee shall promptly comply, at its sole cost and expense, with all changes to the Branding Guidelines which are provided to Licensee in writing, provided that Licensee shall have ninety (90) days, to use down existing stocks of business supplies and promotional materials bearing the Licensed Marks that are no longer in compliance with the Branding Guidelines. Licensee shall, to the extent practical, place the symbols “TM”, “SM”, “®” or other designations legally required for enforcement of trademark or service mark rights next to the Licensed Marks consistent with the same manner in which Licensor and its Affiliates used such symbols or other designations prior to the Effective Date in connection with the Licensed Products or as otherwise reasonably prescribed from time to time by Licensor. Licensee shall not use any other trademark, service mark, logo, inscription, designation or trade name in combination with the Licensed Marks without the prior written approval of Licensor. Licensee agrees, as commercially feasible, to affix notices in connection with its uses of the Licensed Marks a legend indicating that “[the Licensed Mark][®/SM/TM] is a trademark of H-D U.S.A., LLC and is used by [Licensee or its applicable Affiliate] under license.”
1.8 Quality Control. Licensee shall not use the Licensed Marks or conduct itself in any manner that tarnishes, degrades, or disparages Licensor or its business or reputation, and shall not at any time do or suffer to be done any act which would impair Licensor’s proprietary rights in or to the Licensed Marks or the goodwill associated therewith. Licensee shall ensure that the quality of the Licensed Products shall be of equal or better quality than the products offered under the Licensed Marks by Licensor and its Affiliates, as of the Effective Date. Licensee shall comply with any additional quality control procedures, guidelines, or standards provided to Licensee by Licensor, provided that Licensee shall be given a reasonable period of time to comply with any such changes. Licensor shall have the right to audit Licensee’s compliance with this Section 1.8, including inspection of the Licensed Products, the manufacturing facilities for the Licensed Products, and all documents and other materials bearing the Licensed Marks, in each case at Licensor’s sole cost and expense. Licensee shall reasonably comply with any requests by Licensor, upon reasonable advance notice, to conduct any such audits. Notwithstanding anything to the contrary in this Section 1.8, Licensee shall not be in breach of the quality control provisions hereunder with respect to any Licensed Product manufactured by Licensor or any of its Affiliates, to the extent that the breach of the quality control provisions is due to any act or omission by Licensor or its applicable Affiliate in breach of its obligations under the applicable manufacturing agreement between Licensor or its Affiliate and Licensee.
1.9 Compliance with Law. Licensee shall comply with all applicable Laws and regulations and obtain all appropriate governmental approvals pertaining to the production, distribution, sale and advertising of the Licensed Products and pertaining to the operation of its businesses.
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1.10 Maintenance of Licensed Trademarks. Nothing contained in this Agreement shall be construed as requiring Licensor to file any trademark application, to secure any trademark registration, or to maintain in force any trademark registration. Without limiting the foregoing, at Licensor’s sole expense, Licensee shall perform all lawful acts and execute such documents or instruments as Licensor may reasonably request to register, confirm, evidence, maintain or protect Licensor’s rights to or under the Licensed Marks.
1.11 Infringement. Licensee shall promptly notify Licensor in writing of any actual or suspected infringement of the Licensed Marks by a third party of which Licensee becomes aware and of any available evidence relating thereto. Licensee shall cooperate with Licensor’s efforts to investigate, terminate and recover damages for any actual or suspected infringement of the Licensed Marks and Licensor shall reimburse Licensee for any reasonable out-of-pocket expenses related thereto. Licensor shall have the sole right, but not the obligation, to take action against any such actual or suspected infringement.
2. TERMINATION
2.1 Term. This Agreement shall commence on the Effective Date and, unless terminated earlier as provided below, shall continue in effect for a period of two (2) years (the “Initial Term”). Thereafter, this Agreement shall automatically renew for successive two (2) year periods (each, a “Renewal Term,”), unless either party provides written notice to the other party of its intent not to renew at least sixty (60) days prior to the end of the Initial Term or the then-current Renewal Term. The Initial Term, together with the Renewal Terms, are collectively referred to hereunder as the “Term”.
2.2 Termination for Breach. Licensor may terminate this Agreement by written notice, effective immediately (a) if Licensee has breached any provision of this Agreement relating to the ownership, protection or use of the Licensed Marks or any of the quality requirements of Section 1.8, and fails to cure such breach within thirty (30) days of Licensee’s receipt of written notice thereof, (b) in the event of any affirmative act of insolvency by Licensee (i.e., admitting in writing its failure to pay its debts as they come due, making an assignment for the benefit of creditors, filing of a petition or application relating to the bankruptcy of Licensee or requesting that a receiver be appointed for its assets, or filing of any such petition in respect of Licensee by a third party), (c) upon the appointment of any receiver or trustee to take possession of the properties of Licensee, (d) upon the winding-up, or any sequestration by any governmental authority, of Licensee, or (e) if Licensee Transfers or purports to Transfer this Agreement or any of the rights granted under this Agreement in violation of Section 1.6.
2.3 Effect of Termination. Upon termination or expiration of this Agreement, the license granted to Licensee by this Agreement shall immediately and automatically terminate, and Licensee shall cease and desist from all use of the Licensed Marks, provided that Licensee shall have a period of ninety (90) days following the effective date of termination or expiration to sell off any Licensed Products bearing the Licensed Marks that have been manufactured that that are in inventory as of the termination or expiration date in the normal course of business (the “Phase-Out”). Upon the expiration or termination of this Agreement, subject to the Phase-Out, all sublicense agreements for use of the Licensed Marks between Licensee and its sublicensees shall simultaneously terminate. The following sections shall survive the expiration or any termination of this Agreement: 1.4, 1.4, 1.4, 2.3, and 3 through 6.
3. DISCLAIMER OF WARRANTIES
LICENSEE ACKNOWLEDGES AND AGREES THAT THE LICENSED MARKS ARE LICENSED “AS IS”, WITHOUT WARRANTY OF ANY KIND, THAT, LICENSEE ASSUMES ALL RISKS AND LIABILITY ARISING FROM OR RELATING TO ITS USE OF THE LICENSED MARKS, AND THAT LICENSOR DOES NOT MAKE, AND SPECIFICALLY DISCLAIMS, ANY REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE LICENSED MARKS, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE (INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OF
4
NONINFRINGEMENT, SUFFICIENCY, QUALITY, USEFULNESS, COMMERCIAL UTILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND IMPLIED WARRANTIES ARISING FROM COURSE OF DEALING OR COURSE OF PERFORMANCE).
4. INDEMNITY
Each party (the “Indemnifying Party”) shall indemnify, defend and hold harmless the other party, its Affiliates and its and their respective employees, representatives, directors, officers and agents (the “Indemnified Party”) from and against any and all costs, liabilities, causes of action (including without limitation infringement, products liability actions and tort actions) and expenses, including, without limitation, interest, penalties, attorney and third-party fees, and all amounts paid in the investigation, defense and/or settlement of any claim, action or proceeding, that arise out of any third-party claim (including any claim brought by any government or regulatory agency) (each, a “Claim”) arising from or related to (a) where Licensee is the Indemnifying Party, (i) Licensee’s breach of this Agreement, (ii) Licensee’s use of the Licensed Marks, or (iii) Licensee’s manufacture, marketing, advertising, distribution or sale of the Licensed Products; provided, however, that Licensee shall have no indemnity obligation hereunder to the extent that the Claim relates to Licensed Products manufactured by Licensor or any of its Affiliates and the Claim resulted from a breach by Licensor or its applicable Affiliate of its obligations under the applicable manufacturing agreement between Licensor or its Affiliate and Licensee, or (b) where Licensor is the Indemnifying Party, any Claim that Licensee’s use of the Licensed Marks in accordance with this Agreement infringes, violates, conflicts with, or dilutes any third party Intellectual Property. The Indemnifying Party shall have the right to undertake the defense of any indemnified Claim hereunder through counsel reasonably acceptable to the Indemnified Party, and the Indemnified Party shall, at the Indemnifying Party’s expense, reasonably cooperate in such defense and make available all personnel, records, and materials reasonably requested by the Indemnifying Party in connection therewith. The Indemnified Party shall be entitled to participate in such defense with counsel of its own choosing at the Indemnified Party’s sole expense. The Indemnifying Party shall have the right to compromise, settle or otherwise dispose of any such claim if the Indemnifying Party deems it advisable to do so, all at the expense of the Indemnifying Party; provided that the Indemnifying Party does not settle, or consent to any entry of judgment in, any such claim without obtaining the prior written consent of the Indemnified Party, which consent shall not be unreasonably withheld, delayed, or conditioned.
5. LIMITATION OF LIABILITY
5.1 WITH THE EXCEPTION OF LIABILITY ARISING FROM A PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, NEITHER PARTY SHALL BE LIABLE FOR, OR BEAR ANY OBLIGATION IN RESPECT OF, ANY PUNITIVE, INCIDENTAL, INDIRECT, SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES OF ANY KIND OR CHARACTER OR ANY DAMAGES RELATING TO, OR ARISING OUT OF, LOST PROFITS, OR LIMITATIONS OR RESTRICTIONS ON BUSINESS PRACTICES ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, EVEN IF A PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
5.2 LICENSOR SHALL NOT BE LIABLE FOR, OR BEAR ANY OBLIGATION IN RESPECT OF, ANY DAMAGES OF ANY KIND OR CHARACTER WHATSOEVER ARISING OUT OF OR IN CONNECTION WITH LICENSEE’S, ITS AFFILIATES’ OR SUBSIDIARIES’, OR ANY THIRD PARTY’S USE OF THE LICENSED MARKS.
6. MISCELLANEOUS
6.1 Injunctive Relief. Licensee acknowledges and agrees that a breach of this Agreement by Licensee would result in irreparable harm to Licensor. It is accordingly agreed that Licensor shall be entitled to seek an injunction or other equitable relief to prevent breaches or threatened breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of competent jurisdiction, in addition to any other
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remedy to which it is entitled at law or in equity, and shall not be required to provide any bond or other security in connection with any such injunction, order or other relief.
6.2 Assignment. Licensor may assign this Agreement, in whole or part, in connection with its assignment or other transfer of the Licensed Marks. Licensee shall not grant, assign, convey or transfer, whether by sale of assets, sale of stock, merger, by operation of law or otherwise, this Agreement or any of its rights to use the Licensed Marks to any other Person (collectively, a “Transfer”) without the prior written approval of Licensor, which approval may be withheld at the sole discretion of Licensor. For the avoidance of doubt, any change of control of Licensee shall be deemed to be a Transfer requiring the approval of Licensor. Any permitted assignee or transferee of this Agreement or any interest herein shall be bound by all of the terms and conditions of this Agreement.
6.3 Modification or Amendments. Subject to the provisions of applicable Law, and except as otherwise provided in this Agreement, this Agreement may be amended, modified or supplemented only by written instrument signed by the authorized representative of the party against whom it sought to enforce such waiver, amendment, supplement or modification is sought to be enforced.
6.4 Waivers of Default. Waiver by a party of any default by the other party of any provision of this Agreement shall not be deemed a waiver by the waiving party of any subsequent or other default, nor shall it prejudice the rights of the other party. No failure or delay by a party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall a single or partial exercise thereof prejudice any other or further exercise thereof or the exercise of any other right, power or privilege.
6.5 Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. The exchange of a fully executed Agreement (in counterparts or otherwise) by facsimile or by electronic delivery in .pdf format shall be sufficient to bind the parties to the terms and conditions of this Agreement.
6.6 Governing Law. This Agreement (and any claims or disputes arising out of or related hereto or to the transactions contemplated hereby or to the inducement of either party to enter herein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the Laws of the State of Delaware, irrespective of the choice of laws principles of the State of Delaware, including all matters of validity, construction, effect, enforceability, performance and remedies.
6.7 Notices. All notices and other communications between the parties shall be in writing and shall be deemed to have been duly given (a) when delivered in person, (b) when delivered by FedEx or other nationally recognized overnight delivery service; or (c) when delivered by email provided that a confirmation copy is delivered by another method under subparts (a) or (b) , addressed as follows:
(a) if to Licensor:
Harley-Davidson, Inc.
3700 W Juneau Ave
Milwaukee, WI 53224
Attention: Chief Legal officer
Email: Paul.Krause@harley-davidson.com and H-DGeneralCounsel@harley-davidson.com
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with copies (which shall not constitute notice) to:
Latham & Watkins LLP
330 North Wabash Avenue, Suite 2800
Chicago, IL 60611
Attention: Ryan Maierson
Email: ryan.maierson@lw.com
Attention: Jason Morelli
Email: jason.morelli@lw.com
(b) if to Licensee:
Harley-Davidson, Inc.
3700 W Juneau Ave
Milwaukee, WI 53224
Attention: Chief Legal officer
Email: Paul.Krause@harley-davidson.com and H-DGeneralCounsel@harley-davidson.com
with a copy (which shall not constitute notice) to:
Latham & Watkins LLP
330 North Wabash Avenue, Suite 2800
Chicago, IL 60611
Attention: Ryan Maierson
Email: ryan.maierson@lw.com
Attention: Jason Morelli
Email: jason.morelli@lw.com
or to such other persons or addresses as may be designated in writing by the party to receive such notice as provided above.
6.8 Entire Agreement. This Agreement (including all exhibits and Addendums hereto), together with the Separation Agreement and the other Ancillary Agreements constitute the entire agreement, and supersede all other prior agreements, understandings, representations and warranties both written and oral, among the parties, with respect to the subject matter hereof.
6.9 No Third-Party Beneficiaries. Except as otherwise specifically provided in this Agreement, (a) the provisions of this Agreement are solely for the benefit of the parties and are not intended to confer upon any Person except the parties any rights or remedies hereunder; and (b) there are no third-party beneficiaries of this Agreement and this Agreement shall not provide any third Person with any remedy, claim, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.
6.10 Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability or the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.
6.11 Interpretation. The table of contents and headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. Where a reference in this Agreement is made to a Section or Exhibit, such reference shall be to a Section
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of or Exhibit to this Agreement unless otherwise indicated. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” For purposes of this Agreement, whenever the context requires the singular number shall include the plural, and vice versa. All references in this Agreement to “$” are intended to refer to United States dollars. Any reference to a particular Law means such Law as amended, modified or supplemented (including all rules and regulations promulgated thereunder) and, unless otherwise provided, as in effect from time to time.
6.12 Construction. This Agreement shall be construed as if jointly drafted by the parties and no rule of construction or strict interpretation shall be applied against either party. The parties represent that this Agreement is entered into with full consideration of any and all rights which the parties may have. The parties have conducted such investigations they thought appropriate, and have consulted with such advisors as they deemed appropriate regarding this Agreement and their rights and asserted rights in connection therewith. The parties are not relying upon any representations or statements made by the other party, or such other party’s employees, agents, representatives or attorneys, regarding this Agreement, except to the extent such representations are expressly set forth or incorporated in this Agreement. The parties are not relying upon a legal duty, if one exists, on the part of the other party (or such other party’s employees, agents, representatives or attorneys) to disclose any information in connection with the execution of this Agreement or their preparation, it being expressly understood that neither party shall ever assert any failure to disclose information on the part of the other party as a ground for challenging this Agreement.
6.13 Consent to Jurisdiction. The state and federal courts located within the State of Delaware (the “Chosen Courts”) shall have exclusive jurisdiction over any and all disputes between the parties hereto, whether in law or in equity, arising out of or relating to this Agreement and the agreements, instruments and documents contemplated hereby and the parties hereto consent to and agree to subject to the exclusive jurisdiction of such Chosen Courts.
6.14 Waiver of Jury Trial. THE PARTIES HEREBY WAIVE TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, AND SHALL NOT ASSERT IN ANY SUCH DISPUTE, ANY CLAIM THAT: (A) SUCH PARTY IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS; (B) SUCH PARTY AND SUCH PARTY’S PROPERTY IS IMMUNE FROM ANY LEGAL PROCESS ISSUED BY SUCH COURTS; OR (C) ANY ACTION OR OTHER PROCEEDING COMMENCED IN SUCH COURTS IS BROUGHT IN AN INCONVENIENT FORUM. THE MAILING OF PROCESS OF OTHER PAPERS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED IN SECTION 6.7 (OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW) SHALL BE VALID AND SUFFICIENT SERVICE THEREOF AND HEREBY WAIVE ANY OBJECTIONS TO SERVICE ACCOMPLISHED IN THE MANNER PROVIDED HEREIN. THE PARTIES HEREBY IRREVOCABLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY.
6.15 Fees and Expenses. Each party shall bear its own expenses incurred in connection with this Agreement and the transactions contemplated hereby, whether or not such transactions shall be consummated, including all fees of its legal counsel, financial advisers and accountants.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have cause this Agreement to be duly executed by their authorized officers as of the Effective Date.
| LICENSOR | ||
| Harley-Davidson, Inc. | ||
| By: | /s/ Paul J. Krause | |
| Name: | Paul J. Krause | |
| Title: | Authorized Signatory | |
| LICENSEE | ||
| LiveWire EV, LLC | ||
| By: | /s/ Amanda Parker | |
| Name: | Amanda Parker | |
| Title: | Chief Legal Officer | |
| Acknowledged and Approved: | ||
| H-D U.S.A., LLC | ||
| By: | /s/ Paul J. Krause | |
| Name: | Paul J. Krause | |
| Title: | Sole Manager | |
[Signature Page to Trademark License Agreement]
EXHIBIT A
Licensed Marks
[***]
EXHIBIT B
Addenda
[***]
EXHIBIT C
Branding Guidelines
[***]
Exhibit 10.12
Execution Version
Certain portions of this Exhibit have been redacted pursuant to Item 601(b)(10) of Regulation S-K and, where applicable, have been marked with “[***]” to indicate where redactions have been made.
JOINT DEVELOPMENT AGREEMENT
This Joint Development Agreement (together with the Exhibits hereto and the Project Work Statements entered into in connection herewith, the “Agreement”) is made effective as of September 26, 2022 (the “Effective Date”), by and between Harley-Davidson, Inc., a Wisconsin corporation (“HD”), and LiveWire EV LLC, a Delaware limited liability company (“LiveWire”). Each of HD and LiveWire is referred to herein individually as a “Party” and together as the “Parties”.
RECITALS
WHEREAS, HD, acting together with its subsidiaries, historically conducted the Harley Business and the LiveWire Business;
WHEREAS, the Parties entered into that certain Separation Agreement effective as of September 26, 2022 (the “Separation Agreement”), pursuant to which the LiveWire Business was separated from the Harley Business and transferred to LiveWire;
WHEREAS, in connection with the Separation, the Parties entered into that certain Intellectual Property License Agreement dated as of the date hereof (the “IP License Agreement”), pursuant to which each Party licenses certain intellectual property rights to the other; and
WHEREAS, following the Separation, and subject to the terms and conditions of this Agreement, HD and LiveWire wish, from time to time, to work cooperatively on research and development relating to certain Projects (as defined below) and to provide for the ownership and use of their respective Intellectual Property (as defined below) used in and developed in connection with the Projects, as well as the prosecution, maintenance and enforcement of such Intellectual Property.
NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:
I. DEFINITIONS; INTERPRETATION
1.1 Definitions. As used in this Agreement, capitalized terms shall have the meaning set forth in this Article I or elsewhere in the body of this Agreement. To the extent any capitalized terms are not defined herein, they shall have the meanings set forth in the Separation Agreement.
(a) “Affiliate” means any entity that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such legal entity. For the purpose of this definition, “control” (including with correlative meanings, “controlled by” and “under common control with”), when used with respect to any legal entity, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such legal entity, whether through the ownership of voting securities or other interests, by contract, agreement, obligation, indenture, instrument, lease, promise, arrangement, release,
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warranty, commitment, undertaking or otherwise. It is expressly agreed that for purposes of this Agreement, from and after the Separation Time, (i) no member of the HD Group shall be deemed to be an Affiliate of any member of the LiveWire Group, (ii) no member of the LiveWire Group shall be deemed to be an Affiliate of any member of the HD Group, and (iii) no joint venture formed after the Separation Time solely between one or more members of the HD Group, on the one hand, and one or more members of the LiveWire Group, on the other hand, shall be deemed to be an Affiliate of, or owned or controlled by, any member of the HD Group or the LiveWire Group for the purposes of this Agreement.
(b) “Background IP” means, with respect to a Party, Intellectual Property (a) owned by such Party as of the Effective Date, or (b) that such Party acquires ownership of following the Effective Date and that either (i) is conceived, developed, discovered or authored solely by such Party, or (ii) acquired by such Party from a third-party, in each case independently of this Agreement. Background IP does not include Project IP.
(c) “Confidential Information” means (a) non-public information and material of a Party or its Affiliates (and of companies with which such Party has entered into confidentiality agreements) that the other Party obtains knowledge of or access to in connection with this Agreement; (b) non-public Intellectual Property of the Disclosing Party; and (c) business and financial information of the Disclosing Party, including pricing, business plans, forecasts, revenues, expenses, earnings projections, sales data and any and all other non-public financial information; provided, however, “Confidential Information” does not include information that: (a) is or becomes public knowledge without any action by, or involvement of, the Recipient or its Affiliates or contractors; (b) is independently developed by the Recipient without reference or access to the Confidential Information of the Disclosing Party; (c) is already in the Recipient’s possession on a non-confidential basis at the time of disclosure thereof; or (d) is obtained by the receiving Party without restrictions on use or disclosure from a third party who did not receive it, directly or indirectly, from the Disclosing Party; provided that the exceptions set forth in clauses (b), (c) and (d) above shall not apply with respect to Confidential Information of LiveWire, to the extent the applicability of either exception is due to HD owning and or operating the LiveWire Business prior to the Separation.
(d) “HD Products” means all original equipment, parts, accessories, goods and services manufactured, sold or offered for sale by HD or its Affiliates.
(e) “Improvements” means all modifications, enhancements, derivative works and improvements of Background IP or Project IP.
(f) “Intellectual Property” means all intellectual property rights in any and all jurisdictions throughout the world, including domestic and foreign patents, copyrights, mask works, designs, trade secrets, and any other intellectual property rights in technologies, software, know-how, inventions, data, methods, processes and other confidential or proprietary information, but excluding any Trademarks.
(g) “LiveWire Business” means the design, development, marketing, sale or distribution of (a) two-, three- or four-wheeled electric vehicles (including two-wheeled electric vehicles for children of a type designed, developed, marketed, sold or distributed by Stacyc, Inc.) or modular platforms for use in such electric vehicles, (b) parts and accessories exclusively related to electric vehicles, and (c) electric vehicle systems (including batteries, power electronics, motors or electric vehicle system software).
(h) “LiveWire Products” means all original equipment, parts, accessories, goods and services manufactured, sold or offered for sale by LiveWire or its Affiliates within the field of the LiveWire Business.
(i) “Products” means the LiveWire Products or the HD Products, as applicable.
(j) “Project IP” means Intellectual Property first conceived, made, developed or prepared by or on behalf of either Party in the performance, and within the scope, of a Project during the Term. Project IP does not include Background IP of either Party or any Improvement thereof.
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1.2 Interpretation. The headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. Where a reference in this Agreement is made to a Section or Exhibit, such reference shall be to a Section of or Exhibit to this Agreement unless otherwise indicated. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” For purposes of this Agreement, whenever the context requires the singular number shall include the plural, and vice versa. All references in this Agreement to “$” are intended to refer to United States dollars. Any reference to a particular Law means such Law as amended, modified or supplemented (including all rules and regulations promulgated thereunder) and, unless otherwise provided, as in effect from time to time.
II. PROJECTS
2.1 Projects. The Parties anticipate that from time to time they will work together on research and development projects (“Projects”) and will use their respective existing and future know-how and technical skills, including Background IP (defined herein) in connection with such Projects. In the event that HD desires to engage in any development projects for its business that are primarily related to electric vehicles, HD shall consult with LiveWire, and LiveWire shall have the right to make a proposal with respect to the terms of such potential project. The Parties shall discuss in good faith to determine whether or not it would be beneficial to the Parties to enter a Project for such development. If HD engages in any development projects for its business that are primarily related to electric vehicles and fails to consult with LiveWire so that LiveWire can make a proposal with respect such potential project as required herein, then the Intellectual Property developed pursuant to such HD development project will be owned and licensed in accordance with the terms set forth in Section III of this Agreement. In the event that either Party desires to engage in a Project, it shall notify the other Party. Upon mutual agreement on a Project, the Parties shall memorialize the Project in a project work statement substantially in the form attached hereto as Exhibit A (each, a “Project Work Statement”). Each Project Work Statement shall be sequentially numbered, (A-1, A-2, A-3 etc.). Upon execution of a Project Work Statement, and effective as of the effective date of such Project Work Statement, such Project Work Statement shall constitute a part of this Agreement. Each Project Work Statement will include details regarding the applicable Project, including, to the extent applicable, the projected deliverables, specifications for those deliverables, dependencies, resources, project schedules and milestones, any associated testing protocols and criteria, applicable fees or cost reimbursements for the Project, and any apportionment of revenues associated with the exploitation of the deliverables and any Project IP. Except as otherwise provided in a Project Work Statement, each Party shall bear its own costs and expenses in connection with each Project. Any Project that (a) is financed or funded more than sixty-five percent (65%) by LiveWire, or (b) allocates to HD ownership of Project IP relating exclusively to the field of the LiveWire Business, will be required to be reviewed by the Conflicts Committee prior to execution of a Project Work Statement therefor. Each Project Work Statement shall be signed by the Head of EV Technology for LiveWire and by the Vice President of Engineering for HD, or representatives at a similar level within each organization. In the event of a conflict between this Agreement and a Project Work Statement, the terms of the Project Work Statement will prevail to the extent of such conflict.
2.2 Third Parties. Each Party may involve its Affiliates and third party contractors, consultants and agents in Projects on an as needed basis and may share Confidential Information with them, so long as such Affiliates and third party contractors, consultants and agents agree to be bound by written confidentiality obligations consistent with those contained herein. Each Party shall be responsible for the actions in connection with and compliance with the terms of this Agreement by its third party contractors, consultants and agents.
2.3 Project Manager. For each Project under this Agreement, each Party shall identify a point of contact to be its project manager (the “Project Managers”) in the applicable Project Work Statement. The Project Manager shall coordinate and act as a liaison with the other Party with respect to such Project. A Party may from time to time change its Project Manager for a Project upon written notice to the other Party’s Project Manager. Each
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Project Manager will be generally responsible for overseeing and supervising its Party’s fulfillment of its obligations under the Project Work Statement, resolving any day-to-day issues or disputes arising with respect to the Project, discussing the progress of the Project and identifying barriers to success, key issues and resolution options with the other Party’s Project Manager.
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III. OWNERSHIP AND LICENSING OF
INTELLECTUAL PROPERTY AND TECHNOLOGY
3.1 Ownership of Background Intellectual Property. Each Party shall retain all right, title and interest in and to its Background IP.
3.2 Ownership of Project IP.
(a) Unless otherwise stated in the applicable Project Work Statement, as between the Parties, any Project IP relating exclusively to the field of the LiveWire Business will be owned by LiveWire (such Project IP, “LiveWire Project IP”), and all other Project IP will be owned by HD (such Project IP, “HD Project IP”). Unless otherwise stated in the applicable Project Work Statement or as otherwise agreed by the Parties, (i) to the extent that ownership of any right, title or interest in and to the LiveWire Project IP vests in HD by inventorship, authorship, or otherwise by operation of law, HD hereby assigns such LiveWire Project IP to LiveWire, and (ii) to the extent that ownership of any right, title or interest in and to the HD Project IP vests in LiveWire by inventorship, authorship, or otherwise by operation of law, LiveWire hereby assigns such HD Project IP to HD.
(b) Each Party agrees to, and to cause its employees and any applicable contractors to, execute such assignments and other documents and instruments, and take such other actions as reasonably requested by the other Party, to evidence, effectuate, and record the foregoing assignments.
3.3 Ownership of Improvements.
(a) Each Party that conceives, discovers, develops or creates an Improvement of another Party’s Background IP or Project IP shall promptly disclose such Improvement to such other Party. Unless otherwise stated in the applicable Project Work Statement, Improvements, together with any embodiments thereof, irrespective of which Party conceives or develops the Improvement or whether the Improvement is made jointly by the Parties under this Agreement, will be owned as follows:
(i) an Improvement of a Party’s Background IP shall be owned solely by the Party that owns or controls the Background IP and shall be considered such Party’s Background IP hereunder; and
(ii) an Improvement of a Party’s Project IP shall be owned solely by the Party that owns the Project IP pursuant to Section 3.2(a) and shall be considered LiveWire Project IP or HD Project IP, as applicable, hereunder.
(b) To the extent that, by operation of law or otherwise, the provisions set forth in Section 3.3(a) do not vest ownership of an Improvement in the intended Party, then the other Party (i) hereby assigns all of its right, title and interest in and to such Improvement to the intended Party, and (ii) agrees to, and to cause its employees and any applicable contractors to, execute such assignments and other documents and instruments, and take such other actions as reasonably requested by the intended assignee Party, to evidence, effectuate, and record the foregoing assignments.
3.4 Licensing of Background Intellectual Property. Without limiting any rights set forth in the IP License Agreement, each Party hereby grants and agrees to grant to the other Party, to the extent it has the right to do so, a worldwide, royalty-free, fully paid-up, non-exclusive, non-sublicensable, non-transferable (except in connection with a permitted assignment pursuant to Section 9.1 Assignments) license to use and exploit such Party’s Background IP (a) solely for purposes of, and to the extent necessary or useful for, the other Party’s performance of a Project, or (b) solely to the extent necessary to use or exploit such Party’s rights in Project IP. Each Party acknowledges that its use of the other Party’s Background IP must be in combination and in connection with the creation or use of Project IP and not on a stand-alone basis.
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3.5 Licensing of Project IP. Subject to the terms and conditions of this Agreement and the applicable Project Work Statement, each Party hereby grants to the other Party a perpetual, worldwide, royalty-free, fully paid-up, non-exclusive, non-sublicensable (except as set forth below), non-transferable (except in connection with a permitted assignment pursuant to Section 9.1) license to use and exploit Project IP owned by such Party for the purpose of making, having made, using, selling, offering for sale and importing the licensed Party’s Products. The foregoing license shall also be sublicensable to third parties solely in connection with the provision of services to the licensee Party, and not, for the avoidance of doubt, for use by any third party for such third party’s own brands or benefit.
3.6 Acknowledgement and Covenants.
(a) Each Party hereby acknowledges and agrees that, except as expressly set forth in this Agreement or a Project Work Statement, the other Party has no obligation whatsoever to provide support, maintenance, advice, services or any other assistance or any documentation or technical information of any kind in connection with the Intellectual Property licensed by such Party to the other Party hereunder.
(b) Each Party hereby acknowledges and agrees that, except as expressly set forth in this Agreement, the other Party shall have no responsibility with respect to the past, present or future validity, subsistence, enforceability, application and/or registration of any of the Intellectual Property licensed by such Party to the other Party hereunder and may make decisions with respect to the prosecution, maintenance, abandonment, or lapse of all such Intellectual Property in its sole and absolute discretion.
(c) Each Party hereby acknowledges and agrees that it shall not at any time claim ownership or challenge the validity of the Intellectual Property licensed to it hereunder anywhere in the world.
3.7 IP License Agreement. In the event of a conflict between this Agreement and the IP License Agreement, the terms of the IP License Agreement will prevail to the extent of such conflict.
IV. PROSECUTION; ENFORCEMENT
4.1 Prosecution. Each Party shall have the right to pursue and obtain patents, or register any other Intellectual Property rights for Background IP and Project IP owned by such Party, in its sole discretion and at its expense, including preparing, filing, prosecuting and maintaining patent applications and patents claiming inventions related to such Improvements or Project IP and conducting any interferences, re-examinations, inter partes reviews, reissues, oppositions or requests for patent term extension or governmental equivalents thereto. Each Party shall, and shall cause its employees and any applicable contractors to, execute such documents and instruments, and take such other actions and provide such assistance as is reasonably requested by the other Party, to the extent necessary in connection with the prosecution and maintenance of such other Party’s Background IP and Project IP, at such other Party’s sole cost and expense.
4.2 Third Party Infringement. Each Party shall promptly notify the owner of any Project IP or Background IP of any suspected infringement of such Project IP or Background IP by a third party. The owner of Project IP or Background IP shall have the sole right, but not the obligation to commence, prosecute and fully control any action, proceeding or settlement related to such suspected infringement (an “Enforcement Action”). All damages and other proceeds recovered as a result of any judgment, settlement or other resolution of an Enforcement Action shall be retained by the Party that owns such Project IP or Background IP. Each Party agrees to, and to cause its employees and any applicable contractors to, execute such documents and instruments, and take such other actions and provide such assistance as is reasonably requested by the other Party, to the extent necessary in connection with the prosecution of an Enforcement Action by such other Party, at such other Party’s sole cost and expense.
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V. CONFIDENTIALITY
5.1 Obligation of Confidentiality. Each Party wishes to ensure that the Confidential Information provided to Recipient under this Agreement is retained in strict confidence by Recipient. For purposes of this Agreement, “Disclosing Party” refers to a Party and/or one or more of its Affiliates whenever it is disclosing information to another Party and/or one or more of its Affiliates, and “Recipient” refers to a Party and/or one or more of its Affiliates whenever it is receiving information from another Party and/or one or more of its Affiliates. Recipient agrees to keep all Confidential Information of Disclosing Party obtained hereunder (whether written or oral, and whether or not explicitly designated as confidential) as well as all knowledge derived therefrom (including all notes, memoranda, summaries, reports, analyses, compilations, studies or other similar materials) in strict confidence and further agrees not to disclose, directly or indirectly to any third party, nor to use, copy, evaluate or incorporate, within or outside of its business, any of such Confidential Information for any purpose other than for the purposes of a Project. Recipient shall allow access to and disclose such Confidential Information only to those of its employees, directors, and officers who need to have access to such Confidential Information for the purposes of a Project. As a condition of such disclosure, Recipient will inform such persons of the confidential nature of such Confidential Information and will be responsible for any failure by such persons to comply with the obligations of this Agreement. Without in any way limiting or abridging Recipient’s obligation hereunder to keep all Confidential Information of Disclosing Party in strict confidence, Recipient agrees to protect such Confidential Information by using the same degree of care, but no less than a reasonable degree of care, to prevent the unauthorized use, dissemination or publication of such Confidential Information as Recipient uses to protect its own confidential information of a like nature.
5.2 Compelled Disclosure. If Recipient is required by legal or administrative authority to disclose any Confidential Information of Disclosing Party, Recipient will notify Disclosing Party in writing of such requirement as soon as practicable so that Disclosing Party may seek an appropriate protective order or other relief or waive compliance with the provisions of this Agreement, and Recipient will cooperate with, and take reasonable actions requested by, Disclosing Party in seeking such protective order or other relief. If, in the absence of a protective order or other relief or the receipt of a waiver from Disclosing Party, Recipient is nevertheless legally required to disclose any Confidential Information of Disclosing Party or else stand liable for contempt or other legal penalty, Recipient may disclose Confidential Information of Disclosing Party in accordance with such requirement, provided that Recipient (a) may disclose only that portion of such Confidential Information that is required by law to be disclosed, (b) must use its reasonable efforts to ensure that such Confidential Information so disclosed is treated confidentially, and (c) must notify Disclosing Party in writing as soon as practicable of the items of such Confidential Information so disclosed.
5.3 Property of Disclosing Party. Confidential Information of Disclosing Party provided or disclosed hereunder shall remain the exclusive property of Disclosing Party, and providing or disclosing such Confidential Information does not create a right, license, interest or privilege of any kind or nature whatsoever with respect to any such Confidential Information.
5.4 No Representations. Disclosure of Confidential Information is made without any express or implied representation or warranty as to the accuracy or the completeness thereof. Disclosing Party explicitly disclaims any liability relating to its Confidential Information or arising from its use, including as may arise from errors or omissions therefrom. However, Disclosing Party does represent and warrant that it has the right to disclose its Confidential Information hereunder, and that such disclosure will not violate any agreement or other obligation by which Disclosing Party is bound.
5.5 Term of Obligation. The obligations of this V shall come into force on the Effective Date and remain in force until the expiration or termination of this Agreement and for a period of five (5) years thereafter (“Confidentiality Term”); provided, however, that for all Confidential Information disclosed prior to the expiration of the Confidentiality Term, the obligations of the Recipient pursuant to this Agreement shall remain valid until either (a) the Confidentiality Term elapses, or (b) a period of five (5) years from the date of disclosure
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elapses, whichever is later. Notwithstanding the foregoing, any Confidential Information constituting a trade secret shall be maintained as such until such information no longer constitutes a trade secret under applicable law.
VI. REPRESENTATIONS AND WARRANTIES; DISCLAIMER
6.1 Mutual Warranties. Each Party represents and warrants to the other Party that: (a) it is duly organized, validly existing and in good standing under the laws of the jurisdictions in which it is organized; (b) it has the requisite power and authority and the legal right to enter into this Agreement and perform its obligations under this Agreement in accordance with its terms; (c) this Agreement constitutes a legal, valid and binding agreement of such Party, enforceable against such Party in accordance with its terms; (d) it will comply with all applicable laws and regulations in the exercise and performance of its rights and obligations under this Agreement; and (e) its execution, delivery and performance of this Agreement throughout its duration do not conflict with or violate any requirement of applicable laws regulations or order of governmental bodies, and do not conflict with, or constitute a default under any contractual obligation of such Party.
6.2 DISCLAIMER. EXCEPT AS EXPRESSLY PROVIDED HEREIN, NEITHER PARTY MAKES, AND, TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW, SPECIFICALLY DISCLAIMS, ANY REPRESENTATION OR WARRANTY OF ANY KIND, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, INCLUDING ANY IMPLIED WARRANTIES OF CONDITION OF TITLE, MERCHANTABILITY, VALIDITY, NON-INFRINGEMENT OF THIRD-PARTY RIGHTS, OR FITNESS FOR A PARTICULAR PURPOSE.
VII. INDEMNIFICATION AND LIMITATION OF LIABILITY
7.1 General Indemnification. Each Party shall indemnify, defend and hold harmless the other Party, its Affiliates and its and their respective officers, directors, employees and representatives (“Indemnitees”) from and against any and all liabilities, losses, costs, damages, fines, assessments, penalties and expenses (including reasonable attorneys’ fees and expenses) incurred by such Indemnitees in connection with any third-party claim (“Claims”) arising from or relating to: (a) the indemnifying Party’s breach of this Agreement; (b) the death or bodily injury of any agent, employee, customer, business invitee or other person caused by the negligent or tortious conduct of the indemnifying Party; or (c) the damage, loss or destruction of any real or tangible personal property for which the indemnifying Party is legally liable or responsible.
7.2 Background Intellectual Property and Project IP Indemnification. Each Party shall indemnify, defend and hold harmless the other Party and their respective Indemnitees from any and all Claims that the Indemnitee’s use of the indemnifying Party’s Background IP in accordance with this Agreement violates the Intellectual Property rights of a third party.
7.3 Indemnity Procedures. If any claim or action is asserted that would entitle an Indemnitee to indemnification pursuant to Sections 7.1 and 7.2 above (a “Proceeding”), the Party seeking indemnification will give written notice thereof to the Party from which indemnification is sought promptly; provided, however, that the failure of the indemnified Party to give timely notice hereunder will not affect rights to indemnification hereunder, except to the extent that the indemnifying Party demonstrates actual damage caused by such failure. The indemnifying Party may elect to direct the defense or settlement of any Proceeding by giving written notice to the indemnified Party, which election will be effective immediately upon the indemnified Party’s receipt of such written notice. The indemnifying Party will have the right to employ counsel reasonably acceptable to the indemnified Party to defend any Proceeding, or to compromise, settle or otherwise dispose of the same, if the indemnifying Party deems it advisable to do so, all at the expense of the indemnifying Party; provided that the indemnifying Party will not settle, or consent to any entry of judgment in, any Proceeding without obtaining
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either: (a) an unconditional release of the indemnified Party (and their Affiliates and each of their respective officers, directors, employees and agents) from all liability with respect to all claims underlying such Proceeding; or (b) the prior written consent of the indemnified Party. The indemnified Party will not settle or consent to any entry of judgment, in any Proceeding without obtaining the prior written consent of the indemnifying Party (such consent not to be unreasonably withheld, delayed or conditioned). The Parties will fully cooperate with each other in any Proceeding and will make available to each other any books or records useful for the defense of any such Proceeding.
7.4 Limitation of Liability. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW, EXCEPT FOR THE PARTIES’ INDEMNIFICATION OBLIGATIONS AND LIABILITY ARISING FROM A PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OR BREACH OF A PARTY’S CONFIDENTIALITY OBLIGATIONS HEREUNDER, IN NO EVENT SHALL EITHER PARTY OR ITS AFFILIATES BE LIABLE FOR, OR BEAR ANY OBLIGATION IN RESPECT OF, ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES OF ANY KIND OR CHARACTER, OR ANY DAMAGES RELATING TO OR ARISING OUT OF LOST PROFITS, LOSS OF DATA, LOSS IN VALUE, LOSS OF GOODWILL, LOSS OF OPPORTUNITY OR LIMITATIONS OR RESTRICTIONS ON BUSINESS PRACTICES, HOWEVER CAUSED AND UNDER ANY THEORY OF LIABILITY, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, WHETHER OR NOT THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
VIII. TERM AND TERMINATION
8.1 Term. This Agreement shall enter into force with effect on the Effective Date and shall remain in force until terminated upon the Parties’ mutual written agreement (the “Term”). Termination of this Agreement shall terminate the Parties’ rights to enter new Projects, but shall not terminate any existing Project unless the relevant Project is also terminated in accordance with this Section 8.1. The term for each individual Project shall be set forth in each Project Work Statement.
8.2 Termination for Breach. Either Party may terminate this Agreement and all outstanding Projects by written notice, effective immediately, if the other Party has committed a material breach of this Agreement and fails to cure such breach within thirty (30) days of its receipt of written notice of such breach.
8.3 Effect of Termination. Expiration or termination of this Agreement shall not relieve the Parties of any obligations accruing prior to the effective date of termination. Upon termination or expiration of this Agreement for any reason, each Party shall return to the other Party or provide such other Party with written certification of the destruction of, at such other Party’s sole option, all Confidential Information of such other Party (including all copies thereof in any type of media) that are in the Recipient’s possession or control.
8.4 Survival. The provisions of Sections I (Definitions; Interpretation), III (Ownership and Licensing of Intellectual Property and Technology), IV (Prosecution; Enforcement), V (Confidentiality), V (Representations and Warranties; Disclaimer), VII (Indemnification and Limitation of Liability), 8.3 (Effect of Termination), this Section 8.4 (Survival), and IX (General Provisions) shall survive the termination or expiration of this Agreement.
IX. GENERAL PROVISIONS
9.1 Assignment. This Agreement and the rights and obligations hereunder may not be assigned or transferred by either Party, in whole or in part, without the express written consent of the other Party, which shall not unreasonably be withheld, conditioned or delayed. Notwithstanding the foregoing, either Party may (i) assign this Agreement, in whole or in part, to any of its Affiliates, (ii) assign or otherwise transfer this Agreement, in
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whole but not in part, to any Person in connection with a transfer of all or substantially all of the business of such Party (whether by merger, consolidation, sale of assets, sale or exchange of stock, by operation of law or otherwise and whether in a single or multiple transactions), or (iii) sublicense the licenses granted to it pursuant to Section 3.4 and 3.5 to any acquirer of a distinct business unit or division of such Party, provided that such sublicense is limited to the Products of such business unit or division, and not to any of the acquirer’s other products; provided that, in each of the above cases, such transferee, assignee or successor agrees in writing to be bound by the applicable terms of this Agreement. Further, each Party may collaterally assign its rights under this Agreement to its lenders or other financing sources, provided that, upon foreclosure, any assignee or transferee agrees to be bound by the terms of this Agreement. Any attempted or purported assignment or transfer in violation of the preceding shall be null and void and of no effect whatsoever. Subject to the foregoing, this Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and permitted assigns.
