Item 1.01. Entry into a Material Definitive
Agreement.
Overview
On
December 5, 2022, SportsMap Tech Acquisition Corp., a Delaware corporation (“SportsMap”), entered into a Business
Combination Agreement (as it may be amended, supplemented or otherwise modified from time to time, the “Business Combination
Agreement”), by and among SportsMap, Infrared Cameras Holdings, Inc., a Delaware corporation (“ICI”), and
ICH Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of SportsMap (“Merger Sub”).
The
transactions contemplated by the Business Combination Agreement are hereinafter referred to as the “Business Combination.”
The Business Combination Agreement and the transactions contemplated thereby have been unanimously approved by the board of directors
of each of SportsMap, Merger Sub, and ICI and by the stockholders of ICI and Merger Sub.
The Business Combination
Agreement
The Business Combination
The
Business Combination Agreement provides that, on the terms and subject to the conditions of the Business Combination Agreement, Merger
Sub will merge with and into ICI (the “Merger”) with ICI surviving the Merger as a wholly-owned subsidiary of SportsMap
(the “Surviving Company”).
The
Business Combination is expected to close in the first half of 2023, following the receipt of the required approval of SportsMap’s
stockholders and the fulfillment or waiver (if permitted by applicable law) of other customary closing conditions. The closing of the
Business Combination is referred to herein as the “Closing”.
Business Combination
Consideration
At
the effective time of the Merger (the “Effective Time”), in accordance with the terms and subject to the conditions
of the Business Combination Agreement:
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each share of Company Common Stock (as defined in the Business Combination Agreement) issued and outstanding immediately prior to the Effective Time (other than Dissenting Shares (as defined in the Business Combination Agreement) and shares held immediately prior to the Effective Time by ICI as treasury stock) will be converted into the right to receive such number of shares of SportsMap common stock equal to the Exchange Ratio (as defined below), |
| · | each
option (a “Company Option”) to purchase shares of Company Class B Common
Stock (as defined in the Business Combination Agreement) that is outstanding and unexercised
immediately prior to the Effective Time, whether vested or unvested, other than any Out-of-the-Money
Option (as defined in the Business Combination Agreement) (the “Participating Company
Options”), will be converted into an option to purchase a number of shares of SportsMap
common stock upon substantially the same terms and conditions (but taking into account any
accelerated vesting provided for in ICI’s equity plan or any award agreement by reason
of this Agreement or the transactions contemplated by the Business Combination Agreement)
as are in effect with respect to such Company Option prior to the Effective Time, except
that such option shall represent the right to receive a number of shares of SportsMap common
stock equal to the number of shares of Company Class B Common Stock subject to such Company
Option prior to the Effective Time multiplied by the Exchange Ratio, and the exercise price
per share shall be equal to the exercise price per share of such Company Option prior to
the Effective Time multiplied by the Exchange Ratio; and each Out-of-the-Money Option will
be cancelled and terminated for no consideration; |
| · | each
share of common stock, par value $0.001 per share, of Merger Sub issued and outstanding immediately
prior to the Effective Time will be converted into one share of common stock, par value $0.001
per share, of the Surviving Company; |
| · | each
share of ICI common stock held immediately prior to the Effective Time by ICI as treasury
stock will be cancelled and extinguished for no consideration; and |
| · | each
Dissenting Share of ICI will not convert in the Merger and will be entitled to rely on such
rights as are granted pursuant to Delaware law, subject to certain conditions set forth in
the Business Combination Agreement and in accordance with applicable law. |
The
“Exchange Ratio” will be determined by (i) dividing the Adjusted Equity Value by $10, which is the value of one share
of Sports Map common stock, and (ii) further dividing the quotient of the calculation in clause (i) by the aggregate number of shares
of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than shares held immediately prior to the
Effective Time by ICI as treasury stock) on a fully-diluted basis assuming the exercise of all Participating Company Options, excluding
any such shares issuable upon exercise of Out-of-the-Money Options, which will be cancelled at the Effective Time. The “Adjusted
Equity Value” will be equal to (a) $100,000,000, less (b) the aggregate amount of ICI’s outstanding indebtedness at the
Effective Time, plus (b) the aggregate exercise price that would be paid in respect of Participating Company Options if all Participating
Company Options were exercised in full immediately prior to the Effective Time, plus (c) all cash and cash equivalents of ICI as of immediately
prior to the Effective Time, plus (d) the aggregate principal amount of any convertible promissory notes entered into by ICI on
or after the date of the Business Combination Agreement but prior to the Closing in each case on terms and subject to conditions set
forth in the Business Combination Agreement.
