Item
1.01 Entry into a Material definitive Agreement.
On
June 29, 2020, Orisun Acquisition Corp., a Delaware corporation (“Orisun”), Ucommune International Ltd, a Cayman
Islands exempted company and a wholly-owned subsidiary of Orisun (“Purchaser”), Everstone International Ltd,
a Cayman Islands exempted company and a wholly owned subsidiary of Purchaser (“Merger Sub,” together with Orisun,
Purchaser, the “Purchaser Parties”), Ucommune Group Holdings Limited, a Cayman Islands exempted company (“Ucommune”),
certain shareholders of Ucommune (“Ucommune Shareholders”), and Mr. Daqing Mao, as representative of shareholders
of Ucommune, entered into a Merger Agreement (the “Agreement”).
Acquisition
Merger and Acquisition Consideration
Upon
the closing of the transactions contemplated in the Agreement, Orisun will merge with and into Purchaser, resulting in all Orisun
stockholders becoming shareholders of the Purchaser as described under Reincorporation Merger (as defined below). Concurrently
therewith, Merger Sub will merge with and into Ucommune, resulting in Purchaser acquiring 100% of the issued and outstanding equity
securities of Ucommune (the “Acquisition Merger”). Upon the closing of the Acquisition Merger, ordinary shares
of Purchaser shall be reclassified into class A (“Purchaser Class A Ordinary Shares”) and class B ordinary
shares (“Purchaser Class B Ordinary Shares,” together with Purchaser Class A Ordinary Shares, collectively
“Purchaser Ordinary Shares”) where each Purchaser Class A Ordinary Share shall be entitled to one (1) vote
on all matters subject to vote at general and special meetings of the post-closing company and each Purchaser Class B Ordinary
Share shall be entitled to fifteen (15) votes on all matters subject to vote at general and special meetings of the post-closing
company. At the closing of the Acquisition Merger, the former Orisun security holders will receive the consideration specified
below and the former Ucommune Shareholders will receive an aggregate of 53,358,932 Purchaser Class A Ordinary Shares and 9,452,407
Class B Ordinary Shares, among which 3,140,567 Purchaser Ordinary Shares are to be issued and held in escrow to satisfy any indemnification
obligations incurred under the Agreement. 7,188,661 Purchaser Class A Ordinary Shares will be reserved and authorized for issuance
under the equity incentive plan upon closing.
Additionally,
certain Ucommune Shareholders may be entitled to receive earn-out shares as follows: (1) 2,000,000 Purchaser Class A Ordinary
Shares if (x) the VWAP of the Purchaser Class A Ordinary Shares equals or exceeds $16.50 (or any foreign currency equivalent)
in any twenty trading days within a thirty trading day period before December 31, 2022 on any securities exchange or securities
market on which the Purchaser Ordinary Shares are then traded or (y) Ucommune’s revenue exceeds RMB850,000,000 in the fiscal
year of 2020 pursuant to the audited consolidated financial statements of Ucommune as of and for the fiscal year ended December
31, 2020; (2) 1,000,000 Purchaser Class A Ordinary Shares if (x) the VWAP of the Purchaser Class A Ordinary Shares equals or exceeds
$22.75 (or any foreign currency equivalent) in any twenty trading days within a thirty trading day period before December 31,
2023 on any securities exchange or securities market on which the Purchaser Ordinary Shares are then traded or (y) Ucommune’s
revenue exceeds RMB1,275,000,000 in the fiscal year of 2021 pursuant to the audited consolidated financial statements of Ucommune
as of and for the fiscal year ended December 31, 2021; and (3) 1,000,000 Purchaser Class A Ordinary Shares if (x) the VWAP of
the Purchaser Class A Ordinary Shares equals or exceeds $30 (or any foreign currency equivalent) in any twenty trading days within
a thirty trading day period before December 31, 2024 on any securities exchange or securities market on which the Purchaser Ordinary
Shares are then traded or (y) Ucommune’s revenue exceeds RMB1,912,000,000 in the fiscal year of 2022 pursuant to the audited
consolidated financial statements of Ucommune as of and for the fiscal year ended December 31, 2022.
Furthermore,
the parties agreed that immediately following the closing the Acquisition Merger, Purchaser’s board of directors will consist
of seven directors, all of whom shall be designated by Ucommune and a majority of whom shall qualify as independent directors
under Nasdaq rules.