9.2 Entire Agreement. This Agreement, including the Exhibits hereto and any Project Work Statements entered into in connection herewith, represents the entire agreement and supersedes all prior negotiations, understandings, representations, warranties or agreements either written or oral between the Parties with respect to the subject matter hereof.
9.3 Modification. Subject to the provisions of applicable law, and except as otherwise provided in this Agreement, no amendment or modification of this Agreement shall be binding upon the Parties unless made in writing and duly executed by the authorized representatives of the Parties.
9.4 Severability, Waiver. If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall remain in full force and effect and the provision found invalid or unenforceable shall be replaced by a valid and enforceable provision corresponding as closely as possible to the invalid or unenforceable provision in its economic effect. No waiver of any provisions of this Agreement will be valid unless the same is in writing and signed by the Party against whom such waiver is sought to be enforced. A waiver or consent given by either Party on any one occasion is effective only in that instance and will not be construed as a bar to or waiver of any right on any other occasion.
9.5 Notices. All notices and other communications between the Parties shall be in writing and shall be deemed to have been duly given (a) when delivered in person, (b) when delivered by FedEx or other nationally recognized overnight delivery service; or (c) when delivered by email (in each case in this clause (c), solely if receipt is confirmed), addressed as follows:
if to HD:
3700 W. Juneau
Milwaukee, WI 53217
Attention: Chief Legal Officer
Email: H-DGeneralCounsel@harley-davidson.com; and
paul.krause@harley-davidson.com
with copies (which shall not constitute notice) to:
Latham & Watkins LLP
330 North Wabash Avenue, Suite 2800
Chicago, IL 60611
Attention: Ryan Maierson
Email: ryan.maierson@lw.com
Attention: Jason Morelli
Email: jason.morelli@lw.com
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if to LiveWire:
LiveWire
3700 W. Juneau
Milwaukee, WI 53217
Attention: Chief Legal Officer
Email: Paul.Krause@harley-davidson.com; and
H-DGeneralCounsel@harley-davidson.com
with copies (which shall not constitute notice) to:
Latham & Watkins LLP
330 North Wabash Avenue, Suite 2800
Chicago, IL 60611
Attention: Ryan Maierson
Email: ryan.maierson@lw.com
Attention: Jason Morelli
Email: jason.morelli@lw.com
9.6 Governing Law. This Agreement (and any claims or disputes arising out of or related hereto or to the transactions contemplated hereby or to the inducement of either Party to enter herein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the Laws of the State of Delaware, irrespective of the choice of laws principles of the State of Delaware, including all matters of validity, construction, effect, enforceability, performance and remedies.
9.7 Consent to Jurisdiction. The state and federal courts located within the State of Delaware (the “Chosen Courts”) shall have exclusive jurisdiction over any and all disputes between the parties hereto, whether in law or in equity, arising out of or relating to this Agreement and the agreements, instruments and documents contemplated hereby and the parties hereto consent to and agree to subject to the exclusive jurisdiction of such Chosen Courts.
9.8 Waiver of Jury Trial(b) . THE PARTIES HEREBY WAIVE TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, AND SHALL NOT ASSERT IN ANY SUCH DISPUTE, ANY CLAIM THAT: (A) SUCH PARTY IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS; (B) SUCH PARTY AND SUCH PARTY’S PROPERTY IS IMMUNE FROM ANY LEGAL PROCESS ISSUED BY SUCH COURTS; OR (C) ANY ACTION OR OTHER PROCEEDING COMMENCED IN SUCH COURTS IS BROUGHT IN AN INCONVENIENT FORUM. THE MAILING OF PROCESS OF OTHER PAPERS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED IN SECTION 9.5 (OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW) SHALL BE VALID AND SUFFICIENT SERVICE THEREOF AND HEREBY WAIVE ANY OBJECTIONS TO SERVICE ACCOMPLISHED IN THE MANNER PROVIDED HEREIN. THE PARTIES HEREBY IRREVOCABLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY.
9.9 Counterparts. This Agreement may be executed in one or more counterparts, and by the Parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. The exchange of a fully executed Agreement (in counterparts or otherwise) by electronic delivery in .pdf format shall be sufficient to bind the Parties to the terms and conditions of this Agreement.
9.10 No Third-Party Beneficiaries. Except as otherwise specifically provided in this Agreement, (a) the provisions of this Agreement are solely for the benefit of the Parties and are not intended to confer upon any
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person or entity except the Parties any rights or remedies hereunder; and (b) there are no third-party beneficiaries of this Agreement and this Agreement shall not provide any third party with any remedy, claim, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.
9.11 Construction. This Agreement shall be construed as if jointly drafted by the Parties and no rule of construction or strict interpretation shall be applied against either Party. The Parties represent that this Agreement is entered into with full consideration of any and all rights which the Parties may have. The Parties have conducted such investigations they thought appropriate, and have consulted with such advisors as they deemed appropriate regarding this Agreement and their rights and asserted rights in connection therewith. The Parties are not relying upon any representations or statements made by the other Party, or such other Party’s employees, agents, representatives or attorneys, regarding this Agreement, except to the extent such representations are expressly set forth or incorporated in this Agreement. The Parties are not relying upon a legal duty, if one exists, on the part of the other Party (or such other Party’s employees, agents, representatives or attorneys) to disclose any information in connection with the execution of this Agreement or their preparation, it being expressly understood that neither Party shall ever assert any failure to disclose information on the part of the other Party as a ground for challenging this Agreement.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
| Harley-Davidson, Inc. | ||
| By: | /s/ Paul J. Krause | |
| Name: | Paul J. Krause | |
| Title: | Authorized Signatory | |
| LiveWire EV, LLC | ||
| By: | /s/ Amanda Parker | |
| Name: | Amanda Parker | |
| Title: | Chief Legal Officer | |
Exhibit A
Form of Project Work Statement
[***]
Exhibit 10.13
Execution Version
EMPLOYEE MATTERS AGREEMENT
BY AND BETWEEN
HARLEY-DAVIDSON, INC.
AND
LIVEWIRE EV, LLC
DATED AS OF SEPTEMBER 26, 2022
EMPLOYEE MATTERS AGREEMENT
This Employee Matters Agreement (the “Agreement”) is entered into effective as of September 26, 2022, by and between Harley-Davidson, Inc., a Wisconsin corporation (“HD”), and LiveWire EV, LLC, a Delaware limited liability company and wholly owned subsidiary of HD (“LiveWire”), each a “Party” and together, the “Parties.” Capitalized terms used but not otherwise defined shall have the respective meanings assigned to them in Article I.
RECITALS:
WHEREAS, the board of directors of HD (the “HD Board”) has previously determined that it is appropriate, advisable and in the best interests of HD and its stockholders for HD to separate the LiveWire Business from the HD Business, on the terms and conditions set forth herein and in the Separation Agreement;
WHEREAS, to effect the Separation (as defined in the Separation Agreement), the Parties are entering into that certain Separation Agreement dated as of the date hereof (as amended from time to time, the “Separation Agreement”);
WHEREAS, in connection with their entry into the Separation Agreement, HD and LiveWire are entering into this Agreement for the purpose of allocating between and among them and certain of their subsidiaries certain assets, Liabilities and responsibilities with respect to certain (i) employees, independent contractors and directors, (ii) compensation, equity and benefit plans, programs and arrangements and (iii) other employee-related matters; and
WHEREAS, immediately following the consummation of the Separation and pursuant to the terms of that Business Combination Agreement, dated as of December 12, 2021 (as such agreement may be modified, restated, waived or amended from time to time in accordance with its terms, the “Business Combination Agreement”), among other things, (a) LiveWire Group, Inc. (formerly known as LW EV Holdings, Inc.), a Delaware corporation (“HoldCo”) will become the sole stockholder of AEA-Bridges Impact Corp., an exempted company incorporated in the Cayman Islands (“SPAC”), (b) HD will contribute, or cause to be contributed, LiveWire to HoldCo and (c) SPAC will become the sole equityholder and managing member of LiveWire (the “Business Combination” and, together with the Separation, the “Transactions”);
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements, provisions and covenants contained in this Agreement, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used and not otherwise defined in this Agreement shall have their respective meanings set forth below:
“ACA” means the Patient Protection and Affordable Care Act of 2010, as amended.
“Accrued PTO” means, with respect to a LiveWire Employee or a HD Employee, such individual’s accrued vacation, if any.
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“Action” means any demand, action, claim, complaint, dispute, suit, countersuit, arbitration, inquiry, subpoena, proceeding, audit or investigation of any nature (whether criminal, civil, legislative, administrative, regulatory, prosecutorial or otherwise) by or before any Governmental Entity or in any arbitration or mediation.
“Affiliate” means, when used with respect to a specified Person, a Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such specified Person. For the purpose of this definition, “control” (including with correlative meanings, “controlled by” and “under common control with”), when used with respect to any specified Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other interests, by contract, agreement, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment, undertaking or otherwise. It is expressly agreed that for purposes of this Agreement, following the execution of this Agreement, (i) no member of the HD Group shall be deemed to be an Affiliate of any member of the LiveWire Group, (ii) no member of the LiveWire Group shall be deemed to be an Affiliate of any member of the HD Group and (iii) no joint venture formed after the Separation Time solely between one or more members of the HD Group, on the one hand, and one or more members of the LiveWire Group, on the other hand, shall be deemed to be an Affiliate of, or owned or controlled by, any member of the HD Group or the LiveWire Group for the purposes of this Agreement.
“Ancillary Agreements” shall have the meaning provided in the Separation Agreement.
“Approvals or Notifications” shall have the meaning provided in the Separation Agreement.
“Assets” shall have the meaning provided in the Separation Agreement.
“Benefit Plan” means any compensation and/or benefit plan, program, arrangement, agreement or other commitment, including each (i) employment, consulting, severance, termination, pension, retirement, supplemental retirement, excess benefit, profit sharing, bonus, incentive, sales incentive, commission, management objective program, deferred compensation, retention, transaction, change in control and similar plan, program, arrangement, agreement or other commitment, (ii) stock option, restricted stock, stock unit, performance stock, stock appreciation, stock purchase, deferred stock, phantom equity or other compensatory equity or equity-based plan, program, arrangement, agreement or other commitment, (iii) savings, life, health, welfare, post-employment welfare, disability, accident, medical, dental, vision, cafeteria, insurance, flexible spending, adoption/dependent/employee assistance, tuition, vacation, relocation, paid-time-off, other fringe benefit and any other benefit or compensation plan, program, arrangement, agreement or other commitment, including in each case, each “employee benefit plan” as defined in Section 3(3) of ERISA (whether or not subject thereto) and (iv) any trust, escrow, funding, insurance or other agreement related to any of the foregoing.
“Business Records” means all files, documents, instruments, papers, books, studies, reports, records, tapes, microfilms, photographs, letters, ledgers, journals, financial statements, technical documentation (design specifications, functional requirements, operating instructions, logic manuals, flow charts, etc.), user documentation (installation guides, user manuals, training materials, release notes, working papers, etc.), correspondence, lists (including customer and supplier lists and information), regulatory records associated with any Governmental Entity, promotional materials, employee records, corporate records, Tax Returns, other Tax work papers and files and other documents in whatever form, physical, electronic (including email) or otherwise.
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“Closing Company Financial Statements” has the meaning provided in the Business Combination Agreement.
“COBRA” means the continuation coverage requirements for “group health plans” under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and as codified in Code Section 4980B and Sections 601 through 608 of ERISA, together with all regulations promulgated thereunder, and any similar state Law.
“Code” means the Internal Revenue Code of 1986, as amended.
“Contractor” means, with respect to any member of the LiveWire Group or member of the HD Group, any independent individual or agency personnel who works or has worked for such entity (including, without limitation, full-time, part-time or temporary workers). Contractors may include, without limitation, independent contractors who invoice a member of the LiveWire Group or a member of the HD Group (as applicable) directly for services provided and agency workers for which the applicable agency invoices a member of the LiveWire Group or a member of the HD Group (as applicable) for services provided. For the avoidance of doubt, Contractors shall not include third-party firms, vendors or other entities that provide services relating to a particular expertise or subject matter to a member of the LiveWire Group or a member of the HD Group or any of their employees or other personnel.
“Director” shall mean, with respect to any member of the LiveWire Group or member of the HD Group, a non-employee member of the board of directors or managers, as applicable, of such entity.
“Employee” shall mean, with respect to any member of the LiveWire Group or member of the HD Group, any full-time or part-time employee of such entity.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.
“Governmental Approvals” shall have the meaning provided in the Separation Agreement.
“Governmental Entity” means any governmental or regulatory authority, agency, commission, body or other governmental or regulatory entity (including any court or arbitral body (public or private)), United States or non-United States, national or supra-national, state or local, including the SEC and the other Regulatory Authorities.
“HD 401(k) Plan” shall mean the Harley-Davidson Retirement Savings Plan for Salaried Employees, as amended and/or restated from time to time.
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“HD Benefit Plan” shall mean each Benefit Plan that is not a LiveWire Benefit Plan, LiveWire Individual Agreement or an HD Individual Agreement, and (i) which is sponsored, maintained, entered into, or contributed to by any member of the HD Group, or (ii) with respect to which any member of the HD Group otherwise has any liability or obligation, whether fixed or contingent, including the HD Equity Plans, the HD 401(k) Plan, the HD Deferred Compensation Plan, the HD Health and Welfare Plans, the HD Cafeteria Plan, the HD Retiree Health Care Account and the HD Cash Incentive Plans.
“HD Business” has the meaning ascribed to “Harley Business” in the Separation Agreement.
“HD Cafeteria Plan” shall mean a “cafeteria plan” (within the meaning of Section 125 of the Code) maintained by any member of the HD Group.
“HD Cash Incentive Plan” shall mean each annual performance bonus, cash incentive compensation, commission or similar cash payment, plan or program maintained by HD in which one or more LiveWire Employees is eligible to participate as of immediately prior to the Separation Time.
“HD Common Stock” shall mean the issued and outstanding shares of common stock of HD.
“HD Deferred Compensation Plan” shall mean the Harley-Davidson Management Deferred Compensation Plan, as amended and/or restated from time to time.
“HD Employee” shall mean each Employee, Contractor or Director who provides services primarily for the benefit of the HD Business and who (i) following the Separation Time, remains employed by or in service with any member of the HD Group, including any such active employees and any such employees on approved leaves of absence, or (ii) terminated or terminates, as applicable, services with the HD Group prior to the Separation Time.
“HD Equity Awards” shall mean, collectively, any equity award granted pursuant to any HD Equity Plan.
“HD Equity Plans” shall mean, collectively, the Harley-Davidson, Inc. 2009 Stock Incentive Plan, the Amended and Restated Harley-Davidson, Inc. 2014 Stock Incentive Plan, and the Harley-Davidson, Inc. 2020 Stock Incentive Plan.
“HD Group” has the meaning provided in the Separation Agreement.
“HD Indemnitees” has the meaning provided in the Separation Agreement.
“HD Individual Agreement” shall mean each Benefit Plan sponsored, maintained, entered into or contributed to by any member of the HD Group or with respect to which any member of the HD Group otherwise has any liability or obligation, whether fixed or contingent, in any case, under which no more than one service provider is eligible to receive compensation and/or benefits.
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“HD Participant” shall mean any individual who (i) prior to the Separation Time, is eligible to participate in one or more HD Benefit Plans, and (ii) following the Separation Time, is (A) a HD Employee who is eligible to participate in one or more HD Benefit Plans, or (B) a beneficiary, dependent or alternate payee of any of the foregoing.
“HD Pension Plans” shall mean (i) the Harley-Davidson Retirement Annuity Plan and (ii) the Harley Davidson Retirement Plan, in each case, as amended and/or restated from time to time.
“HD Retiree Health Care Account” means the Harley-Davidson Motor Company Group Retiree Health Care Account.
“HD RSU Award” shall mean an award of restricted stock units granted under the Harley-Davidson, Inc. 2020 Stock Incentive Plan (excluding any such award subject to vesting based on the attainment of performance metrics).
“HIPAA” shall mean the Health Insurance Portability and Accountability Act of 1996, as amended.
“IRS” shall mean the U.S. Internal Revenue Service.
“Law” means any supranational, federal, state, local or provincial, municipal, foreign or common law, act, code, statute, treaty, ordinance, rule, regulation, order, judgment, injunction, award, decree, agency requirement, writ, franchise, variance, exemption, approval, certificate, notice, bylaw, standard, policy guidance, license, permit or other binding requirements, policies or instruments of any relevant jurisdiction, including in the United States or elsewhere issued, promulgated, adopted or entered into by or with any Governmental Entity or any Self-Regulatory Organization. .
“Liabilities” shall have the meaning provided in the Separation Agreement.
“LiveWire 401(k) Plan” shall mean the LiveWire EV, LLC 401(k) Plan, as amended and/or restated from time to time.
“LiveWire Benefit Plan” shall mean each Benefit Plan that is not an HD Benefit Plan, HD Individual Agreement or a LiveWire Individual Agreement and (i) which is sponsored, maintained, entered into or contributed to, in each case, solely by any member of the LiveWire Group or (ii) with respect to which any member of the LiveWire Group otherwise has any liability or obligation, whether fixed or contingent, including the LiveWire 401(k) Plan, the LiveWire Cafeteria Plan, the LiveWire Health and Welfare Plans and the LiveWire Cash Incentive Plan.
“LiveWire Business” has the meaning provided in the Separation Agreement.
“LiveWire Business Records” shall mean all Business Records to the extent related to the LiveWire Business.
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“LiveWire Cafeteria Plan” shall mean the “cafeteria plan” (within the meaning of Section 125 of the Code) maintained by LiveWire.
“LiveWire Employee” shall mean each Employee or Contractor who provides services primarily for the benefit of the LiveWire Business and who, following the Separation Time, remains employed by or in service with any member of the LiveWire Group, including any such employees on approved leaves of absence, in each case, as set forth on Exhibit A, which shall be updated within three (3) days prior to the Separation Time.
“LiveWire Group” has the meaning provided in the Separation Agreement.
“LiveWire Indemnitee” has the meaning provided in the Separation Agreement.
“LiveWire Individual Agreement” shall mean each Benefit Plan sponsored, maintained entered into or contributed to by any member of the LiveWire Group or with respect to which any member of the LiveWire Group otherwise has any liability or obligation, whether fixed or contingent, in any case, under which no more than one service provider is eligible to receive compensation and/or benefits.
“LiveWire Participant” shall mean any individual who, (i) prior to the Separation Time, is eligible to participate in one or more HD Benefit Plans or LiveWire Benefit Plans, and (ii) following the Separation Time, is (A) a LiveWire Employee who is eligible to participate in one or more LiveWire Benefit Plans, or (B) a beneficiary, dependent or alternate payee of any of the foregoing.
“NYSE” means the New York Stock Exchange.
“Participating Company” shall mean, (i) with respect to a LiveWire Benefit Plan, any member of the LiveWire Group that is a participating employer in such LiveWire Benefit Plan; and (ii) with respect to an HD Benefit Plan, any member of the HD Group and, prior to the Separation Time, any member of the LiveWire Group, in each case, that is a participating employer in such HD Benefit Plan.
“Person” means any individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture (including with respect to any vessel), estate, trust, association, organization, Governmental Entity or other entity of any kind or nature.
“SEC” means the U.S. Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.
“Self-Regulatory Organization” means any United States or non-United States commission, board, agency or body that is not a Governmental Entity but is charged with the supervision or regulation of brokers, dealers, securities underwriting or trading, stock exchanges, commodities exchanges, electronic communication networks, insurance group or agents, investment group or investment advisers, including the NYSE.
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“Separation Time” has the meaning provided in the Separation Agreement.
“Shared Employee” means the individual set forth on Exhibit B.
“Subsidiary” means, with respect to any Person, any entity, whether incorporated or unincorporated, of which at least a majority of the securities or ownership interests having by their terms voting power to elect a majority of the board of directors or other Persons performing similar functions is directly or indirectly owned or controlled by such Person or by one or more of its respective Subsidiaries.
“Third Party” means any Person that is not a member of the HD Group or LiveWire Group.
ARTICLE II
GENERAL PRINCIPLES
Section 2.1 Post-Separation Employment. Immediately after the Separation Time, by virtue of this Agreement and without further action by any Person, (a) each LiveWire Employee shall continue to be employed or engaged at LiveWire or such other member of the LiveWire Group as employs or engages such LiveWire Employee as of immediately prior to the Separation Time, and (b) each HD Employee, to the extent then employed, shall continue to be employed or engaged at HD or such other member of the HD Group as employs or engages such HD Employee as of immediately prior to the Separation Time. The Parties shall take all actions as are necessary to ensure that all LiveWire Employees are employed or engaged at a member of the LiveWire Group and all HD Employees are employed or engaged at a member of the HD Group, in each case, as of immediately prior to the Separation Time.
Section 2.2 No Termination/Severance; No Change in Control. Except as otherwise set forth in Section 5.2 or Section 7.7(e), no LiveWire Employee or HD Employee shall be deemed to (a) terminate employment or service solely by virtue of the consummation of the Separation, any transfer of employment or other service relationship contemplated hereby, or any related transactions or events contemplated by the Separation Agreement, this Agreement or any Ancillary Agreement, or (b) become entitled to any severance, termination, separation or similar rights, payments or benefits, whether under any Benefit Plan or otherwise, in connection with any of the foregoing. Neither the Separation (as defined in the Separation Agreement) nor any other transaction(s) contemplated by the Separation Agreement, this Agreement or any Ancillary Agreement shall constitute or be deemed to constitute a “change in control,” a “change of control,” “corporate change” or any similar corporate transaction impacting the vesting or payment of any amounts or benefits for purposes of any LiveWire Benefit Plan or HD Benefit Plan.
Section 2.3 Employment Law Liabilities.
(a) Separate Employers. Subject to the provisions of ERISA and the Code, on and after the Separation Time, each member of the HD Group shall be a separate and independent employer from each member of the LiveWire Group.
(b) Employment Litigation. Except as otherwise expressly provided in this Agreement:
(i) HD and/or the other members of the HD Group shall be solely liable for, and no member of the LiveWire Group shall have any obligation or Liability with respect to, any employment-related claims and Liabilities regarding (A) HD Employees and/or prospective HD Employees relating to, arising out of, or resulting from the prospective employment or service,
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actual employment or service and/or termination of employment or service, in any case, of such individual(s) with any member of the HD Group or any member of the LiveWire Group, whether the basis for such claims arose before, on, or after the Separation Time, including, without limitation, any claim or Liability relating to or arising out of any such individual’s participation in an HD Benefit Plan or an HD Individual Agreement, and (B) LiveWire Employees relating to, arising out of, or resulting from the actual employment or service of such individual(s) with any member of the HD Group or any member of the LiveWire Group, solely if the basis for such claims arose on or before the Separation Time, including, without limitation, any such claim or Liability relating to or arising out of any such individual’s participation in an HD Benefit Plan or HD Individual Agreement. For the avoidance of doubt, the HD Group shall be solely responsible for any wages or benefits that have been accrued but not yet paid as of the Separation Time, and shall indemnify the LiveWire Indemnitees for any such Liabilities. The HD Group shall indemnify the LiveWire Indemnitees for any Liabilities related to this Section 2.3(b)(i) pursuant to Section 2.3 of the Separation Agreement.
(ii) LiveWire and/or the other members of the LiveWire Group shall be solely liable for, and no member of the HD Group shall have any obligation or Liability with respect to, any employment-related claims and Liabilities regarding LiveWire Employees and/or prospective LiveWire Employees relating to, arising out of, or resulting from the prospective employment or service, actual employment or service and/or termination of employment or service, in any case, of such individual(s) with any member of the LiveWire Group, solely if the basis for such claims arose after the Separation Time, including, without limitation, any such claim or Liability relating to or arising out of any such individual’s participation in a LiveWire Benefit Plan or LiveWire Individual Agreement. For the avoidance of doubt, the LiveWire Group shall be solely responsible for any wages of the LiveWire Employees or benefits under LiveWire Benefit Plans, or LiveWire Individual Agreements, in each case, that are accrued on and after the Separation Time, and shall indemnify the HD Indemnitees for such Liabilities. The LiveWire Group shall indemnify the HD Indemnitees for any Liabilities related to this Section 2.3(b)(ii) in accordance with the terms of Section 2.2 of the Separation Agreement.
(iii) Notwithstanding the foregoing, any employment-related claims and Liabilities regarding the Shared Employee relating to, arising out of, or resulting from the employment or service and/or termination of employment or service of such Shared Employee with the HD Group or the LiveWire Group shall be allocated between the HD Group and the LiveWire Group in accordance with the allocation methodology mutually agreed upon by HD and LiveWire.
(c) Claims; Prior Notice of Claims Settlement.
(i) HD shall defend any employee claims and employment-related claims for which any member of the HD Group is liable under this Agreement, and LiveWire shall defend any employee claims and employment-related claims for which any member of the LiveWire Group is liable under this Agreement.
(ii) Each Party hereto shall, when applicable, notify in writing and consult with the other Party prior to making any settlement of an employee claim or an employment-related claim for which it is liable under this Agreement, for the purpose of attempting to avoid any prejudice to such other Party arising from the settlement. For the avoidance of doubt, nothing herein shall prevent any Party from settling any employment-related claim or shall confer upon any Party any rights of consent or other rights (other than to notice of proposed settlement and consultation) with respect to any employee claim against another Party. Notwithstanding anything to the contrary, no Party shall settle any employment-related claim for which the other Party bears any settlement liability unless such Party has approved the settlement amount (which approval shall not be unreasonably withheld) and such settlement contains a release of such Party.
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Section 2.4 Reimbursement; Late Payments.
(a) Reimbursement of LiveWire. From time to time after the Separation Time, HD shall promptly reimburse LiveWire, upon LiveWire’s reasonable request and the presentation by LiveWire of such substantiating documentation as HD shall reasonably require, for the cost of any obligations or Liabilities satisfied or assumed by a member of the LiveWire Group that are the responsibility of a member of the HD Group pursuant to this Agreement. Except as otherwise provided in this Agreement, any such request for reimbursement must be made by LiveWire as promptly as practicable following, but in no event later than one hundred twenty (120) days following, the date on which such obligations or Liabilities are satisfied or assumed, as applicable, by the LiveWire Group.
(b) Reimbursement of HD. From time to time after the Separation Time, LiveWire shall promptly reimburse HD, upon HD’s reasonable request and the presentation by HD of such substantiating documentation as LiveWire shall reasonably require, for the cost of any obligations or Liabilities satisfied or assumed by the HD Group that are the responsibility of the LiveWire Group pursuant to this Agreement. Except as otherwise provided in this Agreement, any such request for reimbursement must be made by HD as promptly as practicable following, but in no event later than one hundred twenty (120) days following, the date on which such obligations or Liabilities are satisfied or assumed, as applicable, by the HD Group.
Section 2.5 No Duplication or Acceleration of Benefits. Notwithstanding anything to the contrary in this Agreement, the Separation Agreement or any Ancillary Agreement, no participant in any LiveWire Benefit Plan or LiveWire Individual Agreement shall receive benefits that duplicate benefits provided by the corresponding HD Benefit Plan or HD Individual Agreement for the same period of service. Furthermore, unless expressly provided for in this Agreement, the Separation Agreement or in any Ancillary Agreement or required by applicable Law, no provision in this Agreement shall, in and of itself, be construed to create any right to accelerated vesting of or accelerated payment of any compensation or benefits with respect to any LiveWire Employee.
ARTICLE III
TERMINATION OF PARTICIPATION IN BENEFIT PLANS; SERVICE CREDIT
Section 3.1 Termination of Participation in Benefit Plans.
(a) Except as otherwise expressly provided in this Agreement or any Ancillary Agreement or as otherwise expressly agreed to in writing between the Parties (with the consent of the SPAC, such consent not to be unreasonably withheld), effective as of the date that the applicable LiveWire Benefit Plan is established and begins to cover eligible LiveWire Employees, which (except as expressly provided in this Agreement or any Ancillary Agreement or as otherwise expressly agreed to in writing between the Parties (with the consent of the SPAC, such consent not to be unreasonably withheld)) shall occur no later than the Separation Time (any such date, a “LiveWire Benefits Effective Date”), (i) each member of the HD Group shall cease to be a Participating Company in such LiveWire Benefit Plan (to the extent any such member of the HD Group was such a Participating Company in such LiveWire Benefit Plan as of immediately prior to the LiveWire Benefits Effective Date), (ii) each HD Participant shall cease to participate in, be covered by, accrue benefits under or be eligible to contribute to such LiveWire Benefit Plan (to the extent any such HD Participant so participated in such LiveWire Benefit Plan as of immediately prior to the LiveWire Benefits Effective Date), (iii) each member of the LiveWire Group shall cease to be a Participating Company in the corresponding HD Benefit Plan (to the extent any such member of the
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LiveWire Group was such a Participating Company in such HD Benefit Plan as of immediately prior to the LiveWire Benefits Effective Date), and (iv) each LiveWire Participant shall cease to participate in, be covered by, accrue benefits under or be eligible to contribute to the corresponding HD Benefit Plan (to the extent any such LiveWire Participant so participated in such HD Benefit Plan as of immediately prior to the LiveWire Benefits Effective Date) and, in each case, LiveWire and HD shall take all necessary action prior to the LiveWire Benefits Effective Date to effectuate each such cessation.
(b) Except as otherwise expressly set forth in this Agreement or any Ancillary Agreement, from and after the Separation Time (i) LiveWire and/or the other members of the LiveWire Group shall be solely liable for, and no member of the HD Group shall have any Liability under, any LiveWire Benefit Plan or LiveWire Individual Agreement, and (ii) HD and/or the other members of the HD Group shall be solely liable for, and no member of the LiveWire Group shall have any Liability under, any HD Benefit Plan or any HD Individual Agreement.
Section 3.2 Service Recognition.
(a) Pre-Separation Service Credit. Each LiveWire Benefit Plan shall provide that, for purposes of eligibility, vesting (other than with respect to future equity awards) and determining level of paid time off and severance benefits, each LiveWire Participant’s years of service with any member of the LiveWire Group or HD Group (or any of their respective predecessors) as of immediately prior to the LiveWire Benefits Effective Date, that (i) were recognized under the corresponding HD Benefit Plan, or (ii) would have been recognized under the corresponding HD Benefit Plan in which such LiveWire Participant was eligible to participate immediately prior to the applicable LiveWire Benefits Effective Date, had such LiveWire Participant actually participated in such corresponding HD Benefit Plan, shall be taken into account under LiveWire Benefit Plan to the same extent as credit was (or would have been) recognized under the corresponding HD Benefit Plan, except for purposes of benefit accrual under any defined benefit plan or to the extent that duplication of compensation or benefits would result.
(b) Post-Separation Service Credit. Except to the extent imposed by applicable Law or required by this Agreement, (i) no member of the LiveWire Group shall be obligated to recognize any service of a HD Employee after the earlier of the applicable LiveWire Benefits Effective Date or the Separation Time, as applicable, for any purpose under any LiveWire Benefit Plan, and (ii) no member of the HD Group shall be obligated to recognize any service of a LiveWire Employee after the earlier of the applicable LiveWire Benefits Effective Date or the Separation Time, as applicable, for any purpose under any HD Benefit Plan; provided, however, that nothing herein shall prohibit any member of the LiveWire Group or any member of the HD Group from recognizing such service.
ARTICLE IV
TREATMENT OF HD RSU AWARDS
Section 4.1 Treatment of Outstanding HD RSU Awards.
(a) Award Treatment. At or prior to the Separation Time, each HD RSU Award that is outstanding and held by a LiveWire Employee shall be cancelled and converted into the right to receive cash payments, subject to applicable withholding taxes and deductions (each, an “RSU Payment”), on the date(s) on which the HD RSU Award would have otherwise become vested in accordance with the vesting schedule that applied to such HD RSU Award immediately prior to the Separation Time (the “RSU Vesting Schedule” and such vesting dates, “RSU Vesting Dates”). Each RSU Payment will (i) be in amount equal to (x) the number of shares of HD Common Stock subject to such HD RSU Award that would have otherwise become vested on the applicable RSU Vesting Date in accordance with the applicable RSU Vesting Schedule multiplied by (y) the closing trading price of a share of HD Common Stock on such RSU
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Vesting Date and (ii) be paid to the applicable LiveWire Employee on or within thirty (30) days following the applicable RSU Vesting Date, subject to and conditioned upon such LiveWire Employee’s continued employment or service, as applicable, to the LiveWire Group through the applicable vesting date. With respect to any RSU Vesting Dates that occur on or prior to the Separation Time, HD shall, or shall cause another member of the HD Group to, pay the RSU Payments to the applicable LiveWire Employees within ten (10) business days following the applicable RSU Vesting Dates. With respect to any RSU Vesting Dates that occur on or after the Separation Time, LiveWire shall, or shall cause another member of the LiveWire Group to, pay the RSU Payments to the applicable LiveWire Employees within ten (10) business days following the applicable RSU Vesting Dates.
(b) Other Terms. Except as provided above, the Separation shall not, in and of itself, constitute a termination of employment or service for any LiveWire Employee or any HD Employee for purposes of any HD Equity Awards held by such individual. The Parties further acknowledge and agree that in no event shall the vesting of any HD Equity Awards, in any case, accelerate solely by reason of the transactions or events contemplated by the Separation Agreement, this Agreement or any other Ancillary Agreement. Prior to the Separation Time, HD shall only grant HD RSU Awards or other equity or equity-based awards to LiveWire Employees in the ordinary course of business consistent with past practice pursuant to the HD Equity Plans.
Section 4.2 SEC Registration. HD agrees that, following the Separation Time, it shall use reasonable efforts to continue to maintain a Form S-8 Registration Statement (and maintain the prospectus(es) contained therein for its/their intended use) with respect to and cause to be registered pursuant to the Securities Act, the shares of HD Common Stock authorized for issuance under the HD Equity Plans as required pursuant to the Securities Act and any applicable rules or regulations thereunder.
ARTICLE V
TAX-QUALIFIED DEFINED CONTRIBUTION PLAN
Section 5.1 LiveWire 401(k) Plan. On March 1, 2022 (the “LiveWire 401(k) Effective Date”), LiveWire or another member of the LiveWire Group established the LiveWire 401(k) Plan solely for the benefit of eligible LiveWire Participants. The LiveWire 401(k) Plan shall constitute a LiveWire Benefit Plan for the purposes of this Agreement.
Section 5.2 HD 401(k) Plan. HD acknowledges and agrees that HD made or caused to be made all employer contributions to the HD 401(k) Plan that would have been made on behalf of LiveWire Participants who are then participating in the HD 401(k) Plan had the transactions contemplated by the Separation Agreement not occurred, regardless of any service or end-of-year employment requirements, but prorated for the portion of the plan year ending on the LiveWire 401(k) Effective Date. On the LiveWire 401(k) Effective Date, each LiveWire Participant who, as of immediately prior to the LiveWire 401(k) Effective Date, participated in the HD 401(k) Plan became fully vested in his or her account balance under the HD 401(k) Plan.
Section 5.3 Account Balance Transfers. On the LiveWire 401(k) Effective Date, HD caused the account balances under the HD 401(k) Plan of each LiveWire Participant who, as of prior to the LiveWire 401(k) Effective Date, participated in the HD 401(k) Plan, to be transferred in cash to the LiveWire 401(k) Plan, and LiveWire or another member of the LiveWire Group caused the LiveWire 401(k) Plan to accept the transfer of such amounts, in accordance with Section 414(l) of the Code, Treasury Regulation Section 1.414(1)-1, and Section 208 of ERISA. HD shall cause the HD 401(k) Plan to retain the accounts (including any promissory notes related to outstanding participant loans) and assets attributable to any Person who is not a LiveWire Employee.
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Section 5.4 Treatment of 401(k) Plans. Following the Separation Time, the LiveWire Group shall be solely responsible for, and the HD Group shall not have any Liability with respect to, any and all Liabilities under the LiveWire 401(k) Plan. Following the Separation Time, the HD Group shall be solely responsible for, and the LiveWire Group shall not have any Liability with respect to, any and all Liabilities under the HD 401(k) Plan.
Section 5.5 Cooperation. HD and LiveWire (each acting directly or through any member of the HD Group or any member of the LiveWire Group, as applicable) shall cooperate in making any and all appropriate filings required by the IRS, or required under the Code, ERISA or any applicable regulations with respect to this Article V.
ARTICLE VI
DEFERRED COMPENSATION PLAN; PENSION PLANS
Section 6.1 Treatment of Deferred Compensation Plan. Effective as of the Separation Time, each LiveWire Participant who, as of immediately prior to the Separation Time, participated in the HD Deferred Compensation Plan shall cease to be eligible to participate in or make additional deferrals under the HD Deferred Compensation Plan. Following the Separation Time, LiveWire Participants will be entitled to distributions of their account balances under the HD Deferred Compensation Plan in accordance with (and at such time(s) as provided under) the HD Deferred Compensation Plan. Following the Separation Time, (a) HD (acting directly or through any member of the HD Group) shall be responsible for any and all Liabilities with respect to the HD Deferred Compensation Plan and (b) LiveWire shall not be a “Participating Employer” (as defined in the HD Deferred Compensation Plan) in the HD Deferred Compensation Plan.
Section 6.2 Treatment of HD Pension Plans. Effective as of the Separation Time (or such earlier time as the applicable LiveWire Participant’s employment transferred from the HD Group to the LiveWire Group), each LiveWire Participant who, prior to the Separation Time (or such earlier transfer), participated in an HD Pension Plan will cease to be an active participant in such HD Pension Plan (but, for clarity, will remain entitled to his or her benefits under such HD Pension Plan in accordance with the terms and conditions thereof); provided, however, that HD shall, and shall cause the HD Pension Plans to, recognize such LiveWire Participant’s service with any member of the LiveWire Group (A) for all purposes under such HD Pension Plans until the applicable LiveWire Participant’s Service End Date (as defined in the Harley-Davidson Retirement Plan) and (B) from and after the applicable LiveWire Participant’s Service End Date, for the sole purpose of determining whether such LiveWire Participant is eligible for early retirement or retirement (as applicable) under any HD Pension Plan (but, following the applicable LiveWire Participant’s Service End Date, not for purposes of benefit accrual under the HD Pension Plans). Following the Separation Time, HD (acting directly or through any member of the HD Group) shall be responsible for any and all Liabilities with respect to the HD Pension Plans.
ARTICLE VII
HEALTH AND WELFARE PLANS; WORKERS’ COMPENSATION
Section 7.1 Health and Welfare Benefit Plans. As of the Separation Time, the HD Group maintains each of the health and welfare plans set forth on Exhibit C hereto (the “HD Health and Welfare Plans”) for the benefit of eligible employees of the HD Group and their dependents and beneficiaries, each of which shall remain in effect immediately following the Separation Time. The health and welfare plans maintained by the LiveWire Group as of the Separation Time are referred to herein as the “LiveWire Health and Welfare Plans”.
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Section 7.2 LiveWire Health and Welfare Plans. LiveWire shall use commercially reasonable efforts to cause all LiveWire Health and Welfare Plans to (a) waive all limitations as to preexisting conditions, exclusions and service conditions with respect to participation and coverage requirements applicable to individuals who are LiveWire Participants immediately following the applicable LiveWire Benefits Effective Date, other than limitations that were in effect with respect to such LiveWire Participants as of immediately prior to the applicable LiveWire Benefits Effective Date under the corresponding HD Health and Welfare Plan(s), and (b) waive any waiting period limitation or evidence of insurability requirement that would otherwise be applicable, following the applicable LiveWire Benefits Effective Date, to an individual who is a LiveWire Participant immediately following the applicable LiveWire Benefits Effective Date to the extent such LiveWire Participant had satisfied any similar limitation under the corresponding HD Health and Welfare Plan(s). Additionally, the LiveWire Health and Welfare Plans shall provide that the LiveWire Participants are credited with or otherwise have taken into account, to the extent applicable, any expenses incurred towards deductibles, co-payments or out-of-pocket limits credited to such individual, in each case, under the terms of the corresponding HD Health and Welfare Plans for the plan year in which the applicable LiveWire Benefits Effective Date occurs as if such amounts had been paid by such individual under the LiveWire Health and Welfare Plans.
Section 7.3 Cafeteria Plan. As soon as practicable following the Separation Time and if and to the extent not effected prior to the Separation Time, HD (acting directly or through any other member of the HD Group) shall, in accordance with Revenue Ruling 2002-32, cause the portion of the HD Cafeteria Plan applicable to the LiveWire Participants to be segregated into a separate component and the account balances in such component to be transferred to the LiveWire Cafeteria Plan, which will include any health flexible spending account and dependent care account plan (excluding, for clarity, any health reimbursement arrangements). The LiveWire Cafeteria Plan shall reimburse HD or the HD Cafeteria Plan to the extent amounts were paid by the HD Cafeteria Plan and not collected from the LiveWire Participant and such amounts are subsequently collected by the LiveWire Cafeteria Plan with respect to such LiveWire Participant.
Section 7.4 Health Reimbursement Arrangements. Effective as of the applicable LiveWire Benefits Effective Date, each LiveWire Participant who, as of immediately prior to such LiveWire Benefits Effective Date, participated in a health reimbursement arrangement under an HD Health and Welfare Plan (an “HD HRA”) will cease to be an active participant in the HRA (but, for clarity, will remain entitled to his or her benefits under the HD HRA in accordance with the terms and conditions thereof). Following the applicable LiveWire Benefits Effective Date, HD (acting directly or through any member of the HD Group) shall be responsible for any and all Liabilities with respect to the HD HRA.
Section 7.5 Retirement Health Care Accounts. Effective as of the Separation Time, each LiveWire Participant who, as of immediately prior to the Separation Time, participated in the HD Retiree Health Care Account, shall remain eligible for his or her benefits under the HD Retiree Health Care Account in accordance with the terms and conditions thereof; provided, however, that HD shall, and shall cause the HD Retiree Health Care Account to, recognize such LiveWire Participant’s age and service with any member of the LiveWire Group after the Separation Time for the purpose of determining eligibility for benefits under the HD Retiree Health Care Account. Following the Separation Time, HD (acting directly or through any member of the HD Group) shall be responsible for any and all Liabilities with respect to the HD Retiree Health Care Account.
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Section 7.6 COBRA, HIPAA and ACA.
(a) HD (acting directly or through any other member of the HD Group) and the HD Health and Welfare Plans shall be solely responsible for compliance with the health care continuation coverage requirements of COBRA with respect to each individual who is a HD Participant (or a dependent or beneficiary thereof) at the time such individual experiences a COBRA qualifying event. LiveWire (acting directly or through any other member of the LiveWire Group) and the LiveWire Health and Welfare Plans shall be solely responsible for compliance with the health care continuation coverage requirements of COBRA with respect to each individual who is a LiveWire Participant (or a dependent or beneficiary thereof) at the time such individual experiences a COBRA qualifying event. Neither the consummation of the Separation, any transfer of employment contemplated hereby, or any related transactions or events contemplated by the Separation Agreement, this Agreement or any Ancillary Agreement shall constitute a COBRA qualifying event for purposes of COBRA with respect to any LiveWire Participant or any HD Participant (or any dependent or beneficiary thereof).
(b) HD (acting directly or through any other member of the HD Group) shall be responsible for compliance with any certificate of creditable coverage of other applicable requirements of HIPAA or Medicare applicable to the HD Health and Welfare Plans. LiveWire (acting directly or through any other member of the LiveWire Group) shall be responsible for compliance with any certificate of creditable coverage of other applicable requirements of HIPAA or Medicare applicable to the LiveWire Health and Welfare Plans.
(c) HD (acting directly or through any other member of the HD Group) shall be responsible for compliance with any reporting requirements of the ACA applicable to HD Employees and LiveWire Employees under the HD Health and Welfare Plans. LiveWire (acting directly or through any other member of the LiveWire Group) shall be responsible for compliance with any reporting requirements of the ACA applicable to LiveWire Employees under the LiveWire Health and Welfare Plans.
