Item 1.01. Entry into a Material Definitive Agreement.
Forward Purchase Agreement
On November 20, 2022, PropTech Investment Corporation II, a Delaware corporation
("PTIC II") and Vellar Opportunity Fund SPV LLC - Series 9 (the "Seller"),
entered into an agreement (the "Forward Purchase Agreement") for an OTC Equity
Prepaid Forward Transaction (the "Forward Purchase Transaction"). Pursuant to
the terms of the Forward Purchase Agreement, Seller intends, but is not
obligated, to purchase in the open market through a broker shares of PTIC II
Class A common stock, par value $0.0001 per share ("Class A Common Stock" or the
"Shares"), after the date of the Forward Purchase Agreement and after the
expiration of PTIC II's redemption deadline from holders of Shares (other than
PTIC II or affiliates of PTIC II) who have elected to redeem Shares (such
holders, "Redeeming Holders") pursuant to the redemption rights set forth in
PTIC II's amended and restated certificate of incorporation, dated as of
December 3, 2020, in connection with that certain business combination
agreement, dated as of May 17, 2022 (as the same has been and may be amended,
supplemented or otherwise modified from time to time, the "Business Combination
Agreement" and the transactions contemplated thereby, the "Business
Combination") between PTIC II, RW National Holdings, LLC, a Delaware limited
liability company ("Renters Warehouse") and Lake Street Landlords, LLC, a
Delaware limited liability company, up to a maximum of 9,000,000 Shares at a
redemption price of approximately $10.08 per Share (based on an amount of
$232,870,089 currently held in the Trust Account) to be paid to investors who
elected to redeem their shares at PTIC II's redemption deadline (the "Initial
Price"); provided that Seller may not beneficially own greater than 9.9% of the
issued and outstanding Shares on a post-Business Combination pro forma basis.
Seller has agreed to waive any redemption rights with respect to any Shares in
connection with the Business Combination. Such waiver may reduce the number of
Shares redeemed in connection with the Business Combination, which reduction
could alter the perception of the potential strength of the Business
Combination. The number of Shares purchased by the Seller shall be referred to
as the "Recycled Shares."
The Forward Purchase Agreement provides that not later than one local business
day following the closing (the "Prepayment Date" and the "Closing,"
respectively) of the Business Combination, PTIC II will pay to Seller, out of
funds held in PTIC II's trust account (the "Trust Account"), a cash amount (the
"Prepayment Amount") equal to (x) the product of the number of Recycled Shares
and the Initial Price, less, on the Prepayment Date, (y) one-half of the product
of 10% of the number of Recycled Shares and the Initial Price (the "Leakage
Amount"), which remaining one-half of the Leakage Amount shall be paid by the
Seller to the Combined Company on the earlier to occur of (a) the date that the
SEC declares a registration statement registering the resale of all shares held
by the Seller and its affiliates effective, and (b) the OET Date (as defined in
the Forward Purchase Agreement).. In addition to the Prepayment Amount, PTIC II
shall pay directly from the Trust Account on the Prepayment Date, an amount
equal to the product of 500,000 and the redemption price (the "Additional
Consideration"), for the purpose of repayment of Seller having actually
purchased from third parties prior to the Closing. The Additional Consideration
shall be free and clear of all obligations of Seller in connection with signing
a definitive agreement for the Forward Purchase Transaction. Seller has agreed
to waive any redemption rights with respect to the Shares.
From time to time following the Closing and prior to the earliest to occur of
(a) the third anniversary of the Closing and (b) the date specified by Seller in
a written notice to be delivered to PTIC II at Seller's discretion after the
occurrence of any of a (x) Trigger Event or (y) Delisting Event (as defined in
the Forward Purchase Agreement) (in each case, the "Maturity Date"), Seller may,
in its sole discretion, sell some or all of the Shares. On the last trading day
of each calendar month following the Business Combination, solely from any
proceeds from any sales of Shares by Seller that are not retained for its
account to repay the Leakage Amount, Seller will pay to the Combined Company the
product of the number of Shares sold multiplied by the Reset Price. The "Reset
Price" shall be, on the first scheduled trading day of each month commencing on
the first calendar month following the Closing, the lowest of (a) the
then-current Reset Price, (b) the Initial Price and (c) the VWAP Price of the
Shares of the last ten (10) trading days of the prior calendar month, but not
lower than $5.00; provided that to the extent that PTIC II or the Combined
Company offers and sells any Shares or securities convertible into Shares at a
price lower than the Initial Price, the Reset Price, shall be modified to equal
such reduced price at which such securities may be issued. Seller will retain
any sale proceeds in excess of the product of the number of Shares sold by
Seller and the Reset Price.
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In the event that the VWAP Price of the Class A Common Stock falls below $2.00
per share for 20 trading days during any 30 trading day period (a "Trigger
Event"), then Seller may elect to accelerate the Maturity Date to the date of
such Trigger Event. At the Maturity Date, the Combined Company is required to
purchase from Seller, subject to Seller's consent, all of the unsold Shares for
consideration equal to an amount, in cash or Shares at the sole discretion of
Combined Company (the "Maturity Consideration"), equal to (a) in the case of
cash, the product of the unsold Shares and $1.75, or $2.00, solely in the event
of a Registration Failure (as defined in the Forward Purchase Agreement), and
(b) in the case of Shares, such number of Shares (the "Maturity Shares") with a
value equal to the product of the unsold Shares and $1.75, or $2.00, solely in
the event of a Registration Failure, divided by the VWAP Price of the Shares for
the 30 trading days prior to the Maturity Date; provided that the Maturity
Shares used to pay the Maturity Consideration are freely tradable. If the
Maturity Shares are not freely tradable, Seller shall instead receive such
number of Shares equal to the product of (i) three (3) and (ii) 9,000,000 minus
the Terminated Shares (as defined in the Forward Purchase Agreement) (the
"Penalty Shares"); provided, however, that if the Penalty Shares are freely
tradable within 120 days after the Maturity Date, Seller shall return to
Appreciate such number of Penalty Shares that are valued in excess of Maturity
Consideration based on the 10-day VWAP ending on the date that such Shares
satisfied the Share Conditions.
In addition, pursuant to the terms and conditions of the Forward Purchase
Agreement, Renters Warehouse and the Combined Company agree, from and after
November 20, 2022, not to incur in excess of $25.0 million of indebtedness
through and including the 90th day following the Prepayment Date without the
prior written consent of the Seller.
A break-up fee equal to (i) all of Seller's reasonable and documented fees and
expenses relating to the Forward Purchase Agreement capped at $50,000 plus (ii)
$500,000, shall be payable by the Combined Company to Seller in the event the
Forward Purchase Agreement is terminated by PTIC II (collectively, the "Break-up
Fee"). However, the Break-up Fee is not payable if the Business Combination
Agreement is terminated prior to the closing of such Business Combination.
The description of the Forward Purchase Agreement does not purport to be
complete and is qualified in its entirety by the terms and conditions thereof, a
copy of which is attached hereto as Exhibit 10.1 and incorporated herein by
reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
10.1 Forward Purchase Agreement, dated November 20, 2022, by and between
Vellar Opportunity Fund and PropTech Investment Corporation II.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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