Reincorporation
Merger
Concurrently with the Acquisition Merger, Orisun will be merged with and into Purchaser, the separate corporate existence of Orisun will
cease and Purchaser will continue as the surviving corporation (the “Reincorporation Merger”). In connection
with the Reincorporation Merger, each share of Orisun’s issued and outstanding capital stock will be converted into an equivalent
amount of Purchaser’s capital stock:
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Each
share of Orisun’s common stock will be converted automatically into one Purchaser
Class A Ordinary Share;
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Each
right to acquire one-tenth of one share of Orisun’s common stock will be converted
automatically into one right to acquire one-tenth of one Purchaser Class A Ordinary Share;
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Each
warrant entitled to purchase one half (1/2) of one share of Orisun’s common stock
at a price of $11.50 per whole share will be converted automatically into one warrant
to purchase one half (1/2) of one Purchaser Class A Ordinary Share at a price of $11.50
per whole share;
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Each
issued and outstanding unit of Orisun will be converted automatically into one unit of
Purchaser; and
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Each
unit purchase option of Orisun will be converted automatically into one unit purchase
option of Purchaser.
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Representations
and Warranties
In
the Agreement, Ucommune and certain Ucommune Shareholders make certain representations and warranties (with certain exceptions
set forth in the disclosure schedule to the Agreement) relating to, among other things: (a) proper corporate organization of Ucommune
and its subsidiaries and similar corporate matters; (b) authorization, execution, delivery and enforceability of the Agreement
and other transaction documents; (c) absence of conflicts; (d) capital structure; (e) accuracy of charter documents and corporate
records; (f) required consents and approvals; (g) financial information; (h) absence of certain changes or events; (i) title to
assets and properties; (j) material contracts; (k) ownership of real property; (l) licenses and permits; (m) compliance with laws,
including those relating to foreign corrupt practices and money laundering; (n) ownership of intellectual property; (o) customers
and suppliers; (p) employment and labor matters; (q) taxes matters; (r) environmental matters; (s) brokers and finders; (t) that
Ucommune is not an investment company; and (u) other customary representations and warranties.
In
the Agreement, Orisun makes certain representations and warranties relating to, among other things: (a) proper corporate organization
and similar corporate matters; (b) authorization, execution, delivery and enforceability of the Agreement and other transaction
documents; (c) litigation; (d) brokers and finders; (e) capital structure; (f) validity of share issuance; (g) minimum trust fund
amount; and (h) validity of Nasdaq Stock Market listing; (i) SEC filing requirements and financial statements; (j) material contracts;
(k) compliance with laws, including those relating to foreign corrupt practices and money laundering.
Conduct
Prior to Closing; Covenants
Each
of Ucommune and Orisun has agreed to, and cause its subsidiaries to, operate the business in the ordinary course, consistent with
past practices, prior to the closing of the transactions (with certain exceptions) and not to take certain specified actions without
the prior written consent of the other party.
The
Agreement also contains covenants providing for:
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Each
party providing access to their books and records and providing information relating to their respective business to the other
party, its legal counsel and other representatives;
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Ucommune
delivering the financial statements required by Orisun to make applicable filings with the SEC;
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Cooperation
in making certain filings with the SEC; and
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Ucommune’s
agreement to pay certain amounts to extend the time Orisun has to complete a business combination under certain circumstances
and if necessary.
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Conditions
to Closing
General
Conditions
Consummation
of the Agreement and the transactions herein is conditioned on, among other things, (i) the absence of any order or provisions
of any applicable Law making the transactions illegal or otherwise preventing the transactions; (ii) Orisun and Ucommune receiving
approval from their respective stockholders to the transactions, (iii) Orisun retaining its listing on Nasdaq and the additional
listing application for the closing payment shares issued to shareholders of Ucommune being approved by Nasdaq; and (iv) each of
the additional agreement as described in the Agreement being executed provided that the non-execution of the Lock-up Agreement
(see below) by Ucommune Shareholders who are not the key personnel nor controlled by the key personnel as defined in the Merger
Agreement and grantees of Ucommune’s options that are vested as of the closing, collectively holding no more than 5% of
share capital in Ucommune immediately prior to the closing shall not affect the closing.