Section 7.7 Liabilities.
(a) Insured Benefits. With respect to employee welfare and fringe benefits that are provided through the purchase of insurance, (i) LiveWire shall cause the LiveWire Health and Welfare Plans to, through such insurance policies, pay and discharge all eligible claims of LiveWire Participants that are incurred on or after the effective date of coverage of such LiveWire Participants in the LiveWire Health and Welfare Plans, and (ii) HD shall cause the HD Health and Welfare Plans to, through such insurance policies pay and discharge all eligible claims of HD Participants that are incurred prior to, on or after the Separation Time (provided that such HD Participants are enrolled in the HD Health and Welfare Plans). For the avoidance of doubt, except as otherwise expressly set forth in this Article VII, neither LiveWire Health and Welfare Plans nor HD Health and Welfare Plans shall be responsible for any benefit claims incurred following a LiveWire Participant’s termination of participation in an HD Health and Welfare Plan if the LiveWire Participant does not validly enroll in an applicable LiveWire Health and Welfare Plan.
(b) Self-Insured Benefits. With respect to employee health or medical benefits that are provided through a self-insured plan or program HD shall cause the HD Health and Welfare Plans to, through such self-insured plan or program, continue to pay and discharge all eligible claims of (i) HD Participants incurred prior to, on or after the Separation Time and (ii) LiveWire Participants incurred before the Separation Time, in each case, regardless of when such claims are reported.
(c) Short-Term and Long-Term Disability Benefits.
(i) Long-Term Disability Benefits. Any HD Employee or LiveWire Employee who becomes entitled to receive, or experiences a qualifying disability and is in an eligibility waiting or exclusion period to receive, long-term disability under any HD Health and Welfare Plan prior to the effective date of coverage for a LiveWire Employee under the LiveWire Health and Welfare Plan providing long-term disability benefits shall continue to receive or be eligible to receive long-term disability benefits under such HD Health and Welfare Plan following such date.
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(ii) Short-Term Disability Benefits. Any LiveWire Employee who becomes entitled to receive short-term disability benefits under any HD Health and Welfare Plan prior to the effective date of coverage for a LiveWire Employee under the LiveWire Health and Welfare Plan providing short-term disability benefits shall be transferred to, and receive any short-term disability benefits to which such LiveWire Employee is entitled under, the applicable LiveWire Health and Welfare Plans as of date in accordance with the terms of such plan. Any HD Employee who becomes entitled to receive short-term disability benefits under any HD Benefit Plan prior to, on or after the Separation Time shall continue to receive any short-term disability benefits to which such HD Employee is entitled under the HD Health and Welfare Plans as of the Separation Time in accordance with the terms of such plan.
(d) Incurred Claim Definition. For purposes of this Article VII, a claim or Liability shall generally be deemed to be incurred (i) with respect to medical, dental, vision and/or prescription drug benefits, on the date that the health services giving rise to such claim or Liability are rendered or performed and not when such claim is made; provided, however that with respect to a period of continuous hospitalization, a claim is incurred upon the first date of such hospitalization and not on the date that such services are performed and (ii) with respect to life insurance, accidental death and dismemberment and business travel accident insurance, upon the occurrence of the event giving rise to such claim or Liability.
(e) Accrued Paid-Time-Off. Prior to the Separation Time, to the extent required by applicable Law, LiveWire shall solicit in writing the consent of each LiveWire Employee to rollover to LiveWire or another member of the LiveWire Group, such LiveWire Employee’s Accrued PTO as of the Separation Time (the “Rollover Consents”). With respect to each LiveWire Employee who (i) is not required to consent to such a rollover under applicable Law or (ii) timely provides such Rollover Consent to LiveWire and consents to such a rollover, LiveWire shall (directly or through another member of the LiveWire Group) recognize and honor the Accrued PTO credited to each LiveWire Employee by such individual’s employer immediately prior to the Separation Time. To the extent permitted and/or required under applicable Law, the Accrued PTO of any LiveWire Employee who (A) elects in his or her Rollover Consent to receive a payment of his or her Accrued PTO or (B) does not timely provide a Rollover Consent to LiveWire, shall be paid by HD to such individual(s) in a cash lump sum upon the transfer of such individual’s employment between the HD Group and the LiveWire Group prior to the Separation, and, for the avoidance of doubt, HD shall be solely responsible and liable for such payments. Notwithstanding the foregoing, (x) all Accrued PTO shall be used in accordance with the terms and conditions of the post-Separation employer’s applicable policies and programs, to the extent permissible by Law, and (y) any paid-time-off accruals in respect of post-Separation services (if any) shall be made in accordance with the terms and conditions of the post-Separation employer’s applicable policies and programs (except to the extent otherwise provided in an applicable LiveWire Individual Agreement or HD Individual Agreement).
Section 7.8 Workers’ Compensation Liabilities. All workers’ compensation Liabilities relating to, arising out of, or resulting from any claim by a HD Employee that results from an accident occurring, or from an occupational disease which becomes manifest (collectively, “Workers’ Comp Liabilities”) before, as of or after the Separation Time, shall be retained by and be obligations of HD or its insurers. All Workers’ Comp Liabilities relating to, arising out of, or resulting from any claim by a LiveWire Employee that arises or manifests prior to the date on which such LiveWire Employee is covered by an applicable workers’ compensation insurance program maintained by a member of the LiveWire Group shall be obligations of HD and its insurers. All Workers’ Comp Liabilities relating to, arising out of, or resulting from any claim by a LiveWire Employee that arises or manifests on or after the date on which such LiveWire Employee is covered under a workers’ compensation insurance program maintained by a member of the LiveWire Group
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shall be obligations of LiveWire and its insurers. For purposes of this Agreement, a compensable injury giving rise to a Workers’ Comp Liability shall be deemed to be sustained upon the occurrence of the event giving rise to eligibility for workers’ compensation benefits or at the time that an occupational disease becomes manifest, as the case may be. Each member of the HD Group and each member of the LiveWire Group shall cooperate with respect to any notification to appropriate Governmental Entities of the Separation Time and the issuance of new, or the transfer of existing, workers’ compensation insurance policies and claims handling contracts.
ARTICLE VIII
CASH INCENTIVE COMPENSATION
Section 8.1 Cash Incentive Plans.
(a) 2021 Cash Incentive Payments. If the Separation Time occurs prior to payment by the HD Group of the cash incentives payable pursuant to any HD Cash Incentive Plan with respect to calendar year 2021 (such payments, the “2021 Cash Incentive Payments”), then HD shall pay to each LiveWire Employee who, prior to the Separation, was a participant in such an HD Cash Incentive Plan prior to October 1, 2021 and becomes entitled to payment of a 2021 Cash Incentive Payment pursuant to such HD Cash Incentive Plan, an amount equal to such LiveWire Employee’s 2021 Cash Incentive Payment thereunder (pro-rated for any partial year of employment). The 2021 Cash Incentive Payments shall be paid to the applicable LiveWire Employees as and when payments are made generally under the applicable HD Cash Incentive Plans with respect to calendar year 2021, and subject to such terms and conditions as apply generally under such HD Cash Incentive Plan.
(b) 2022 Cash Incentive Payments. With respect to each LiveWire Employee who, prior to the Separation, was a participant in an HD Cash Incentive Plan with respect to calendar year 2022 (the “2022 HD Cash Incentive Plan”) and remains employed by LiveWire through December 1, 2022, an amount equal to the cash incentive payment that such LiveWire Employee would have been entitled to receive under the 2022 HD Cash Incentive Plan had the Separation not occurred, pro-rated based on the period during calendar year 2022 during which such LiveWire Employee was a participant in the 2022 HD Cash Incentive Plan (such payments, the “2022 Cash Incentive Payments”). The 2022 Cash Incentive Payments shall be paid to the applicable LiveWire Employees as and when payments are made generally under the applicable HD Cash Incentive Plans with respect to calendar year 2022.
(c) LiveWire Cash Incentive Liabilities. At or prior to the Separation and from time to time following the Separation Time, LiveWire shall, or shall cause another member of the LiveWire Group to, adopt, for the benefit of eligible LiveWire Employees, one or more cash incentive programs (each, a “LiveWire Cash Incentive Plan”). Following the Separation Time, the LiveWire Group shall be solely responsible for, and HD Group shall not have any obligation or Liability with respect to, any and all payments, obligations and other Liabilities under any LiveWire Cash Incentive Plan.
(d) HD Cash Incentive Liabilities. Subject to and except as expressly provided under Section 8.1(a) above, following the Separation Time, the HD Group shall be solely responsible for, and the LiveWire Group shall not have any obligation or Liability with respect to, any and all payments, obligations and other Liabilities under any HD Cash Incentive Plan.
ARTICLE IX
PAYROLL REPORTING AND WITHHOLDING
Section 9.1 Tax Procedures. With respect to the LiveWire Employees, the Parties shall adopt the “standard procedure” for preparing and filing IRS Forms W-2 (Wage and Tax Statements) and for purposes of filing IRS Forms W-4 (Employee’s Withholding Allowance Certificate) and W-5 (Earned Income Credit Advance Payment Certificate), as described in Revenue Procedure 2004-53.
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Section 9.2 Garnishments, Tax Levies, Child Support Orders, and Wage Assignments. With respect to garnishments, tax levies, child support orders, and wage assignments in effect with HD (or any other member of the HD Group) as of the Separation Time for any LiveWire Employees, LiveWire (and any other employing member of the LiveWire Group), as appropriate, shall honor such payroll deduction authorizations and shall continue to make payroll deductions and payments to the authorized payee, as specified by the court or governmental order which was on file with HD as of immediately prior to the Separation Time. HD shall, as soon as practicable after the Separation Time, provide LiveWire (and any other employing member of the LiveWire Group), as appropriate, with such information in HD’s possession (and not already in the possession of a member of the LiveWire Group) or employee consents as may be reasonably requested by the LiveWire Group and necessary for the LiveWire Group to make the payroll deductions and payments to the authorized payee as required by this Section 9.2.
Section 9.3 Authorizations for Payroll Deductions. Unless otherwise prohibited by a Benefit Plan or by this Agreement or an Ancillary Agreement, LiveWire and the other members of the LiveWire Group, as appropriate, shall honor payroll deduction authorizations attributable to any LiveWire Employee that are in effect with any member of the HD Group as of immediately prior to the Separation Time relating to such LiveWire Employee, and shall not require that such LiveWire Employee submit a new authorization to the extent that the type of deduction by LiveWire or any other member of the LiveWire Group, as appropriate, does not differ from that made by the member of the HD Group prior to the Separation Time. Such deduction types include: pre-tax contributions to any Benefit Plan, including any voluntary benefit plan; scheduled loan repayments to any Benefit Plan; and direct deposit of payroll, employee relocation loans, and other types of authorized company receivables usually collectible through payroll deductions. Each Party shall, as soon as practicable after the Separation Time, provide the other Party with such information in its possession as may be reasonably requested by the other Party and as necessary for that Party to honor the payroll deduction authorizations contemplated by this Section 9.3.
ARTICLE X
GENERAL AND ADMINISTRATIVE
Section 10.1 Business Associate Agreements. The Parties hereby agree to enter into any business associate agreements that may be required for the sharing of any information pursuant to this Agreement to comply with the requirements of HIPAA.
Section 10.2 Non-Solicitation. The Parties acknowledge and agree that they are subject to and bound by certain non-solicitation and non-hire restrictions set forth in Section 4.6 of the Separation Agreement, and that the Parties shall comply with their respective obligations thereunder.
Section 10.3 Employee Records.
(a) Records Relating to HD Employees. To the extent permitted by applicable Law, all records and data in any form relating to HD Employees shall be the property of the HD Group.
(b) Records Relating to LiveWire Employees. To the extent permitted by applicable Law, all records and data in any form relating to LiveWire Employees shall be the property of the LiveWire Group and considered part of the LiveWire Business Records under the Separation Agreement; provided, however, that records and data pertaining to such an employee and relating to any period that such employee was (i) employed by any member of the HD Group and/or (ii) covered under any Benefit Plan sponsored by any member of the HD Group (to the extent that such records or data relate to such coverage) prior to the Separation Time shall be shared with the appropriate HD Group by the LiveWire Group to the extent such records are reasonably necessary for payroll or Benefit Plan purposes.
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Section 10.4 Sharing Of Information. The Parties hereto acknowledge and agree that they are subject to and bound by certain requirements to share and exchange information as set forth in Article III of the Separation Agreement, and that the Parties shall comply with their respective obligations thereunder.
Section 10.5 Reasonable Efforts/Cooperation. Each Party shall use its commercially reasonable efforts to promptly take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws to consummate the transactions contemplated by this Agreement, including adopting Benefit Plans and/or Benefit Plan amendments. The Parties agree to consult and cooperate to the extent reasonably necessary with respect to any Actions, and, upon reasonable written request of the other Party, shall use reasonable efforts to make available to such other Party the former, current and future directors, officers, employees, other personnel and agents of it and its Subsidiaries (whether as witnesses or otherwise). The requesting party shall bear all costs and expenses in connection with the foregoing. Without limiting the generality of the foregoing, each of the Parties shall reasonably cooperate in all respects with regard to all matters relating to the transactions contemplated by this Agreement for which the other Party seeks a determination letter or private letter ruling from the IRS, an advisory opinion from the U.S. Department of Labor or any other filing, consent or approval with respect to or by a Governmental Entity. Notwithstanding the foregoing, this Section 10.5 shall not require either Party to take any step that would significantly interfere, or that such Party reasonably determines could significantly interfere, with its business.
Section 10.6 Employer Rights. Nothing in this Agreement shall (a) prohibit any member of the HD Group from amending, modifying or terminating any HD Benefit Plan or HD Individual Agreement at any time, subject to the terms and conditions thereof, or (b) prohibit any member of the LiveWire Group from amending, modifying or terminating any LiveWire Benefit Plan or any LiveWire Individual Agreement at any time, subject to the terms and conditions thereof. In addition, nothing in this Agreement shall be interpreted as an amendment or other modification of any Benefit Plan.
Section 10.7 Effect on Employment. Without limiting any other provision of this Agreement, none of the Separation Time or any actions taken in furtherance of the Separation Time, whether under the Separation Agreement, this Agreement, any other Ancillary Agreement or otherwise, in any case, shall in and of itself cause any employee to be deemed to have incurred a termination of employment or service or, except as expressly provided in this Agreement, to entitle such individual to any payments or benefits under any Benefit Plan or otherwise. Furthermore, nothing in this Agreement is intended to or shall confer upon any LiveWire Employee or HD Employee any right to continued employment or service, or any recall or similar rights to an individual on layoff or any type of approved leave.
Section 10.8 Consent Of Third Parties. If any provision of this Agreement is dependent on the consent of any third party and such consent is withheld, the Parties hereto shall use their reasonable best efforts to implement the applicable provisions of this Agreement to the fullest extent practicable. If any provision of this Agreement cannot be implemented due to the failure of such third party to consent, the Parties hereto shall negotiate in good faith to implement the provision in a mutually satisfactory alternative manner.
Section 10.9 Access To Employees. Following the Separation Time, LiveWire and HD shall, or shall cause the LiveWire Group and the HD Group, as applicable, to make available to each other those LiveWire Employees or HD Employees, as applicable, who may reasonably be needed by the other Party in order to defend or prosecute any legal or administrative action (other than a legal action between any member of the LiveWire Group on the one hand and any member of the HD Group on the other) to which any employee, officer, director or Benefit Plan of the LiveWire Group or HD Group is a party and which relates
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to their respective Benefit Plans prior to the Separation Time. The Party to whom an employee is made available in accordance with this Section 10.9 shall pay or reimburse the other Party for all reasonable expenses reimbursed by such other Party to such employee in connection therewith, including all reasonable travel, lodging, and meal expenses, but excluding any amount for such employee’s time spent in connection herewith.
Section 10.10 Beneficiary Designation/Release Of Information/Right To Reimbursement. Without limiting any other provision hereof, to the extent permitted by applicable Law and except as otherwise provided for in this Agreement, all beneficiary designations, authorizations for the release of information and rights to reimbursement made by or relating to LiveWire Participants under HD Benefit Plans in effect immediately prior to the Separation Time shall be transferred to and be in full force and effect under the corresponding LiveWire Benefit Plans until such beneficiary designations, authorizations or rights are replaced or revoked by, or no longer apply to, the relevant LiveWire Participant.
Section 10.11 Compliance. As of the Separation Time, HD (acting directly or through any member of the HD Group) shall be solely responsible for compliance under ERISA and all other applicable Law with respect to each HD Benefit Plan, and LiveWire (acting directly or through any member of the LiveWire Group) shall be solely responsible for compliance under ERISA and all other applicable Law with respect to each LiveWire Benefit Plan.
Section 10.12 Allocation of Liabilities. With respect to the determination of whether a Liability shall be treated for purposes of this Agreement as a Liability of LiveWire or of HD, the express designation of such Liability in this Agreement shall prevail. If no such express designation exists, authorized representatives of LiveWire and HD will determine in good faith by mutual agreement whether the Liability relates primarily to either the LiveWire Business, in which case it will be deemed a Liability of LiveWire or the HD Business, in which case it will be deemed a Liability of HD. If such representatives are unable to agree on the business to which such Liability relates, the treatment of such Liability on the Closing Company Financial Statements at the Closing shall prevail. If, however, such Liability is not addressed on the Closing Company Financial Statements at the Closing, then the allocation of such Liability shall be determined pursuant to Section 11.25 below.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Termination.
(a) This Agreement may be terminated at any time prior to the Separation Time by and in the sole and absolute discretion of the HD Board without the approval of any other Person, including the shareholders of HD or LiveWire. Additionally, in the event the Business Combination Agreement is validly terminated, this Agreement shall automatically terminate without further action by the Parties. In the event that this Agreement is terminated, this Agreement shall become null and void and no Party, nor any Party’s directors, officers or employees, shall have any Liability of any kind to any Person by reason of this Agreement. After the Separation Time, this Agreement may not be terminated except by an agreement in writing signed by HD and LiveWire.
(b) In the event of any termination of this Agreement prior to the Separation Time, no Party (nor any of its directors, officers or employees) shall have any Liability or further obligation to the other Party by reason of this Agreement.
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Section 11.2 Section 409A. Notwithstanding anything in this Agreement to the contrary, with respect to any compensation or benefits that may be subject to Section 409A of the Code and related Department of Treasury guidance thereunder, the Parties agree to negotiate in good faith regarding any treatment different from that otherwise provided herein to the extent necessary or appropriate to (a) exempt such compensation and benefits from Section 409A of the Code, (b) comply with the requirements of Section 409A of the Code, and/or (c) otherwise avoid the imposition of tax under Section 409A of the Code; provided, however, that this Section 11.2 does not create an obligation on the part of either Party to adopt any amendment, policy or procedure, to take any other action or to indemnify any Person for any failure to do any of the foregoing.
Section 11.3 Corporate Power.
(a) HD represents on behalf of itself and each other member of the HD Group, and LiveWire represents on behalf of itself and each other member of the LiveWire Group, as follows:
(i) each such Person has the requisite corporate or other applicable power and authority and has taken all corporate or other applicable action necessary in order to execute, deliver and perform this Agreement and each Ancillary Agreement to which it is a party and to consummate the transactions contemplated hereby; and
(ii) this Agreement and each Ancillary Agreement to which it is a party has been or will be duly executed and delivered by it and constitutes or will constitute a valid and binding agreement of it enforceable in accordance with the terms thereof.
(b) Each Party acknowledges that it and the other Party may execute this Agreement by facsimile, stamp or mechanical signature. Each Party expressly adopts and confirms each such facsimile, stamp or mechanical signature made in its respective name as if it were a manual signature, agrees that it shall not assert that any such signature is not adequate to bind such Party to the same extent as if it were signed manually and agrees that at the reasonable request of the other Party at any time it shall as promptly as reasonably practicable cause this Agreement to be manually executed (any such execution to be as of the date of the initial date thereof).
Section 11.4 Survival of Covenants. Except as expressly set forth in this Agreement, the covenants, representations and warranties contained in this Agreement, and liability for the breach of any obligations contained herein or therein, shall survive the Separation Time and shall remain in full force and effect in accordance with their terms.
Section 11.5 Notices. Any notice, request, instruction or other document to be given hereunder by any party to the others shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid or by prepaid overnight courier (providing written proof of delivery), or by electronic mail (with confirmed receipt), addressed as follows:
| If to HD or LiveWire, to: | ||
| c/o LiveWire | ||
| 3700 West Juneau Avenue | ||
| Milwaukee, WI 53208 | ||
| Attention: | Paul Krause | |
| Email: | paul.krause@harley-davidson.com; | |
| H-DGeneralCounsel@harley-davidson.com | ||
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| with a copy (which shall not constitute notice) to: |
| Latham & Watkins LLP 811 Main St. |
| Houston, TX 77002 |
| Attention: Ryan Maierson |
| Email: ryan.maierson@lw.com |
| Attention: Jason Morelli |
| Email: jason.morelli@lw.com |
or to such other persons or addresses as may be designated in writing by the party to receive such notice as provided above.
Section 11.6 Entire Agreement. This Agreement (including any Exhibits hereto), the Business Combination Agreement (and any exhibits, schedules or other ancillary documents thereto), and any Ancillary Agreement constitute the entire agreement, and supersede all other prior agreements, understandings, representations and warranties both written and oral, among the Parties, with respect to the subject matter hereof.
Section 11.7 Relation to Separation Agreement. Except as expressly provided in the Separation Agreement, to the extent there is any inconsistency between this Agreement and the terms of Separation Agreement that is the subject of this Agreement and such inconsistency relates to the allocation between HD and LiveWire (among them or their subsidiaries) of assets, Liabilities and responsibilities with respect to certain (a) employees, independent contractors and directors, (b) compensation, equity and benefit plans, programs and arrangements and (c) other employee-related matters, the terms of this Agreement shall prevail.
Section 11.8 Waivers of Default. Waiver by a Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the other Party. No failure or delay by a Party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall a single or partial exercise thereof prejudice any other or further exercise thereof or the exercise of any other right, power or privilege. In addition, unless the Business Combination Agreement shall have been terminated in accordance with its terms, no such waiver shall be effective without the prior written consent of the SPAC.
Section 11.9 Amendments. Subject to the provisions of applicable Law, and except as otherwise provided in this Agreement, this Agreement may be amended, modified or supplemented only by written instrument signed by the authorized representative of the Party against whom it sought to enforce such waiver, amendment, supplement or modification is sought to be enforced. In addition, unless the Business Combination Agreement shall have been terminated in accordance with its terms, no such amendment, modification or supplement shall be effective without the prior written consent of the SPAC.
Section 11.10 Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. The exchange of a fully executed Agreement (in counterparts or otherwise) by facsimile or by electronic delivery in .pdf format shall be sufficient to bind the parties to the terms and conditions of this Agreement.
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Section 11.11 Further Assurances.
(a) In addition to the actions specifically provided for elsewhere in this Agreement, each of the Parties hereto shall use its commercially reasonable efforts, prior to, on and after the Separation Time, to take, or cause to be taken, all actions, and to do, or cause to be done, all things reasonably necessary, proper or advisable on its part under applicable Laws, regulations and agreements, to consummate and make effective the Transactions.
(b) Without limiting the foregoing, prior to, on and after the Separation Time, each Party hereto shall cooperate with each other Party hereto, and without any further consideration, but at the expense of the requesting Party, to execute and deliver, or use its commercially reasonable efforts to cause to be executed and delivered, all instruments, including instruments of conveyance, assignment and transfer, and to make all filings with, and to obtain or make any Approvals or Notifications of, any Governmental Entity or any other Person under any permit, license, agreement, indenture or other instrument (including any Third Party consents or Governmental Approvals), and to take all such other actions as such Party may reasonably be requested to take by any other Party hereto from time to time, consistent with the terms of this Agreement, in order to effectuate the provisions and purposes of this Agreement and the transactions contemplated hereby.
Section 11.12 Performance. HD shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement to be performed by any member of the HD Group. LiveWire shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement to be performed by any member of the LiveWire Group. Each Party (including its permitted successors and assigns) further agrees that it shall cause all of the other members of the HD Group or the LiveWire Group (as applicable) not to take, or omit to take, any action which action or omission would violate or cause such Party to violate this Agreement or materially impair such Party’s ability to consummate the transactions contemplated hereby or thereby.
Section 11.13 Third-Party Beneficiaries. Except as otherwise expressly provided in this Agreement, (a) the provisions of this Agreement are solely for the benefit of the Parties and are not intended to confer upon any Person (including any shareholders of HD or shareholders of LiveWire) except the Parties hereto any rights or remedies hereunder; and (b) there are no third-party beneficiaries of this Agreement and this Agreement shall not provide any third Person (including any shareholders of HD or shareholders of LiveWire) with any remedy, claim, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement. Without limiting the generality of the foregoing, in no event shall any HD Employee or LiveWire Employee (or any dependent, beneficiary or alternate payee of any of the foregoing) have any third-party rights under this Agreement. Nothing in this Agreement shall adopt, amend, or terminate or shall be construed to adopt, amend, terminate, or interpret the terms of, any Benefit Plan (including any HD Benefit Plan, HD Individual Agreement, LiveWire Benefit Plan or LiveWire Individual Agreement), or any other program or arrangement described in or contemplated by this Agreement. Notwithstanding the foregoing, the SPAC shall be a third-party beneficiary of the rights of LiveWire under this Agreement.
Section 11.14 Headings. The article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
Section 11.15 Governing Law. This Agreement (and any claims or disputes arising out of or related hereto or to the transactions contemplated hereby or to the inducement of any Party to enter herein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the Laws of the State of Delaware, irrespective of the choice of laws principles of the State of Delaware, including all matters of validity, construction, effect, enforceability, performance and remedies.
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Section 11.16 Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by either Party without the prior written consent of the other Party; provided that any permitted assignment will not relieve any Party of its obligations under this Agreement. Any attempted or purported assignment in violation of the preceding sentence shall be null and void and of no effect whatsoever. Subject to the preceding two sentences, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the Parties and their respective successors and assigns.
Section 11.17 Specific Performance.
(a) The Parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the specific terms hereof or were otherwise breached. It is accordingly agreed that prior to the termination of this Agreement in accordance with Section 11.1, the Parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement (without necessity of posting bond or other security (any requirements therefor being expressly waived)), this being in addition to any other remedy to which they are entitled at Law or in equity.
(b) Each of the Parties agrees that it will not oppose the granting of an injunction, specific performance or other equitable relief as provided herein on the basis that (i) the other Party has an adequate remedy at Law or (ii) an award of specific performance is not an appropriate remedy for any reason at Law or equity. Any Party seeking an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement shall not be required to provide any bond or other security in connection with any such order or injunction.
Section 11.18 Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability or the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.
Section 11.19 Interpretation. The table of contents and headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. Where a reference in this Agreement is made to a Section, Schedule or Exhibit, such reference shall be to a Section of, Schedule to or Exhibit to this Agreement unless otherwise indicated. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” For purposes of this Agreement, whenever the context requires the singular number shall include the plural, and vice versa. All references in this Agreement to “$” are intended to refer to United States dollars. Any reference to a particular Law means such Law as amended, modified or supplemented (including all rules and regulations promulgated thereunder) and, unless otherwise provided, as in effect from time to time.
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Section 11.20 Construction. This Agreement shall be construed as if jointly drafted by the Parties and no rule of construction or strict interpretation shall be applied against either Party. The Parties represent that this Agreement is entered into with full consideration of any and all rights which the Parties may have. The Parties have conducted such investigations they thought appropriate, and have consulted with such advisors as they deemed appropriate regarding this Agreement and their rights and asserted rights in connection therewith. The Parties are not relying upon any representations or statements made by the other Party, or such other Party’s employees, agents, representatives or attorneys, regarding this Agreement, except to the extent such representations are expressly set forth or incorporated in this Agreement. The Parties are not relying upon a legal duty, if one exists, on the part of the other Party (or such other Party’s employees, agents, representatives or attorneys) to disclose any information in connection with the execution of this Agreement or their preparation, it being expressly understood that neither Party shall ever assert any failure to disclose information on the part of the other Party as a ground for challenging this Agreement.
Section 11.21 Performance. Each Party shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary or Affiliate of such Party.
Section 11.22 No Admission of Liability. The allocation of assets and liabilities herein is solely for the purpose of allocating such assets and liabilities between HD and LiveWire and is not intended as an admission of liability or responsibility for any alleged liabilities vis-à-vis any Third Party, including with respect to the liabilities of any non-wholly owned subsidiary of HD or LiveWire.
Section 11.23 Limited Liability of Shareholders. Notwithstanding any other provision of this Agreement, except in the case of fraud no individual who is a shareholder, director, employee, officer, agent or representative of HD or LiveWire, in such individual’s capacity as such, shall have any liability in respect of or relating to the covenants or obligations of HD or LiveWire, as applicable, under this Agreement or in respect of any certificate delivered with respect hereto, to the fullest extent legally permissible, each of HD or LiveWire, for itself and its respective Subsidiaries and its and their respective shareholders, directors, employees and officers, waives and agrees not to seek to assert or enforce any such liability that any such Person otherwise might have pursuant to applicable Law.
Section 11.24 Limitations of Liability. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, NEITHER HD NOR ITS AFFILIATES, ON THE ONE HAND, NOR LIVEWIRE NOR ITS AFFILIATES, ON THE OTHER HAND, SHALL BE LIABLE UNDER THIS AGREEMENT TO THE OTHER FOR ANY INCIDENTAL CONSEQUENTIAL, SPECIAL, INDIRECT, PUNITIVE, EXEMPLARY, REMOTE, SPECULATIVE OR SIMILAR DAMAGES IN EXCESS OF COMPENSATORY DAMAGES OF THE OTHER ARISING IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (OTHER THAN ANY SUCH LIABILITY WITH RESPECT TO INDEMNIFICATION OF SUCH DAMAGES PAID BY AN INDEMNITEE IN RESPECT OF A THIRD-PARTY CLAIM); PROVIDED, THAT ANY BREACH OF THIS AGREEMENT BY ANY PARTY SHALL BE SUBJECT TO THE INDEMNIFICATION OBLIGATIONS SET FORTH IN THE SEPARATION AGREEMENT.
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Section 11.25 Consent to Jurisdiction(a) ; WAIVER OF JURY TRIAL.
(a) This Agreement, together with any Action, dispute, remedy or other proceeding arising from or relating to this Agreement or the transactions contemplated hereby or any relief or remedies sought by any Parties hereto (whether in contract, tort or statute), and the rights and obligations of the parties hereunder, shall be governed by and construed in accordance with the laws of the State of Delaware for contracts made and to be fully performed in such state, without giving effect to any conflicts of laws rules, principles or regulations that would require the application of the laws of another jurisdiction. The state and federal courts located within the State of Delaware (the “Chosen Courts”) shall have exclusive jurisdiction over any and all disputes between the parties hereto, whether in law or in equity, arising out of or relating to this Agreement and the agreements, instruments and documents contemplated hereby and the parties hereto consent to and agree to subject to the exclusive jurisdiction of such Chosen Courts.
(b) THE PARTIES HEREBY WAIVE TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, AND SHALL NOT ASSERT IN ANY SUCH DISPUTE, ANY CLAIM THAT: (I) SUCH PARTY IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS; (II) SUCH PARTY AND SUCH PARTY’S PROPERTY IS IMMUNE FROM ANY LEGAL PROCESS ISSUED BY SUCH COURTS; OR (III) ANY ACTION OR OTHER PROCEEDING COMMENCED IN SUCH COURTS IS BROUGHT IN AN INCONVENIENT FORUM. THE MAILING OF PROCESS OF OTHER PAPERS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED IN SECTION 11.5 (OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW) SHALL BE VALID AND SUFFICIENT SERVICE THEREOF AND HEREBY WAIVE ANY OBJECTIONS TO SERVICE ACCOMPLISHED IN THE MANNER PROVIDED HEREIN. THE PARTIES HEREBY IRREVOCABLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the day and year first above written.
| HARLEY-DAVIDSON, INC. | ||
| By: | /s/ Paul J. Krause | |
| Name: Paul J. Krause | ||
| Title: Chief Executive Officer | ||
| LIVEWIRE EV LLC | ||
| By: | /s/ Amanda Parker | |
| Name: Amanda Parker | ||
| Title: Chief Legal Officer | ||
EXHIBIT A
LIVEWIRE EMPLOYEES
| 1. | Abad, Mariano |
| 2. | Akrikencheikh, Judi |
| 3. | Amber, Lucas |
| 4. | Aunkst, David |
| 5. | Bednarz, Mike |
| 6. | Bekefy, Jon |
| 7. | Krimpelbein, Ben (Pending Start) |
| 8. | Bhushan, Swaroop |
| 9. | Black, Matthew |
| 10. | Blomdahl, Kirk |
| 11. | Brett, Pfarr |
| 12. | Burns, Shannon |
| 13. | Cahya, Harianto, |
| 14. | Chitnis, Abhishek |
| 15. | Cirillo, Jill |
| 16. | Cole, Mark |
| 17. | Connelly, David |
| 18. | Delling, Lindsay |
| 19. | Douglas, Harlan |
| 20. | Easterla, Dylan |
| 21. | Halverson, Eric |
| 22. | Esmael, Mufaddal |
| 23. | Fabian, Lucas |
| 24. | Farage, Ryan |
| 25. | Feldman, Gerald |
| 26. | Fleming, Justin |
| 27. | Flieh, Huthaifa |
| 28. | Frazier, Anna |
| 29. | Gabergrits, Evgueni |
| 30. | Gales, Mark |
| 31. | Gnanasek, Mugesh |
| 32. | Gopireddy, Manasa |
| 33. | Graaf, Jason |
| 34. | Gudmundsson, Stefan |
| 35. | Haag, Jeff |
| 36. | Hafezinasab, Hamidreza |
| 37. | Handley, Christian |
| 38. | Hannah, Michael |
| 39. | Hebert, Stephen |
| 40. | Herb, Robert |
| 41. | Hietpas, Brian |
| 42. | Huang, Robert |
| 43. | Hunter, Mitchell |
| 44. | Klaus, Jeff (Pending Hire) |
| 45. | Nienhuis, Jeffrey (Pending Hire) |
| 46. | Jha, Niharika |
| 47. | Jimenez, Natasha |
| 48. | Johnson, Rick |
| 49. | Jyoti, Nitin |
| 50. | Kato, Mikalea |
| 51. | Kazmirski, Todd |
| 52. | Kelley-Sexton, Margo |
| 53. | Kelly, Renae |
| 54. | Kohlman, Chris |
| 55. | Konieczka, Kyle |
| 56. | Konkel, Eric |
| 57. | Konshak, Joe |
| 58. | Kuczmarski, Ashley |
| 59. | Kulai, Harshith |
| 60. | Lehrbaum, Daniel |
| 61. | Lorbiecki, Alexandra |
| 62. | Luddy, Stephan (pending start) |
| 63. | Gillihan, Maijken (pending start) |
| 64. | Maksim, Sorin (pending start) |
| 65. | Marchese, Gina |
| 66. | Marotta Jr, Frank |
| 67. | Masoud, Vaezi |
| 68. | McGinley, Ben |
| 69. | Mennitt, Tim |
| 70. | Metzner, Adam |
| 71. | Millis, Joseph |
| 72. | Monge, Louie |
| 73. | Morrissey, Ryan |
| 74. | Mroz, Jamieson |
| 75. | Neelam, Chopade |
| 76. | Noonan, Maureen |
| 77. | O’Mahoney, Dylan |
| 78. | Osgood, Steven |
| 79. | Perez, Nicholas |
| 80. | Plesetz, Jonathan |
| 81. | Prosser, Nick |
| 82. | Purfeerst, Jamie |
| 83. | Ravari, Shahriar |
| 84. | Reitinger, Samuel |
| 85. | Richter, Dwayne |
| 86. | Rinaldo, Steven |
| 87. | Romo, Hector |
| 88. | Roseberry, Harlan |
| 89. | Rosenkranz, Erik |
| 90. | Roth, Shannon |
| 91. | Safarik, Dan |
| 92. | Sanchez, Mario |
| 93. | Sandeep, Chava (pending hire) |
| 94. | Scalzo, Timothy |
| 95. | Scherbarth, Brian |
| 96. | Schweiner, Vanessa |
| 97. | Scot, Ferguson |
| 98. | Severance, Ryan |
| 99. | Shweta, Sawant |
| 100. | Silovich, Brian |
| 101. | Stafford, Eric |
| 102. | Strader, Vance |
| 103. | Sweney, Rob |
| 104. | Szymanski, Kevin |
| 105. | Tareen, Affan |
| 106. | Tarun, Sadineni (Pending hire) |
| 107. | Thede, Jared |
| 108. | Thuilliez, Jacob |
| 109. | Tirumalareddy, Pavan |
| 110. | Trebe, Kevin |
| 111. | Uduwage, Don |
| 112. | Weaver, Austin |
| 113. | Weiss, Andrew |
| 114. | Woyak, James |
| 115. | Yuhasz, Donald |
| 116. | Ziegler, Taylor |
EXHIBIT B
SHARED EMPLOYEE
| 1. | Jochen Zeitz |
EXHIBIT C
HD HEALTH AND WELFARE PLANS
| 1. | Harley-Davidson, Inc. U.S. Salaried Leave, Vacation and Other Time Off Information |
| 2. | Harley-Davidson Motor Company Group Retiree Health Care Account |
| 3. | Group Insurance Plan for Employees of Harley-Davidson Motor Company Group LLC, which includes the following benefits: |
| a. | Medical |
| b. | Prescription drug |
| c. | Dental |
| d. | Vision |
| e. | Life Insurance |
| f. | Accidental death & dismemberment |
| g. | Supplemental life insurance |
| h. | Short-term disability |
| i. | Long-term disability for salaried employees |
| j. | Long-term disability and voluntary life insurance for Kansas City Hourly Employees |
| k. | Personal accident insurance plan |
| l. | Business travel accident insurance |
| m. | Employee assistance plan |
| n. | Cafeteria plan |
| o. | Health care spending accounts |
| p. | Dependent care spending account |
Exhibit 10.14
Execution Version
Certain portions of this Exhibit have been redacted pursuant to Item 601(b)(10) of
Regulation S-K and, where applicable, have been marked with “[***]” to indicate
where redactions have been made.
CONTRACT MANUFACTURING AGREEMENT
This CONTRACT MANUFACTURING AGREEMENT (this “Agreement”) is made as of September 26, 2022 (the “Signing Date”), by and between Kwang Yang Motor Co., Ltd., a Taiwanese company (“KYMCO”), and LiveWire EV, LLC, a Delaware limited liability company (“LiveWire”). KYMCO and LiveWire are each a “Party” and are sometimes referred to herein collectively as the “Parties.”
RECITALS
WHEREAS, Parties believe that there are compelling benefits to cooperate together to realize specific opportunities in the electric vehicles (“EV”) industry and desire to engage in the long term cooperation (“Long Term Collaboration”) as described under certain Long Term Collaboration Agreement made as of 12 December 2021 (the “Long Term Collaboration Agreement”); and
WHEREAS, in connection with the Long Term Collaboration, LiveWire desires to exclusively obtain from KYMCO, and KYMCO desires to provide to LiveWire, contract manufacturing and procurement services in relation to the LiveWire’s Slayer Powertrains and all two-wheel products that leverage Slayer Powertrains (“Covered Products”) as further specified and identified in Exhibit A (the “Products”), in accordance with the terms and conditions of this Agreement. Any joint development, design or manufacturing of EV products (including the Products), platforms and/or resources will be separately agreed by the Parties in accordance with the guidelines set forth under Section 7.6 of the Long Term Collaboration Agreement.
NOW, THEREFORE, in consideration of the foregoing, the covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 For purposes of this Agreement, capitalized terms shall have the meaning set forth in the body of this Agreement or as set forth below in this ARTICLE 1. To the extent any capitalized terms are not defined herein, they shall have the meanings set forth in the Long Term Collaboration Agreement.
(a) “Actual Cost” means, with respect to the manufacture and delivery of a Product, KYMCO’s actual direct costs, without mark-up, to manufacture and deliver such product, plus a reasonable allocation of overhead and other operating expenses and, with respect to third-party providers, a reasonable allocation of the amounts paid to such providers that is proportionate to usage of services by or on behalf of LiveWire; provided that, subject to Section 12.1(b), KYMCO shall not increase LiveWire’s fixed cost allocations because of adverse changes in KYMCO’s production volumes, and KYMCO shall not be required to increase its own fixed cost allocations because of adverse changes in LiveWire’s production volumes.
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(b) “Affiliate(s)” in relation to (a) KYMCO, means any company, enterprise, or legal entity directly or indirectly Controlled by KYMCO; (b) LiveWire, means any company, enterprise, or legal entity directly or indirectly Controlled by LiveWire; and (c) any other Person, means any company, enterprise, or legal entity directly or indirectly Controlled by such Person, Controlling such Person or under common Control with such Person.
(c) “Business Day” shall mean any day, other than Saturday, Sunday or other day on which commercial banks are authorized or required to close in the U.S. and Taiwan.
(d) “Change of Control Event” means (i) the sale of all or substantially all of the assets of a Party, or (ii) a sale of equity interests, merger, consolidation, recapitalization or reorganization of a Party, unless the Control of such a Party after such sale of equity interests, merger, consolidation, recapitalization or reorganization are beneficially owned, directly or indirectly, by the Persons who beneficially owned such Party’s Control prior to such transaction.
(e) “Confidential Information” has the meaning given to that expression in Appendix 1 of the Long Term Collaboration Agreement and includes (i) non-public information and material of a Party or its Affiliates (and of companies with which such Party has entered into confidentiality agreements) that the other Party obtains knowledge of or access to in connection with this Agreement; (ii) non-public Intellectual Property of the disclosing party; and (iii) business and financial information of the disclosing party, including pricing, business plans, forecasts, revenues, expenses, earnings projections, sales data and any and all other non-public financial information; provided, however, “Confidential Information” does not include information that: (A) is or becomes public knowledge without any action by, or involvement of, the recipient or its Affiliates or contractors; (B) is independently developed by the recipient without reference or access to the Confidential Information of the disclosing party; (C) is already in the recipient’s possession on a non-confidential basis at the time of disclosure thereof; or (D) is obtained by the receiving Party without restrictions on use or disclosure from a third party who did not receive it, directly or indirectly, from the disclosing party.
(f) “Contractual Expiration Date” means, with respect to each Product, the date specified in Exhibit A as the “Contractual Expiration Date” for such Product, after which KYMCO will have no obligation to continue manufacturing such Product and LiveWire shall have no obligation to continue purchasing such Product (other than under any Orders submitted prior to such date or following such date pursuant to Section 2.14).
(g) “Control” means ownership of fifty percent (50%) or more of the share capital or voting stock of a company, enterprise or other legal entity or the power to appoint the majority of board members or otherwise direct or cause to the direction of the management or policies of a company, enterprise or other legal entity.
(h) “EV Manufacturing Processes” means proprietary processes relating to the fabrication and assembly of EV Powertrain systems and components, as well as final EV vehicle assembly (including appropriate sub assembly actions and painting of appropriate components).
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(i) “KYMCO’s Facility” means KYMCO’s manufacturing facility or storage facility (or the applicable facility of KYMCO’s supplier) designated by KYMCO for the manufacture or storage of Products hereunder.
(j) “KYMCO Production Assets” means all Production Assets other than LiveWire Production Assets.
(k) “KYMCO Tooling” means all Tooling other than LiveWire Tooling and Shared Tooling.
(l) “Improvements” means all modifications, enhancements, derivative works and improvements of Intellectual Property.
(m) “Intellectual Property” means all intellectual property rights in any and all jurisdictions throughout the world, including domestic and foreign patents, copyrights, mask works, designs, trade secrets, and any other intellectual property rights in technologies, software, know-how, inventions, data, methods, processes and other confidential or proprietary information, but excluding any Trademarks.