Pursuant
to the Business Combination Agreement, SportsMap will reserve for issuance 2,400,000 shares of SportsMap common stock (the “Earnout
Shares”). The Earnout Shares will be issued pro rata to the holders of ICI common stock if either (a) during the period
beginning six months after the closing of the Business Combination and ending on December 31, 2024, the common stock of the post-closing
public company (“PubCo”) achieves a market price of $12.50 per share for a specified number of days, or the combined
company consummates a transaction in which its stockholders have the right to receive consideration implying a value of at least $12.50
per share, or (b) PubCo achieves revenue of $68.5 million during the fiscal year ending December 31, 2024, subject to certain limitations
set forth in the Business Combination Agreement.
In
addition, the Business Combination Agreement provides that, if ICI raises additional capital by the issuance of convertible promissory
notes on or after the date of the Business Combination Agreement but prior to the Closing, such convertible notes will convert into Company
Class A Common Stock (as defined in the Business Combination Agreement) immediately prior to the Effective Time and will convert in the
Merger in the same manner as Company Common Stock.
Representations and
Warranties; Covenants
The
Business Combination Agreement contains representations and warranties of each of the parties thereto that are customary for transactions
of this type.
The Business Combination
Agreement contains customary covenants, including, among others, (i) covenants with respect to the conduct of the businesses of SportsMap
and ICI prior to the Closing (subject to certain limitations), (ii) covenants requiring the parties to prepare and mutually agree upon,
and a covenant of SportsMap to file with the Securities and Exchange Commission (the “SEC”), a proxy statement relating
to the Business Combination to be distributed to SportsMap’s stockholders (the “Proxy Statement”), and (iii)
covenants requiring each of SportsMap and ICI not to solicit or negotiate with third parties regarding alternative transactions and to
comply with certain related restrictions. Additionally, SportsMap has agreed to include in the Proxy Statement a recommendation of the
board of directors of SportsMap to SportsMap’s stockholders that they approve the proposals included in the Proxy Statement.
Conditions to Each
Party’s Obligations
The
obligation of SportsMap, ICI and Merger Sub to consummate the Business Combination is subject to the fulfillment (or waiver, if permitted
by applicable law) of to the following closing conditions, (i) there being in effect no order or law issued, enacted or promulgated
by any court or other governmental entity, or other legal restraint or prohibition, preventing or making unlawful, restraining or prohibiting
the consummation of the Business Combination, (ii) SportsMap’s Proxy Statement receiving SEC Clearance (as defined in the
Business Combination Agreement), (iii) SportsMap’s common stock being approved for listing on a National Exchange (as defined
in the Business Combination Agreement), (iv) the required approval of SportsMap’s stockholders having been obtained, and (v) after
giving effect to the Business Combination, SportsMap having at least $5,000,0001 of net tangible assets (as determined in accordance
with Rule 3a51-1(g)(1) of the Exchange Act) immediately after the Effective Time.
In
addition, the obligation of SportsMap and Merger Sub to consummate the Business Combination is subject to the fulfillment (or waiver,
if permitted by applicable law) of other closing conditions, including, but not limited to, (i) the representations and warranties
of ICI being true and correct to the standards applicable to such representations and warranties and each of the covenants of ICI having
been performed or complied with in all material respects, and (ii) no Company Material Adverse Effect having occurred.
The
obligation of ICI to consummate the Business Combination is also subject to the fulfillment (or waiver, if permitted by applicable law)
of other closing conditions, including, but not limited to, (i) the representations and warranties of SportsMap being true and correct
to the standards applicable to such representations and warranties and each of the covenants of SportsMap having been performed or complied
with in all material respects, (ii) no SportsMap Material Adverse Effect having occurred, (iii) the
aggregate proceeds available to the Surviving Company following the Business Combination being in excess of $10,000,000, and (iv) SportsMap
having satisfied all initial and continued listing requirements of the Trading Market (as defined in the Business Combination Agreement)
and not having received notice of non-compliance therewith that has not been cured prior to, or would not be cured at or immediately
following, the Effective Time.
Termination
The
Business Combination Agreement may be terminated under certain customary and limited circumstances prior to the closing of the Business
Combination, including, but not limited to, (i) by either SportsMap or ICI if the Business Combination is not consummated by June
30, 2023, provided that such date may be extended by ICI by an additional 60 days under certain circumstances set forth in the Business
Combination Agreement, (ii) by SportsMap if there is a material breach of the representations, warranties or covenants of ICI, subject
to a thirty (30)-day cure period following notice of such breach, and (iii) by ICI upon a material breach of the representations,
warranties or covenants of SportsMap, subject to a thirty (30)-day cure period following notice of such breach. If the Business Combination
Agreement is validly terminated, none of the parties to the Business Combination Agreement will have any liability or any further obligation
under the Business Combination Agreement, other than customary confidentiality obligations, except in the case of willful breach or fraud.