Ucommune’s
Conditions to Closing
The
obligations of Ucommune to consummate the transactions contemplated by the Agreement, in addition to the conditions described
above, are conditioned upon each of the following, among other things:
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Purchaser
Parties complying with all of their obligations under the Agreement in all material respects;
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subject
to applicable materiality qualifiers, the representations and warranties of Purchaser Parties being true on and as of the
closing date of the transactions and Purchaser Parties complying with all required covenants in the Agreement;
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Purchaser
Parties complying with the reporting requirements under the applicable Securities Act and Exchange Act; and
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there
having been no material adverse effect to Purchaser Parties.
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Purchaser
Parties’ Conditions to Closing
The
obligations of Purchaser Parties to consummate the transactions contemplated by the Agreement, in addition to the conditions described
above in the first paragraph of this section, are conditioned upon each of the following, among other things:
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Ucommune
and its subsidiaries complying with all of the obligations under the Agreement in all material respects;
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subject
to applicable materiality qualifiers, the representations and warranties of Ucommune and its subsidiaries being true on and
as of the closing date of the transactions and Ucommune and its subsidiaries complying with all required covenants in the
Agreement;
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there
having been no material adverse effect to Ucommune’s business; and
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Orisun
receiving legal opinions from Ucommune’s counsels in the PRC and Cayman Islands.
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Termination
The
Agreement may be terminated and/or abandoned at any time prior to the closing, whether before or after approval of the proposals
being presented to Orisun’s stockholders, by:
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Orisun,
if the audited financial statements for the years ended December 31, 2019, 2018 and 2017 and the reviewed financial statements
of the Company as of and for the six (6) month period ended June 30, 2020 have not been delivered by August 21, 2020;
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either
Orisun or Ucommune, if the closing has not occurred by December 31, 2021, provided that no material breach of this Agreement
by the party seeking to terminate this Agreement shall have occurred or have been made;
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Orisun,
if Ucommune has materially breached any representation, warranty, agreement or covenant contained in the Agreement or this
Agreement, the plan of merger or the transactions fail to be authorized or approved by the Ucommune Shareholders and such
breach has not been cured within fifteen (15) days following the receipt by Ucommune of a notice describing such breach, and
Orisun will be entitled to a break-up fee of $3,000,000 promptly after such termination; or
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Ucommune,
if Orisun has materially breached any representation, warranty, agreement or covenant contained in the Agreement and such
breach has not been cured within fifteen (15) days following the receipt by Orisun a notice describing such breach, and Ucommune
will be entitled to a break-up fee of $3,000,000 promptly after such termination.
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Indemnification
Until
the six (6) months anniversary from and after the closing date, certain Ucommune Shareholders agreed to indemnify Purchaser from
any losses incurred or sustained by the Purchaser arising from any breach, inaccuracy or nonfulfillment of any of the representations,
warranties and covenants of Ucommune contained herein. The indemnification applies only to amounts (in aggregate) in excess of
$1,000,000, and the indemnification obligations are capped at the value of the shares that are being held in escrow. Such indemnification
can only be satisfied with the cancellation of Purchaser Ordinary Shares.
The
foregoing summary of the Agreement does not purport to be complete and is qualified in its entirety by reference to the actual
agreement, which is filed as Exhibit 2.1 hereto.
In
addition to the Agreement, the following agreements will be entered into in connection with the closing of the business combination.
Escrow
Agreement
In
connection with the transactions, the Purchaser, Mr. Daqing Mao as the representative of Ucommune Shareholders and an escrow agent
will enter into an Escrow Agreement pursuant to which Purchaser will deposit 3,140,567 of its Purchaser Ordinary Shares to secure
the indemnification obligations as contemplated by the Agreement.
Registration
Rights Agreement
In
connection with the transactions, Purchaser and certain Ucommune Shareholders may enter into a Registration Rights Agreement to
provide for the registration of the Purchaser Ordinary Shares.
Lock-Up
Agreements
In
connection with the transactions, Purchaser will enter into a Lock-Up Agreement with each Ucommune Shareholder with respect to
certain lock-up arrangements, which will provide that such Ucommune Shareholder will not, within certain period of time from the
Closing of the transactions, offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any of the
shares issued in connection with the Acquisition, enter into a transaction that would have the same effect, or enter into any
swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of such shares,
whether any of these transactions are to be settled by delivery of any such shares, in cash, or otherwise.