(n) “Lead Time” means, with respect to a Product, the period of time preceding the scheduled delivery date of such Product that is specified in Exhibit A
(o) “LiveWire Production Assets” means the Production Assets used exclusively for the production of Products.
(p) “LiveWire Production Materials” means all Production Materials other than Shared Production Materials.
(q) “LiveWire Tooling” means Tooling used exclusively for the production of Products.
(r) “Losses” means any and all liability, loss, cost, expense, debt or obligation of any kind, character or description, and whether known or unknown, accrued, absolute or otherwise, and regardless of when asserted or by whom.
(s) “Minimum Order Quantity” means, with respect to a Product, the minimum number of units that LiveWire must order when it places an Order for such Product, as specified in Exhibit A and as may be modified by mutual agreement of the Parties in good faith from time to time.
(t) “Minimum Annual Volume Commitment” means, with respect to a Product, the annual volume of such Product required to be purchased by LiveWire from KYMCO as specified in Exhibit A.
(u) “Order” means a written or electronic firm purchase request for Products issued by LiveWire to KYMCO and accepted by KYMCO after the Effective Date of this Agreement. Orders may be placed as discrete purchases or as part of an ongoing delivery schedule and will be placed utilizing the SD&I Process.
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(v) “Order Deficit Impact Fee” means the sum of (i) the Product Price of the Product Order Deficit less the Actual Cost of such Products, and (ii) the allocation of overhead and other operating expenses included in the Actual Cost of such Products.
(w) “Person” mean an individual, a corporation, an association, a partnership, an estate, a trust and any other entity or organization.
(x) “Personal Information” means all information received by either Party in any tangible or intangible form that relates to or personally identifies or makes identifiable the other Party’s employees, customers, agents, end-users, suppliers, contacts or representatives. Examples of Personal Information may include, but are not limited to, individual names, addresses, phone numbers, email addresses, purchase history, employment information, financial information, medical information, credit card numbers, social security numbers, and product service history.
(y) “Platform” means, with respect to a vehicle, the battery, motor and power electronics that deliver the performance for such vehicle.
(z) “Powertrain” means LiveWire EV propulsion unit and related control and management systems.
(aa) “Product Order Deficit” means, with respect to a Product, the amount (if any) by which the Minimum Annual Volume Commitment for such Product exceeds the actual quantity of such Product ordered by LiveWire during any applicable year.
(bb) “Product Price” means, with respect to a Product, the price that is specified for such Product on Exhibit A, [***].
(cc) “Production Assets” means the machinery and equipment (and related gauges and fixtures used for assembly) that are used for the production of Products hereunder, excluding Tooling.
(dd) “Production Materials” means raw materials, components, subassemblies, parts, other supplies and any industrial services required for the manufacturing of Products hereunder.
(ee) “SD&I Process” means the Supply, Demand and Inventory (SD&I) process to be mutually agreed by the Parties.
(ff) “Shared Production Materials” means Production Materials that are used in both KYMCO products and Products, with the exception of any such materials that LiveWire determines to procure for itself in accordance with Section 5.3. For the avoidance of doubt, such Shared Production Materials (a) shall exclude LiveWire Production Materials, and (b) shall exclude other LiveWire products, accessories, parts and other materials sourced as LiveWire Production Materials that are provided, licensed, or sold to KYMCO by LiveWire.
(gg) “Shared Tooling” means Tooling that is mutually determined by the Parties and treated as “Joint Tooling” under the Long Term Collaboration Agreement.
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(hh) “Specifications” means LiveWire’s written functional and performance criteria, visual inspection criteria, electrical test and electrical parameters, dimensional and structural requirements, test methods and other specifications (including packaging requirements) for each Product, which are provided to KYMCO in writing.
(ii) “Termination Charges” means, without duplication, with respect to a Product, all expenditures, accruals or cost allocations arising from, relating to or incurred in connection with KYMCO’s end of production of such Product earlier than the end of the Initial Term for such Product, including all those relating to: (i) the termination or cancellation of procurement of materials, goods and services, including supplier compensation payments, cancellation penalties, payments for obsolescence of material, work-in-progress and finished goods (whether sold at a loss or scrapped) or life-time buys of materials or goods from suppliers and all applicable premiums that were approved by LiveWire; (ii) the termination of employees or contract employees, including any wages, salaries and benefits through the earlier of the end of the Initial Term for the relevant Product and the date the obligation to pay such wages, salary and benefits expires, severance costs (to the extent such severance costs are consistent with KYMCO’s standard severance plan or any applicable collective bargaining agreement then in place), relocation costs, outplacement services, training costs and other termination-related payments; (iii) any overtime charges incurred in connection with last-time buys or building of a bank of materials that were approved by LiveWire; (iv) the disposal or scrapping of materials, work-in-progress or finished goods; (v) machinery and equipment, including related tooling, jigs, dies, gauges, fixtures, molds, patterns and other accessories, whether incurred as a result of the reconfiguration, relocation, disposal or scrapping thereof, an adjustment in the allocable share of depreciation and amortization or otherwise; (vi) any outstanding incremental capital investment made by KYMCO with respect to such Product (including related costs of capital); (vii) the surrender or vacation of unused manufacturing space dedicated to the relevant Product, including rental and leasehold payments, an allocable share of depreciation and amortization taxes and insurance premiums through the end of the Initial Term for the relevant Product; and (viii) the write-off of net book value of KYMCO Production Assets that are disposed of or destroyed in connection with the end of production of the relevant Product, in each case, regardless of whether such cash expenditures, accruals and cost allocations are incurred or disbursed prior or after the end of production of the relevant Product. For the avoidance of doubt, to the extent an expenditure, accrual or cost allocation, has been satisfied or paid by LiveWire in accordance the other provisions of this Agreement such amount shall be excluded from the calculation of Termination Charges.
(jj) “Tooling” means all tooling, including related jigs, dies, gauges, fixtures, molds, patterns and similar accessories, required for the manufacturing of Products hereunder.
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1.2 Each of the following terms is defined in the Section set forth opposite such term:
| Term |
Article / Section | |
| Agreement | Preamble | |
| Average FX Rate | 3.3(b) | |
| Chosen Courts | 14.6 | |
| Covered Products | Recitals | |
| Data Processing Agreement | Exhibit B | |
| Effective Date | 13.1 | |
| EV | Recitals | |
| Exceptions | ARTICLE 10 | |
| Force Majeure Event | ARTICLE 11 | |
| Forecasts | 2.4 | |
| Indirect Taxes | 3.3(c) | |
| Initial Term | 13.1 | |
| KYMCO | Preamble | |
| KYMCO Data | 8.3 | |
| LiveWire | Preamble | |
| LiveWire Data | 8.3 | |
| LiveWire’s Recall Obligations | 6.3 | |
| Long Term Collaboration | Recitals | |
| Long Term Collaboration Agreement | Recitals | |
| Parties | Preamble | |
| Party | Preamble | |
| Payor | 3.3(c) | |
| Privacy and Security Requirements | Exhibit B | |
| Products | Recitals | |
| Quarterly True-Up Report | 3.2 | |
| Recall | 6.1 | |
| Renewal Term | 13.1 | |
| Review Month | 3.3(b) | |
| Signing Date | Preamble | |
| Technical Manufacturing Documents | 7.1 | |
| Term | 13.1 | |
| Warranty Period | 4.2 |
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ARTICLE 2
MANUFACTURING SERVICES
2.1 Manufacturing Services. LiveWire hereby appoints KYMCO as LiveWire’s exclusive manufacturer for the Covered Products for a period that begins on the date that KYMCO begins manufacturing such Products and ends five (5) years thereafter, provided that KYMCO has relevant manufacturing abilities and capabilities for such Products. As LiveWire introduces new products as part of Covered Products, the Parties will revise Exhibit A to include such new products as Products hereunder, subject to the manufacturing abilities and capabilities as mentioned above. LiveWire may also request KYMCO to manufacture other products from time to time, and if KYMCO agrees to manufacture such products, the Parties will revise Exhibit A to include such products. KYMCO hereby accepts the appointment and agrees to manufacture and supply to LiveWire the Products in accordance with the Specifications from the Effective Date until the Contractual Expiration Date of each Product, in accordance with the terms of this Agreement, subject to the early termination of this Agreement in accordance with Article 13. KYMCO will perform its manufacturing services (a) in a professional and workmanlike manner and in accordance with good industry practice and applicable law, and (b) with at least the same (and no less than reasonable) standard of service (including with respect to quality, skill and diligence) that KYMCO provides to its own other businesses.
2.2 Contractors. KYMCO may subcontract its obligations hereunder, provided that, during the exclusivity period for the Covered Products, KYMCO may not engage subcontractors to manufacture Covered Products without LiveWire’s prior written consent (which shall not be unreasonably withheld, conditioned or delayed), except that LiveWire’s consent shall not be needed for KYMCO to subcontract to KYMCO’s Affiliates. KYMCO shall be and remain responsible for each subcontractor’s compliance with this Agreement to the same extent KYMCO would be responsible for its own compliance with this Agreement. For the avoidance of doubt, except for LiveWire Production Materials, KYMCO may, subject to Section 5.2 of the Agreement, procure any Production Materials from any other third parties.
2.3 Minimum Annual Volume Commitments; Annual Review. LiveWire agrees to order, each year during the term, an amount of each Product that meets or exceeds the Minimum Annual Volume Commitment for such Product. If at the end of each year during the Term, there is a Product Order Deficit, then KYMCO will issue LiveWire an invoice for the Order Deficit Impact Fee, and LiveWire may elect, in its sole discretion, to order and take receipt of the amount of Product necessary to meet the Minimum Annual Volume Commitment for such Product, or pay the Order Deficit Impact Fee within sixty (60) days of receipt of the invoice; provided that, at LiveWire’s option, LiveWire shall be relieved of its obligation to pay the Order Deficit Impact Fee to the extent that the Product Order Deficit is the result of KYMCO’s failure to fulfill Orders placed in accordance with this Agreement (except to the extent KYMCO’s failure to fulfill Orders was caused, directly or indirectly, by LiveWire). The Parties will review the Minimum Annual Volume Commitments on an annual basis.
2.4 Forecasts. LiveWire shall provide KYMCO, on a monthly basis in accordance with the SD&I Process, a rolling forecast indicating LiveWire’s monthly Product requirements for the following twelve (12) months (“Forecasts”). The quantity of Products forecasted for the first ninety (90) days of each Forecast shall be firm and binding and LiveWire shall be obligated to submit an Order for and purchase the quantities of Products set forth in such binding portion of each Forecast, including the Minimum Order Quantity.
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2.5 Orders. LiveWire shall issue Orders for Products in accordance with the Lead Time for each Product. Each Order shall include, at minimum:
(a) LiveWire’s internal order reference;
(b) an adequate description of the Products being ordered (e.g. a part number);
(c) the price to be paid for the Products ordered;
(d) the Product quantity and time of delivery;
(e) the place or places of delivery;
(f) any special packaging requirements; and
(g) any special packing and shipping requirements.
2.6 Acceptance of Orders; Fair Share.
(a) Within five (5) Business Days of KYMCO’s receipt of an Order, KYMCO shall expressly acknowledge receipt and, if applicable, acceptance of the Order by sending an email to LiveWire (or such other method of communication agreed to by the Parties from time to time); provided, that, if there are any special packaging requirements or special packing and shipping requirements that have not been accepted by KYMCO through any prior Order, then both Parties shall make reasonable efforts to mutually agree upon an extension to this five (5)-Business-Day period for Order acceptance as soon as possible after the receipt of such Order . KYMCO shall accept all Orders that comply with the Lead Time and the Minimum Order Quantity, that are consistent with the Forecast, and that comply with the other terms and conditions of this Agreement and shall consider in good faith whether to accept Orders outside of the foregoing parameters. Notwithstanding the foregoing, KYMCO shall be relieved from any obligation to fulfill LiveWire’s Orders for a Product to the extent that: (i) the quantities of Production Materials delivered to KYMCO’s Facility are insufficient to fulfill LiveWire’s Order for Products; or (ii) the Products ordered exceed KYMCO’s maximum production capacity for such Products; provided, that, if the quantities of any Shared Production Materials are insufficient to meet the Parties’ aggregate requirements for the manufacture of Products hereunder and KYMCO’s requirements for its own products, then any such Production Materials acquired by the Parties shall be apportioned between the Parties on a pro rata basis based on the applicable production schedules so that each Party’s requirements are covered proportionately.
(b) KYMCO shall: (i) maintain sufficient manufacturing capacity to meet the forecasted volumes for each Product; and (ii) maintain business continuity and risk mitigation strategies substantially similar to those that KYMCO provides to its own other businesses.
2.7 Lead Times; Specifications.
(a) The Parties may mutually agree to change the Lead Time applicable to a Product in good faith and neither Party will unreasonably withhold, condition, or delay consent to a requested change to a Lead Time modification proposed by the other Party.
(b) LiveWire shall have the right to change the Specifications provided that LiveWire shall notify KYMCO in advance of the contents, timing and other matters concerned with such change to the Specifications and shall be responsible for any additional cost and expense necessary for the manufacturing of the Products to conform to the amended Specifications, provided that any such change to the Specifications shall be mutually agreed to by the Parties, and such agreement shall not be unreasonably withheld.
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2.8 Packaging. LiveWire shall provide standards for packaging for each Product to KYMCO prior to the first shipment and delivery of each Product. KYMCO shall prepare a packaging test report in accordance with the standard and schedule as provided by LiveWire for LiveWire’s review and confirmation prior to utilizing such packaging. Should any change to the packaging be requested after the first delivery, LiveWire shall notify KYMCO in advance so that relevant testing and measures for such change may be effected. LiveWire understands and agrees that it shall bear all costs and expenses relating to the packaging and any testing for the packaging of each Product.
2.9 Delivery; Incoterms. All Products will be delivered by KYMCO to LiveWire FOB Kaohsiung. Except as otherwise provided hereunder, the terms, conditions and obligations of FOB (Incoterms 2020) are incorporated herein by reference.
2.10 Discrepancies. If LiveWire discovers any discrepancy between: (i) the quantity or type of Products ordered by LiveWire and that received by LiveWire; or (ii) the quantity or type of Products invoiced by KYMCO and that received by LiveWire, LiveWire will promptly notify KYMCO thereof, and in any event in less than thirty (30) days from such discovery.
2.11 Shortages. If the discrepancy is a shortage and KYMCO invoiced LiveWire for the full amount of Products ordered, KYMCO shall, at LiveWire’s option: (i) adjust the invoice; (ii) refund LiveWire for amounts paid for such Products to adjust for such shortage; or (iii) as quickly as commercially and reasonably practicable, at KYMCO’s cost and expense, supply the number of units in such shortage to LiveWire provided LiveWire has paid or commits to pay KYMCO in full for such units. KYMCO shall be entitled to any insurance proceeds paid to LiveWire in respect of a shortage for which it replaces units or compensates LiveWire.
2.12 Overages. In case of an unintentional overage in any shipment, irrespective of when and by which Party discovered, LiveWire shall keep such quantity and pay the amount invoiced or the amount to be invoiced if the invoice did not include such overage, provided that KYMCO has taken commercially reasonable actions to try to prevent such overages from occurring. LiveWire shall have the right to adjust any Forecasts to account for such overages.
2.13 Verification. For purposes of verifying and substantiating any claim(s) for compensation made by a Party under this Agreement, such Party shall provide to the other Party reasonable access to such Party’s premises and such information as the other Party shall reasonably request. Access to such books and records shall only be provided to the extent permitted by applicable law.
2.14 Contractual Expiration Date. LiveWire must submit any Order with respect to a Product with sufficient Lead Time so that the Product can be delivered before the Contractual Expiration Date, and KYMCO will have no obligation to continue manufacturing any Product after the Contractual Expiration Date for such Product and LiveWire will have no obligation to continue purchasing such Product from KYMCO after the Contractual Expiration Date for such Product (other than under any Orders submitted prior to such date or following such date pursuant to this Section 2.14); provided, that, KYMCO may, in its sole discretion, accept Orders that would require manufacturing after the applicable Contractual Expiration Date and, if KYMCO chooses to accept any such Order, such Order will be subject to the terms of this Agreement.
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2.15 Dealer and Customer Responsibilities. LiveWire shall have sole responsibility for its dealer and customer relationships related to Products, including dealer and customer satisfaction, warranty (but without limiting any rights or remedies LiveWire may have hereunder with respect to non-conforming Products) and other dealer and customer obligations. KYMCO shall have no contractual relationship with, and no responsibility to, the dealer or end customers of the Products with respect to the Products.
ARTICLE 3
PAYMENT
3.1 Invoices. KYMCO will issue an invoice for the Product Price for all Products delivered hereunder, at or promptly following delivery. KYMCO will issue an invoice for any Termination Charges and any other costs, fees, expenses or charges hereunder (except as noted in the foregoing or elsewhere in this Agreement) within a reasonable time of incurring and/or determining such costs, fees, expenses or charges.
3.2 Quarterly True-Up. Within one month following the end of each calendar quarter during the Term, KYMCO shall conduct an analysis to determine whether the direct costs incurred by KYMCO in connection with the manufacture and delivery of Products during such quarter differed from the direct cost component of the Product Price, and whether the allocation of overhead and other operating expenses for such calendar quarter should be adjusted from the allocation of overhead and other operating expenses in the Product Price, based on the relative manufacture of KYMCO products and Products during such calendar quarter; provided that, subject to Section 12.1(b), KYMCO shall not increase LiveWire’s fixed cost allocations because of adverse changes in KYMCO’s production volumes, and KYMCO shall not be required to increase its own fixed cost allocations because of adverse changes in LiveWire’s production volumes. Upon conclusion of such analysis, KYMCO will deliver a report to LiveWire which specifies the results of the analysis (the “Quarterly True-Up Report”).
3.3 Payment; Foreign Exchange Conversion; Taxes.
(a) LiveWire shall pay invoices (other than amounts disputed in good faith) within sixty (60) days after the receipt date of such invoice, provided that, notwithstanding anything to the contrary in this Agreement, [***]; provided that payment of any amounts shall not be deemed to be a waiver of LiveWire’s right to dispute or recover such amounts. All payments will be made in United States Dollars. In the event that either LiveWire fails to make a payment as prescribed above, following written notification to LiveWire by KYMCO, KYMCO may withhold further delivery of Product(s) to LiveWire until such delinquent payment is received. If LiveWire fails to pay all or any portion of any such invoiced amount by the required date, LiveWire will be obligated to pay to KYMCO, in addition to the amount due, interest at an interest rate of [***] per month, accruing continuously from the date the payment was due through the date of actual payment.
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(b) Conversion of New Taiwan Dollar to United States Dollars required under this Agreement will be made using a designated exchange rate between the New Taiwan Dollar and United States Dollars that will be set based on the following process: (i) as promptly as reasonably practicable after the start of each January, April, July and October (each, a “Review Month”) during the Term, the Parties shall calculate the average of the daily New Taiwan Dollar and United States Dollars foreign exchange rate published by The Wall Street Journal (https://www.wsj.com/market-data/quotes/fx/TWDUSD/historical-prices) (the “Average FX Rate”) for the immediately preceding calendar quarter, (ii) in the second and third month of each calendar quarter, the New Taiwan Dollar and United States Dollars foreign exchange rate for Orders placed during such months shall be the Average FX Rate for the immediately preceding calendar quarter, and (iii) in the first month of each calendar quarter, the New Taiwan Dollar and United States Dollars foreign exchange rate for Orders placed during such month shall be the Average FX Rate for the second preceding calendar quarter. If fluctuations in rates of exchange in effect between the New Taiwan Dollar and United States Dollars at a quarter exceeds the Average FX Rate calculated as described in the immediately preceding sentence by ± two (2) % or more, whether by way of an increase or decrease, the applicable Average FX Rate calculated as described in the immediately preceding sentence shall be adjusted proportionally.
(c) LiveWire shall be responsible for all sales, use and goods and services, value-added, and any other similar Taxes, duties and charges (“Indirect Taxes”) imposed by any federal, state or local government entity on any amounts payable by LiveWire hereunder, provided that KYMCO will be solely responsible for the payment of its income Taxes, franchise or similar Taxes, its employee’s salaries, unemployment insurance, workers’ compensation, employee benefits and other employment-related costs, charges and deductions. Each invoice provided under Section 3.1 shall properly reflect all Indirect Taxes payable by LiveWire, and if applicable, such information reasonably required for LiveWire to obtain a refund, credit or offset of such Indirect Taxes in accordance with applicable law. Livewire and KYMCO shall make reasonable efforts to cooperate to the extent necessary to obtain any exemption relating to, or reduced rate of, any such Indirect Tax, including by providing exemption certificates or other information reasonable required to establish an exemption. The parties will reasonably cooperate to minimize any deduction or withholding for or on account of Tax, including making applicable double taxation treaty clearance applications. If any Taxes are required to be deducted or withheld from any payments made by one Party (the “Payor”) to another Party hereunder, then such Payor shall withhold or deduct the required amount and promptly pay such Taxes to the applicable Tax authority and any such amounts shall be deemed to have been paid hereunder.
3.4 Quarterly Pricing Review; Changes in Product Prices. The Parties will review the Product Prices every three (3) months from the Effective Date.
3.5 [***]
ARTICLE 4
QUALITY
4.1 Warranty. KYMCO warrants to LiveWire, its successors and assigns for the duration of the Warranty Period that the Products delivered to LiveWire in accordance with the terms and conditions of this Agreement (i) will be free from defects in workmanship and will conform to the Specifications, and (ii) will be free from Liens and encumbrances.
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4.2 Warranty Period. The foregoing warranties shall [***] (the “Warranty Period”). Notwithstanding the foregoing, if at the time of receipt of the Specifications, KYMCO reasonably determines that, due to current technological limitations, the foregoing Warranty Period cannot be provided, KYMCO shall have the right to notify LiveWire of such issue and the Parties agree to mutually discuss in good faith a reduced Warranty Period accordingly. Where no consensus can be reached through the discussion of the Parties, LiveWire shall be entitled to contract or designate third party suppliers for the relevant Products, parts and/or accessories to the extent that the foregoing Warranty Period cannot be provided by KYMCO. LiveWire may submit a written request to KYMCO requesting an extension to the Warranty Period for a Product. KYMCO shall consider any such request in good faith, and notify LiveWire of the cost to LiveWire of any such extension, which cost shall be reasonably determined in accordance with typical warranty cost analysis. If the Parties mutually agree on such extension, the Warranty Period for the applicable Product will be so extended (with respect to quantities of such Product supplied by KYMCO following the effective date of the extension), and the Product prices shall be increased to include the cost of the extended Warranty Period. For the avoidance of doubt, KYMCO shall only be liable for Warranty claims relating to KYMCO’s manufacturing and/or assembly of such Products, parts and accessories and for claims related to parts and accessories procured as Shared Production Materials.
4.3 Remediation. In the event LiveWire discovers any quality problems with the Products delivered hereunder, LiveWire shall promptly advise KYMCO and the Parties shall seek to remedy any such problems from occurring in the future. If LiveWire can reasonably demonstrate that a Product delivered hereunder fails to conform to the warranties set forth in Section 4.1 and Section 4.2 of this Agreement and provide reasonable supporting evidence for such failure, (i) in the event where such non-conforming Products have already been sold and delivered to any third-party by LiveWire, LiveWire will, after providing KYMCO with an estimated cost relating thereto, either repair or replace, at its sole option, the non-conforming Products for such third-party, and KYMCO will reimburse LiveWire for any costs (including any shipping or delivery costs in connection with a repair or replacement) reasonably incurred relating to such repair or replacement; and (ii) other than the circumstances described in the preceding Section 4.3(i), each Party will use commercially reasonable efforts to cooperate with the other Party and to take any actions reasonably requested by the other Party with respect to the remediation of any such non-conforming Products at KYMCO’s cost (including any shipping or delivery costs in connection with a repair or replacement). For the avoidance of doubt, KYMCO shall not be liable for any breach of the warranties set forth in Section 4.1 and Section 4.2 and LiveWire will have no legal remedy from KYMCO for the relevant non-conforming Products if such breach is caused (x) by materials or items that are owned, furnished, or designated by LiveWire, (y) by designs, specifications, qualifications and/or instructions provided by LiveWire in writing or as can be proven are provided by LiveWire through other evidence, or (z) a failure of a supplier of LiveWire Production Materials, LiveWire Production Assets or Tooling to comply with its obligations under its supply contracts with LiveWire or KYMCO; provided that, for suppliers of Shared Production Materials, KYMCO shall use commercially reasonable efforts to work with the applicable supplier to remediate such failure, and shall pass through to LiveWire, the pro rata portion of any refunds or credits due to LiveWire it obtains under its agreement with such Production Materials supplier with respect to such non-conforming Products. For the avoidance of doubt, where LiveWire has already received any refunds or credits from KYMCO or a supplier, as applicable, LiveWire shall not claim the same from KYMCO. The Warranty Period for any repaired or replacement Product will be the balance of the Warranty Period for the original non-conforming Product remaining from the date KYMCO was notified of the warranty claim of the Product.
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4.4 DISCLAIMER. EXCEPT FOR THE WARRANTIES SET FORTH IN SECTION 4.1 AND SECTION 4.2, KYMCO EXPRESSLY DISCLAIMS TO THE FULL EXTENT PERMISSIBLE BY LAW ANY WARRANTIES, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AS TO THE NATURE OR STANDARD OF THE SERVICES OR PRODUCTS WHICH KYMCO MAY PROVIDE HEREUNDER, INCLUDING ANY WARRANTIES OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE AND ALL WARRANTIES ARISING FROM ANY COURSE OF DEALING OR USAGE OF TRADE.
4.5 EXCLUSIVE REMEDIES. SECTION 4.3 CONSTITUTES LIVEWIRE’S SOLE AND EXCLUSIVE REMEDIES FOR A BREACH OF THE WARRANTIES SET FORTH IN SECTION 4.1 AND SECTION 4.2; PROVIDED THAT THE FOREGOING SHALL NOT LIMIT KYMCO’S LIABILITY ELSEWHERE IN THIS AGREEMENT FOR MANUFACTURING DEFECTS. KYMCO WILL HAVE A REASONABLE TIME TO PROVIDE A REMEDY IN ACCORDANCE WITH SECTION 4.3.
4.6 Certification of Conformity. Each Party will obtain any relevant regulatory certification or approval of its branded products at its own expense, and such certification or approval will be the exclusive property of such Party. Each Party will provide all reasonable assistance and documentation (other than financial support) to the other Party for obtaining certification, including access and support for Conformity of Production plant audits and required support and information from suppliers.
4.7 Field Quality Information. For all quality information of the Products (e.g., vehicle information, customer complaints, maintenance data, service record, inspection record, and accident report) obtained by LiveWire, LiveWire shall share such information with KYMCO.
ARTICLE 5
PRODUCTION MATERIALS; PRODUCTION ASSETS; PROCUREMENT
AGENCY
5.1 Procurement by LiveWire. LiveWire shall be exclusively responsible for procurement of [***] (other than their receipt by KYMCO and handling inside of KYMCO’s Facility) as follows:
(a) source-selecting all [***];
(b) procuring all [***] including: (i) negotiating the price and all other terms applicable to the supply of [***]; (ii) placing orders for [***] directly to KYMCO’s Facility with, and issuing forecasts and delivery releases to, the relevant suppliers; (iii) arranging for delivery of [***] directly to KYMCO’s Facility in timely manner and paying for all related logistics and installation costs; and (iv) receiving and settling all supplier invoices for [***];
(c) negotiating the price and all other terms applicable to the supply of [***] and entering into contracts with all applicable suppliers (following which KYMCO shall be responsible, as LiveWire’s agent, for ordering, arranging delivery and settling invoices from such suppliers as set forth in Section 5.2(c));
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(d) handling any warranty claims and other claims [***], cost recoveries and termination and resourcing processes against the relevant suppliers of the foregoing; and
(e) for avoidance of doubt, source-selecting, procuring, purchasing and arranging for delivery and storage of all service parts and parts and accessories (P&A) that are not considered [***] for the purpose of filling up Livewire’s backup supplies for its own post-sale service.
5.2 Procurement by KYMCO. With respect to [***], KYMCO shall be exclusively responsible for procurement of [***] as set forth below, and LiveWire shall be ultimately responsible for the procurement of [***] to be used in Products; provided that LiveWire appoints KYMCO as its agent, and KYMCO agrees to its appointment as an agent for LiveWire, for the procurement of [***] as set forth below. Accordingly, KYMCO shall engage in the following activities:
(a) source-selecting all [***]; source-selecting all [***], provided that KYMCO should use commercially reasonable efforts to provide LiveWire with written notice or other methods as can be proven through other evidence at least ninety (90) days or as soon as possible, if the ninety (90)-day period is not reasonably practicable, prior to any change to the selection of, appointment of, contracting with, or substitution of any third-party supplier or manufacturer of the [***];
(b) procuring all [***] including negotiating the price and all other terms applicable to the supply of [***]; provided that KYMCO will not agree to changes to contracts for the procurement of [***] that would, in KYMCO’s reasonable judgment, have a material adverse impact on LiveWire;
(c) (i) placing orders for [***] directly to KYMCO’s Facility with, and issuing forecasts and delivery releases to, the relevant suppliers; (ii) arranging for delivery of [***] directly to KYMCO’s Facility in timely manner; and (iii) receiving and settling all supplier invoices for [***].
5.3 Re-designation of Shared Production Materials. Notwithstanding anything to the contrary herein, if KYMCO, in its sole discretion, determines that it will no longer use any Shared Production Materials in KYMCO products, then KYMCO shall use reasonable efforts to provide LiveWire with sixty (60) days’ prior notice after which KYMCO shall have no obligations to procure such materials and LiveWire shall be required to procure such materials on its own as LiveWire Production Materials in accordance with Section 5.1. Furthermore, LiveWire may, in its sole discretion, decide to use a separate supplier for procurement of any items included in the Shared Production Materials, in which case it shall notify KYMCO, and thereafter LiveWire shall procure such materials on its own as LiveWire Production Materials in accordance with Section 5.1 (provided that KYMCO shall not be required to cancel any pending orders for such Shared Production Materials).
5.4 Supplier Issues. In the event of a conflict, dispute or other issue with a third-party supplier or manufacturer in connection with the foregoing, either Party may submit a description of such issue to the other Party and the Parties will convene within a reasonable time following receipt of such description to address such issue in good faith.
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5.5 Risk of Loss; Ownership.
(a) LiveWire Tooling and Finished Products; Removal. LiveWire shall own, and insure against and bear the risk of loss, theft and damage of and to, all LiveWire Tooling and finished Products delivered to LiveWire in accordance with Section 2.9. To inform LiveWire’s procurement of replacement LiveWire Tooling, KYMCO will provide LiveWire reasonable advance notice of LiveWire Tooling that is expected to wear out based on its expected life. LiveWire will be responsible for the cost of repairing or replacing the LiveWire Tooling and finished Products if they are stolen, worn out, damaged or destroyed other than due to KYMCO’s negligence or willful misconduct. Upon termination or expiration of this Agreement, [***], at LiveWire’s reasonable cost and expense, with respect thereto. For the avoidance of doubt, LiveWire shall reimburse KYMCO the unreimbursed amount paid for the LiveWire Production Materials and any other items paid by KYMCO that are removed from KYMCO’s Facility by LiveWire.
(b) KYMCO Tooling; Removal. KYMCO shall own, and insure against and bear the risk of loss, theft and damage of and to, all KYMCO Tooling. KYMCO will be responsible for the cost of repairing or replacing the KYMCO Tooling if they are stolen, worn out, damaged or destroyed other than due to LiveWire’s negligence or willful misconduct.
(c) Production Materials and Production Assets. KYMCO shall own, and insure against and bear the risk of loss, theft and damage of and to, all Production Materials. KYMCO shall keep safe and bear the risk of loss, theft and damage of and to all LiveWire Production Assets in the KYMCO’s Facility. Once Production Materials are incorporated into a finished Product, until such Product is delivered in accordance with Section 2.9, such Product shall be and remain the sole property of KYMCO, and KYMCO shall insure against and bear the risk of loss, theft and damage of and to such Products. KYMCO shall own the KYMCO Production Assets.
(d) Ownership of LiveWire Production Assets on Termination. LiveWire shall have the sole ownership of all LiveWire Production Assets. Upon termination or expiration of this Agreement, [***] at LiveWire’s reasonable cost and expense, with respect thereto.
5.6 Joint Use. The Parties agree that, in the future and upon mutual agreement, items that are LiveWire Production Materials, LiveWire Production Assets, LiveWire Tooling may also be licensed to KYMCO for KYMCO’s use. The details of such license shall be as separately agreed to by the Parties.
5.7 Designation of Shared Tooling. Parties should discuss in good faith to determine whether any Tooling should be treated as Shared Tooling and, upon Parties’ mutual agreement, should designate such Tooling as Shared Tooling in writing or other methods as can be proven through other evidence. Upon and after the designation of any Shared Tooling, Clause 3.1(2)(c) and Clause 3.1(4)(b) of the Long Term Collaboration Agreement shall apply, mutatis mutandis, to the Shared Tooling.
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ARTICLE 6
RECALLS
6.1 Recall by KYMCO. In the event of a Product recall, quality action or field campaign (“Recall”) initiated by KYMCO, LiveWire will cooperate fully with KYMCO with respect to such Recall, and will perform all acts reasonably requested by KYMCO with respect to such Recall. LiveWire will consult with KYMCO regarding the content of any public statements regarding the Recall.
6.2 Recall by LiveWire. In the event of a Recall initiated by LiveWire, KYMCO will cooperate fully with LiveWire with respect to such Recall, and will perform all acts reasonably requested by LiveWire with respect to such Recall. KYMCO will consult with LiveWire regarding the content of any public statements regarding the Recall.
6.3 Cost of Recall. If a Recall is initiated due to a defect in workmanship or a non-conformity to the Specifications of a Product and later determined to be due to a breach of KYMCO’s Section 4.1 warranty obligations even after the expiration of the Warranty Period, (i) in the event where such non-conforming Products have already been sold and delivered to any third-party by LiveWire LiveWire will either repair or replace, at its sole option, the non-conforming Products for such third-party, and KYMCO will reimburse LiveWire for any costs (including any shipping or delivery costs in connection with a repair or replacement) reasonably incurred relating to such repair or replacement; and (ii) other than the circumstances described in the preceding Section 6.3(i), each Party will use commercially reasonable efforts to cooperate with the other Party and to take any actions reasonably requested by the other Party with respect to the remediation of any such non-conforming Products at KYMCO’s cost (including any shipping or delivery costs in connection with a repair or replacement), and will be responsible for the following out-of-pocket expenses incurred by LiveWire or by KYMCO as a result of such Recall (directly or through LiveWire’s warranty reimbursements to its dealers and distributors) to correct the defective Product: diagnosis, removal, round-trip shipping, installation, testing, and [***]. The Parties agree that, should there be any disputes regarding the compensation amount, the Parties shall first offer an opportunity to resolve such dispute through amicable discussion between the Parties. If a Recall is initiated for any other reason (“LiveWire’s Recall Obligations”), LiveWire will be responsible for all expenses incurred by KYMCO as a result of such Recall, and compensate all damages and losses suffered by KYMCO as a result of such Recall. If a Recall is initiated both because of a breach of KYMCO’s warranty obligations and because of LiveWire’s Recall Obligations, then each Party shall be responsible for a pro rata share of the total expenses incurred in connection with such Recall in proportion to each Party’s respective responsibility for the circumstances giving rise to the Recall as determined in good faith by the Parties.
6.4 Notice. Prior to a Party notifying the government or any regulatory authority of its final determination that a Recall involving one or more Products will be conducted, the Party agrees to deliver written notice to the other Party that a Recall is being considered and to allow the other Party a reasonable opportunity to review the relevant data and offer comments on the possible Recall. During this period, the Parties shall also discuss and determine how the Recall will be handled. However, each Party will decide, in its sole discretion, when to conduct a Recall and the scope of any such Recall.
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ARTICLE 7
TECHNICAL DOCUMENTS; INTELLECTUAL PROPERTY RIGHTS
7.1 LiveWire hereby grants to KYMCO, or undertakes to ensure that KYMCO is granted, as the case may be, a non-exclusive, non-transferable right to use all patents, technical information and other forms of intellectual property rights associated with the Products for the purposes of fulfilling its obligations under this Agreement. LiveWire shall from time to time furnish to KYMCO all sub-assembly drawings, specifications, the build book, quality standards and other documentary information (collectively, the “Technical Manufacturing Documents”) which are necessary to provide the service of manufacturing Products pursuant to the terms of this Agreement. As between LiveWire and KYMCO, (i) LiveWire shall own and have full responsibility for the design of Products, including all Technical Manufacturing Documents and (ii) KYMCO shall own and have full responsibility for KYMCO’s manufacturing processes and standard work instructions.
7.2 If (i) any Intellectual Property relating to EV Manufacturing Processes is jointly invented by personnel of each of the Parties or (ii) any Improvements to a Party’s Intellectual Property is developed by personnel of the other Party on an ad hoc basis in connection with the manufacturing of Products by KYMCO in accordance with this Agreement (other than Intellectual Property developed pursuant to formal projects under any joint development agreement or other similar agreements separately agreed by Parties), the ownership and licensing of such Intellectual Property or such Improvement shall be the joint property and jointly and severally owned by each of KYMCO and LiveWire.
7.3 KYMCO shall install and maintain at all times during the Term of this Agreement adequate “firewalls” arrangements with regard to the Technical Manufacturing Documents no less robust than those that have been put in place in other projects for any third-party other than LiveWire and shall use commercially reasonable efforts to ensure that engineers employed or engaged by KYMCO working, full-time or part-time, on projects with LiveWire shall not disclose the Technical Manufacturing Documents to any third party, including any other personnel of KYMCO (other than KYMCO personnel involved in LiveWire-KYMCO collaborative projects, in connection with such collaborative projects). Notwithstanding the foregoing, there shall be no limitation under any firewalls on KYMCO and its Affiliates’ usage of any Intellectual Property owned by KYMCO or its Affiliates or any general industry knowledge or from working on KYMCO branded projects.
7.4 KYMCO shall have engineers employed or engaged by KYMCO working, full-time or part-time, on the manufacturing processes or other actions taken by KYMCO in its provision of manufacturing services to execute a non-compete agreement that would prohibit them from working with any other motorcycle OEM for a duration of twelve (12) months after the termination of such engineer’s employment with KYMCO.
ARTICLE 8
CONFIDENTIALITY
8.1 Confidentiality. Each of the Parties agrees that any Confidential Information of the other Party received in the course of performance under this Agreement shall be kept strictly confidential by the Parties, except that KYMCO may disclose LiveWire’s Confidential Information for the sole purpose of providing services pursuant to this Agreement to any Affiliate of KYMCO or to third parties that provide such services in accordance with the terms of this Agreement; provided, that KYMCO shall ensure that any such Affiliate or third party is bound by obligations of confidentiality at least as strict as those contained herein. KYMCO shall be responsible for any such Affiliate or third party keeping confidential such Confidential Information of LiveWire. The Party receiving Confidential Information further agrees (i) not to use the disclosing Party’s Confidential Information except as necessary to perform its
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obligations under this Agreement, and (ii) to take the same care with the disclosing Party’s Confidential Information as it does with its own, but in no event less than a reasonable degree of care. Upon the termination or expiration of this Agreement, each Party shall return to the other Party or destroy all of such other Party’s Confidential Information. Each of the Parties shall treat the terms of this Agreement as if they were the Confidential Information of the other Party and shall not disclose the terms of this Agreement without the other Party’s prior written consent, except as required by applicable law, by the rules of any national stock exchange with respect to a Party’s publicly-traded securities or as otherwise permitted under this Agreement. Unless otherwise expressly provided herein, the provisions under Appendix 1 of the Long Term Collaboration Agreement shall apply.
8.2 Government Order. If the receiving Party is requested to disclose any of the disclosing Party’s Confidential Information pursuant to any judicial or governmental order, the receiving Party, if legally permissible, will promptly notify the disclosing Party of such order so that the disclosing Party, in its sole discretion, may seek an appropriate protective order and/or take any other action to prevent or minimize the breadth of such disclosure.
8.3 Data Privacy and Security. Because the services under the Agreement may require KYMCO to receive, store, transmit or manage data related to the business of LiveWire, or Personal Information of or relating to its employees, customers, manufacturers or contractors (collectively, “LiveWire Data”), or to otherwise access LiveWire’s systems, KYMCO shall comply with the provisions of Exhibit B and otherwise ensure appropriate protection and handling of LiveWire Data. Because the services under the Agreement also may require LiveWire to receive, store, transmit or manage data related to the business of KYMCO, or Personal Information of or relating to its employees, customers, manufacturers or contractors (collectively, “KYMCO Data”), or to otherwise access KYMCO’s systems, LiveWire shall comply with the provisions of Exhibit B and otherwise ensure appropriate protection and handling of KYMCO Data.
ARTICLE 9
INDEMNIFICATION
9.1 Indemnification by LiveWire. LiveWire shall defend, indemnify and hold KYMCO, its officers, directors, employees and agents harmless from any and all Losses suffered or incurred by KYMCO in connection with any and all third-party claims to the extent arising from or relating to [***] but in all cases excluding claims for which KYMCO has an obligation to indemnify LiveWire pursuant to Section 9.2.
9.2 Indemnification by KYMCO. KYMCO shall defend, indemnify and hold LiveWire, its officers, directors, employees and agents harmless from any and all Losses suffered or incurred by LiveWire in connection with any and all third-party claims to the extent arising from or relating to [***] but in all cases excluding claims for which LiveWire has an obligation to indemnify KYMCO pursuant to Section 9.1.
9.3 Indemnification Procedures. The indemnified Party agrees to: (i) promptly notify the indemnifying Party in writing of a claim against which it is indemnified hereunder; (ii) give the indemnifying Party sole control of the defense and all related settlement negotiations (subject to the written approval of the indemnified Party, not to be unreasonably withheld, for any settlements that do not unconditionally release the indemnified Party or that materially affect the terms of the Agreement); and (iii) provide the indemnifying Party, at the indemnifying Party’s expense, with the assistance, information, and authority reasonably necessary to perform the above. The indemnified Party may also participate in the defense of a claim at its option and its own expense.
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ARTICLE 10
LIMITATION OF LIABILITY
notwithstanding anything in this agreement to the contrary, except for liability arising from a party’s [***] to the fullest extent permitted under applicable law, neither kymco nor livewire shall be liable under this agreement to the other for any consequential, special, indirect, or incidental damages arising in connection with the transactions contemplated hereby. even in circumstances where the exceptions apply, in no circumstances shall damages, liabilities or losses for purposes of exceptions include losses of a party’s shareholders.
ARTICLE 11
FORCE MAJEURE
In case a Party shall be hindered, delayed or prevented from performing its obligations under this Agreement (other than its payment obligation), or if such performance is rendered impossible by reason of fire, explosion, earthquake, storm, flood, drought, embargo, pandemic, epidemic, quarantine, lock-down order, wars or other hostilities, strike, lockout or other labor disturbance, mechanical breakdown, governmental action, or any other event that is beyond the reasonable control of, and not caused by, a Party (a “Force Majeure Event”), then the Party so hindered, delayed or prevented shall not be liable to the other Party for the resulting delay or failure to carry out its obligations hereunder. In any such event, such Party’s affected obligations hereunder shall be postponed for such time as its performance is suspended or delayed on account thereof. The affected Party will promptly notify the other Party, either orally or in writing, upon learning of the occurrence of such Force Majeure Event. If the Force Majeure Event affects the provision of services by KYMCO hereunder, KYMCO shall use commercially reasonable efforts to remove such Force Majeure Event as soon as and to the extent reasonably possible and, in any event, will treat LiveWire the same as any other internal or external recipient of the affected services, if any. Upon the cessation of the Force Majeure Event, the affected Party will use commercially reasonable efforts to resume its performance with the least possible delay.