A
copy of the Business Combination Agreement is filed with this Current Report on Form 8-K as Exhibit 2.1, and is incorporated herein
by reference, and the foregoing description of the Business Combination Agreement is qualified in its entirety by reference thereto.
The Business Combination Agreement contains representations, warranties and covenants that the respective parties made to each other
as of the date of the Business Combination Agreement or other specific dates. The assertions embodied in those representations, warranties
and covenants were made for purposes of the contract among the respective parties and are subject to important qualifications and limitations
agreed to by the parties in connection with negotiating such agreement. The representations, warranties and covenants in the Business
Combination Agreement are also modified in important part by the underlying disclosure schedules which are not filed publicly and which
are subject to a contractual standard of materiality different from that generally applicable to stockholders and were used for the purpose
of allocating risk among the parties rather than establishing matters as facts. SportsMap does not believe that these schedules contain
information that is material to an investment decision.
Sponsor Letter Agreement
Concurrently
with the execution of the Business Combination Agreement, SportsMap, LLC, a Delaware limited liability company (the “Sponsor”),
SportsMap, ICI and certain other holders of SportsMap common stock entered into a Sponsor Letter Agreement (the “Sponsor Letter
Agreement”), pursuant to which, the Sponsor and each such holder agreed, among other things, (a) to vote all of the shares
of SportsMap common stock beneficially owned by the Sponsor and such holder in favor of the adoption of the Business Combination Agreement
and the approval of the Business Combination, (b) to be bound by certain other covenants and agreements related to the Business Combination,
and (c) to be bound by certain transfer restrictions with respect to its shares in SportsMap prior to the closing of the Business
Combination, in each case, on the terms and subject to the conditions set forth in the Sponsor Letter Agreement.
The
foregoing description of the Sponsor Letter Agreement is subject to and qualified in its entirety by reference to the full text of the
Sponsor Letter Agreement, a copy of which is included as Exhibit 10.1 hereto, and the terms of which are incorporated herein by
reference.
Transaction Support Agreement
Concurrently
with the execution of the Business Combination Agreement, SportsMap, ICI and each of the holders of Company Class A Common Stock entered
into a Transaction Support Agreement (the “Transaction Support Agreement”), pursuant to which each such holder agreed,
among other things, (a) to vote all of the shares of ICI common stock beneficially owned by such holder (which vote may be done
by executing a written consent) in favor of any actions required in furtherance of the Merger, the conversion of any convertible promissory
notes issued by ICI on or after the date of the Business Combination Agreement but prior to the Closing, and the transactions contemplated
by the Business Combination Agreement, (b) to be bound by certain other covenants and agreements related to the Business Combination,
and (c) to be bound by certain transfer restrictions with respect to its shares in ICI prior to the closing of the Business Combination,
in each case, on the terms and subject to the conditions set forth in the Transaction Support Agreement.
The
foregoing description of the Transaction Support Agreement is subject to and qualified in its entirety by reference to the full text
of the Transaction Support Agreement, a copy of which is included as Exhibit 10.2 hereto, and the terms of which are incorporated
herein by reference.
Registration Rights
Agreement
At
the effective time of the Business Combination, SportsMap, the Sponsor, members of the Sponsor and certain former stock and option holders
of ICI will enter into a registration rights agreement (the “Registration Rights Agreement”), pursuant to which, among
other things, SportsMap will grant to such holders certain customary registration rights with respect to the shares of SportsMap they
hold or will receive in the Business Combination.
The
foregoing description of the Registration Rights Agreement is subject to and qualified in its entirety by reference to the full text
of the form of Registration Rights Agreement, a copy of which is included as Exhibit A to Exhibit 10.1 hereto, and the terms of
which are incorporated herein by reference.
Lock-Up Agreements
At
the Closing, SportsMap, the Sponsor, each holder of Company Class A Common Stock and certain holders of Participating Company Options
will enter into lock-up agreements (the “Lock-Up Agreements”), pursuant to which, among other things, the holders
will agree to be subject, to restrictions on the transfer of the shares of SportsMap common stock (or shares issuable in respect of options
to purchase shares of SportsMap common stock) they receive in the Business Combination for (i) with respect to 50% of such shares, the
earlier of (a) six months after the date of Closing and (b) the first date on which the closing price of a share of SportsMap common
stock equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and similar
transactions) for any 20 trading days within any 30-trading day period commencing after the Closing; and (ii) with respect to the remainder
of such shares, six months after the Closing Date.
The
foregoing description of the Lock-Up Agreements is subject to and qualified in its entirety by reference to the full text of the
form of Lock-Up Agreement, a copy of which is included as Exhibit B to Exhibit 10.1 hereto, and the terms of which are
incorporated herein by reference.