ARTICLE 12
OPERATIONAL MATTERS
12.1 Meetings. The Parties will meet either physically, telephonically or virtually as is acceptable to the Parties, as follows:
(a) General. Where each Party deemed necessary, such Party may provide to the other a two (2) day prior written notice for the Parties to meet and discuss the issues at hand. In the event that an urgent issue or matter arises that requires prompt action by the parties, either Party may promptly arrange for a meeting for the purpose of resolving such issue or matter.
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(b) Quarterly Product Price Review. Within two (2) weeks following the issuance of each Quarterly True-Up Report, the Parties will meet to review the Product Prices and discuss in good faith any modifications to the Product Prices or the methodology for their determination. Such discussions may include a review of the Parties’ respective cost allocations, and notwithstanding anything to the contrary in Section 1.1(a) and Section 3.2, as part of any such review, the Parties will discuss in good faith any modifications to cost allocations, including modifications resulting from either Party deleveraging. The Parties may mutually agree on changes thereto, including any changes to increase or decrease Product Prices or with respect to particular Products, and when such change in Product Price shall take effect. In the event the Parties are unable to mutually agree on such changes within the applicable seven (7) day period following the first meeting of the Parties in each aforementioned period the Product Prices and/or methodology will remain unchanged.
(c) Annual Volume Commitment and Order Requirement Review. Within the three (3) week period prior to each anniversary of the Effective Date, the Parties will meet to review the Minimum Annual Volume Commitment for each Product, and the permitted deviation between the Minimum Annual Volume Commitment and Forecasts, and discuss in good faith any modifications thereto. The Parties may mutually agree on changes to the Minimum Annual Volume Commitment for any Product and such changes will be effective from the date six (6) months following such mutual agreement or from any other date as mutually accepted by the Parties. In the event the Parties are unable to mutually agree on such changes within such three (3) week period, the Parties will refer the disagreement for resolution to Section 12.2.
12.2 Disputes. The Parties’ shared objective is to resolve all disputes that may arise between them arising from or in relation to this agreement as amicably and efficiently as possible, and neither Party will unreasonably delay the resolution of a dispute. Within fourteen (14) days after a written notice of a dispute, LiveWire and KYMCO personnel who are senior (when possible) to the people with responsibility for administering this Agreement and who have the authority to resolve the dispute will meet either on the telephone or face to face, at a mutually agreeable time and location and attempt in good faith to resolve the dispute. If the Parties fails to reach agreement on a satisfactory resolution of the disputes within thirty (30) days of the date of referral of the relevant dispute, either Party may pursue remedies in accordance with Section 14.6.
ARTICLE 13
TERM AND TERMINATION
13.1 Term. Unless earlier terminated pursuant to the terms and conditions of this Agreement, this Agreement shall commence on the completion date of LiveWire’s combination with a special purpose acquisition company and the commencement date of public trading of LiveWire’s shares (“Effective Date”) and shall remain in force for ten (10) years (“Initial Term”); provided, however, with respect to any Covered Product, the Initial Term applicable to the manufacturing of Covered Products shall not expire until the five (5) year exclusive manufacturing period for the Covered Product expires. Following the end of the Initial Term (or, with respect to Covered Products, the end of the five (5) year exclusive manufacturing period for Covered Products), this Agreement shall automatically renew for successive five (5) year periods (each, a “Renewal Term”), subject to termination in accordance with Section 13.2 or Section 13.3. The Initial Term, together with the Renewal Terms, are collectively referred to hereunder as the “Term”.
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13.2 Termination by Either Party.
(a) If either Party fails to perform any of its material duties or obligations pursuant to this Agreement and such breach is not cured within thirty (30) days, in the event such breach involves the payment of money, or within ninety (90) days, with respect to any other breach, after notice to such Party specifying the nature of such failure, the other Party may terminate this Agreement in its entirety, or with respect to any or all of the services provided to the defaulting Party, upon further notice to the defaulting Party. Either Party may terminate this Agreement immediately upon the occurrence of any of the following events: the other Party (i) is prevented from performing its obligations by reason of a Force Majeure Event for a period of six (6) months or more; (ii) becomes insolvent; (iii) enters bankruptcy, receivership, liquidation, composition of creditors, dissolution or similar proceeding; or (iv) undergoes a Change of Control Event. In the event that KYMCO terminates this Agreement upon a Change of Control Event of LiveWire, except that LiveWire is Controlled by [***] after the relevant Change of Control Event, LiveWire shall have a period of up to [***] following such termination to transition the manufacturing services provided hereunder to itself or a third party. KYMCO shall continue to perform any manufacturing services requested by LiveWire with respect to the Products during such period subject to the terms and conditions of this Agreement.
(b) Either Party will have the right to terminate this Agreement, with respect to one, several or all Products included in the Covered Products, by providing written notice of termination to the other Party on or after the date that the exclusive manufacturing period for such Covered Products expires, which termination will be effective [***] following delivery of such notice. In the event that LiveWire terminates this Agreement pursuant to this Section 13.2(b), (i) if the applicable termination occurs during the Initial Term for the relevant Product(s), LiveWire shall be liable for any Termination Charges related to the terminated Product(s); provided that, (1) KYMCO shall attempt to minimize and mitigate any Termination Charges; (2) subject to Section 5.5(d), KYMCO shall make available to LiveWire all assets the cost of which are included in the Termination Charges (e.g., materials, work-in-progress and finished goods, machinery and equipment, including related tooling, jigs, dies, gauges, fixtures, molds, patterns and other accessories), and LiveWire shall bear all removal and logistics costs therefor; (3) KYMCO shall attempt, to the extent practicable in KYMCO’s reasonable business judgment, to repurpose or redeploy, including for other Covered Products, any assets the cost of which would be included in the Termination Charges and any such assets that are repurposed or redeployed will be excluded from the Termination Charges, provided that any costs incurred by KYMCO in connection with such repurposing or redeployment shall be included in the Termination Charges; and (4) at LiveWire’s request, KYMCO shall, to the extent practicable in KYMCO’s reasonable business judgment, assign to LiveWire, in whole or in part, those third-party contracts for the procurement of materials, goods, and services required for the manufacture of Products hereunder, for which Termination Charges would otherwise have been payable; and (ii) KYMCO may adjust in its reasonable discretion the fee for the non-terminated Products if KYMCO reasonably determines that the termination of the supply of the relevant Product(s) will increase the cost of production of the non-terminated Products.
Should LiveWire decide to terminate this Agreement during a Renewal Term, LiveWire shall compensate KYMCO, without duplication, with respect to the relevant Product, all expenditures, accruals or cost allocations arising from, relating to or incurred in connection with KYMCO’s end of production of such Product during such a Renewal Term for such Product, including all those relating to: (i) the termination or cancellation of procurement of materials, goods and services, including supplier compensation payments, cancellation penalties, payments for obsolescence of material, work-in-progress and finished goods
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(whether sold at a loss or scrapped) or life-time buys of materials or goods from suppliers and all applicable premiums that were approved by LiveWire; (ii) the termination of employees or contract employees, including any wages, salaries and benefits through the earlier of the end of such a Renewal Term for the relevant Product and the date the obligation to pay such wages, salary and benefits expires, severance costs (to the extent such severance costs are consistent with KYMCO’s standard severance plan or any applicable collective bargaining agreement then in place), relocation costs, outplacement services, training costs and other termination-related payments; (iii) any overtime charges incurred in connection with last-time buys or building of a bank of materials that were approved by LiveWire; (iv) the disposal or scrapping of materials, work-in-progress or finished goods; (v) machinery and equipment, including related tooling, jigs, dies, gauges, fixtures, molds, patterns and other accessories, whether incurred as a result of the reconfiguration, relocation, disposal or scrapping thereof, an adjustment in the allocable share of depreciation and amortization or otherwise; (vi) any outstanding incremental capital investment made by KYMCO with respect to such Product (including related costs of capital); (vii) the surrender or vacation of unused manufacturing space dedicated to the relevant Product, including rental and leasehold payments, an allocable share of depreciation and amortization taxes and insurance premiums through the end of such a Renewal Term for the relevant Product; and (viii) the write-off of net book value of KYMCO Production Assets that are disposed of or destroyed in connection with the end of production of the relevant Product, in each case, regardless of whether such cash expenditures, accruals and cost allocations are incurred or disbursed prior or after the end of production of the relevant Product, provided that to the extent an expenditure, accrual or cost allocation, has been satisfied or paid by LiveWire in accordance the other provisions of this Agreement such amount shall be excluded from the calculation of the compensation, provided further that such compensation shall be limited to the foregoing costs that are actually incurred by KYMCO during such a Renewal Term.
13.3 Termination by LiveWire. Notwithstanding anything to the contrary herein, if the United States enacts consumer EV tax credits or similar, generally available incentive(s) to promote public EV consumption or reshore foreign manufacturing and such incentives would result in the Products manufactured by KYMCO outside the United States becoming materially uncompetitive versus United States manufactured alternatives, (i) LiveWire will consult with KYMCO regarding the actual impact on the Parties’ manufacturing arrangements, and (ii) the Parties will in good faith mutually agree to terminate or amend this Agreement, with respect to one, several or all Products, such that the United States market would be excluded from the contract manufacturing contemplated under this Agreement, and KYMCO will not unreasonably withhold, condition, or delay consent to a requested termination or amendment, as applicable, proposed by LiveWire. In the event that Parties terminates or amends this Agreement pursuant to this Section 13.3(ii), the Parties will in good faith discuss and mutually agree an alternate collaboration or manufacturing opportunity with an economic value equivalent to the shortfall in economic value as a result of KYMCO’s loss of the manufacturing exclusivity for Covered Products in the United States. Notwithstanding the foregoing, if KYMCO has established, in the United States, facilities, manufacturing, test equipment and labor which derives the benefit of the associated EV tax credit and is able to manufacture the applicable Covered Products pursuant to the terms of this Agreement, (x) LiveWire will not have the right to exercise the rights under this Section 13.3(ii) and (y) the Parties will revise Exhibit A to reflect the change to Actual Cost.
13.4 Other Rights. The provisions of this Article are without prejudice to any other rights or remedies either Party may have by reason of the default of the other Party. Nothing herein shall relieve any Party from any obligations (including those under any accepted Order) or liabilities that incurred prior to the termination of this Agreement.
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13.5 Survival. Notwithstanding the foregoing, the provisions of ARTICLE 1, Section 3.1, Section 3.2, Section 3.3, ARTICLE 4, Section 5.5(d), ARTICLE 6, ARTICLE 8, ARTICLE 9, ARTICLE 10, Section 13.4, Section 13.5 and ARTICLE 14 shall survive the expiration or termination of this Agreement by any reason whatsoever.
13.6 Transition and Further Assurances. In the event of a termination for LiveWire’s Change of Control Event under Section 13.2, KYMCO will discuss with LiveWire in good faith, to the extent applicable, an equitable adjustment to the Minimum Annual Volume Commitment for the year in which KYMCO gave LiveWire notice of such termination. Upon termination of this Agreement, KYMCO shall make available to LiveWire any Technical Manufacturing Documents or written Specifications and Tooling owned by LiveWire that are in KYMCO’s possession or control. Upon termination of this Agreement, KYMCO shall use commercially reasonable efforts to assist, at LiveWire’s cost, with LiveWire’s transition of the manufacture of Products to LiveWire or its designee, it being understood and agreed that KYMCO shall not be required under any circumstances to provide or disclose KYMCO’s proprietary manufacturing processes or know-how to LiveWire or any other Person.
ARTICLE 14
GENERAL PROVISIONS
14.1 Assignment; Successors and Assigns. Neither Party shall assign or transfer this Agreement, in whole or part, without the other Party’s prior written consent. Notwithstanding the foregoing, LiveWire may (i) assign this Agreement, in whole or in part, to any of its Affiliates, or (ii) assign or otherwise transfer this Agreement, in whole but not in part, to the surviving entity after the proposed business combination between LiveWire and AEA-Bridges Impact Corp.; provided that, in each of the above cases, such transferee, assignee or successor agrees in writing to be bound by the terms of this Agreement. Any attempted or purported assignment or transfer in violation of the preceding shall be null and void and of no effect whatsoever. Subject to the foregoing, this Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and permitted assigns.
14.2 Modification or Amendments. Subject to the provisions of applicable law, and except as otherwise provided in this Agreement, this Agreement may be amended, modified or supplemented only by written instrument signed by the authorized representative of the Party against whom it sought to enforce such waiver, amendment, supplement or modification is sought to be enforced.
14.3 Waivers of Default. Waiver by a Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the other Party. No failure or delay by a Party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall a single or partial exercise thereof prejudice any other or further exercise thereof or the exercise of any other right, power or privilege.
14.4 Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. The exchange of a fully executed Agreement (in counterparts or otherwise) by facsimile or by electronic delivery in .pdf format shall be sufficient to bind the Parties to the terms and conditions of this Agreement.
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14.5 Governing Law. This Agreement (and any claims or disputes arising out of or related hereto or to the transactions contemplated hereby or to the inducement of either Party to enter herein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the laws of the State of Delaware, irrespective of the choice of laws principles of the State of Delaware, including all matters of validity, construction, effect, enforceability, performance and remedies.
14.6 Consent to Jurisdiction. This Agreement, together with any Action, dispute, remedy or other proceeding arising from or relating to this Agreement or the transactions contemplated hereby or any relief or remedies sought by any Parties hereto (whether in contract, tort or statute), and the rights and obligations of the Parties hereunder, shall be governed by and construed in accordance with the laws of the State of Delaware for contracts made and to be fully performed in such state, without giving effect to any conflicts of laws rules, principles or regulations that would require the application of the laws of another jurisdiction. The state and federal courts located within the State of Delaware (the “Chosen Courts”) shall have exclusive jurisdiction over any and all disputes between the Parties hereto, whether in law or in equity, arising out of or relating to this Agreement and the agreements, instruments and documents contemplated hereby and the Parties hereto consent to and agree to subject to the exclusive jurisdiction of such Chosen Courts.
14.7 WAIVER OF JURY TRIAL. THE PARTIES HEREBY WAIVE TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, AND SHALL NOT ASSERT IN ANY SUCH DISPUTE, ANY CLAIM THAT: (A) SUCH PARTY IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS; (B) SUCH PARTY AND SUCH PARTY’S PROPERTY IS IMMUNE FROM ANY LEGAL PROCESS ISSUED BY SUCH COURTS; OR (C) ANY ACTION OR OTHER PROCEEDING COMMENCED IN SUCH COURTS IS BROUGHT IN AN INCONVENIENT FORUM. THE MAILING OF PROCESS OF OTHER PAPERS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED IN SECTION 14.8 (OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW) SHALL BE VALID AND SUFFICIENT SERVICE THEREOF AND HEREBY WAIVE ANY OBJECTIONS TO SERVICE ACCOMPLISHED IN THE MANNER PROVIDED HEREIN. THE PARTIES HEREBY IRREVOCABLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY.
14.8 Notices. Any notice, request, instruction or other document to be given hereunder by either Party to the other shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid or by prepaid overnight courier (providing written proof of delivery), or by confirmed facsimile transmission or electronic mail (with confirmed receipt), addressed as follows:
24
If to KYMCO, to:
Kwang Yang Motor Co., Ltd.
No.35, Wanxing St., Sanmin Dist., Kaohsiung City, Taiwan (R.O.C.)
Attention: HSIA,TSUNG-LIANG (夏宗良), General Manager
Email: ky3564@mail.kymco.com
if to LiveWire, to:
LiveWire EV, LLC
3700 West Juneau Avenue
Milwaukee, Wisconsin, 53208
Attention: General Counsel
Email: H-DGeneralCounsel@harley-davidson.com
or to such other persons or addresses as may be designated in writing by the Party to receive such notice as provided above.
14.9 Entire Agreement. This Agreement, the Orders and the exhibits, annexes and schedules hereto and thereto contain the entire agreement between the Parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter and there are no agreements or understandings between the Parties with respect to such subject matter other than those set forth or referred to herein. Any terms submitted by LiveWire, including on any document or form submitted by LiveWire which are in addition to or inconsistent with those set forth herein, are hereby expressly rejected by KYMCO and shall not apply to LiveWire’s purchase of Products from KYMCO unless agreed to in writing signed by both Parties. In the event of any inconsistency or conflict between or among the provisions of this Agreement and any Order, the inconsistency shall be resolved by giving precedence to this Agreement.
14.10 No Third-Party Beneficiaries. The provisions of this Agreement are solely for the benefit of the Parties and are not intended to confer upon any Person (including any shareholders of KYMCO or shareholders of LiveWire) except the Parties hereto any rights or remedies hereunder. There are no third-party beneficiaries of this Agreement, and this Agreement shall not provide any third Person (including any shareholders of KYMCO or shareholders of LiveWire) with any remedy, claim, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.
14.11 Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability or the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.
25
14.12 Interpretation. The headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. Where a reference in this Agreement is made to an Article, Section, Schedule, Exhibit or Annex, such reference shall be to an Article of, Section of, Schedule to, Exhibit to or Annex to this Agreement unless otherwise indicated. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” For purposes of this Agreement, whenever the context requires the singular number shall include the plural, and vice versa. All references in this Agreement to “$” are intended to refer to United States dollars. Any reference to a particular law means such law as amended, modified or supplemented (including all rules and regulations promulgated thereunder) and, unless otherwise provided, as in effect from time to time.
14.13 Expenses. Except as otherwise expressly provided herein, each Party shall pay its own expenses incident to this Agreement and the transactions contemplated herein.
14.14 No Set-Off. The obligations under this Agreement shall not be subject to set-off for non-performance or any monetary or non-monetary claim by any Party or any of their respective Affiliates under any other agreement between the Parties or any of their respective Affiliates.
14.15 Construction. This Agreement shall be construed as if jointly drafted by the Parties and no rule of construction or strict interpretation shall be applied against either Party. The Parties represent that this Agreement is entered into with full consideration of any and all rights which the Parties may have. The Parties have conducted such investigations they thought appropriate, and have consulted with such advisors as they deemed appropriate regarding this Agreement and their rights and asserted rights in connection therewith. The Parties are not relying upon any representations or statements made by the other Party, or such other Party’s employees, agents, representatives or attorneys, regarding this Agreement, except to the extent such representations are expressly set forth or incorporated in this Agreement. The Parties are not relying upon a legal duty, if one exists, on the part of the other Party (or such other Party’s employees, agents, representatives or attorneys) to disclose any information in connection with the execution of this Agreement or their preparation, it being expressly understood that neither Party shall ever assert any failure to disclose information on the part of the other Party as a ground for challenging this Agreement.
14.16 Relationship of the Parties. The relationship of the Parties to one another is that of independent contractors and no Party nor its agents or employees shall be considered employees or agents of another Party, unless specifically provided otherwise herein. This Agreement does not constitute and shall not be construed as constituting a partnership or joint venture or grant of a franchise between KYMCO and LiveWire. Neither Party shall have the right to bind the other Party to any obligations to third parties, unless specifically provided otherwise herein.
14.17 Compliance with Laws. Each Party shall comply, at its own expense, with the provisions of all laws applicable to the performance of its obligations under this Agreement.
26
14.18 Other Agreements. Except as expressly set forth herein, this Agreement is not intended to address, and should not be interpreted to address, the matters specifically and expressly covered by the Long Term Collaboration Agreement or the other Ancillary Agreements.
[Signature pages follow]
27
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their respective authorized officers as of the Signing Date.
| Kwang Yang Motor Co., Ltd. | ||
| By: | /s/ KO, CHUN-PING | |
| Name: | KO, CHUN-PING | |
| Title: | Chief Executive Officer (CEO) | |
[Signature page to the Contract Manufacturing Agreement]
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their respective authorized officers as of the Signing Date.
| LiveWire EV, LLC | ||
| By: | /s/ Ryan Morrissey | |
| Name: Ryan Morrissey | ||
| Title: CEVO | ||
[Signature page to the Contract Manufacturing Agreement]
EXHIBIT A
COVERED PRODUCTS
Slayer Platform Products
| [***] | [***] | [***] | [***] | [***] | [***] | [***] | ||||||
| [***] | ||||||||||||
| [***] | ||||||||||||
| [***] |
1
EXHIBIT B
DATA PRIVACY AND SECURITY
1.1 Compliance with Consumer Protection, Security and Privacy Laws. In connection with this Agreement, KYMCO may have access to Personal Information or LiveWire Data, and likewise, LiveWire may have access to Personal Information or KYMCO Data. In that event, KYMCO and LiveWire will enter into a written agreement in order to determine and specify the different aspects of the processing of Personal Information and to allocate each Party’s specific role and responsibilities related to such processing (“Data Processing Agreement”). Furthermore, KYMCO and LiveWire represent and warrant that at all times during and after the Term of the Agreement, with regard to the processing of Personal Information described in such Data Processing Agreement, each will:
(a) comply, at each Party’s own expense, with all applicable local, state, federal, and international privacy, confidentiality, consumer protection, advertising, electronic mail, data security, data destruction, and other similar laws, rules, regulations, and industry best practices, whether in effect now or in the future (all of the foregoing will be collectively referred to as the “Privacy and Security Requirements”). Each Party acknowledges that it alone is responsible for identifying, understanding, and complying with its obligations under the Privacy and Security Requirements as they apply to its performance of this Agreement and possession of the Personal Information and the other Party’s Data;
(b) use, handle, collect, maintain, safeguard, and destroy Personal Information and the other Party’s Data solely as permitted under this Agreement and in accordance with all Privacy and Security Requirements; and, in particular;
(c) maintain and enforce administrative, technical, and physical security procedures designed to ensure the confidentiality, integrity, and availability of Personal Information and the other Party’s Data that are (i) at least equal to those required by all relevant Privacy and Security Requirements, and, to the extent not inconsistent with the foregoing, (ii) in accordance with industry best practices for services of this kind;
(d) not transmit or make available any Personal Information to any entity or individual outside the respective country where each Party is located (as informed in this Agreement), except that each Party may transmit or make available the Personal Information and the other’s Data back to the United States or Taiwan or other country where each Party’s facility using the other Party’s services is located; and
(e) not sell, transfer, disclose to any unauthorized Person, or use the Personal Information or the other Party’s Data received in connection with this Agreement except, to the extent applicable: (i) to provide the services under this Agreement; (ii) to cooperate with law enforcement investigations, to comply with legally executed subpoenas, or as specifically required by law (provided the other Party is notified immediately of any such request, unless expressly precluded from providing such notice by the applicable process); or (iii) for those other uses, if any, expressly authorized by the other Party in writing.
1
The foregoing requirements are in addition to any other confidentiality and security obligations under the Agreement, including without limitation the Confidentiality Agreement. Nothing contained in this paragraph will be construed as granting Supplier any ownership interest in the Personal Information. Except in accordance with a Data Processing Agreement or otherwise pursuant to explicit written agreement between the Parties, under no circumstances will either Party transmit Personal Information to the other.
1.2 Due Diligence; Assistance in Compliance. On written request from LiveWire, KYMCO will provide reasonable documentation, including summaries of any applicable third-party audits, substantiating KYMCO’s compliance with the Privacy and Security Requirements and sufficient to satisfy any due diligence obligations imposed on LiveWire under any of the Privacy and Security Requirements. At no charge to LiveWire, KYMCO will cooperate with LiveWire and any regulator or other governmental entity having jurisdiction over LiveWire or the Personal Information or LiveWire Data relating to KYMCO’s performance of this Agreement and possession and use of the Personal Information and LiveWire Data.
1.3 Due Diligence; Assistance in Compliance. On written request from KYMCO, LiveWire will provide reasonable documentation, including summaries of any applicable third-party audits, substantiating LiveWire’s compliance with the Privacy and Security Requirements and sufficient to satisfy any due diligence obligations imposed on KYMCO under any of the Privacy and Security Requirements. At no charge to KYMCO, LiveWire will cooperate with KYMCO and any regulator or other governmental entity having jurisdiction over KYMCO or the Personal Information or KYMCO Data relating to LiveWire’s performance of this Agreement and possession and use of the Personal Information and KYMCO Data.
1.4 Actual or Potential Breach; Cooperation; Notification. KYMCO will immediately notify LiveWire of any actual or suspected breach of confidentiality, privacy or security with regard to LiveWire Personal Information or LiveWire Data. At no additional cost, KYMCO will fully cooperate with LiveWire in investigating the breach, including, but not limited to, the provision of system, application, and access logs, conducting forensics reviews of relevant systems, imaging relevant media, and making personnel available for interview. On notice of any actual or suspected breach, KYMCO will immediately institute appropriate controls to maintain and preserve all electronic evidence relating to the breach in accordance with industry best practices. In the event any breach of security or confidentiality by KYMCO or its agents requires notification to an individual under any Privacy and Security Requirements, LiveWire will have sole control over the timing, content, and method of notification and KYMCO will promptly reimburse LiveWire for all costs and expenses incurred as a result of the breach, including but not limited to, notice, print and mailing costs, and the costs of obtaining credit monitoring services and identity theft insurance for the individuals whose Personal Information was or may have been compromised.
2
1.5 Actual or Potential Breach; Cooperation; Notification. LiveWire will immediately notify KYMCO of any actual or suspected breach of confidentiality, privacy or security with regard to KYMCO Personal Information or KYMCO Data. At no additional cost, LiveWire will fully cooperate with KYMCO in investigating the breach, including, but not limited to, the provision of system, application, and access logs, conducting forensics reviews of relevant systems, imaging relevant media, and making personnel available for interview. On notice of any actual or suspected breach, LiveWire will immediately institute appropriate controls to maintain and preserve all electronic evidence relating to the breach in accordance with industry best practices. In the event any breach of security or confidentiality by LiveWire or its agents requires notification to an individual under any Privacy and Security Requirements, KYMCO will have sole control over the timing, content, and method of notification and LiveWire will promptly reimburse KYMCO for all costs and expenses incurred as a result of the breach, including but not limited to, notice, print and mailing costs, and the costs of obtaining credit monitoring services and identity theft insurance for the individuals whose Personal Information was or may have been compromised.
3
Exhibit 14.1
LIVEWIRE GROUP, INC.
CODE OF BUSINESS CONDUCT AND ETHICS
Adopted September 26, 2022
In accordance with the requirements of the Securities and Exchange Commission (“SEC”) and the New York Stock Exchange (“NYSE”), the Board of Directors (the “Board”) of LiveWire Group, Inc. (the “Company”) has adopted this Code of Business Conduct and Ethics (the “Code”) to encourage:
| • | Honest and ethical conduct, including fair dealing and the ethical handling of actual or apparent conflicts of interest; |
| • | Full, fair, accurate, timely and understandable disclosures; |
| • | Compliance with applicable laws and governmental rules and regulations; |
| • | Prompt internal reporting of any violations of law or the Code; |
| • | Accountability for adherence to the Code, including fair process by which to determine violations; |
| • | The protection of the Company’s legitimate business interests, including its assets and corporate opportunities; and |
| • | Confidentiality of information entrusted to directors, officers and employees by the Company and its customers. |
All directors, officers and employees (each a “Covered Party” and, collectively, the “Covered Parties”) of the Company and all of its subsidiaries and controlled affiliates are expected to be familiar with the Code and to adhere to the principles and procedures set forth below.
| I. | Conflicts of Interest |
A conflict of interest occurs when the private interests of a Covered Party interfere, or appear to interfere, with the interests of the Company as a whole.
For example, a conflict of interest can arise when a Covered Party takes actions or has personal interests that make it difficult to perform his or her Company duties objectively and effectively. A conflict of interest may also arise when a Covered Party, or a member of his or her immediate family,1 receives improper personal benefits as a result of his or her position at the Company.
Conflicts of interest can also occur indirectly. For example, a conflict of interest may arise when a Covered Party is also an executive officer, a major shareholder or has a material interest in an organization doing business with the Company.
| 1 | Item 404(a) of SEC Regulation S-K defines “immediate family member” as a person’s child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, or any person (other than a tenant or employee) sharing the person’s household. |
Each Covered Party has an obligation to conduct the Company’s business in an honest and ethical manner, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships. Any situation that involves, or may reasonably be expected to involve, a conflict of interest with the Company, should be disclosed promptly to the Company’s Audit Committee of the Board and/or the Company’s Chief Legal Officer.
This Code does not attempt to describe all possible conflicts of interest that could develop. Other common conflicts from which Covered Parties must refrain are set out below:
| • | Covered Parties may not engage in any conduct or activities that are inconsistent with the Company’s best interests or that disrupt or impair the Company’s relationship with any person or entity with which the Company has or proposes to enter into a business or contractual relationship. |
| • | Covered Parties may not accept compensation, in any form, for services performed for the Company from any source other than the Company. |
| • | No Covered Party may take up any management or other employment position with, or have any material interest in, any firm or company that is in direct or indirect competition with the Company. |
| II. | Disclosures |
The information in the Company’s public communications, including all reports and documents filed with or submitted to the SEC, must be full, fair, accurate, timely and understandable.
To ensure the Company meets this standard, all Covered Parties (to the extent they are involved in the Company’s disclosure process) are required to maintain familiarity with the disclosure requirements, processes and procedures applicable to the Company commensurate with their duties. Covered Parties are prohibited from knowingly misrepresenting, omitting or causing others to misrepresent or omit, material facts about the Company to others, including the Company’s independent auditors, governmental regulators and self-regulatory organizations.
| III. | Compliance with Laws, Rules and Regulations |
The Company is obligated to comply with all applicable laws, rules and regulations. It is the personal responsibility of each Covered Party to adhere to the standards and restrictions imposed by these laws, rules and regulations in the performance of his or her duties for the Company.
Trading on inside information is a violation of federal securities law. Covered Parties in possession of material non-public information about the Company or companies with whom we do business must abstain from trading or advising others to trade in the respective company’s securities from the time that they obtain such inside information until adequate public disclosure of the information. Material information is information of such importance that it can be expected to affect the judgment of investors as to whether or not to buy, sell, or hold the securities in question. To use non-public information for personal financial benefit or to “tip” others, including family members, who might make an investment decision based on this information is not only unethical but also illegal.
The Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer or Controller (or persons performing similar functions) of the Company are also required to promote compliance by all employees with the Code and to abide by Company standards, policies and procedures.
| IV. | Reporting, Accountability and Enforcement |
The Company promotes ethical behavior at all times. All reported Code violations will be investigated while considering the rights and privacy of all parties concerned. In certain cases, the identity of the individual reporting violations can be kept confidential; however, there may be times when it is required to reveal that information under the law, or to conduct a proper investigation. All reports made will receive a timely response. Reports can be made via the following methods:
| • | Contacting your supervisor |
| • | Contacting the Human Resource department |
| • | Contacting the Legal department |
| • | Contacting the Internal Audit department |
| • | Using the 3rd party Code of Business Conduct & Ethics website and phone numbers |
| • | By Internet: you may report a potential violation or concern by going to https://irdirect.net/LVWREV/whistleblower_iframe |
| • | By Telephone: From inside the United States, dial 800-916-7037. From outside the United States, dial the numbers as indicated below: |
Phone Numbers:
Canada: 800-916-7037
UK: 800-652-3673
Germany: 800-180-2137
France: 080-091-4677
China: 400-120-0690
Japan: 053-112-2792
Company identifier: 589738
Covered Parties should promptly report suspected violations of laws, rules, regulations or the Code or any other unethical behavior by any director, officer, employee or anyone purporting to be acting on the Company’s behalf to appropriate personnel, including officers, the Chief Legal Officer, outside counsel for the Company and the Board or the relevant committee thereof. Reports may be made anonymously.
The Audit Committee of the Board or other appropriate officer or body shall investigate and determine, or shall designate appropriate persons to investigate and determine, the legitimacy of such reports. The Audit Committee or other appropriate officer or body will then determine the appropriate disciplinary action. Such disciplinary action includes, but is not limited to, reprimand, termination with cause, and possible civil and criminal prosecution.
To encourage employees to report any and all violations, the Company will not tolerate retaliation for reports made in good faith. Retaliation or retribution against any Covered Party for a report made in good faith of any suspected violation of laws, rules, regulations or this Code is cause for appropriate disciplinary action.
| V. | Corporate Opportunities |
All Covered Parties owe a duty to the Company to advance the legitimate interests of the Company when the opportunity to do so arises. Covered Parties are prohibited from directly or indirectly (a) taking personally for themselves opportunities that are discovered through the use of Company property, information or positions; (b) using Company property, information or positions for personal gain; and (c) competing with the Company.
| VI. | Confidentiality |
In carrying out the Company’s business, Covered Parties may learn confidential or proprietary information about the Company, its customers, distributors, suppliers, or joint venture partners. Confidential or proprietary information includes all non-public information relating to the Company, or other companies, that would be harmful to the relevant company or useful or helpful to competitors if disclosed. Covered Parties must maintain the confidentiality of all information entrusted to them, except when disclosure is authorized or legally mandated.
| VII. | Media Contact and Public Comment |
If a Covered Party receives an inquiry from an investment analyst, shareholder or others about the performance of the Company’s stock, the Covered Party must refer the inquiry to the Investor Relations department.
All media inquiries should be referred to the Investor Relations department.
| VIII. | Personal Conduct and Social Media Policy |
Covered Parties should take care when presenting themselves in public settings, as well as online and in web-based forums or networking sites. Each Covered Party is encouraged to conduct himself or herself in a responsible, respectful, and honest manner at all times. The Company understands that Covered Parties may wish to create and maintain a personal presence online using various forms of social media. However, in so doing Covered Parties should include a disclaimer that the views expressed therein do not necessarily reflect the views of the Company. Covered Parties should be aware that that even after a posting is deleted, certain technology may still make that content available to readers.
Covered Parties are prohibited from using or disclosing confidential, proprietary, sensitive or trade secret information of the Company, its partners, vendors, consultants or other third parties with which the Company does business. Harassment of other directors, officers or employees will also not be tolerated. A Covered Party may not provide any content to Company
social media sites that may be construed as political lobbying or solicitation of contributions, or use the sites to link to any sites sponsored by or endorsing political candidates or parties, or to discuss political campaigns, political issues or positions on any legislation or law.
| IX. | Fair Dealing |
Each Covered Party should endeavor to deal fairly with the Company’s customers, service providers, suppliers, competitors and employees. No Covered Party may take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any unfair dealing practice.
| X. | Gifts, Meals & Business Entertainment |
The purpose of business gifts and entertainment in a commercial setting is to create goodwill and sound working relationships, not to gain unfair advantage with customers. Covered Parties must act in a fair and impartial manner in all business dealings. Gifts and entertainment should further the business interests of the Company and not be construed as potentially influencing business judgment or creating an obligation.
Gifts must not be lavish or in excess of the generally accepted business practices of one’s country and industry.2 Gifts of cash or cash equivalents are never permitted. Requesting or soliciting personal gifts, favors, entertainment or services is unacceptable. Covered Parties should contact the officers, the Chief Legal Officer, outside counsel for the Company and the Board or the relevant committee thereof to discuss if they are not certain that a gift is appropriate.
The FCPA prohibits giving anything of value, directly or indirectly, to officials of foreign governments or foreign political candidates in order to obtain or retain business. It is strictly prohibited to make illegal payments to government officials of any country. In addition, the promise, offer or delivery to an official or employee of the U.S. government of a gift, favor or other gratuity in violation of these rules would not only violate Company policy but could also be a criminal offense. State and local governments, as well as foreign governments, may have similar rules.
| XI. | Political Activity and Contributions |
Covered Parties may participate in the political process as individuals on their own time. However, Covered Parties must make every effort to ensure that they do not create the impression that they speak or act on behalf of the Company with respect to political matters.
| 2 | In general, no gift, entertainment or business courtesy should be offered, given, provided or accepted unless it: (1) is not a gift of cash, stock or negotiable instruments, (2) is consistent with customary business practices, (3) is not excessive in value (less than $150), (4) cannot be construed as a bribe or payoff and (5) does not violate any laws or regulations. Covered employees and members of their immediate families may not offer, give or receive gifts from persons or entities who deal with the Company: (a) in those cases where the gift would be illegal or result in a violation of law; (b) as part of an agreement to do anything in return for the gift, (c) if the gift has a value beyond what is normal and customary in the Company’s business; (d) if for directors, the gift is being made to influence the director’s actions as a member of the Board; or (e) if the gift could create the appearance of a conflict of interest. |
Company contributions to any political candidate or party or to any other organization that might use the contributions for a political candidate or party are prohibited. A Covered Party may not receive any reimbursement from corporate funds for a personal political contribution.
| XII. | Kickbacks and Improper Payments |
The Company interacts with its stakeholders every day and the Company must do so in a way that is fair and does not compromise its position for sustained success. When interacting with any Company stakeholder, Covered Parties cannot offer favors or payments that improperly influence the stakeholders decision making concerning a Covered Party or the Company. Covered Parties also cannot seek or accept any such favors or payments that influence a Covered Parties decision making.
| XIII. | Protection and Proper Use of Company Assets |
All Covered Parties should protect the Company’s assets and ensure their efficient use. Theft, carelessness and waste have a direct impact on the Company’s profitability. All Company assets should be used for legitimate business purposes.
| XIV. | Waivers |
Before an employee, or an immediate family member of any such employee, engages in any activity that would be otherwise prohibited by the Code, he or she is strongly encouraged to obtain a written waiver from the Board.
Before a director or executive officer, or an immediate family member of a director or executive officer, engages in any activity that would be otherwise prohibited by the Code, he or she must obtain a written waiver from the disinterested directors of the Board or a committee of the Board. Such waiver must then be disclosed to the Company’s shareholders, along with the reasons for granting the waiver.
| XV. | No Rights Created |
This Code is a statement of certain fundamental principles, policies and procedures that govern the Company’s Covered Parties in the conduct of the Company’s business. It is not intended to and does not create any rights in any employee, customer, client, visitor, supplier, competitor, shareholder or any other person or entity. It is the Company’s belief that the policy is robust and covers most conceivable situations.
Exhibit 16.1
September 30, 2022
Office of the Chief Accountant
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
United States of America
Ladies and Gentlemen:
We have read LiveWire Group, Inc.’s (“LiveWire”) statements included under Item 4.01 of its Form 8-K/A dated September 30, 2022. We agree with the statements concerning our Firm under Item 4.01, in which we were informed of our dismissal on September 30, 2022, following the completion of LiveWire’s review of the quarter ended September 25, 2022, which consists only of the accounts of the pre-Business Combination special purpose acquisition company, AEA-Bridges Impact Corp. We are not in a position to agree or disagree with other statements contained therein.
| Very truly yours, |
| /s/ WithumSmith+Brown, PC |
| New York, New York |
Exhibit 99.1
LiveWire EV
US GAAP Combined financial statements
LiveWire EV
US GAAP Combined financial statements
For the six months ended June 26, 2022 and June 27, 2021
LiveWire EV
US GAAP Combined financial statements
INDEX TO FINANCIAL STATEMENTS
LiveWire EV FINANCIAL STATEMENTS
| COMBINED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS |
2 | |||||
| COMBINED BALANCE SHEETS |
3 | |||||
| COMBINED STATEMENTS OF CASH FLOWS |
4 | |||||
| COMBINED STATEMENTS OF CHANGES IN EQUITY |
5 | |||||
| 1) |
Description of Business and Basis of Presentation | 6 | ||||
| 2) |
New Accounting Standards | 7 | ||||
| 3) |
Revenue | 8 | ||||
| 4) |
Income Taxes | 8 | ||||
| 5) |
Additional Balance Sheet Information | 9 | ||||
| 6) |
Leases | 10 | ||||
| 7) |
Fair Value Measurements | 11 | ||||
| 8) |
Product Warranty and Recall Campaigns | 12 | ||||
| 9) |
Employee Retirement and Other Postretirement Benefits | 12 | ||||
| 10) |
Commitments and Contingencies | 13 | ||||
| 11) |
Share-Based Awards | 13 | ||||
| 12) |
Related Party Transactions | 14 | ||||
| 13) |
Subsequent Events | 15 | ||||
LiveWire EV
US GAAP Combined financial statements
COMBINED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands)
(Unaudited)
| Six Months Ended | ||||||||
| June 26, 2022 |
June 27, 2021 |
|||||||
| Revenue, net (Note 3) |
$ | 25,662 | $ | 15,906 | ||||
| Costs and expenses: |
||||||||
| Cost of goods sold |
25,187 | 17,255 | ||||||
| Selling, administrative and engineering expense |
35,281 | 29,783 | ||||||
|
|
|
|
|
|||||
| Operating expense |
60,468 | 47,038 | ||||||
|
|
|
|
|
|||||
| Operating loss |
(34,806 | ) | (31,132 | ) | ||||
| Other income (expense), net |
156 | (11 | ) | |||||
| Interest expense related party (Note 12) |
(475 | ) | (124 | ) | ||||
| Interest (expense) income |
(20 | ) | 10 | |||||
|
|
|
|
|
|||||
| Loss before income taxes |
(35,145 | ) | (31,257 | ) | ||||
| Income tax provision |
163 | 47 | ||||||
|
|
|
|
|
|||||
| Net loss |
(35,308 | ) | (31,304 | ) | ||||
| Other comprehensive loss: |
||||||||
| Foreign currency translation adjustments |
(94 | ) | (28 | ) | ||||
|
|
|
|
|
|||||
| Comprehensive loss |
$ | (35,402 | ) | $ | (31,332 | ) | ||
|
|
|
|
|
|||||
See accompanying notes to Combined financial statements.
2
LiveWire EV
US GAAP Combined financial statements
COMBINED BALANCE SHEETS
(In thousands)
| (Unaudited) June 26, 2022 |
December 31, 2021 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash |
$ | 5,365 | $ | 2,668 | ||||
| Accounts receivable, net |
5,339 | 6,772 | ||||||
| Accounts receivable from related party (Note 12) |
1,248 | 124 | ||||||
| Inventories (Note 5) |
25,834 | 16,797 | ||||||
| Other current assets (Note 5) |
1,659 | 3,556 | ||||||
|
|
|
|
|
|||||
| Total current assets |
39,445 | 29,917 | ||||||
| Property, plant and equipment, net (Note 5) |
22,817 | 17,894 | ||||||
| Goodwill |
8,327 | 8,327 | ||||||
| Deferred tax assets |
72 | 72 | ||||||
| Lease assets (Note 6) |
2,953 | 3,471 | ||||||
| Intangible assets, net |
2,040 | 2,271 | ||||||
| Other long-term assets |
1,275 | — | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 76,929 | $ | 61,952 | ||||
|
|
|
|
|
|||||
| LIABILITIES AND EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 18,526 | $ | 9,011 | ||||
| Accrued liabilities (Note 5) |
13,353 | 15,574 | ||||||
| Contingent consideration liability (Note 7) |
— | 2,180 | ||||||
| Notes payable to related party (Note 12) |
— | 103 | ||||||
| Current portion of lease liabilities (Note 6) |
1,223 | 1,146 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
33,102 | 28,014 | ||||||
| Long-term supplier liability (Note 5) |
3,514 | 5,330 | ||||||
| Long-term portion of lease liabilities (Note 6) |
1,832 | 2,423 | ||||||
| Deferred tax liabilities |
268 | 186 | ||||||
| Long-term portion of notes payable to related party (Note 12) |
— | 5,699 | ||||||
| Other long-term liabilities |
322 | 375 | ||||||
| Commitments and contingencies (Note 10) |
— | — | ||||||
|
|
|
|
|
|||||
| Total liabilities |
39,038 | 42,027 | ||||||
| Total equity: |
||||||||
| Net Parent investment |
37,840 | 19,780 | ||||||
| Accumulated other comprehensive income |
51 | 145 | ||||||
|
|
|
|
|
|||||
| Total equity |
37,891 | 19,925 | ||||||
|
|
|
|
|
|||||
| Total liabilities and equity |
$ | 76,929 | $ | 61,952 | ||||
|
|
|
|
|
|||||
See accompanying notes to Combined financial statements.
3
LiveWire EV
US GAAP Combined financial statements
COMBINED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Six Months ended | ||||||||
| June 26, 2022 |
June 27, 2021 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ | (35,308 | ) | $ | (31,304 | ) | ||
| Adjustments to reconcile net loss to net cash used by operating activities: |
||||||||
| Depreciation and amortization |
2,806 | 2,072 | ||||||
| Change in valuation of contingent consideration liability |
— | 24 | ||||||
| Stock compensation |
(171 | ) | 232 | |||||
| Deferred income taxes |
82 | — | ||||||
| Payment of contingent consideration in excess of acquisition date fair value |
(413 | ) | — | |||||
| Other, net |
(1,413 | ) | 423 | |||||
| Changes in current assets and liabilities: |
||||||||
| Accounts receivable, net |
1,433 | (1,475 | ) | |||||
| Accounts receivable from related party |
(1,124 | ) | (54 | ) | ||||
| Inventories |
(9,037 | ) | 5,873 | |||||
| Other current assets |
1,892 | (639 | ) | |||||
| Accounts payable and accrued liabilities |
3,609 | (11,627 | ) | |||||
|
|
|
|
|
|||||
| Net cash used by operating activities |
(37,644 | ) | (36,475 | ) | ||||
|
|
|
|
|
|||||
| Cash flows from investing activities: |
||||||||
| Capital expenditures |
(5,722 | ) | (3,937 | ) | ||||
|
|
|
|
|
|||||
| Net cash used by investing activities |
(5,722 | ) | (3,937 | ) | ||||
|
|
|
|
|
|||||
| Cash flows from financing activities: |
||||||||
| Borrowings on notes payable to related party |
15,333 | — | ||||||
| Repayments on notes payable to related party |
— | (1,000 | ) | |||||
| Payment of contingent consideration up to acquisition date fair value |
(1,767 | ) | — | |||||
| Transfers from Parent |
32,497 | 42,986 | ||||||
|
|
|
|
|
|||||
| Net cash provided by financing activities |
46,063 | 41,986 | ||||||
|
|
|
|
|
|||||
| Net increase in cash |
2,697 | 1,574 | ||||||
| Cash: |
||||||||
| Cash, beginning of period |
2,668 | 2,401 | ||||||
|
|
|
|
|
|||||
| Cash, end of period |
$ | 5,365 | $ | 3,975 | ||||
|
|
|
|
|
|||||
See accompanying notes to Combined financial statements.
4
LiveWire EV
US GAAP Combined financial statements
COMBINED STATEMENTS OF CHANGES IN EQUITY
(In thousands)
(Unaudited)
| Net Parent Investment |
Accumulated Other Comprehensive Income (Loss) |
Total Equity | ||||||||||
| Balance, December 31, 2021 |
$ | 19,780 | $ | 145 | $ | 19,925 | ||||||
| Net loss |
(35,308 | ) | — | (35,308 | ) | |||||||
| Other comprehensive loss |
— | (94 | ) | (94 | ) | |||||||
| Net contribution from Parent |
53,368 | — | 53,368 | |||||||||
|
|
|
|
|
|
|
|||||||
| Balance, June 26, 2022 |
$ | 37,840 | $ | 51 | $ | 37,891 | ||||||
|
|
|
|
|
|
|
|||||||
| Net Parent Investment |
Accumulated Other Comprehensive Income (Loss) |
Total Equity | ||||||||||
| Balance, December 31, 2020 |
$ | 1,793 | $ | 230 | $ | 2,023 | ||||||
| Net loss |
(31,304 | ) | — | (31,304 | ) | |||||||
| Other comprehensive loss |
— | (28 | ) | (28 | ) | |||||||
| Net contribution from Parent |
43,218 | — | 43,218 | |||||||||
|
|
|
|
|
|
|
|||||||
| Balance, June 27, 2021 |
$ | 13,707 | $ | 202 | $ | 13,909 | ||||||
|
|
|
|
|
|
|
|||||||
See accompanying notes to Combined financial statements.
5
LiveWire EV
Notes to Combined financial statements
(Unaudited)
| 1) | Description of Business and Basis of Presentation |
LiveWire EV (the “Company”) is comprised of certain net assets and operating activities related to the historical electric vehicle operations of certain wholly owned indirect subsidiaries of Harley-Davidson, Inc. (the “Parent”). The Parent has common shares listed on the New York Stock Exchange. The accompanying combined financial statements and footnotes (“Combined financial statements”) present the assets, liabilities, revenues, and expenses directly attributed to the Company, as well as certain allocations from the Parent. The Company does not operate as a separate, stand-alone entity and historically was included as part of the motorcycles and related products (“Motorcycles”) segment of the Parent.
The Company has one reportable segment that sells electric vehicles, parts and accessories, and apparel in the United States (US) and certain international markets. The Company introduced its first electric motorcycle in July 2019 as the Harley-Davidson LiveWire. In the second half of 2021, the Company established the LiveWire brand and introduced the rebranded LiveWire One electric motorcycle. The Company also sells electric balance bikes under the STACYC and H-D IRONe brands, as well as through private label arrangements. Electric motorcycles are sold at wholesale to a network of independent dealers and, beginning in the third quarter of 2021, also at retail through a Company-operated retail partner and through online sales. Electric balance bikes are sold at wholesale to independent dealers and an independent distributor, as well as, direct to consumers online.
Merger / Business Combination with AEA-Bridges Impact Corp.
On December 12, 2021, the Parent and AEA-Bridges Impact Corp (ABIC), a special purpose acquisition company (SPAC) sponsored by executives of AEA Investors and Bridges Fund Management, entered into a definitive business combination agreement (Business Combination Agreement) under which, at closing, ABIC (following its Domestication, as defined in the Business Combination Agreement) combined with the Company to create a new publicly traded company (Combined Company), listed on the New York Stock Exchange. Concurrently with the execution of the Business Combination Agreement, the Company entered into subscription agreements with its Parent and an independent strategic investor, Kwang Yang Motor Co., Ltd. (KYMCO), (collectively, the “PIPE Investors”) pursuant to which, on the terms and subject to the conditions therein, the PIPE Investors collectively subscribed for 20.0 million shares of common stock for an aggregate purchase price equal to $200.0 million (the “PIPE Investment”). The business combination closed and the PIPE Investment was consummated on September 26, 2022 as more fully described in Note 13, Subsequent Events.
As a result of the Business Combination Agreement signed on December 12, 2021, the Parent and the Company entered into a separation agreement (the Separation Agreement) which sets forth the Company’s agreements with Harley-Davidson regarding the separation of the LiveWire business from Harley-Davidson into an independent company (the “Separation”). The Separation was consummated on September 26, 2022 as more fully described in Note 13, Subsequent Events.
Basis of Presentation
In the opinion of the Company’s management, the accompanying unaudited Combined financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Combined balance sheet as of June 26, 2022, the Combined statements of operations and comprehensive loss for the six months ended June 26, 2022 and June 27, 2021, the Combined statements of cash flows for the six months then ended, and the Combined statements of changes in equity for the six months ended June 26, 2022 and June 27, 2021.
Certain information and disclosures normally included in complete financial statements have been condensed or omitted pursuant to the rules and regulations of the United States Securities and Exchange Commission (SEC) and generally accepted accounting principles in the United States of America (U.S. GAAP) for interim financial reporting. These unaudited Combined financial statements should be read in conjunction with the audited combined financial statements and accompanying notes for the years ended December 31, 2021 and 2020.
The preparation of financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported in the Combined financial statements and the accompanying notes. Actual results could differ from those estimates.
The Combined financial statements present the Company as it was historically managed and operated by the Parent. The accompanying Combined financial statements have been derived from the consolidated financial statements and accounting records of the Parent to reflect the operations of the Company for the periods presented and have been prepared in accordance with accounting principles generally accepted in the US and pursuant to the rules and regulations of the US Securities and Exchange Commission (SEC). The Company’s financial information is presented as combined carve-out financial information using the historical results of operations and the historical bases of assets and liabilities of the Parent. Intercompany transactions within the Company have been eliminated in preparing the Combined financial statements.
6
LiveWire EV
Notes to Combined financial statements
(Unaudited)
Management of the Company believes assumptions underlying the Combined financial statements are reasonable. However, the Combined financial statements may not be indicative of the combined financial position, results of operations, and cash flows of the Company in the future or if it had operated independently of the Parent. Actual costs that would have been incurred if the Company had operated as a standalone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, primarily including, technology support, marketing, finance, engineering, usage of shared assets, and other general corporate and administrative costs, such as treasury, human resources, and others. The Company also may incur additional costs associated with being a standalone, publicly listed company that were not included in the expense allocations and, therefore, may result in additional costs that are not reflected in the historical results of operations, financial position, and cash flows. Principal assumptions underlying the Combined financial statements include:
| • | The Combined statements of operations and comprehensive loss include all revenues and costs directly attributable to the Company as well as an allocation of expenses from the Parent related to shared manufacturing costs; engineering expenses, selling expenses, general and administrative expenses, marketing expenses, employee-related expenses, charges for use of shared assets, and other expenses related to Parent’s corporate functions that provide support to the Company. The Parent allocates these costs to the Company using methodologies that management believes are appropriate and reasonable. Costs are generally attributed based on specific identification, legal obligation, or in another manner that best reflects the nature of how the expense is incurred, such as gross revenue, wholesale motorcycle shipments, standard cost, production units, and other allocation methods as deemed appropriate. |
| • | The Combined balance sheets include the attribution of certain assets and liabilities that have historically been held at the corporate level by the Parent, but which are specifically identifiable or attributable to the Company. The Parent’s cash management and financing activities are centralized. Accordingly, no cash has been attributed to the Combined financial statements, except for certain legally held cash accounts held by entities included in the Combined financial statements. |
| • | Net Parent investment in the Combined statements of changes in equity and the Combined balance sheets represents the accumulation of the Company’s net loss over time and the net effect of transactions with and allocations from the Parent. |
| • | Transactions between the Parent and the Company are generally considered to be effectively settled in cash at the time the transaction is recorded except for the note payable to related party and accounts receivable from related party (see disclosure in Note 12, Related Party Transactions). The net effect of the settlement of transactions with the Parent is reflected in the combined statements of cash flows as a financing activity and in the Combined balance sheets as “Net Parent investment.” |
| • | Within the Combined financial statements and tables presented, certain columns and rows may not sum due to the use of rounded numbers for disclosure purposes. |
| • | Certain comparative amounts have been reclassified to conform to the current year presentation. |
Liquidity and Going Concern
The Company historically managed liquidity risk by effectively managing its working capital, capital expenditures, and cash flows, making use of a central treasury function at the Parent to manage pooled cash investments and borrowing requirements. As an early-stage growth company, the Company does not expect to generate from operations adequate liquidity to fund its operations for the next twelve months. Prior to the business combination with ABIC the Parent supported the operating, investing and financing activities of the Company. Following the business combination with ABIC, the Company received net proceeds of approximately $293.7 million as more fully described in Note 13, Subsequent Events. Management believes that cash on hand and the proceeds received from the business combination will provide sufficient liquidity to meet the Company’s projected obligations for at least twelve months from September 30, 2022, the date these Combined financial statements were issued.
The Combined financial statements for the Company have been prepared on the basis of accounting policies applicable to a going concern. The going concern basis presumes that for the foreseeable future, funds will be available to finance future operations and that the realization of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.
| 2) | New Accounting Standards |
Other than the recent accounting pronouncements disclosed in the Company’s Combined financial statements for the fiscal year ended December 31, 2021, there have been no new accounting pronouncements or changes in accounting pronouncements during the first six months ended June 26, 2022 that are significant or potentially significant to the Company.
7
LiveWire EV
Notes to Combined financial statements
(Unaudited)
| 3) | Revenue |
The Company recognizes revenue when it satisfies a performance obligation by transferring control of a good or service to a customer. Revenue is measured based on the consideration that the Company expects to be entitled to in exchange for the goods or services transferred. Taxes that are collected from a customer concurrent with revenue-producing activities are excluded from revenue.
Disaggregated Revenue, net by major source was as follows (in thousands):
| Six Months Ended | ||||||||
| June 26, 2022 |
June 27, 2021 |
|||||||
| Electric motorcycles |
$ | 6,982 | $ | 4,192 | ||||
| Electric balance bikes, parts and accessories |
18,197 | 11,342 | ||||||
| Motorcycle parts and accessories |
478 | 288 | ||||||
| Apparel |
5 | 84 | ||||||
|
|
|
|
|
|||||
| Revenue, net |
$ | 25,662 | $ | 15,906 | ||||
|
|
|
|
|
|||||
Revenue from the sale of electric motorcycles, electric balance bikes as well as parts and accessories and apparel are recorded when control is transferred to the customer, generally at the time of shipment to independent dealers and distributors or at the time of delivery to retail customers.
The Company offers sales incentive programs to independent dealers and retail customers designed to promote the sale of its products. The Company estimates its variable consideration related to its sales incentive programs using the expected value method. The Company accounts for consideration payable to a customer as part of its sales incentives as a reduction of revenue, which is accrued at the later of the date the related sale is recorded or the date the incentive program is both approved and communicated.
The Company offers the right to return eligible parts and accessories and apparel. When the Company offers a right to return, it estimates returns based on an analysis of historical trends and records revenue on the initial sale only in the amount that it expects to be entitled. The remaining consideration is deferred in a refund liability account. The refund liability is remeasured for changes in the estimate at each reporting date with a corresponding adjustment to revenue.
Variable consideration related to sales incentives and rights to return is adjusted at the earliest of when the amount of consideration the Company expects to receive changes, or the consideration becomes fixed. Adjustments for variable consideration related to previously recognized sales were not material during 2022 and 2021.
Shipping and handling costs associated with freight after control of a product has transferred to a customer are accounted for as fulfillment costs. The Company accrues for the shipping and handling in the same period that the related revenue is recognized.
The Company offers standard, limited warranties on its motorcycles, electric balance bikes, and parts and accessories. These warranties provide assurance that the product will function as expected and are not separate performance obligations. The Company accounts for estimated warranty costs as a liability upon transferring control to the customer.
Contract Liabilities
The Company maintains certain deferred revenue balances related to payments received at contract inception in advance of the Company’s performance under the contract and generally relates to customer deposits for electric balance bikes. Deferred revenue is recognized as revenue as the Company performs under the contract. Deferred revenue, included in Accrued liabilities on the Combined balance sheets, was as follows (in thousands):
| June 26, 2022 |
June 27, 2021 |
|||||||
| Balance, beginning of period |
$ | 1,644 | $ | — | ||||
| Balance, end of period |
1,092 | 1,888 | ||||||
Previously deferred revenue recognized as revenue in the six months ended June 26, 2022 was $2,185 thousand. The Company expects to recognize approximately $1,092 thousand of the remaining deferred revenue in 2022.
| 4) | Income Taxes |
The Company’s effective income tax rate for the six months ended June 26, 2022 was -0.46% compared to -0.15% for the six months ended June 27, 2021.
8
LiveWire EV
Notes to Combined financial statements
(Unaudited)
The Company generated operating losses in each of the periods presented. The Company is not recognizing an income tax benefit related to these losses because the Company does not believe there is sufficient positive evidence regarding the ability to realize the benefit of these losses. Further, the operating results of the Company have historically been included in the consolidated federal and combined state tax returns of the Parent and the resulting tax attributes have been fully utilized by the Parent and are no longer available to the Company for future use. Certain separate state NOLs which belong to the Company are reflected in the financials presented. After an assessment of the positive and negative evidence regarding the realizability of the separate state NOLs and other deferred tax assets reflected in the financials, it was determined a valuation allowance was required.
| 5) | Additional Balance Sheet Information |
Inventories consisted of the following (in thousands):
| June 26, 2022 |
December 31, 2021 |
|||||||
| Raw materials and work in progress |
$ | 6,993 | $ | 5,233 | ||||
| Electric motorcycles and electric balance bikes |
14,137 | 8,636 | ||||||
| Parts and accessories and apparel |
4,704 | 2,928 | ||||||
|
|
|
|
|
|||||
| $ | 25,834 | $ | 16,797 | |||||
|
|
|
|
|
|||||
Other current assets include prepaid supplier deposits of $974 thousand and $3,025 thousand as of June 26, 2022 and December 31, 2021 relating to future inventory purchases.
Property, plant and equipment, net consisted of the following, (in thousands):
| June 26, 2022 |
December 31, 2021 |
|||||||
| Construction in progress |
$ | 16,961 | $ | 9,746 | ||||
| Tooling |
9,827 | 10,155 | ||||||
| Machinery and equipment |
2,844 | 3,317 | ||||||
| Software |
2,798 | 2,798 | ||||||
| Leasehold improvements |
1,635 | 1,266 | ||||||
|
|
|
|
|
|||||
| 34,065 | 27,282 | |||||||
| Accumulated depreciation |
(11,248 | ) | (9,388 | ) | ||||
|
|
|
|
|
|||||
| $ | 22,817 | $ | 17,894 | |||||
|
|
|
|
|
|||||
Depreciation for the six months ended June 26, 2022 and June 27, 2021 was $2,575 thousand and $1,841 thousand, respectively. Software, net of accumulated amortization, included in Property, plant and equipment, net was $1,776 thousand and $2,242 thousand as of June 26, 2022 and December 31, 2021 respectively. The Company had $5,995 thousand and $3,651 thousand related to purchases of Property, plant and equipment included in Accounts payable as of June 26, 2022 and December 31, 2021, respectively.
Other long-term assets consisted primarily of capitalized implementation costs incurred in connection with cloud computing arrangements that do not include a license to internal-use software in accordance with Accounting Standards Update 2018-15.
9
LiveWire EV
Notes to Combined financial statements
(Unaudited)
Accrued liabilities consisted of the following, (in thousands):
| June 26, 2022 |
December 31, 2021 |
|||||||
| Payroll and employee benefits |
$ | 3,424 | $ | 6,129 | ||||
| Engineering |
3,411 | 2,680 | ||||||
| Supplier commitment |
1,672 | — | ||||||
| Warranty and recalls |
607 | 720 | ||||||
| Deferred revenue |
1,092 | 1,644 | ||||||
| Sales incentives |
222 | 795 | ||||||
| Taxes |
736 | 918 | ||||||
| Other |
2,189 | 2,688 | ||||||
|
|
|
|
|
|||||
| $ | 13,353 | $ | 15,574 | |||||
|
|
|
|
|
|||||
The Company has a liability related to an excess firm purchase commitment to a supplier. Based on contractual terms, beginning with calendar year 2022, the Company expects to pay, in January of each calendar year, any amounts due to the supplier from the preceding calendar year. The total obligation was $5,186 thousand and $5,330 thousand as of June 26, 2022 and December 31, 2021, respectively. The non-current portion, included in Long-term supplier liability on the combined balance sheets was $3,514 thousand and $5,330 thousand, as of June 26, 2022 and December 31, 2021, respectively. The current portion of the liability was recorded within Accrued liabilities and was $1,672 thousand as of June 26, 2022. There was no current portion as of December 31, 2021.
| 6) | Leases |
The Company determines if an arrangement is or contains a lease at contract inception.
Right of Use (ROU) assets represent the Company’s right to use an underlying asset over the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of future lease payments over the lease term. The ROU asset also includes prepaid lease payments and initial direct costs and is reduced for lease incentives paid by the lessor. The discount rate used to determine the present value is generally the Parent’s incremental borrowing rate because the implicit rate in the lease is not readily determinable. The lease term used to calculate the ROU asset and lease liabilities includes periods covered by options to extend or terminate when the Company is reasonably certain the lease term will include these optional periods.
In accordance with ASC Topic 842, the Company elected the short-term lease practical expedient that allows entities to recognize lease payments on a straight-line basis over the lease term for leases with a term of 12 months or less. The Company has also elected the practical expedient under ASC Topic 842 allowing entities to not separate non-lease components from lease components, but instead account for such components as a single lease component for all leases except leases involving assets used in manufacturing and distribution processes.
The Company has operating real estate lease arrangements. The Company’s leases have a remaining lease term of 1 to 5 years. The Company’s leases do not contain any material residual value guarantees or material restrictive covenants.
Operating lease expense was $624 thousand and $213 thousand for the six months ended June 26, 2022 and June 27, 2021, respectively.
Balance sheet information related to the Company’s leases was as follows (in thousands):
| June 26, 2022 |
December 31, 2021 |
|||||||
| Lease assets |
$ | 2,953 | $ | 3,471 | ||||
| Current portion of lease liability |
1,223 | 1,146 | ||||||
| Long-term portion of lease liabilities |
1,832 | 2,423 | ||||||
|
|
|
|
|
|||||
| $ | 3,055 | $ | 3,569 | |||||
|
|
|
|
|
|||||
10
LiveWire EV
Notes to Combined financial statements
(Unaudited)
Future maturities of the Company’s operating lease liabilities as of June 26, 2022 were as follows (in thousands):
| Future lease payments: |
||||
| 2022 |
$ | 638 | ||
| 2023 |
1,229 | |||
| 2024 |
887 | |||
| 2025 |
209 | |||
| 2026 |
150 | |||
| Thereafter |
— | |||
|
|
|
|||
| 3,113 | ||||
| Present value discount |
(58 | ) | ||
|
|
|
|||
| Lease liabilities |
$ | 3,055 | ||
|
|
|
Other lease information surrounding the Company’s operating leases was as follows (in thousands):
| Six Months ended | ||||||||
| June 26, 2022 |
June 27, 2021 |
|||||||
| Cash outflows for amounts included in the measurement of lease liabilities |
$ | 620 | $ | 205 | ||||
| ROU assets obtained in exchange for lease obligations |
85 | 1,329 | ||||||
| Lease modifications |
— | — | ||||||
| Weighted-average remaining lease term (in years) |
2.72 | 4.11 | ||||||
| Weighted-average discount rate |
1.30 | % | 1.91 | % | ||||
| 7) | Fair Value Measurements |
The Company assesses the inputs used to measure fair value using a three-tier hierarchy.
| • | Level 1 inputs include quoted prices for identical instruments and are the most observable. |
| • | Level 2 inputs include quoted prices for similar assets and observable inputs. |
| • | Level 3 inputs are not observable in the market and include the Company’s judgments about the assumptions market participants would use in pricing the asset or liability. |
As of December 31, 2021, the Company had a contingent consideration obligation related to an aggregate earnout payment associated with the Parent’s 2019 acquisition of STACYC, Inc (STACYC). The contingent consideration related to an aggregate earnout payment with a potential payout ranging from $0 to $6,537 thousand based on the achievement of sales volume targets during the twelve-month performance periods beginning in June 2019, 2020, and 2021, respectively. Each annual period had its own milestone target and related potential earn-out payment. The earnout was payable in three installments during 2020, 2021, and 2022. The Company recorded a liability of $4,978 thousand at the acquisition-date for the fair value based on the likelihood of contingent earn-out payments as part of the total consideration. In 2021 and 2020, the Company made payments of $2,180 thousand during each period based on the full achievement of performance targets for the first two annual performance periods. On June 24, 2022, the Company made the final earnout payment of $2,180 thousand. The final payment settled the Company’s contingent consideration obligation related to acquisition of STACYC.
The fair value of the company’s contingent consideration liability for each remeasurement period was calculated using the following significant unobservable inputs:
| December 31, 2021 |
||||
| Discount Rate per performance period [a] |
|
2020: 0.6 2021: 0.7 |
% % | |
| Revenue Volatility [b] |
25 | % | ||
| Revenue Metric Risk Premium [c] |
11 | % | ||
11
LiveWire EV
Notes to Combined financial statements
(Unaudited)
| [a] | Discount rates applied in arriving at expected cash flow are based on the Company’s estimated cost of debt over the appropriate time horizon as it relates to the annual contingent payments. |
| [b] | Revenue volatility is based on historical revenue volatility data observed for guideline public companies and selected as the product volume volatility assumption for the Monte-Carlo Simulation. |
| [c] | The Revenue Metric Risk Premium was calculated based on the risk-free rate, revenue beta, equity risk premium, size premium and company-specific risk premium |
Below is a roll-forward of the contingent consideration liability measured at estimated fair value for the following periods (in thousands):
| Six Months ended | ||||||||
| June 26, 2022 |
June 27, 2021 |
|||||||
| Balance, beginning of period |
$ | 2,180 | $ | 4,311 | ||||
| Revaluation of contingent consideration liability |
— | 24 | ||||||
| Cash paid |
(2,180 | ) | — | |||||
|
|
|
|
|
|||||
| Balance, end of period |
$ | — | $ | 4,335 | ||||
|
|
|
|
|
|||||
| 8) | Product Warranty and Recall Campaigns |
The Company provides a limited warranty on the new electric motorcycles for a period of two years, except for the battery which is covered for five years. The Company also provides limited warranties on parts and accessories and electric balance bikes. The warranty coverage for the retail customer generally begins when the product is sold to the retail customer. The Company accrues for future warranty claims when the Company transfers control to its customer using an estimated cost based primarily on historical Company claim information. In the case of both warranty and recall costs, as actual experience becomes available it is used to update the accruals.
Additionally, the Company may from time-to-time initiate certain voluntary recall campaigns. The Company records estimated recall costs when the liability is both probable and estimable. This generally occurs when the Company’s management approves and commits to a recall. The warranty and recall liability are included in Accrued liabilities and Other long-term liabilities on the Combined balance sheets.
Changes in the Company’s warranty and recall liability were as follows (in thousands):
| Six Months ended | ||||||||
| June 26, 2022 |
June 27, 2021 |
|||||||
| Balance, beginning of period |
$ | 1,095 | $ | 778 | ||||
| Warranties issued during the period |
95 | 337 | ||||||
| Settlements made during the period |
(342 | ) | (547 | ) | ||||
| Currency translation adjustments |
(43 | ) | (1 | ) | ||||
| Recalls and changes to pre-existing warranty liabilities |
124 | 595 | ||||||
|
|
|
|
|
|||||
| Balance, end of period |
$ | 929 | $ | 1,162 | ||||
|
|
|
|
|
|||||
The liability for recall campaigns included in the balance above was $266 thousand and $269 thousand as of June 26, 2022 and December 31,2021, respectively.
| 9) | Employee Retirement and Other Postretirement Benefits |
Defined Benefit Plans and Other Postretirement Benefit Plans
The Parent sponsors a qualified pension plan and a postretirement healthcare plan which cover eligible Company employees and retirees. These defined benefit plans include both Company eligible employees and other employees of the Parent (“Shared” plans) and are accounted for as multiemployer benefit plans and the related net benefit plan assets and obligations are not included in the Company’s Combined balance sheets. A portion of the related net periodic benefit plan cost has been allocated to the Company based on an estimated cost per plan participant and allocations of corporate and other shared functional personnel. The Company recorded
12
LiveWire EV
Notes to Combined financial statements
(Unaudited)
expense of $22 thousand and $92 thousand for the six months ended June 26, 2022 and June 27, 2021, respectively, for the Company’s allocation of net periodic pension and healthcare plan costs related to the Company’s employees. The Company is not required to make any contributions to the plans sponsored by the Parent.
Defined Contribution Plans
The Parent has various defined contribution benefit plans that in total cover substantially all full-time employees. Employees can make voluntary contributions in accordance with the provisions of their respective plan, which includes a 401(k)-tax deferral option.
On March 1, 2022, the Company established a LiveWire 401(k) plan for the benefit of the Company’s employees. In connection with the establishment of the LiveWire 401(k) plan, the Parent made all employer contributions to its 401(k) plan on behalf of the Company’s employees, prorated for the portion of the plan year ending March 1, 2022. Upon the establishment of the LiveWire 401(k) plan, each of the Company’s employees then-participating in the Parent’s 401(k) plan became fully vested in his or her account balance under the Parent’s 401(k) plan and their account balances under the Parent’s 401(k) plan were transferred to the LiveWire 401(k) plan.
The Company expensed $833 thousand and $387 thousand for the six months ended June 26, 2022 and June 27, 2021, respectively, related to defined contribution benefits plans contributions.
| 10) | Commitments and Contingencies |
The Company is subject to claims related to product and other commercial matters. In determining costs to accrue related to these items, the Company carefully analyzes cases and considers the likelihood of adverse judgments or outcomes, as well as the potential range of possible loss. The Company accrues for matters when losses are both probable and estimable. Any amounts accrued for these matters are monitored on an ongoing basis and are updated based on new developments or new information as it becomes available for each matter. Refer to Note 5, Additional Balance Sheet Information for a discussion of a supplier liability and Note 8, Product Warranty and Recall Campaigns for a discussion of warranty and recall liabilities. The Company is self-insured for product liability claims, and the Parent maintains insurance for individual claim amounts in excess of the self-insured amounts.
| 11) | Share-Based Awards |
Certain employees of the Company participated in the Parent’s share-based compensation plan under which the Parent’s Board of Directors may grant to employees share-based awards, including RSUs and performance shares. As additional employees transferred from the Parent to the Company, any outstanding share-based awards previously granted have been retained by the employees and have been transferred to the Company. All awards granted under the plans are based on the Parent’s common shares and, as such, were reflected in the Combined balance sheets as Net Parent investment and Accrued liabilities for equity-classified awards and liability-classified awards, respectively. Share-based compensation included in the Combined statements of operations and comprehensive loss includes expense attributable to the Company based on the awards and terms previously granted to the Company’s employees. Total share-based award compensation expense recognized by the Company for the six months ended June 26, 2022 and June 27, 2021 was $592 thousand and $232 thousand, respectively. The cost of each equity-classified award is based on the fair value as of the grant date. The cost of each liability-classified award is based on the fair value at the grant date, subsequently remeasured at each reporting date until the date of settlement. Forfeitures for share-based awards are estimated at the grant date and adjusted when it is likely to change. Share-based award expense is recognized on a straight-line basis over the service periods. The expense recognized reflects the number of awards that are ultimately expected to vest based on service. At settlement of equity classified awards, the Parent delivers common stock to participants from its authorized but unissued common stock.
During the three months ended March 27, 2022, the Company elected to cancel and convert outstanding RSUs held by 91 of the Company’s employees into the right to receive cash payments (each, an “RSU Payment”) on the date which the RSU award would otherwise become vested in accordance with the vesting schedule applied to such award immediately prior to cancellation of the award. The cancellation of equity-classified awards resulted in a reduction to Net Parent investment and share-based award expense of $171 thousand. The conversion to RSU Payments, which are liability-classified awards, resulted in an increase to Accrued liabilities and share-based award expense of $474 thousand. The incremental compensation cost resulting from the modification of the RSUs was immaterial. As of June 26, 2022, the accrued liability for the cash awards was $673 thousand.
Each RSU Payment is a liability-classified award, which will (i) be in amount equal to (x) the number of shares of the Parent’s common stock subject to such RSU award that would have otherwise become vested on the applicable RSU vesting date in accordance with the applicable RSU vesting schedule, multiplied by (y) the closing trading price of a share of the Parent’s common stock on such RSU vesting date and (ii) be paid to the applicable employee of the Company on or within 30 days following the applicable RSU vesting date, subject to and conditioned upon such employee’s continued employment or service, as applicable, to the Company through the applicable vesting date.
As of June 26, 2022, there was $2,042 thousand of unrecognized compensation cost related to liability-classified awards, net of estimated forfeitures, that is expected to be recognized over a weighted-average period of 1.47 years.
13
LiveWire EV
Notes to Combined financial statements
(Unaudited)
| 12) | Related Party Transactions |
Historically, the Company has been managed and operated in the normal course of business by various Parent entities. Accordingly, certain costs have been allocated to the Company and are reflected as expenses in the Combined statements of operations and comprehensive loss. The Company considers the allocation methodologies used to be reasonable, such that the allocations appropriately reflect the various Parent entities’ historical expenses attributable to the Company for purposes of the Combined financial statements. However, the expenses reflected in the Combined financial statements may not be indicative of the actual expenses that would have been incurred during the periods presented if the Company had historically operated as a stand-alone independent entity. It is not practicable to estimate actual costs that would have been incurred had the Company been a standalone company during the periods presented. In addition, the expenses reflected in the Combined financial statements may not be indicative of expenses that the Company will incur in the future.
Manufacturing cost of sales
The Company produces electric motorcycles in manufacturing facilities shared with the Parent. Certain costs of goods sold for shared facilities and shared manufacturing of $2,808 thousand and $1,742 thousand for the six months ended June 26, 2022 and June 27, 2021, respectively, were specifically identified or allocated, mainly based on standard cost of production.
Operating expense allocation
The Parent provides technology support, marketing, engineering, shared assets, finance, and other corporate and administrative services such as treasury, human resources, and legal, to the Company. These expenses of $1,707 thousand and $686 thousand for the six months ended June 26, 2022 and June 27, 2021, respectively, have been allocated to the Company and are included in Selling, administrative and engineering expense in the Combined statements of operations and comprehensive loss, where direct assignment of costs incurred by the Parent was not possible or practical. These costs were allocated using related drivers associated with the nature of the business, such as gross revenue and wholesale motorcycle shipments. Other cost allocation metrics, such as headcount and square footage, were not deemed appropriate given the Company’s reliance on facilities and personnel that are shared with the Parent.
Cash management and financing
The Company’s Treasury function is maintained by the Parent. Accordingly, no cash, cash equivalents, or marketable securities have been attributed to the Combined financial statements, except for certain cash accounts. Certain cash accounts and the notes payable to related party are retained by the Company because they were legally held by the Company. The Parent utilizes a centralized approach to cash management and the financing of its operations. Under this centralized cash management approach, the Parent provides funds to the Company.
Cash transfers from Parent related to services and funding for operations provided by the Parent were $32,497 thousand and $42,986 thousand for the period ended June 26, 2022 and June 27, 2021, respectively. Net contributions from the Parent are included within Net Parent investment in the Combined statements of changes in equity.
| Six Months ended (in thousands) |
||||||||
| June 26, 2022 |
June 27, 2021 |
|||||||
| Net contribution from Parent |
$ | 53,368 | $ | 43,218 | ||||
| Settlement of notes payable to related party and accrued interest |
(21,610 | ) | — | |||||
| Transfer of assets to Parent |
568 | — | ||||||
| Stock compensation |
171 | (232 | ) | |||||
|
|
|
|
|
|||||
| Transfers from Parent per cash flow statement |
$ | 32,497 | $ | 42,986 | ||||
|
|
|
|
|
|||||
Other transactions
All sales of electric motorcycles and related products to independent dealers in the US and Canada are financed by the purchasing independent dealers through HDFS, a wholly owned subsidiary of the Parent; therefore, accounts receivable related to these sales to independent dealers are recorded in Accounts receivable from related party on the Combined balance sheets. Amounts financed by independent dealers through HDFS, not yet remitted to the Company by HDFS on the dealers’ behalf are generally settled within 30 days.
Notes payable to related party on the Combined balance sheets relate to three lines of credit agreements with the Parent, two of which were entered into on December 23, 2020 and the third was entered into on July 6, 2021. There are no financial covenants associated with these lines of credit. Each of these agreements allow for earlier payment on demand of Parent in the event of default.
14
LiveWire EV
Notes to Combined financial statements
(Unaudited)
The Company’s first line of credit agreement has a maximum borrowing limit of $5,000 thousand with an interest rate of 6.6%. This line of credit was amended and restated on December 22, 2021 with a maturity date of December 31, 2022. The Company had no outstanding amounts at June 26, 2022 and December 31, 2021.
The Company’s second line of credit agreement with the Parent has a maximum borrowing limit of $10,000 thousand with an interest rate of 6.6% and a maturity date of December 31, 2023. This line of credit agreement limits the use of proceeds to the payment of contingent consideration related to the Company’s purchase agreement for the acquisition of STACYC on March 4, 2019. The Company had no outstanding amount under this line of credit at June 26, 2022 and $5,333 thousand outstanding at December 31, 2021.
The Company’s third line of credit agreement has a maximum borrowing limit of $60,000 thousand with an interest rate of 6.6%. This line of credit was amended and restated on December 22, 2021 with a maturity date December 22, 2022. The Company had no outstanding amount under this line of credit at June 26, 2022 and $100 thousand outstanding at December 31, 2021.
The notes payable to related party presented on the Combined balance sheets included the following accrued interest amounts as of (in thousands):
| June 26, 2022 |
December 31, 2021 |
|||||||
| Current portion of notes payable to related party |
$ | — | $ | 3 | ||||
| Long-term portion of notes payable to related party |
— | 366 | ||||||
|
|
|
|
|
|||||
| $ | — | $ | 369 | |||||
|
|
|
|
|
|||||
Interest paid on the notes payable to related party was $0 and $59 for the six months ended June 26, 2022 and June 27, 2021, respectively.
During the period ended June 26, 2022, the Company borrowed $15,333 thousand under the lines of credit agreements prior to their final settlement on June 24, 2022. Pursuant to the Separation Agreement, the Parent elected to settle all notes payable to related party outstanding as of June 24, 2022, including accrued interest, through capital contribution and without any cash being exchanged between the Company and the Parent. The settlement includes the principal amount and accrued interest of $20,766 thousand and $844 thousand, respectively. The capital contribution to settle the notes payable and accrued interest increased the Net Parent investment on the Combined balance sheets.
| 13) | Subsequent Events |
The Company evaluated subsequent events through September 30, 2022, the date that the financial statements were issued.
On September 26, 2022, prior to the consummation of the business combination (described below), the Company consummated the Separation subject to the terms of the Separation Agreement. As a result, certain assets and liabilities were retained and settled by the Parent and did not transfer to the Company. As of June 26, 2022, the value of assets and liabilities and related tax effects retained by the Parent at Separation was $8,961 thousand and $11,393 thousand, respectively. The most significant assets retained by the Parent included assets that relate to Harley-Davidson branded LiveWire motorcycles including certain assets that relate to the manufacture of LiveWire One electric motorcycles. The most significant liabilities retained and settled by the Parent included employee liabilities related to service rendered prior to the closing of the business combination, accounts payable outstanding for amounts owed to suppliers to manufacture electric motorcycles, a supplier liability for an excess firm purchase commitment, and certain warranty liabilities associated with the Harley-Davidson branded LiveWire motorcycle (see disclosure in Note 8, Product Warranty and Recall Campaigns).
On September 26, 2022, the Company consummated the merger with ABIC (following its Domestication, as defined in the Business Combination Agreement) resulting in net proceeds of approximately $293.7 million, including $100 million investment from the Parent and $100 million investment from KYMCO through a PIPE. Additionally, LiveWire received ABIC’s cash held in trust account of $13.6 million (net of the SPAC share redemption amount of $368.1 million and payment of transaction costs incurred by ABIC of $20.6 million) and the $100 million equity backstop (the “H-D Backstop Amount”) provided by the Parent in exchange for 10,000,000 of common stock (the “H-D Backstop Shares) for a purchase price of $10.00 per share pursuant to the terms of the Business Combination Agreement and as a result of public shareholders exercising their redemption rights with respect to 36,597,112 shares of ABIC Class A common stock for $368.1 million in the aggregate, at a redemption price of approximately $10.06 per share. After giving effect to the business combination, the redemption of ABIC Class A common stock as described above, the issuance of the H-D Backstop Shares and the consummation of the PIPE Investments, there are 202,402,888 shares of LiveWire common stock issued and outstanding as of the closing date. Upon closing, the Parent retained an equity interest in the Combined Company of 89.4%, ABIC’s shareholders have an equity interest in the Combined Company of approximately 1.7%, ABIC’s founders have an equity interest in the Combined Company of approximately 4.0% and KYMCO has an equity interest in the Combined Company of approximately 4.9%. The Company expects that the merger will be accounted for as a reverse recapitalization, with LiveWire being identified as the accounting acquirer.
15
Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Defined terms used but not defined in this Exhibit 99.2 shall have the same meaning as terms defined and included elsewhere in the Current Report on Form 8-K to which this Exhibit 99.2 is attached, and, if not defined in the Current Report on Form 8-K to which this Exhibit 99.2 is attached, the Registration Statement on Form S-4 (File Nos. 333-262573 and 333-262573-01) (the “Registration Statement”). Unless the context otherwise requires, “LiveWire” refers to LiveWire Group, Inc. and its subsidiaries after the Closing, “ABIC” refers to AEA-Bridges Impact Corp. prior to the Domestication, “Domesticated ABIC” refers to AEA-Bridges Impact Corp. prior to Closing, and “Legacy LiveWire” refers to LiveWire EV, LLC prior to the Closing.
The following unaudited pro forma condensed combined financial information present the combination of the financial information of ABIC and Legacy LiveWire adjusted to give effect to the separation of the Legacy LiveWire business from Harley-Davidson, Inc. (“H-D”) into an independent company (the “Separation”), the Business Combination and related transactions (collectively, the “Transactions”). In May 2020, the SEC adopted Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses,” or the “Final Rule.” The Final Rule became effective on January 1, 2021 and the unaudited pro forma condensed financial information herein is presented in accordance therewith.
ABIC was a blank check company incorporated as a Cayman Islands exempted company on July 29, 2020. ABIC was incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities. The registration statement for ABIC’s IPO was declared effective on October 1, 2020. On October 5, 2020 ABIC consummated the IPO of 40,000,000 ABIC Units, generating gross proceeds of $400 million. Simultaneously with the closing of the IPO, ABIC consummated the sale of 10,500,000 warrants (the “Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to the Sponsor, generating gross proceeds of $10.5 million. Following the closing of the IPO on October 5, 2020, an amount of $400 million ($10.00 per ABIC Unit) from the net proceeds of the sale of the ABIC Units in the IPO and the sale of the Private Placement Warrants was placed in the Trust Account and invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or in any open-ended investment company that holds itself out as a money market fund investing solely in U.S. Treasuries and meeting certain conditions under Rule 2a-7 of the Investment Company Act, as determined by ABIC, until the earliest of (i) the completion of a business combination; and (ii) the distribution of the funds in the Trust Account to ABIC’s shareholders.
Legacy LiveWire sells electric vehicles and related parts and accessories (“P&A”) and apparel in the United States and certain international markets.
The unaudited pro forma condensed combined balance sheet as of June 26, 2022 combines the historical balance sheet of ABIC as of June 30, 2022 and the historical balance sheet of Legacy LiveWire as of June 26, 2022, on a pro forma basis as if the Transactions, summarized below, had been consummated on June 26, 2022. The unaudited pro forma condensed combined statements of operations for the six months ended June 26, 2022 combines the historical statements of operations of ABIC for the period from January 1, 2022 to June 30, 2022 and Legacy LiveWire for the period from January 1, 2022 to June 26, 2022. The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2021 combines the historical statements of operations of ABIC and Legacy LiveWire for such period, on a pro forma basis as if the Transactions, summarized below, had been consummated on January 1, 2021, the beginning of the earliest period presented, giving effect to:
| • | The Separation transaction accounting and autonomous entity adjustments |
| • | the impact of the Separation Agreement, Master Services Agreement, Transition Services Agreement, Contract Manufacturing Agreement, Employee Matters Agreement, Tax Matters Agreement and other commercial agreements between Legacy LiveWire and H-D and the provisions contained therein. |
| • | The Business Combination and related transactions transaction accounting adjustments |
| • | the reverse recapitalization (as described in Note 1) between ABIC and Legacy LiveWire; |
| • | the redemption of 36,597,112 Class A Ordinary Shares for $368.1 million out of the Trust Account, at a redemption price of approximately $10.06 per share; |
| • | the $100 million investment from H-D and the $100 million investment from KYMCO Group, a leading global powersports company headquartered in Taiwan, through a PIPE (private investment in public equity); |
| • | the $100 million Backstop amount from the Legacy LiveWire Equityholder; and |
| • | the one-time expenses associated with the Business Combination. |
The unaudited pro forma condensed combined financial statements should be read in conjunction with Legacy LiveWire’s and ABIC’s unaudited and audited financial statements and related notes; the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of ABIC” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of LiveWire,” and other financial information included elsewhere in the Proxy Statement/Prospectus.
Description of the Business Combination
On December 12, 2021, ABIC, LiveWire, LW EV Merger Sub Inc. (“Merger Sub”), H-D and Legacy LiveWire entered into the Business Combination Agreement. On September 16, 2022, the Business Combination was approved by an ABIC shareholder vote and closed September 26, 2022.
The Business Combination consisted of a series of transactions, pursuant to which (i) on September 23, 2022, ABIC completed the Domestication, in connection with which all of the outstanding ABIC Shares converted into shares of Domesticated ABIC Common Stock, par value $0.0001 per share, and each outstanding ABIC Warrant converted into a Domesticated ABIC Warrant and outstanding units were canceled and instead entitle the holder thereof to, per unit, one share of common stock of Domesticated ABIC and one-half of one warrant of Domesticated ABIC; (ii) on September 26, 2022, H-D and Legacy LiveWire consummated the separation of the Legacy LiveWire business and the other transactions contemplated by the Separation Agreement; (iii) following the Domestication and immediately following the Separation, the Merger occurred, in which Merger Sub was merged with and into Domesticated ABIC, with Domesticated ABIC surviving the merger as a wholly owned direct subsidiary of LiveWire, and LiveWire continued as the public company, with each share of Domesticated ABIC Common Stock converted into the right of the holder thereof to receive one share of LiveWire Common Stock; (iv) immediately following the Merger, H-D caused the Legacy LiveWire Equityholder to consummate the Exchange, pursuant to which LiveWire acquired from the Legacy LiveWire Equityholder, and the Legacy LiveWire Equityholder transferred, conveyed and delivered to LiveWire, all of the Legacy LiveWire Equity and the Legacy LiveWire Equityholder received, in consideration for the transfer, conveyance and delivery of the Legacy LiveWire Equity, 161,000,000 shares of LiveWire Common Stock and the right to receive up to an additional 12,500,000 shares of LiveWire Common Stock in the future (as described in more detail below), and, as a result of the Exchange, Legacy LiveWire became a direct, wholly owned subsidiary of LiveWire; and (v) immediately following the consummation of the Exchange, LiveWire contributed 100% of the outstanding equity interests of Legacy LiveWire to Domesticated ABIC.
Pursuant to investment agreements entered into in connection with the Business Combination Agreement, the KYMCO Group agreed to subscribe for an aggregate 10,000,000 newly-issued shares of LiveWire Common Stock for a purchase price of $10.00 per share for an aggregate gross purchase price equal to $100 million. Additionally, pursuant to the Business Combination Agreement, and an investment agreement entered into prior to the Closing, the Legacy LiveWire Equityholder agreed to subscribe for an aggregate of 10,000,000 newly-issued shares of LiveWire Common Stock at a purchase price of $10.00 per share for an aggregate purchase price of $100 million. At the Closing, LiveWire consummated the PIPE Investments.
H-D also caused the Legacy LiveWire Equityholder to pay and deliver to LiveWire an amount in cash equal to $100 million (the “H-D Backstop Amount”) in exchange for 10,000,000 of LiveWire Common Stock for a purchase price of $10.00 per share pursuant to the terms of the Business Combination Agreement and as a result of Public Shareholders exercising their redemption rights with respect to 36,597,112 Class A Ordinary Shares for $368.1 million, at a redemption price of approximately $10.06 per share.
The Legacy LiveWire Equityholder has the contingent right to earn up to an additional 12,500,000 shares of LiveWire Common Stock (the “Earn Out Shares”), subject to the following conditions:
| • | 6,250,000 of the Earn Out Shares will vest if and at such time as a $14.00 LiveWire Common Stock Price is achieved during the Earn Out Period (as defined below); and |
| • | 6,250,000 of the Earn Out Shares will vest if and at such time as a $18.00 LiveWire Common Stock Price is achieved during the Earn Out Period. |
The “LiveWire Common Stock Price” will be considered achieved only (a) when the volume-weighted average price of the shares of common stock of LiveWire is greater than or equal to the applicable threshold for any 20 trading days within a 30-trading day period or (b) the per-share price (based on a fully diluted basis, inclusive of issues of the Earn Out Shares, which are expected to be classified as equity) implied in a change of control transaction is greater than or equal to the applicable threshold.
“Earn Out Period” means the period beginning 18 months post-Closing and ending on the fifth (5th) anniversary date of the beginning of the Earn Out Period.
In connection with the Business Combination, the Sponsor agreed at the Closing to forfeit 2,000,000 Class B Ordinary Shares (“Founder Shares”) owned by the Sponsor (“Sponsor Shares”) in accordance with the Investor Support Agreement.
The following summarizes the shares of common stock of LiveWire outstanding at the Closing:
| Shares | % | |||||||
| Existing Legacy LiveWire equityholders (1) |
181,000,000 | 89.4 | % | |||||
| LiveWire public stockholders |
3,402,888 | 1.7 | ||||||
| AEA-Bridges Impact sponsor stockholders |
8,000,000 | 4.0 | ||||||
| KYMCO stockholder |
10,000,000 | 4.9 | ||||||
|
|
|
|
|
|||||
| Total shares outstanding at close |
202,402,888 | 100.0 | % | |||||
|
|
|
|
|
|||||
| (1) | Excludes 12,500,000 LiveWire Common Stock in estimated potential earn out shares as the price threshold for each tranche has not yet been triggered. |
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 26, 2022
(in thousands)
| Separation | Business Combination | |||||||||||||||||||||||||||||||
| Legacy LiveWire (Historical) |
Transaction Accounting Adjustments |
Pro Forma Legacy LiveWire |
AEA-Bridges Impact Corp. |
Transaction Accounting Adjustments |
Pro Forma Combined |
|||||||||||||||||||||||||||
| ASSETS |
||||||||||||||||||||||||||||||||
| Current assets |
||||||||||||||||||||||||||||||||
| Cash |
$ | 5,365 | $ | — | $ | 5,365 | $ | 337 | $
|
400,575 200,000 100,000 (20,132 (15,968 (4,653 (368,137 |
) ) ) ) |
|
(b (c (d (e (f (g (j |
) ) ) ) ) ) ) |
$ | 297,387 | ||||||||||||||||
| Due from Sponsor |
— | — | — | 5 | — | 5 | ||||||||||||||||||||||||||
| Accounts receivables, net |
5,339 | (513 | ) | (a | ) | 4,826 | — | — | 4,826 | |||||||||||||||||||||||
| Account receivable from related party |
1,248 | (63 | ) | (a | ) | 1,185 | — | — | 1,185 | |||||||||||||||||||||||
| Inventories, net |
25,834 | (7,301 | ) | (a | ) | 18,533 | — | — | 18,533 | |||||||||||||||||||||||
| Other current assets |
1,659 | (1,012 | ) | (a | ) | 647 | 127 | — | 774 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Total current assets |
39,445 | (8,889 | ) | 30,556 | 469 | 291,685 | 322,710 | |||||||||||||||||||||||||
| Cash and securities held in Trust Account |
— | — | — | 400,575 | (400,575 | ) | (b | ) | — | |||||||||||||||||||||||
| Property, plant and equipment, net |
22,817 | — | 22,817 | — | — | 22,817 | ||||||||||||||||||||||||||
| Goodwill |
8,327 | — | 8,327 | — | — | 8,327 | ||||||||||||||||||||||||||
| Deferred tax assets |
72 | (72 | ) | (l | ) | — | — | — | — | |||||||||||||||||||||||
| Lease assets |
2,953 | — | 2,953 | — | — | 2,953 | ||||||||||||||||||||||||||
| Intangible assets, net |
2,040 | — | 2,040 | — | — | 2,040 | ||||||||||||||||||||||||||
| Other long-term assets |
1,275 | — | 1,275 | — | — | 1,275 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Total assets |
76,929 | (8,961 | ) | 67,968 | 401,044 | (108,890 | ) | 360,122 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| LIABILITIES AND EQUITY |
||||||||||||||||||||||||||||||||
| Current liabilities |
||||||||||||||||||||||||||||||||
| Accounts payable |
18,526 | (3,130 | ) | (a | ) | 15,396 | — | — | 15,396 | |||||||||||||||||||||||
| Accounts payable and accrued expenses |
— | — | — | 8,308 | (7,395 | ) | (f | ) | 913 | |||||||||||||||||||||||
| Accrued liabilities |
13,353 | (6,247 | ) | (a | ) | 7,106 | — | — | 7,106 | |||||||||||||||||||||||
| Derivative warrant liabilities |
— | — | — | 11,590 | — | 11,590 | ||||||||||||||||||||||||||
| Deferred underwriting fee payable |
— | — | — | 13,125 | (13,125 | ) | (f | ) | — | |||||||||||||||||||||||
| Current portion of lease liabilities |
1,223 | — | 1,223 | — | — | 1,223 | ||||||||||||||||||||||||||
| Separation | Business Combination | |||||||||||||||||||||||||||||||
| Legacy LiveWire (Historical) |
Transaction Accounting Adjustments |
Pro Forma Separation of Legacy LiveWire |
AEA-Bridges Impact Corp. (Historical) |
Transaction Accounting Adjustments |
Pro Forma Combined |
|||||||||||||||||||||||||||
| Total current liabilities |
33,102 | (9,377 | ) | 23,725 | 33,023 | (20,520 | ) | 36,228 | ||||||||||||||||||||||||
| Long-term supplier liability |
3,514 | (3,514 | ) | (a | ) | — | — | — | — | |||||||||||||||||||||||
| Long-term portion of lease liabilities |
1,832 | — | 1,832 | — | — | 1,832 | ||||||||||||||||||||||||||
| Deferred tax liabilities |
268 | 1,820 | (l | ) | 2,088 | — | — | 2,088 | ||||||||||||||||||||||||
| Other long-term liabilities |
322 | (322 | ) | (a | ) | — | — | — | — | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Total liabilities |
39,038 | (11,393 | ) | 27,645 | 33,023 | (20,520 | ) | 40,148 | ||||||||||||||||||||||||
| Commitments and contingencies |
||||||||||||||||||||||||||||||||
| Class A ordinary shares subject to possible redemption, $0.0001 par value, 40,000,000 shares issued and outstanding at $10.00 per share redemption value |
— | — | — | 400,575 | |
100,000 (500,575 |
) |
|
(h (h |
) ) |
— | |||||||||||||||||||||
| Stockholders’ equity |
||||||||||||||||||||||||||||||||
| LiveWire Common Stock, $0.0001 par value |
— | 16 | (k | ) | 16 | — | |
2 1 5 (4 |
) |
|
(c (d (h (j |
) ) ) ) |
20 | |||||||||||||||||||
| Preference shares, $0.0001 par value; 5,000,000 shares authorized; no shares issued and outstanding |
— | — | — | — | — | — | ||||||||||||||||||||||||||
| Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 10,000,000 shares issued and outstanding |
— | — | — | 1 | (1 | ) | (h | ) | — | |||||||||||||||||||||||
| Additional paid-in capital |
— | 40,256 | (k | ) | 40,256 | — | |
199,998 99,999 (20,132 (99,999 500,570 (32,656 (368,133 |
) )
) ) |
|
(c (d (e (h (h (i (j |
) ) ) ) ) ) ) |
319,903 | |||||||||||||||||||
| Accumulated deficit |
— | — | — | |
(32,555 |
) |
|
4,552 (4,653 32,656 |
)
|
|
(f (g (i |
) ) ) |
— | |||||||||||||||||||
| Net Parent investment |
37,840 | |
4,325 (40,273 (1,892 |
) ) |
|
(a (k (l |
) ) ) |
— | — | — | — | |||||||||||||||||||||
| Accumulated other comprehensive income |
51 | — | 51 | — | — | 51 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Total equity |
37,891 | 2,432 | 40,323 | (32,554 | ) | 312,205 | 319,974 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Total liabilities and equity |
76,929 | (8,961 | ) | 67,968 | 401,044 | (108,890 | ) | 360,122 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 26, 2022
(in thousands, except share and per share data)
| Separation | Business Combination | |||||||||||||||||||||||||||
| Legacy LiveWire (Historical) |
Autonomous Entity Adjustments |
Pro Forma Separation of Legacy LiveWire |
AEA-Bridges Impact Corp. (Historical) |
Transaction Accounting Adjustments |
Pro Forma Combined |
|||||||||||||||||||||||
| Revenue, net |
$ | 25,662 | $ | — | $ | 25,662 | $ | — | $ | — | $ | 25,662 | ||||||||||||||||
| Costs and expenses: |
||||||||||||||||||||||||||||
| Cost of goods sold |
25,187 | |
705 3 |
|
|
(bb (cc |
) ) |
25,895 | — | — | 25,895 | |||||||||||||||||
| Selling, administrative and engineering expense |
35,281 | 1,057 | (cc | ) | 36,338 | — | — | 36,338 | ||||||||||||||||||||
| Formation and operational costs |
— | — | — | 2,265 | — | 2,265 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Operating expense |
60,468 | 1,765 | 62,233 | 2,265 | — | 64,498 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Operating loss |
(34,806 | ) | (1,765 | ) | (36,571 | ) | (2,265 | ) | — | (38,836 | ) | |||||||||||||||||
| Other income, net |
156 | — | 156 | — | — | 156 | ||||||||||||||||||||||
| Interest expense related party |
(475 | ) | — | (475 | ) | — | — | (475 | ) | |||||||||||||||||||
| Interest (expense) income |
(20 | ) | — | (20 | ) | 325 | — | 305 | ||||||||||||||||||||
| Change in fair value of warrant liability |
— | — | 23,028 | — | 23,028 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| (Loss) income before income taxes |
(35,145 | ) | (1,765 | ) | (36,910 | ) | 21,088 | — | (15,822 | ) | ||||||||||||||||||
| Income tax provision |
163 | — | (dd | ) | 163 | — | — | 163 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Net (loss) income |
(35,308 | ) | (1,765 | ) | (37,073 | ) | 21,088 | — | (15,985 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Weighted average shares outstanding of Class A ordinary shares |
40,000,000 | n/a | ||||||||||||||||||||||||||
| Basic and diluted net income per ordinary share, Class A ordinary shares |
0.42 | n/a | ||||||||||||||||||||||||||
| Weighted average shares outstanding of Class B ordinary shares |
10,000,000 | n/a | ||||||||||||||||||||||||||
| Basic and diluted net income per ordinary share, Class B ordinary shares |
0.42 | n/a | ||||||||||||||||||||||||||
| Net loss per share: |
||||||||||||||||||||||||||||
| Weighted average LiveWire Common Stock outstanding |
n/a | 202,402,888 | ||||||||||||||||||||||||||
| Net loss per LiveWire Common Stock - basic and diluted |
n/a | (0.08 | ) | |||||||||||||||||||||||||
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2021
(in thousands, except share and per share data)
| Separation | Business Combination | |||||||||||||||||||||||||||||||
| Legacy LiveWire (Historical) |
Autonomous Entity Adjustments |
Pro Forma Separation of Legacy LiveWire |
AEA-Bridges Impact Corp. (Historical) |
Transaction Accounting Adjustments |
Pro Forma Combined | |||||||||||||||||||||||||||
| Revenue, net |
$ | 35,806 | $ | — | $ | 35,806 | $ | — | $ | — | $ | 35,806 | ||||||||||||||||||||
| Costs and expenses: |
||||||||||||||||||||||||||||||||
| Cost of goods sold |
38,380 | |
1,061 5 |
|
|
(bb (cc |
) ) |
39,446 | — | — | 39,446 | |||||||||||||||||||||
| Selling, administrative and engineering expense |
65,608 | 2,299 | (cc | ) | 67,907 | — | — | 67,907 | ||||||||||||||||||||||||
| Formation and operating costs |
— | — | — | 7,695 | 101 | (aa | ) | 7,796 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Operating expense |
103,988 | 3,365 | 107,353 | 7,695 | |
101 |
|
(115,149 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Operating loss |
(68,182 | ) | (3,365 | ) | (71,547 | ) | (7,695 | ) | |
(101 |
) |
(79,343 | ) | |||||||||||||||||||
| Other income, net |
302 | — | 302 | — | — | 302 | ||||||||||||||||||||||||||
| Interest expense related party |
(293 | ) | — | (293 | ) | — | — | (293 | ) | |||||||||||||||||||||||
| Interest income |
19 | — | 19 | 164 | — | 183 | ||||||||||||||||||||||||||
| Change in fair value of derivative warrant liabilities |
— | — | — | 12,353 | — | 12,353 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| (Loss) income before income taxes |
(68,154 | ) | (3,365 | ) | (71,519 | ) | 4,822 | |
(101 |
) |
(66,798 | ) | ||||||||||||||||||||
| Income tax provision |
138 | — | (dd | ) | 138 | — | — | (dd | ) | 138 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Net (loss) income per share: |
$ | (68,292 | ) | $ | (3,365 | ) | $ | (71,657 | ) | $ | 4,822 | $ | (101 | ) | $ | (66,936 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Weighted average shares outstanding of Class A ordinary shares |
40,000,000 | n/a | ||||||||||||||||||||||||||||||
| Basic and diluted net income per ordinary share, Class A ordinary shares |
$ | 0.10 | n/a | |||||||||||||||||||||||||||||
| Weighted average shares outstanding of Class B ordinary shares |
10,000,000 | n/a | ||||||||||||||||||||||||||||||
| Basic and diluted net income per ordinary share, Class B ordinary shares |
$ | 0.10 | n/a | |||||||||||||||||||||||||||||
| Net loss per share: |
||||||||||||||||||||||||||||||||
| Weighted average LiveWire Common Stock outstanding |
n/a | 202,402,888 | ||||||||||||||||||||||||||||||
| Net loss per LiveWire Common Stock - basic and diluted |
n/a | (0.33 | ) | |||||||||||||||||||||||||||||
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
1. Basis of Presentation
The Business Combination will be accounted for as a reverse recapitalization, in accordance with GAAP. Under this method of accounting, ABIC will be treated as the “acquired” company for financial reporting purposes. Accordingly, the Business Combination will be treated as the equivalent of Legacy LiveWire issuing stock for the net assets of ABIC, accompanied by a recapitalization. The net assets of ABIC will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination will be those of Legacy LiveWire.
Legacy LiveWire has been determined to be the accounting acquirer based on evaluation of the following facts and circumstances:
| • | Legacy LiveWire’s majority shareholder, the Legacy LiveWire Equityholder, will have the largest voting interest in the combined company; |
| • | Legacy LiveWire’s executive management will make up the majority of the management of the combined company; |
| • | Legacy LiveWire’s majority shareholder, the Legacy LiveWire Equityholder, will have the ability to designate the majority of the initial Board and subsequent decisions on the Board will be based on shareholder vote, of which the Legacy LiveWire Equityholder has the largest voting interest; |
| • | the combined company assumed the name “LiveWire Group Inc.”; and |
| • | Legacy LiveWire is the larger entity based on revenue. Additionally, Legacy LiveWire has a larger employee base and substantive operations. |
The unaudited pro forma condensed combined balance sheet as of June 26, 2022 assumes that the Transactions occurred on June 26, 2022. The unaudited pro forma condensed combined statement of operations for the six months ended June 26, 2022 and the year ended December 31, 2021 give pro forma effect to the Transactions as if they had been completed on January 1, 2021. All periods are presented on the basis of Legacy LiveWire as the accounting acquirer in the Business Combination.
The unaudited pro forma condensed combined financial information is for illustrative and informational purposes only and is not intended to represent or be indicative of what LiveWire’s financial condition or results of operations would have been had Legacy LiveWire operated historically as a company independent of H-D or if the Transactions had occurred on the dates indicated. The unaudited pro forma combined financial information also should not be considered representative of LiveWire’s future combined financial condition or combined results of operations. The audited annual combined financial statements of Legacy LiveWire have been derived from H-D’s historical accounting records and reflect certain allocation of expenses. All of the allocations and estimates in such financial statements are based on assumptions that H-D’s management believes are reasonable. The historical combined financial statements do not necessarily represent the financial position or results of operations of the Legacy LiveWire business had they been operated as a standalone company during the periods or at the dates presented. As a result, autonomous entity adjustments, based on contractual agreements related to the Separation, have been reflected in the unaudited pro forma combined financial information.
The unaudited pro forma condensed combined financial information does not reflect any anticipated synergies, operating efficiencies, tax savings or cost savings that may be associated with LiveWire.
The unaudited pro forma condensed combined provision for income taxes does not necessarily reflect the amounts that would have resulted had ABIC and Legacy LiveWire filed consolidated income tax returns during the periods presented.
2. Accounting Policies
Management will perform a comprehensive review of the two entities’ accounting policies. As a result of that review, management may identify differences between the accounting policies of the two entities which, when conformed, could have a material impact on the financial statements of LiveWire. Based on its initial analysis, management did not identify any significant differences that would have a material impact on the unaudited pro forma condensed combined financial information. As a result, the unaudited pro forma condensed combined financial information does not assume any differences in accounting policies.
3. Adjustments to Unaudited Pro Forma Condensed Combined Financial Information
Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet
Adjustments a), k), and l) relate to the Separation, all other adjustments relate to the Business Combination.
| a) | Reflects the adjustment for assets and liabilities which will remain with H-D in accordance with the separation agreement. These amounts were included in the historical combined balance sheet as they related to the Legacy LiveWire historical operations. Legacy LiveWire’s historical financial statements reflect the net assets in accordance with the manner in which H-D’s management operated the business. |
| b) | Reflects the reclassification of $400.6 million of cash and marketable securities held in the Trust Account as of the balance sheet date that becomes available to fund expenses in connection with the Business Combination or future cash needs of the combined company prior to the redemptions described in adjustment j below. |
| c) | Reflects the gross proceeds of $200.0 million from the private placement of 20,000,000 shares of LiveWire Common Stock, par value $0.0001, at $10.00 per share pursuant to the PIPE Investments, inclusive of $100.0 million from an investment from Legacy LiveWire Equityholder and $100.0 million from the KYMCO Group. |
| d) | Reflects the H-D Backstop Amount of $100 million received from the Legacy LiveWire Equityholder in exchange for 10,000,000 shares of LiveWire Common Stock, par value $0.0001, at $10.00 per share. Based on the Business Combination Agreement, the Legacy LiveWire Equityholder agreed to purchase the number of shares of LiveWire Common Stock with a dollar value equal to the number of Class A Ordinary Shares that Public Shareholders have elected to redeem, up to 10,000,000 shares. |
| e) | Reflects the capital contribution of $20.1 million to H-D pursuant to the Business Combination Agreement to reimburse H-D for transaction costs. In accordance with the terms of the Business Combination Agreement, on the Closing Date, LiveWire paid upon release of proceeds from the Trust Account all of H-D’s Transaction Expenses (up to $27 million) that were accrued and unpaid as of Closing. As these transaction costs are the legal obligation of H-D, the offset of the cash payment is reflected in additional paid-in capital as a capital contribution of $20.1 million to Parent. |
| f) | Reflects the payment of $16.0 million of transaction costs incurred and accrued by ABIC. Of that amount, $8.6 million relates to deferred underwriters’ fees incurred as part of the IPO, which were cash settled upon the consummation of the Business Combination. The remaining $7.4 million relates to the payments of transaction-related costs accrued on the historical balance sheet of ABIC as of June 30, 2022. The deferred underwriters’ fees accrual was reduced by $4.6 million in September 2022 as described in adjustment aa below. |
| g) | Reflects the transaction costs of $4.7 million to be incurred concurrently with the Business Combination, which relates to legal, third-party advisory and other miscellaneous fees to be incurred by ABIC. |
| h) | Reflects the reclassification of (i) Founder Shares from Class B Ordinary Shares to ABIC Class A Ordinary Shares subject to possible redemption and (ii) ABIC Class A Ordinary Shares subject to possible redemption to LiveWire Common Stock at close. |
| i) | Reflects the elimination of ABIC historical accumulated deficit. |
| j) | Represents the redemption of 36,597,112 Class A Ordinary Shares for $368.1 million allocated to LiveWire Common Stock and additional paid-in capital using par value of $0.0001 per share and at a redemption price of approximately $10.06 per share. |
| k) | Represents the reclassification of the parent’s net investment in Legacy LiveWire, including other pro forma adjustments, into Additional paid-in capital and LiveWire Common Stock, par value $0.0001, based on the number of shares of LiveWire Common Stock outstanding as of the Closing. |
| l) | Reflects the adjustment to deferred tax assets of $0.1 million, and to deferred tax liabilities of $1.8 million, both primarily associated with inventory and warranty related accruals which will remain with H-D in accordance with the separation agreement, using a blended statutory rate of 22.7% and related adjustments to the valuation allowance for deferred tax assets that are not more- likely-than-not to be realized. |
Adjustments to Unaudited Pro Forma Condensed Combined Statements of Operations
Adjustments bb) and cc) relate to the Separation, aa) relates to the Business Combination and dd) relates to both.
| aa) | Reflects estimated net transaction-related costs of $0.1 million, which consists of transaction-related costs expected to be incurred by ABIC subsequent to June 30, 2022 of $4.7 million partially offset by a reduction in the deferred underwriters’ fee payable of $4.6 million which is related to ABIC’s negotiations with its bankers prior to Closing. Pro forma transaction related costs adjustment of $4.7 million excludes $0.8 million and $6.6 million of transaction related costs already in the historical statement of operations of ABIC for the six months ended June 30, 2022 and the year ended December 31, 2021, respectively. The transaction costs are nonrecurring. |
| bb) | Reflects the effect of Contract Manufacturing Agreement that Legacy LiveWire and H-D entered into at Separation. The cost of products sold adjustment reflects the price adjustments related to historical transfers from H-D to Legacy LiveWire under the pricing terms of the Contract Manufacturing Agreement. Historically, inventory was recorded at actual cost. |
| cc) | These incremental costs include the effect of Transition Services Agreement and a Master Services Agreement between LiveWire and H-D that will be entered into concurrent with the Closing. Under the Transition Services Agreement, H-D will continue to provide LiveWire support function services at a cost to LiveWire, including finance, information technology and infrastructure. Under the Master Services Agreement, H-D will continue to provide LiveWire with certain services that LiveWire does not yet have the capability to perform for itself, including testing and development, product regulatory support and color materials, finishes and graphics services, as LiveWire may request from time to time. As disclosed in the footnotes to the historical audited financial statements of Legacy LiveWire included elsewhere in the Current Report on Form 8-K to which this Exhibit 99.2 is attached, certain costs incurred by the Parent to support the Legacy LiveWire operations had been allocated based on various metrics deemed reasonable by management. Accordingly, the unaudited pro forma combined financial statements have been adjusted to depict LiveWire’s costs under the Transition Services Agreement and Master Services Agreement that will be entered into between LiveWire, as an autonomous entity, and H-D. |
| dd) | A tax benefit for the pre-tax pro forma adjustments has not been recorded. Legacy LiveWire determined that it is not more likely than not that it would be able to realize the tax benefits from such losses due to the negative evidence of historical losses. |
4. Net Loss per Share
Represents the net loss per share calculated using outstanding shares that resulted from the Transactions, assuming the shares were outstanding since January 1, 2021. As the Transactions are being reflected as if they had occurred at the beginning of the periods presented, the calculation of weighted-average shares outstanding for basic and diluted net loss per share assumes that the shares issuable relating to the Transactions have been outstanding for the entire periods presented.
The unaudited pro forma condensed combined financial information has been prepared for the six months ended June 26, 2022 and the year ended December 31, 2021:
| Six months ended June 26, 2022 |
Year ended December 31, 2021 |
|||||||
| (in thousands, except share and per share data) |
Pro Forma Combined |
Pro Forma Combined |
||||||
| Pro forma net loss |
(15,985 | ) | (66,936 | ) | ||||
| Weighted average LiveWire Common Stock outstanding |
202,402,888 | 202,402,888 | ||||||
| Net loss per LiveWire Common Stock - basic and diluted (1) |
(0.08 | ) | (0.33 | ) | ||||
| (1) | For the purposes of applying the if converted method for calculating diluted earnings per share, it was assumed that all outstanding warrants sold in the IPO and the private placement are exchanged for LiveWire Common Stock. However, since this results in anti-dilution, the effect of such exchange was not included in calculation of diluted loss per share. |
Exhibit 99.3
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF LIVEWIRE
The following discussion and analysis should be read together with the historical audited annual combined financial statements and unaudited interim combined financial statements, and the related notes that are included in the final proxy statement/prospectus (the “Proxy Statement/Prospectus”) relating to our business combination with ABIC, dated July 27, 2022 and filed with the Securities and Exchange Commission. The discussion and analysis should also be read together with the pro forma financial information as of June 26, 2022 and for the six months ended June 26, 2022 and the year ended December 31, 2021 that is attached to this Current Report on Form 8-K as exhibit 99.2. The following discussion may contain forward-looking statements. Actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include those factors discussed below and elsewhere in this information statement, particularly in “Cautionary Note Concerning Forward Looking Statements” and “Risk Factors.” References to “LiveWire” throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations section refers to “Legacy LiveWire”.
Overview
LiveWire sells electric vehicles and related parts and accessories and apparel in the United States and certain international markets. H-D introduced its first electric motorcycle in late 2019 as the Harley-Davidson LiveWire. In 2021, building on early success and the continued growth in the global market demand for electric vehicles, H-D launched LiveWire as a standalone electric vehicle division, with the first LiveWire-branded product, the LiveWire ONE, debuting in July 2021. In 2019, H-D acquired STACYC Inc. and began selling electric balance bikes, which are currently sold under the STACYC and H-D IRONe brands, as well as through private label arrangements. Electric motorcycles are sold at wholesale to a network of independent retail partners and, beginning in the third quarter of 2021, at retail through a Company-operated retail partner and through online sales. Electric balance bikes are sold at wholesale to independent dealers and independent distributors. LiveWire is focused on innovating and developing technology in the electric vehicle market. LiveWire’s vision is to create the next generation of electric motorcycles with products and experiences that merge the power and technology of electric with the unique soulful connection that comes from an analog machine.
In 2021, LiveWire generated revenue, net of $35.8 million compared to $30.9 million and $20.2 million in 2020 and 2019, respectively. For the six months ended June 26, 2022, the Company generated revenue, net of $25.7 million compared to $15.9 million in the six months ended June 27, 2021.
LiveWire’s net loss for 2021 was $68.3 million compared to $77.6 million and $56.5 million in 2020 and 2019, respectively, and $35.3 million for the six months ended June 26, 2022 compared to $31.3 million for the six months ended June 27, 2021. LiveWire’s net losses reflect the start-up nature of LiveWire’s business including low shipment volumes associated with the introduction of a new electric motorcycle combined with investments in product development as LiveWire continues to focus on technological innovation that will support future products and growth.
Recent Developments
Business Combination
On December 12, 2021, H-D (the “Parent”) entered into the Business Combination Agreement with ABIC, a special purpose acquisition company, to effect the separation of its electric vehicle business. On September 16, 2022, the Business Combination was approved in a ABIC shareholder vote and closed September 26, 2022.
The merger is anticipated to be accounted for as a reverse recapitalization, in accordance with GAAP. Under this method of accounting, ABIC will be treated as the “acquired” company for financial reporting purposes. Accordingly, the Business Combination will be treated as the equivalent of LiveWire issuing stock for the net assets of ABIC, accompanied by a recapitalization. The net assets of ABIC will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination will be those of LiveWire.
Upon closing of the merger and PIPE investments, the most significant change in the successor’s future reported financial position and results was an increase in cash due to net proceeds received of approximately $293.7 million, including a $100 million investment from the LiveWire Equityholder, and a $100 million investment from certain members of the KYMCO Group, through a PIPE. Additionally, the increase in cash reflects the amount of cash released from the Trust Account (net of the SPAC Share Redemption Amount) and the $100 million equity backstop provided by the Parent in exchange for 10,000,000 of LiveWire Common Stock for a purchase price of $10.00 per share pursuant to the terms of the Business Combination Agreement and as a result of Public Shareholders exercising their redemption rights with respect to 36,597,112 Class A Ordinary Shares for $368.1 million, at a redemption price of approximately $10.06 per share.
As a consequence of the merger, LiveWire is the successor to an SEC-registered company, which will require LiveWire to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices. LiveWire expects to incur additional annual expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees and additional internal and external accounting and legal and administrative resources, including increased audit and legal fees. In addition, LiveWire expects to incur additional costs as a result of entering into agreements with H-D, including a Transition Services Agreement, Master Services Agreement, and Contract Manufacturing Agreement with H-D whereby H-D will provide manufacturing, support function, and other administrative services. For additional information, refer to LiveWire’s unaudited pro forma financial information included as Exhibit 99.2 to the Form 8-K.
Key Factors Affecting the LiveWire’s Operating Results
LiveWire believes that its future success and financial performance depend on a number of factors that present significant opportunities for its business, but also pose risks and challenges, including those discussed below and in the Section in the Proxy titled “Risk Factors.”
Technology Innovation
LiveWire is committed to and passionate about leading the electric motorcycle market. The focus will be on technology development, with an approach to product and go-to-market actions that reflect the expectations of the targeted customer to deliver the most desirable electric motorcycles in the world through pioneering the future of motorcycling by means of design, software and experience for the pursuit of urban adventure and beyond.
The electric vehicle market is highly competitive and includes both established automotive manufacturers and new entrants. LiveWire is well positioned to become a premier electric motorcycle brand as the first publicly traded electric motorcycle company in the U.S. and as a leader in the transformation of the motorcycling market. To establish market share and scale and expand our business, LiveWire plans to continue to enhance global manufacturing and distribution capabilities and make substantial investments in research and development for the commercialization and continued enhancements of future generations of LiveWire’s electric motorcycles, related technologies and other products.
Establishing Contract Manufacturing Capacity
Achieving growth for LiveWire’s electric motorcycles requires LiveWire to increase its material purchases and contract manufacturing capacity and improve its supply chain processes in the US and internationally. The amount and timing of LiveWire’s future contract manufacturing capacity requirements, and resulting capital expenditures, will depend on many factors, including the pace and results of LiveWire’s research and development efforts to meet
technological development milestones, LiveWire’s ability to develop and launch new electric vehicles, LiveWire’s ability to achieve sales and experience customer demand for LiveWire’s vehicles at the levels LiveWire anticipates, LiveWire’s ability to utilize planned capacity in its existing contract manufacturers’ facilities, LiveWire’s ability to retain contract manufacturing relationships and LiveWire’s ability to enter new international markets. LiveWire will benefit from industry-leading strategic partners – H-D and the KYMCO Group, a globally recognized brand of scooters, motorcycles, and side-by-side ATVs headquartered in Taiwan, by leveraging their engineering expertise, manufacturing footprint, distribution, supply chain infrastructure and global logistics capabilities. Additionally, LiveWire will have access to H-D’s established distribution and dealership network.
Partnering with Industry-Leading Original Equipment Manufacturers and/or Tier-One Vehicle Suppliers
LiveWire entered into a long-term collaboration agreement with the KYMCO Group to explore further business opportunities in the electric vehicle market by leveraging LiveWire and the original equipment manufacturer’s capability in the design, development, and manufacturing of electric vehicles. This will allow LiveWire to focus on vehicle design, strong brand affiliation and a differentiated customer experience. LiveWire’s partnership with the KYMCO Group will create rapid scale for LiveWire without asset-intense investments.
LiveWire believes that its business model and established experience in delivering new products will reduce the considerable execution risk typically associated with new vehicle companies. Through such platform sharing, component sourcing and manufacturing partnerships, LiveWire believes it will be able to accelerate its time to market and reduce vehicle development costs. LiveWire intends to meet timing, cost and quality expectations while optimally matching its cost structure with its projected production ramp by leveraging such partnerships and trained workforces. Remaining hardware agnostic allows for selection of partners, components and manufacturing decisions to be based on both timeline and cost advantages and enables LiveWire to focus on delivering truly innovative design features, a superior customer experience, and a leading user interface that leverages sophisticated software and other technology advancements.
Market Trends and Competition
LiveWire offers innovative and proprietary electric vehicle technology and intends to expand its market share over time in product categories that LiveWire believes will grow as electric vehicle adoption occurs in the segment. Existing competitors may expand their product offerings and sales strategies, and new competitors may enter the market. Furthermore, LiveWire’s competition includes other types of alternative fuel vehicles, plug-in hybrid electric vehicles and high fuel-economy internal combustion engine vehicles. If LiveWire’s market share does not grow due to increased competition, or the market fails to expand as LiveWire has projected, its revenue and ability to generate profits in the future may be impacted.
Regulatory Landscape
LiveWire operates in an industry that is subject to and benefits from environmental regulations, which have generally become more stringent over time, particularly across developed markets. Regulations in LiveWire’s target markets include economic incentives to purchasers of electric vehicles and tax credits for electric vehicle manufacturers. While LiveWire expects environmental regulations to provide a tailwind to its growth, it is possible for certain regulations to result in margin pressures.
Supply Chain and Inflation
The global supply chain and logistics challenges continue to impact LiveWire and the industry. As a result of these challenges, LiveWire has experienced cost inflation for logistics, raw materials and purchased components as well as increased manufacturing conversion costs; however, given LiveWire’s production volumes these impacts have not been material to date. LiveWire expects supply chain cost inflation will continue in the second half of 2022, but that inflation rates will improve compared to rates experienced in the first half of 2022.
The Company has also experienced some disruption related to supply constraints for certain components including those impacted by the continued global semiconductor chip shortages. While these disruptions have not materially impacted production volumes to date, LiveWire expects production during the remainder of 2022 to be impacted as result of supply disruptions. Refer to “Certain Unaudited LiveWire Prospective Financial Information” within the Proxy for more information regarding 2022 projected results.
COVID-19 Pandemic and Macroeconomic Uncertainties on Future Operations
LiveWire continues to manage through the impacts of the COVID-19 pandemic keeping safety and community well-being a priority. The full impact of the COVID-19 pandemic on future results depends on future developments, such as the ultimate duration and scope of the pandemic including associated variants, the success of vaccination programs, the consequences of vaccine requirements, and its impact on Livewire’s employees, customers, independent retail partners, distributors and suppliers. Future impacts and disruptions could have an adverse effect on production, supply chains, distribution and demand for Livewire’s products. Additionally, ongoing global issues may affect our business and operating results and the global economy, including the geopolitical impact of the conflict in Ukraine and any related economic or other sanctions.
Basis of Presentation
Refer to Note 1 of the Notes to Annual Combined Financial Statements for a discussion of the underlying basis used to prepare the combined financial statements.
Key Business Metrics
To analyze LiveWire’s business performance, determine financial forecasts and help develop long-term strategic plans, management reviews the following key business metrics, which are important measures that represent the growth of the business:
| • | Wholesale motorcycle unit shipments – LiveWire defines wholesale motorcycle unit shipments as the number of electric motorcycles sold by LiveWire to independent dealers for which LiveWire recognized revenue during the period. |
| • | Company retail motorcycle unit sales – LiveWire defines Company retail motorcycle unit sales as the number of new electric motorcycles sold at retail by LiveWire through its Company-operated retail partner or through online sales for which LiveWire recognized revenue during the period. LiveWire began selling electric motorcycles direct to retail consumers in the third quarter of 2021. |
| • | Independent retail motorcycle unit sales – LiveWire defines independent retail motorcycle unit sales as the number of new electric motorcycles sold at retail by independent retail partners. These unit sales are not revenues for LiveWire but represent revenues for individual retail partners. The data source for electric motorcycle retail sales figures is new sales warranty and registration information provided by independent retail partners and compiled by LiveWire. LiveWire must rely on information that its independent retail partners supply concerning new retail sales, and LiveWire does not regularly verify the information that its independent retail partners supply. This information is subject to revision. |
| • | Company-operated retail partner – Retail partner operated by LiveWire. |
| • | Independent retail partners – Retail partners owned and operated by independent entities under contract with LiveWire to sell LiveWire electric motorcycles, related products and services. |
The following table details the key business metric amounts for the periods indicated:
| Six Months Ended | Year Ended | |||||||||||||||||||
| June 2022 | June 2021 | December 2021 | December 2020 | December 2019 | ||||||||||||||||
| Wholesale motorcycle unit shipments: |
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| US |
206 | 78 | 119 | 717 | 385 | |||||||||||||||
| International |
46 | 107 | 313 | 481 | 95 | |||||||||||||||
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| 252 | 185 | 432 | 1,198 | 480 | ||||||||||||||||
| Company retail motorcycle unit sales – US |
70 | — | 29 | — | — | |||||||||||||||
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| 322 | 185 | 461 | 1,198 | 480 | ||||||||||||||||
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| Retail motorcycle unit sales: |
||||||||||||||||||||
| Company (a) |
70 | — | 29 | — | — | |||||||||||||||
| Independent retail partners (b) |
299 | 407 | 933 | 719 | 157 | |||||||||||||||
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| 369 | 407 | 962 | 719 | 157 | ||||||||||||||||
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| Retail motorcycle unit sales: |
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| US |
238 | 249 | 566 | 451 | 141 | |||||||||||||||
| International |
131 | 158 | 396 | 268 | 16 | |||||||||||||||
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| 369 | 407 | 962 | 719 | 157 | ||||||||||||||||
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| (a) | Data source for Company retail sales figures shown above is LiveWire’s records. |
| (b) | Data source for independent retail sales figures shown above is new sales warranty and registration information provided by retail partners and compiled by LiveWire. LiveWire must rely on information that its independent retail partners supply concerning new retail sales, and LiveWire does not regularly verify the information that its independent retail partners supply. This information is subject to revision. |
The following table details the number of retail partners:
| As of June 26, 2022 |
As of December 31, 2021 |
|||||||
| Company-operated retail partner |
1 | 1 | ||||||
| Independent retail partners: |
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| U.S. |
70 | 44 | ||||||
| International |
— | — | ||||||
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| 70 | 44 | |||||||
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| Total |
71 | 45 | ||||||
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Retail partners shown above include those that have been contracted by LiveWire to sell LiveWire motorcycles. As of June 26, 2022 and December 31, 2021, this total includes 16 and 27 partners, respectively, that were actively working to complete the licensing required to sell LiveWire motorcycles as of the end of the period. LiveWire intends to grow this network as it expands its distribution capabilities. The Harley-Davidson LiveWire motorcycles produced in 2019 and 2020 have been or will be retailed through the H-D dealership network until the remaining inventory of H-D branded LiveWire motorcycles is depleted.
LiveWire believes these key business metrics provide useful information to help investors understand and evaluate LiveWire’s business performance. Wholesale motorcycle unit shipments and Company retail motorcycle unit sales are key drivers of revenue and profit. Retail motorcycle unit sales made through both Company-operated and independent retail partners is a key measure of consumer demand and market share for LiveWire’s electric motorcycles.
Components of Results of Operations
Revenue
LiveWire generates revenue from the sale of electric motorcycles, electric balance bikes, related parts and accessories, and apparel. Electric motorcycles are sold at wholesale to a network of independent retail partners and, beginning in the third quarter of 2021, at retail through a Company-operated retail partner and direct to consumers through online sales. Electric balance bikes are sold at wholesale to independent dealers and independent distributors, as well as, direct to consumers online. LiveWire expects revenue to increase sequentially in future periods as it expects shipments to continue to grow.
Cost of Goods Sold
Cost of goods sold primarily consists of direct materials, components, in-bound freight, customs and duties, supplies and labor-related costs, including salaries, benefits and share-based compensation. Cost of goods sold also includes allocated overhead costs, including facilities costs, depreciation of manufacturing-related equipment and facilities and other direct costs. LiveWire expects cost of goods sold to increase in absolute dollars in future periods as it expects shipments to continue to grow and expects cost of goods sold per unit to decrease as leverage improves behind expected growth.
Selling, Administrative and Engineering Expense
Selling, administrative and engineering expenses consist of personnel related expenses for LiveWire’s corporate, executive, finance, engineering, product development and other administrative functions, expenses for outside professional services, including legal, audit and advisory services as well as expenses for facilities, depreciation, amortization, and marketing and advertising costs. Personnel-related expenses consist of salaries, benefits and share-based compensation. It also includes other engineering expenses, which consist of expenditures for research and development activities relating to product development and improvements.
LiveWire expects selling, administrative and engineering expenses to increase for the foreseeable future as it scales headcount, expands hiring of engineers and designers, continues to invest in new vehicle model design and development of technology in order to drive the growth of the business, and as a result of operating as a public company, including compliance with the rules and regulations of the SEC, legal, audit, additional insurance expenses, investor relations activities and other administrative and professional services.
Other Income (Expense), Net
Other income (expense) consists of the allocated non-service components of net periodic defined benefit plan (costs) benefits. The Parent sponsors a qualified pension plan and a postretirement healthcare plan which cover eligible LiveWire employees and retirees. A portion of the related net periodic benefit plan cost or income has been allocated to LiveWire based on an estimated amount per plan participant and allocations of corporate and other shared functional personnel.
Interest Expense Related Party
Interest expense consists primarily of interest expense associated with notes payable to H-D. Refer to Note 15 of the Notes to Annual Combined Financial Statements for further discussion regarding LiveWire’s related party transactions.
As contemplated by the Separation Agreement, all notes payable to related party outstanding as of June 24, 2022, including accrued interest, were settled with the Parent as of June 24, 2022, through a capital contribution and without any cash being exchanged between the Company and the Parent. The settlement includes the principal and accrued interest of $20.8 million and $0.8 million, respectively.
Interest Income (Expense)
Interest income (expense) primarily consists of investment income on investments related to deferred compensation plan liabilities.
Income Tax Provision
LiveWire’s income taxes as presented are calculated on a separate tax return basis. LiveWire’s operations have historically been included in the Parent’s U.S. federal and state tax returns or non-U.S. jurisdictions tax returns. The income tax provision (benefit) consists of an estimate for U.S. federal, state and foreign income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities and changes in the tax law. LiveWire has generated operating losses in each of the years presented; however, any hypothetical net operating loss attributes generated and related valuation allowances are deemed to have been distributed to the Parent through net parent investment and are not presented on the balance sheet.
Results of Operations
Comparison of the Six Months Ended June 26, 2022 and June 27, 2021
| Six Months Ended | $ Change | % Change | ||||||||||||||
| (in thousands, except percentages) |
June 26, 2022 |
June 27, 2021 |
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| Revenue, net |
$ | 25,662 | $ | 15,906 | $ | 9,756 | 61.3 | % | ||||||||
| Costs and expenses: |
||||||||||||||||
| Cost of goods sold |
25,187 | 17,255 | 7,932 | 46.0 | % | |||||||||||
| Selling, administrative and engineering expense |
35,281 | 29,783 | 5,498 | 18.5 | % | |||||||||||
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| Operating expense |
60,468 | 47,038 | 13,430 | 28.6 | % | |||||||||||
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| Operating loss |
(34,806 | ) | (31,132 | ) | (3,674 | ) | 11.8 | % | ||||||||
| Other income (expense), net |
156 | (11 | ) | 167 | *nm | % | ||||||||||
| Interest expense related party |
(475 | ) | (124 | ) | (351 | ) | 282.9 | % | ||||||||
| Interest income (expense) |
(20 | ) | 10 | (30 | ) | (297.2 | )% | |||||||||
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| Loss before income taxes |
(35,145 | ) | (31,257 | ) | (3,888 | ) | 12.4 | % | ||||||||
| Income tax provision |
163 | 47 | 116 | 246.8 | % | |||||||||||
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| Net loss |
(35,308 | ) | (31,304 | ) | (4,004 | ) | 12.8 | % | ||||||||
| Other comprehensive loss: |
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| Foreign currency translation adjustments |
(94 | ) | (28 | ) | (66 | ) | 237.3 | % | ||||||||
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| Comprehensive loss |
$ | (35,402 | ) | $ | (31,332 | ) | $ | (4,070 | ) | 13.0 | % | |||||
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*nm – not meaningful
Revenue
The following table presents net revenue by major source for the six months ended June 26, 2022 and June 27, 2021:
| (in thousands, except percentages) |
Six Months Ended | $ Change | % Change | |||||||||||||
| June 26, 2022 |
June 27, 2021 |
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| Electric motorcycles |
$ | 6,982 | $ | 4,192 | $ | 2,790 | 66.6 | % | ||||||||
| Electric balance bikes, parts and accessories |
18,197 | 11,342 | 6,855 | 60.4 | % | |||||||||||
| Motorcycle parts and accessories |
478 | 288 | 190 | 66.0 | % | |||||||||||
| Apparel |
5 | 84 | (79 | ) | (94.0 | )% | ||||||||||
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| $ | 25,662 | $ | 15,906 | $ | 9,756 | 61.3 | % | |||||||||
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Revenue for the six months ended June 26, 2022 increased by $9.8 million, or 61.3%, to $25.7 million from $15.9 million for the six months ended June 27, 2021. The increase was primarily due to higher revenue from electric balance bikes, parts and accessories of $6.9 million and higher revenue from electric motorcycles of $2.8 million. The increase in revenue from electric balance bikes, parts and accessories was driven by higher shipment volumes of $4.4 million and a shift in product mix of $2.5 million. The increase in revenue from electric motorcycles was driven by higher shipment volumes of $2.3 million and a decrease in sales promotions of $0.5 million.
Motorcycle parts and accessories revenue increased $0.2 million, up 66.0% compared to the prior period. Apparel revenue decreased $79 thousand, down 94.0%, compared to the prior period.
Cost of Goods Sold
Cost of goods sold for the six months ended June 26, 2022 increased by $7.9 million, or 46.0%, to $25.2 million from $17.3 million for the six months ended June 27, 2021. The increase was primarily due to increased shipments of both electric balance bikes, parts and accessories and electric motorcycles. Increased shipments of electric motorcycles increased cost of goods sold by $3.2 million, in alignment with the increased revenue described above. Separately, increased shipments of electric balance bikes, parts and accessories during the six months ended June 26, 2022 resulted in an increase of cost of goods sold of $3.0 million, and product mix further increased cost of goods sold by $1.4 million, in alignment with the increased revenue described above.
Selling, Administrative and Engineering Expense
Selling, administrative and engineering expense for the six months ended June 26, 2022 increased by $5.5 million, or 18.5%, to $35.3 million from $29.8 million for the six months ended June 27, 2021. The increase was primarily due to increases in personnel costs of $4.3 million related to higher headcount, increases in professional service costs of $3.9 million related primarily to marketing and increases in other costs of $1.5 million related primarily to depreciation and other administrative expenses. The increase was partially offset by a decrease in product development costs of $4.4 million due to higher expenditures incurred in the six months ended June 27, 2021 related to development of a future LiveWire electric vehicle.
Other Income (Expense), Net
Other income (expense), net for the six months ended June 26, 2022 was $0.2 million of income compared to $11 thousand of expense for the six months ended June 27, 2021. The change was primarily driven by a reduction in qualified pension plan costs.
Interest Expense Related Party
Interest expense related party for the six months ended June 26, 2022 increased by $0.4 million, to $0.5 million from $0.1 million for the six months ended June 27, 2021 due to an increase in related party notes payable prior to their settlement on June 24, 2022.
Interest Income (Expense)
Interest income (expense) for the six months ended June 26, 2022 was $20 thousand of expense compared to $10 thousand of income for the six months ended June 27, 2021.
Income Tax Provision
Income tax expense for the six months ended June 26, 2022 increased by $116 thousand, or 246.8%, to $163 thousand from $47 thousand for the six months ended June 27, 2021.
Comparison of the Years Ended December 31, 2021 and 2020
| Year Ended December 31, | $ Change | % Change | ||||||||||||||
| (in thousands, except percentages) |
2021 | 2020 | ||||||||||||||
| Revenue, net |
$ | 35,806 | $ | 30,863 | $ | 4,943 | 16.0 | % | ||||||||
| Costs and expenses: |
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| Cost of goods sold |
38,380 | 55,819 | (17,439 | ) | (31.2 | )% | ||||||||||
| Selling, administrative and engineering expense |
65,608 | 52,099 | 13,509 | 25.9 | % | |||||||||||
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| Operating expense |
103,988 | 107,918 | (3,930 | ) | (3.6 | )% | ||||||||||
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| Operating loss |
(68,182 | ) | (77,055 | ) | 8,873 | (11.5 | )% | |||||||||
| Other income (expense), net |
302 | (30 | ) | 332 | *nm | |||||||||||
| Interest expense related party |
(293 | ) | (186 | ) | (107 | ) | 57.5 | % | ||||||||
| Interest income |
19 | 56 | (37 | ) | (66.1 | )% | ||||||||||
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| Loss before income taxes |
(68,154 | ) | (77,215 | ) | 9,061 | (11.7 | )% | |||||||||
| Income tax provision |
138 | 357 | (219 | ) | (61.3 | )% | ||||||||||
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| Net loss |
(68,292 | ) | (77,572 | ) | 9,280 | (12.0 | )% | |||||||||
| Other comprehensive (loss) income: |
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| Foreign currency translation adjustments |
(85 | ) | 236 | (321 | ) | (136.0 | )% | |||||||||
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| Comprehensive loss |
$ | (68,377 | ) | $ | (77,336 | ) | $ | 8,959 | (11.6 | )% | ||||||
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Revenue
The following table presents net revenue by major source for the years ended December 31, 2021 and 2020:
| (in thousands, except percentages) |
Year Ended December 31, | $ Change | % Change | |||||||||||||
| 2021 | 2020 | |||||||||||||||
| Electric motorcycles |
$ | 8,706 | $ | 12,846 | $ | (4,140 | ) | (32.2 | )% | |||||||
| Electric balance bikes |
26,101 | 16,544 | 9,557 | 57.8 | % | |||||||||||
| Parts & accessories |
904 | 1,422 | (518 | ) | (36.4 | )% | ||||||||||
| Apparel |
95 | 51 | 44 | 86.3 | % | |||||||||||
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| $ | 35,806 | $ | 30,863 | $ | 4,943 | 16.0 | % | |||||||||
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Revenue for the year ended December 31, 2021 increased by $4.9 million, or 16.0%, to $35.8 million from $30.9 million for the year ended December 31, 2020. The increase was primarily due to an increase in shipments of electric balance bikes, which resulted in an increase of revenues of $9.6 million, partially offset by a $4.1 million decrease in electric motorcycle revenue. The decrease in electric motorcycle revenue was primarily driven by a decrease in shipments of electric motorcycles, which decreased revenue by $17.9 million, partially offset by a decrease in sales promotions, which increased revenue by $13.8 million. The decrease in sales promotions was driven by a sales concession of $15.3 million made in 2020 to LiveWire’s independent dealers related to retail store investments they
had made for the sale and service of H-D branded electric motorcycles. Refer to Note 3 of the Notes to Annual Combined Financial Statements for further discussion on this sales concession. This decrease was partially offset by increases in other sales incentives of $1.5 million in 2021 which were implemented to clear the network of H-D branded LiveWire motorcycles to support the launch of LiveWire ONE.
The lower shipments of electric motorcycles in 2021 reflects LiveWire’s decision to temporarily pause production while it implemented its updated strategy, including the decision to discontinue the H-D branded LiveWire model and introduce the new LiveWire branded LiveWire ONE model. Production of the new LiveWire ONE motorcycles began in the second quarter of 2021 with limited shipments during the year ended December 31, 2021.
Parts & accessories revenue represented a decrease of $0.5 million, down 36.4% compared to the prior period, in line with the decrease in the electric motorcycle units sold. Apparel revenue represented an increase of $44 thousand, up 86.3%, compared to the prior period.
Cost of Goods Sold
Cost of goods sold for the year ended December 31, 2021 decreased by $17.4 million, or 31.2%, to $38.4 million from $55.8 million for the year ended December 31, 2020. The decrease was primarily due to decreased shipments of electric motorcycles, which resulted in lower cost of goods sold of $14.3 million, partially offset by increased shipments of electric balance bikes, which resulted in higher cost of goods sold of $6.3 million, for a net decrease in cost of goods sold related to electric motorcycle and balance bike shipments of $8.0 million. The remaining decrease of $9.4 million related primarily to lower costs associated with liabilities for excess firm purchase commitments.
Selling, Administrative and Engineering Expense
Selling, administrative and engineering expense for the year ended December 31, 2021 increased by $13.5 million, or 25.9%, to $65.6 million from $52.1 million for the year ended December 31, 2020. The increase was primarily due to increases in personnel costs of $9.7 million related to higher headcount, increases in professional service costs of $3.6 million related primarily to audit, legal and other professional services and increases in other costs of $3.2 million related primarily to depreciation, technology and other administrative expenses. The increase was partially offset by decreases in expense allocations from the Parent of $4.2 million due to the decrease in revenue and wholesale units sold which are primary drivers of the allocations.
Other Income (Expense), Net
Other income (expense), net for the year ended December 31, 2021 was $0.3 million of income compared to $30 thousand of expense for the year ended December 31, 2020. The change was primarily driven by a reduction in qualified pension plan costs which was primarily attributable to a curtailment gain recorded in connection with the Parent’s decision to cease benefit accruals for salaried employees after December 31, 2022.
Interest Expense Related Party
Interest expense related party for the year ended December 31, 2021 increased by $0.1 million, to $0.3 million from $0.2 million for the year ended December 31, 2020 due to an increase in related party notes payable.
Interest Income
Interest income for the year ended December 31, 2021 decreased by $37 thousand, or 66.1%, to $19 thousand from $56 thousand for the year ended December 31, 2020.
Income Tax Provision
Income tax expense for the year ended December 31, 2021 decreased by $0.2 million, or 61.3%, to $0.2 million from $0.4 million for the year ended December 31, 2020.
Comparison of the Years Ended December 31, 2020 and 2019
| Year Ended December 31, | $ Change | % Change | ||||||||||||||
| (in thousands, except percentages) |
2020 | 2019 | ||||||||||||||
| Revenue, net |
$ | 30,863 | $ | 20,188 | $ | 10,675 | 52.9 | % | ||||||||
| Costs and expenses: |
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| Cost of goods sold |
55,819 | 21,298 | 34,521 | 162.1 | % | |||||||||||
| Selling, administrative and engineering expense |
52,099 | 56,997 | (4,898 | ) | (8.6 | )% | ||||||||||
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| Operating expense |
107,918 | 78,295 | 29,623 | 37.8 | % | |||||||||||
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| Operating loss |
(77,055 | ) | (58,107 | ) | (18,948 | ) | 32.6 | % | ||||||||
| Other (expense) / income, net |
(30 | ) | 75 | (105 | ) | (140.0 | )% | |||||||||
| Interest expense related party |
(186 | ) | (1 | ) | (185 | ) | *nm | |||||||||
| Interest income |
56 | 41 | 15 | 36.6 | % | |||||||||||
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| Loss before income taxes |
(77,215 | ) | (57,992 | ) | (19,223 | ) | 33.1 | % | ||||||||
| Income tax provision (benefit) |
357 | (1,475 | ) | 1,832 | (124.2 | )% | ||||||||||
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| Net loss |
(77,572 | ) | (56,517 | ) | (21,055 | ) | 37.3 | % | ||||||||
| Other comprehensive income (loss): |
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| Foreign currency translation adjustments |
236 | (6 | ) | 242 | *nm | |||||||||||
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| Comprehensive loss |
$ | (77,336 | ) | $ | (56,523 | ) | $ | (20,813 | ) | 36.8 | % | |||||
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*nm – not meaningful
Revenue
The following table presents net revenue by major source for the years ended December 31, 2020 and 2019:
| (in thousands, except percentages) |
Year Ended December 31, | $ Change | % Change | |||||||||||||
| 2020 | 2019 | |||||||||||||||
| Electric motorcycles |
$ | 12,846 | $ | 11,712 | 1,134 | 9.7 | % | |||||||||
| Electric balance bikes |
16,544 | 7,882 | 8,662 | 109.9 | ||||||||||||
| Parts & accessories |
1,422 | 416 | 1,006 | 241.8 | ||||||||||||
| Apparel |
51 | 178 | (127 | ) | (71.3 | ) | ||||||||||
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| $ | 30,863 | $ | 20,188 | $ | 10,675 | 52.9 | % | |||||||||
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Revenue for the year ended December 31, 2020 increased by $10.7 million, or 52.9%, to $30.9 million from $20.2 million for the year ended December 31, 2019. The increase was primarily due to increased shipments of electric motorcycles, which resulted in an increase of revenues of $18.0 million, and an increase in shipments of electric balance bikes, which resulted in an increase of revenues of $8.7 million. The increase in revenue from higher shipments was partially offset by a sales concession the Company made to its independent dealers in the fourth quarter of 2020. The sales concession was offered to LiveWire’s independent dealers related to retail store investments they had made for the sale and service of H-D branded electric motorcycles and resulted in a $15.3 million reduction in revenue from electric motorcycles in 2020. Refer to Note 3 of the Notes to Annual Combined Financial Statements for further discussion of this sales concession.
Parts & accessories revenue represented an increase of $1.0 million, up 241.8% compared to the prior period, in line with the increase in the shipments of electric motorcycles and electric balance bikes. Apparel revenue represented a decrease of $0.1 million, down 71.3% compared to the prior period.
Cost of Goods Sold
Cost of goods sold for the year ended December 31, 2020 increased by $34.5 million, or 162.1%, to $55.8 million from $21.3 million for the year ended December 31, 2019. The increase was primarily due to increased shipments for both electric motorcycles, which resulted in an increase of cost of goods sold of $14.2 million, and electric balance bikes, which resulted in an increase of cost of goods sold of $5.0 million. In addition, during 2020 the Company recorded a $7.8 million expense to record a long-term supplier liability for excess firm purchase commitments. There was no comparable expense in 2019.
Selling, Administrative and Engineering Expense
Selling, administrative and engineering expense for the year ended December 31, 2020 decreased by $4.9 million, or 8.6%, to $52.1 million from $57.0 million for the year ended December 31, 2019. The decrease was primarily due to a reduction in marketing costs of $13.0 million, primarily due to uncertainty related to COVID-19 and a strategic shift in model to LiveWire ONE towards the end of the fourth quarter of 2020. The overall decrease was partially offset by increases in allocated cost from the Parent of $3.9 million in line with the increase in revenue from 2019 to 2020, increases in salaries and other people cost of $2.1 million, and other increases primarily related to higher depreciation expense and warranty costs.
Other (Expense) / Income, Net
Other (expense) income, net for the year ended December 31, 2020 was $30 thousand of expense compared to $75 thousand of income for the year ended December 31, 2019. The change was primarily due to an increase in defined benefit plan expenses allocated from H-D in 2020 compared to 2019.
Interest Expense Related Party
Interest expense related party for the year ended December 31, 2020 increased by $0.2 million, to $0.2 million from $1 thousand for the year ended December 31, 2019. The increase was primarily due to borrowings from Parent with interest starting in December 2019 resulting in a full year of interest expense in 2020 compared to less than one month of interest expense in 2019.
Interest Income
Interest income for the year ended December 31, 2020 increased by $15 thousand, or 36.6%, to $56 thousand from $41 thousand for the year ended December 31, 2019.
Income Tax Provision (Benefit)
Income tax expense for the year ended December 31, 2020 increased by $1.8 million to an expense of $0.4 million from a benefit of $1.5 million for the year ended December 31, 2019. The increase was primarily due to the lower tax benefit that the Company expects would be more likely than not to be realized. Operating results of the Company have historically been included in the consolidated federal and combined state tax returns of the Parent and the resulting tax attributes are deemed to have been fully distributed to and utilized by Parent as of 2019 and are not available to the Company for future use.
Liquidity and Capital Resources
As of June 26, 2022 and December 31, 2021, LiveWire’s cash and cash equivalents were $5.4 million and $2.7 million, respectively.
LiveWire historically managed liquidity risk by effectively managing its working capital, capital expenditures and cash flows, making use of a central treasury function at the Parent to manage pooled cash investments and borrowing requirements. As an early-stage growth company, LiveWire does not expect to generate from operations, adequate liquidity to fund its operations for the next twelve months. Prior to the Business Combination the Parent supported LiveWire’s operating, investing and financing activities. Following the Business Combination, LiveWire received net proceeds of approximately $293.7 million as more fully described below.
On September 26, 2022, LiveWire received additional financing specifically through the Business Combination, an investment from the Company Equityholder, and an investment from certain members of the KYMCO Group, through a PIPE. Additionally, LiveWire received the cash released from the Trust Account (net of the SPAC Share Redemption Amount) and the $100 million equity backstop provided by the Parent in exchange for 10,000,000 of LiveWire Common Stock for a purchase price of $10.00 per share pursuant to the terms of the Business Combination Agreement and as a result of Public Shareholders exercising their redemption rights with respect to 36,597,112 Class A Ordinary Shares for $368.1 million, at a redemption price of approximately $10.06 per share. On a pro forma basis, LiveWire’s cash and cash equivalents would have amounted to $297.4 million as of June 26, 2022.
Management believes that cash on hand and the proceeds received from the Business Combination will provide sufficient liquidity to meet LiveWire’s projected obligations, including those related to existing contractual obligations, for at least the next twelve months.
LiveWire plans to use its current cash on hand and additional financing raised through the Business Combination and PIPE Financing, to support its core business operations and strategic plan to accelerate its go-to-market strategy, invest in new product development, and enhance its global manufacturing and distribution capabilities. LiveWire expects its capital expenditures and working capital requirements to increase substantially in the near future, as it grows the business, develops its customer support and marketing infrastructure and expands its research and development efforts.
LiveWire’s purchase orders for inventory used in manufacturing generally do not become firm commitments until 90 days prior to expected delivery. LiveWire records a liability for excess firm commitments. Refer to Note 6 of the Notes to Annual Combined Financial Statements for further discussion of excess firm commitments. LiveWire’s material contractual operating cash commitments at June 26, 2022 relate to leases. LiveWire’s long-term lease obligations and future payments are discussed further in Note 8 of the Notes to Annual Combined Financial Statements.
Cash Flows
The following table summarizes LiveWire’s cash flow activities for the periods presented:
| Six Months Ended | Year Ended | |||||||||||||||||||
| (in thousands) |
June 26, 2022 |
June 27, 2021 |
December 31, 2021 |
December 31, 2020 |
December 31, 2019 |
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| Net cash used by operating activities |
$ | (37,644 | ) | $ | (36,475 | ) | $ | (74,539 | ) | $ | (53,714 | ) | $ | (69,216 | ) | |||||
| Net cash used by investing activities |
(5,722 | ) | (3,937 | ) | (9,951 | ) | (3,243 | ) | (14,177 | ) | ||||||||||
| Net cash provided by financing activities |
46,063 | 41,986 | 84,757 | 58,304 | 84,447 | |||||||||||||||
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| Net increase in cash |
$ | 2,697 | $ | 1,574 | $ | 267 | $ | 1,347 | $ | 1,054 | ||||||||||
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The overall increase in cash during the six months ended June 26, 2022 was due primarily to borrowings on Notes payable to related party and is intended to fund future operations of the Company. As contemplated by the Separation Agreement, all Notes payable to related party outstanding as of June 24, 2022, including accrued interest, were settled with the Parent as of June 24, 2022, through capital contribution and without any cash being exchanged between the Company and the Parent.
Net Cash Used by Operating Activities
LiveWire had negative cash flow from operating activities during 2019, 2020, 2021, and through the first six months of 2021 and 2022. The negative cash flow from operating activities reflects the low volume of electric motorcycle shipments and ongoing product development investments given the start-up nature of the electric motorcycle business.
Net cash used in operating activities increased by $1.1 million to $37.6 million for the six months ended June 26, 2022 compared to $36.5 million for the six months ended June 27, 2021. The increase in cash used in operating activities was primarily due to a higher net loss partially offset by lower cash outflows related to working capital. Cash flow related to changes in working capital was favorably impacted by changes in accounts payable and accrued liabilities partially offset by unfavorable changes in inventory. Changes in accrued liabilities were favorable to the prior interim period given the payout of a sales concession during the six months ended June 27, 2021. The unfavorable changes in inventories were due primarily to increased inventory of electric balance bikes and related parts and accessories.
Net cash used in operating activities increased by $20.8 million to $74.5 million for the year ended December 31, 2021 compared to $53.7 million for the year ended December 31, 2020. The increase in cash used in operating activities was primarily driven by higher cash outflows related to unfavorable changes in working capital. Working capital was adversely impacted by a decrease in accrued liabilities, primarily due to the payout of a sales concession in the first quarter of 2021 as well as unfavorable cash flows related to changes in accounts receivable from related party during the year ended December 31, 2021 compared to year ended December 31, 2020. These negative impacts on working capital were partially offset by favorable changes in inventories during the year ended December 31, 2021 compared to year ended December 31, 2020.
Net cash used in operating activities decreased by $15.5 million to $53.7 million for the year ended December 31, 2020 compared to $69.2 million for the year ended December 31, 2019. The decrease in cash used in operating activities was primarily driven by favorable changes in working capital. Working capital was impacted by an increase in accrued liabilities, related to a sales concession offered in 2020, as well as favorable changes in accounts receivable from related party and inventory during 2020 as compared to 2019.
Net Cash Used by Investing Activities
Net cash used in investing activities increased by $1.8 million to $5.7 million for the six months ended June 26, 2022 compared to $3.9 million for the six months ended June 27, 2021. The increase was due to higher capital expenditures related to investments to support the production of future products.
Net cash used in investing activities increased by $6.8 million to $10.0 million for the year ended December 31, 2021 compared to $3.2 million for the year ended December 31, 2020. The increase was primarily due to increased capital expenditures related to investments to support the production of future products.
Net cash used in investing activities decreased by $11.0 million to $3.2 million for the year ended December 31, 2020 compared to $14.2 million for the year ended December 31, 2019. The decrease in cash flows used in investing activities was primarily attributable to a $7.0 million decrease in cash used for business acquisitions and a $3.9 million decrease in capital expenditures. The cash used in business acquisitions relates to the acquisition of STACYC during the year ended December 31, 2019. There were no business acquisitions during the year ended December 31, 2020.
LiveWire expects to fund future cash flows used in investing activities with cash flow generated by operations and additional financing raised through the Business Combination and PIPE Financing. LiveWire estimates capital expenditures to be between $21 million and $27 million in 2022.
Net Cash Provided by Financing Activities
Net cash provided by financing activities increased by $4.1 million to $46.1 million for the six months ended June 26, 2022 compared to $42.0 million for the six months ended June 27, 2021. The increase was primarily due to increased proceeds from borrowing on Notes payable to related party of $15.3 million. This was partially offset by decreased cash transfers from Parent of $10.5 million and payment of $1.8 million of contingent consideration related to the STACYC acquisition.
Net cash provided by financing activities increased by $26.5 million to $84.8 million for the year ended December 31, 2021 compared to $58.3 million for the year ended December 31, 2020. The increase was primarily due to increases in the cash transfers from Parent of $29.3 million. This was partially offset by a reduction in proceeds from borrowing on Notes payable to related party of $3.4 million.
Net cash provided by financing activities decreased by $26.1 million to $58.3 million for the year ended December 31, 2020 compared to $84.4 million for the year ended December 31, 2019. The decrease in cash provided by financing activities was driven by a decrease of $28.0 million in cash transfers from Parent, payment of $1.9 million of contingent consideration related to the STACYC acquisition and repayment of $1.5 million of related party notes payable. This was partially offset by an increase of $5.2 million in receipts from borrowings on related party notes payable.
Critical Accounting Policies and Estimates
LiveWire’s financial statements are based on the selection and application of significant accounting policies, which require management to make significant estimates and assumptions. Management believes that the following are some of the more critical judgment areas in the application of accounting policies that currently affect LiveWire’s financial condition and results of operations.
Product Warranty and Recalls - LiveWire provides a limited warranty on the new electric motorcycles for a period of two years, except for the battery which is covered for five years. LiveWire also provides limited warranties on parts and accessories and electric balance bikes. Estimated warranty costs are recorded at the time of sale and are based primarily on historical LiveWire claim information. In the case of both warranty and recall costs, as actual experience becomes available it is used to update the accruals.
Additionally, LiveWire may from time to time initiate certain voluntary recall campaigns. The estimated costs associated with voluntary recalls are recorded when the liability is both probable and estimable. This generally occurs when LiveWire’s management approves and commits to a recall. The accrued cost of a recall is based on an estimate of the cost to repair each affected vehicle and the number of vehicles expected to be repaired based on historical data concerning the percentage of affected customers that take advantage of recall offers. In the case of both warranty and recall costs, as actual experience becomes available it is used to update the accruals.
The factors affecting actual warranty and recall costs can be volatile. As a result, actual warranty claims experience and recall costs may differ from estimates, which could lead to material changes in our accrued warranty and recall costs. LiveWire’s warranty and recall liabilities are discussed further in Note 10 of the Notes to Annual Combined Financial Statements.
Income Taxes - LiveWire’s income taxes as presented are calculated on a separate tax return basis. LiveWire’s operations have historically been included in the Parent’s U.S. federal and state tax returns or non-U.S. jurisdictions tax returns. LiveWire accounts for income taxes in accordance with Accounting Standards Codification Topic 740, Income Taxes (Topic 740). Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and other loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. LiveWire reviews its deferred income tax asset valuation allowances on a quarterly basis or whenever events or changes in circumstances indicate that a review is required. In determining the requirement for a valuation allowance, the historical and projected financial results of the legal entity or combined group recording the net deferred income tax asset is considered, along with any positive or negative evidence including tax law changes. Since future financial results and tax law may differ from previous estimates,
periodic adjustments to LiveWire’s valuation allowances may be necessary. LiveWire has generated operating losses in each of the years presented, however, any hypothetical net operating loss attributes generated and related valuation allowances are deemed to have been distributed to the Parent through net parent investment and are not presented on the balance sheet.
LiveWire is subject to income taxes in the U.S. and numerous foreign jurisdictions. These tax laws and regulations are complex and significant judgment is required in determining LiveWire’s worldwide provision for income taxes and recording the related deferred tax assets and liabilities.
In the ordinary course of LiveWire’s business, there are transactions and calculations where the ultimate tax determination is uncertain. Accruals for unrecognized tax benefits are provided for in accordance with the requirements of Topic 740. An unrecognized tax benefit represents the difference between the recognition of benefits related to items for income tax reporting purposes and financial reporting purposes. Any unrecognized tax benefit is not included within the combined balance sheets as any benefit would reside with Parent. Parent is regularly audited by tax authorities as a normal course of business. Although the outcome of tax audits is always uncertain, LiveWire believes that it has appropriate support for the positions taken had LiveWire filed its own tax returns and that its annual tax provision includes amounts sufficient to pay any assessments. Nonetheless, the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued for each year and would be the obligation of Parent.
Refer to Note 5 of the Notes to Annual Combined Financial Statements for further discussion regarding LiveWire’s income taxes.
Business Combinations - The Company accounts for business combinations using the acquisition method of accounting. The acquisition method of accounting requires that purchase price, including the fair value of contingent consideration, of the acquisition be allocated to the assets acquired and liabilities assumed using the estimated fair values determined by management as of the acquisition date. The excess of the purchase price over the fair value of assets acquired and liabilities assumed is recognized as goodwill.
The Company performs valuations of assets acquired and liabilities assumed and allocates the purchase price to the respective assets and liabilities. Determining the fair value of assets acquired and liabilities assumed requires significant judgment and estimates, including the selection of valuation methodologies, estimates of future revenue, costs and cash flows, discount rates, royalty rates, and selection of comparable companies. The Company engages the assistance of third-party valuation specialists in concluding on fair value measurements in connection with determining fair values of assets acquired and liabilities assumed in a business combination. The resulting fair values and useful lives assigned to acquisition-related intangible assets impact the amount and timing of future amortization expense.
These estimates are inherently uncertain and unpredictable, and if different estimates were used the purchase price for the acquisition could be allocated to the acquired assets and liabilities differently from the allocation that the Company has made. In addition, unanticipated events and circumstances may occur which may affect the accuracy or validity of such estimates, and if such events occur, the Company may be required to record a charge against the value ascribed to an acquired asset, an increase in the amounts recorded for assumed liabilities, or an impairment of some or all of the goodwill.
In relation to the Company’s acquisition of STACYC, Inc., the purchase price contained contingent consideration. The contingent consideration related to an aggregate earn-out payment with total payout of $6.5 million based on the achievement of sales volume targets during the twelve-month performance periods beginning in June 2019, 2020 and 2021, respectively. Each annual period had its own milestone target and related potential earn-out payment. The fair value was estimated using a Monte-Carlo simulation that utilized key assumptions defined in the earn-out agreement including sales volume performance periods, caps and floors.
On June 24, 2022, the Company made the final earnout payment of $2.2 million. The final payment settled the Company’s contingent consideration obligation related to acquisition of STACYC.
Goodwill and Intangible Assets - Goodwill represents the excess of acquisition cost over the fair value of the net assets purchased. Goodwill is tested for impairment, based on financial data related to the reporting unit to which it has been assigned, at least annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If the carrying amount of the reporting unit exceeds its fair value, goodwill is considered impaired and an impairment loss is recognized for the amount by which the carrying amount exceeds the fair value, limited to the total goodwill allocated to the reporting unit. When evaluating goodwill for impairment, LiveWire first performs a qualitative assessment to determine whether it is more likely than not that the reporting unit is impaired. If LiveWire determines that it is not more likely than not that the fair value of the reporting unit exceeds its carrying amount, LiveWire calculates the estimated fair value of the reporting unit using income and market approaches. Significant assumptions are incorporated into the income approach, such as estimated growth rates and a risk-adjusted discount rate. Fair value under the market approach utilized the guideline public company methodology, which uses valuation indicators determined from other businesses that are similar to our reporting unit.
Intangible assets consist of trademarks, non-compete agreements and others and are stated at cost less accumulated amortization. The intangible assets have been determined to have finite lives and are amortized on a straight-line basis over their estimated useful lives.
Significant judgments are required in assessing impairment of intangible assets and include identifying whether events or changes in circumstances require an impairment assessment, estimating future cash flows, determining appropriate discount and growth rates and other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value whether an impairment exists and if so the amount of that impairment.
The intangible assets are tested for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. The events and circumstances LiveWire monitors and considers include significant decreases in the market price for similar assets, significant adverse changes to the extent and manner in which the asset is used, an adverse change in legal factors or business climate, an accumulation of costs that exceed the estimated cost to acquire or develop a similar asset, and continuing losses that exceed forecasted costs. When the carrying value of an intangible asset is not recoverable based on the existence of one or more of the above indicators, recoverability is determined by comparing the carrying amount of the asset to net future undiscounted cash flows that the asset is expected to generate. An impairment charge would then be recognized equal to the amount by which the carrying amount exceeds the fair value of the asset.
Corporate Allocations - Historically, LiveWire has been managed and operated in the normal course of business by the Parent. Accordingly, certain shared costs have been allocated to LiveWire and are reflected as expenses in the accompanying Combined statements of operations and comprehensive loss. Management considers the expense methodology and resulting allocation to be reasonable for all periods presented; however, the allocations may not be indicative of actual expenses that would have been incurred had LiveWire operated as an independent, publicly traded company for the periods presented. Actual costs that LiveWire may have incurred had it been a standalone company would depend on a number of factors, including the chosen organizational structure, whether functions were outsourced or performed by LiveWire’s employees and strategic decisions made in areas such as manufacturing, selling and marketing, research and development, information technology and infrastructure.
Emerging Growth Company Status
Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can choose not to take advantage of the extended transition period and comply with the requirements that apply to non-emerging growth companies, and any such election to not take advantage of the extended transition period is irrevocable.
ABIC is an “emerging growth company” as defined in Section 2(a) of the Securities Act and has elected to take advantage of the benefits of the extended transition period for new or revised financial accounting standards. Following the consummation of the Business Combination, LiveWire expects to remain an emerging growth company at least through the end of the 2022 fiscal year and LiveWire expects to continue to take advantage of the benefits of the extended transition period, although it may decide to early adopt such new or revised accounting standards to the extent permitted by such standards. This may make it difficult or impossible to compare LiveWire’s financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used.
New Accounting Standards Not Yet Adopted
Other than the recent accounting pronouncements disclosed in LiveWire’s Annual Combined Financial Statements, there have been no new accounting pronouncements or changes in accounting pronouncements during the first six months ended June 26, 2022 that are significant or potentially significant to LiveWire.
Quantitative and Qualitative Disclosures About Market Risk
As of December 31, 2021, LiveWire’s cash and cash equivalents amounted to $2.7 million. LiveWire historically managed liquidity risk by effectively managing its working capital, capital expenditures and cash flows, making use of a central treasury function at the Parent to manage pooled cash investments and borrowing requirements.
Financial instruments that potentially subject LiveWire to concentrations of credit risk principally consist of accounts receivable. LiveWire limits its credit risk with respect to accounts receivable by performing credit evaluations and requiring collateral to secure amounts owed to LiveWire by its customers, each when deemed necessary.
Inflationary factors, such as cost increases for logistics, manufacturing, raw materials and purchased components, may adversely affect LiveWire’s operating results. Although LiveWire does not believe inflation has had a material impact on its financial condition given its lower production volumes, a high rate of inflation in the future may have an adverse effect on LiveWire’s ability to maintain and increase its gross margin or decrease its operating expenses as a percentage of its revenues if the selling prices of its products do not increase as much or more than its increase in costs.
LiveWire is also exposed to possible disruption of supply or shortage of materials, in particular for lithium-ion battery cells and key semiconductor chip components necessary for electric vehicles and any inability to purchase raw materials and components could negatively impact LiveWire’s operations.
At December 31, 2021, LiveWire’s notes payable to related party of $5.8 million are with its Parent and had fully fixed interest rates for the life of the underlying lines of credit agreements with H-D, and hence LiveWire is not subject to interest rate risk. Furthermore, all Notes payable to related party outstanding as of June 24, 2022, including accrued interest, were settled with the Parent as of June 24, 2022, through capital contribution and without any cash being exchanged between the Company and the Parent.
LiveWire sells its electric motorcycles, electric balance bikes and related products internationally and, in most markets, those sales are made in the foreign country’s local currency. As a result, LiveWire’s operating results are
affected by fluctuations in the values of the U.S. dollar relative to foreign currencies, however, the impact of such fluctuations on LiveWire’s operations to date are not material given the majority of LiveWire’s sales are currently in the U.S. LiveWire plans to expand its business and operations internationally and expects its exposure to currency rate risk to increase as it grows its international presence.
Exhibit 99.4
Harley-Davidson, LiveWire and AEA-Bridges Impact Corp Announce Closing of Business Combination
| • | LiveWire raises approximately $334m in gross proceeds |
| • | LiveWire becomes the first EV motorcycle company to list on the NYSE |
| • | Trading begins on September 27th under the new ticker “LVWR” on the New York Stock Exchange |
MILWAUKEE, NEW YORK and LONDON (September 27, 2022) – Harley-Davidson, Inc. (“Harley-Davidson”) (NYSE: HOG), the world’s most desirable motorcycle company, and AEA-Bridges Impact Corp. (“ABIC”) (NYSE: IMPX), a special purpose acquisition company with a dedicated sustainability focus, sponsored by executives of AEA Investors and Bridges Fund Management, today announced the completion of their previously announced business combination under which LiveWire EV, LLC (the “Company”), Harley-Davidson’s electric motorcycle division, combined with ABIC, to create a new public company.
The business combination was officially approved at an extraordinary general meeting by ABIC stockholders on September 16, 2022. Upon completion of the business combination, the combined public company will operate as LiveWire Group, Inc. (“LiveWire”) and its common stock and warrants will begin trading on the New York Stock Exchange (“NYSE”) under the symbols “LVWR” and “LVWR WS,” respectively today, September 27, 2022. Through this combination, LiveWire will become the first and only EV motorcycle company in the U.S. to list on the NYSE.
“This transaction represents a proud and exciting milestone for LiveWire towards its ambition to become the most desirable electric motorcycle brand in the world,” said Jochen Zeitz, Chairman, President and CEO of Harley-Davidson, and Chairman and CEO of LiveWire. “We believe LiveWire is well positioned to define the two-wheel EV market, and we’re excited about the future – in celebration of our listing today, we’re pleased to open reservations for the production version of the S2 Del Mar for the U.S. market.”
LiveWire will be ringing the opening bell at the NYSE today, to celebrate the Company’s public listing
Soulful by design, LiveWire is transforming the everyday into urban adventure and beyond. Building a future for riders differentiated by look, sound, and feel. LiveWire is leading the electrification of motorcycling by means of design, software and experience. Backed by 119-years of engineering and manufacturing heritage but with the agility of a start-up, LiveWire is well positioned to define the future of two-wheel EV.
About LiveWire
LiveWire is the future in the making for the pursuit of urban adventure and beyond. Drawing on its DNA as an agile disruptor from the lineage of Harley-Davidson and capitalizing on a decade of learnings in the EV sector, LiveWire’s ambition is to be the most desirable electric motorcycle brand in the world. With a dedicated focus on EV, LiveWire plans to develop the technology of the future and to invest in the capabilities needed to lead the transformation of motorcycling. LiveWire benefits from Harley-Davidson’s engineering expertise, manufacturing footprint, supply chain infrastructure, and global logistics capabilities. Innovating by design and attracting industry-leading talent, LiveWire is headquartered virtually, with initial hubs in Silicon Valley, CA (LiveWire Labs) and Milwaukee, WI. www.livewire.com
About Harley-Davidson
Harley-Davidson, Inc. is the parent company of Harley-Davidson Motor Company and Harley-Davidson Financial Services. Our vision: Building our legend and leading our industry through innovation, evolution and emotion. Our mission: More than building machines, we stand for the timeless pursuit of adventure. Freedom for the soul. Our ambition is to maintain our place as the most desirable motorcycle brand in the world. Since 1903, Harley-Davidson has defined motorcycle culture by delivering a motorcycle lifestyle with distinctive and customizable motorcycles, experiences, motorcycle accessories, riding gear and apparel. Harley-Davidson Financial Services provides financing, insurance and other programs to help get riders on the road. www.harley-davidson.com
Advisors
J.P. Morgan Securities LLC served as financial advisor to Harley-Davidson, and Latham & Watkins LLP acted as legal counsel to Harley-Davidson. Credit Suisse Securities (USA) LLC served as financial advisor and capital markets advisor to ABIC. Citigroup Global Markets Inc. served as capital markets advisor to ABIC. Kirkland & Ellis LLP acted as legal counsel to ABIC.
Forward-Looking Statements Legend
This communication may contain a number of “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information concerning LiveWire’s possible or assumed future results of operations, business strategies, debt levels, competitive position, industry environment, potential growth opportunities and the effects of regulation, including whether the business combination between the Company and ABIC (the “Business Combination”) will generate returns for shareholders. These forward-looking statements are based on Harley-Davidson’s or LiveWire’s management’s current expectations, estimates, projections and beliefs, as well as a number of assumptions concerning future events. When used in this communication, the words “estimates,” “projected,” “expects,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “may,” “will,” “should,” “future,” “propose” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements.
These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside Harley-Davidson’s or LiveWire’s management’s control, that could cause actual results to differ materially from the results discussed in the forward-looking statements. These risks, uncertainties, assumptions and other important factors include, but are not limited to: (a) the ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition, the ability of LiveWire to grow and manage growth profitably, maintain relationships with customers and suppliers and retain its management and key employees; (b) costs related to the Business Combination; (c) changes in applicable laws or regulations, including legal or regulatory developments (including, without limitation, accounting considerations) which could result in the need for LiveWire to restate its historical financial statements and negatively impact the trading price of LiveWire’s securities; (d) the possibility that Harley-Davidson and LiveWire may be adversely affected by other economic, business, and/or competitive factors; (e) Harley-Davidson’s ability to execute its business plans and strategies, including The Hardwire; (f) LiveWire’s estimates of expenses and profitability and (g) other risks and uncertainties indicated from time to time in the final prospectus of LiveWire, including those under “Risk Factors” therein, and other documents filed or to be filed with the Securities and Exchange Commission by Harley-Davidson or LiveWire. You are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made.
Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Harley-Davidson and LiveWire assume no obligation and, except as required by law, do not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. Neither Harley-Davidson nor LiveWire gives any assurance that LiveWire will achieve its expectations.
Media Contact:
Jenni Coats
jenni.coats@harley-davidson.com
+1 414 343 7902
George Prassas
george.prassas@harley-davidson.com
+44 7752 080 383
Investor Contacts:
Shawn Collins
shawn.collins@harley-davidson.com
+1 414 343 8002
Source: LiveWire Group, Inc.
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