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Forward Purchase Agreement | 3 Months Ended
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Mar. 31, 2023
Forward Purchase Agreement |
Forward Purchase Agreement | Note 17. Forward Purchase Agreement On June 16, 2022, NLIT entered into a Forward Purchase Agreement with Midtown East Management NL, LLC (“Midtown East”). Subsequent to entering into the Forward Purchase Agreement, the Company, NLIT, and Midtown East entered into assignment and novation agreements with Verdun Investments LLC (“Verdun”) and Vellar Opportunity Fund SPV LLC – Series 1 (“Vellar”), pursuant to which Midtown East assigned its obligations as to 1,666,666 shares of the shares of Class A Stock to be purchased under the Forward Purchase Agreement to each of Verdun and Vellar. As contemplated by the Forward Purchase Agreement:
● | Prior to the closing, Midtown East, Verdun and Vellar purchased approximately 3.8 million shares of NLIT Class A common stock directly from investors at market price in the public market. Midtown East and other counter parties waived their redemption rights with respect to the acquired shares;
● | One business day following the closing, NLIT paid approximately $39.3 million from the cash held in its trust account to Midtown East; Verdun and Vellar for the shares purchased and approximately $0.3 million in related expense amounts.
● | At the Maturity Date, Midtown East, Verdun and Vellar shall be entitled to (1) the product of the shares then held by them multiplied by the Forward Price, and (2) an amount, in cash or shares at the sole discretion of NLIT, equal to (a) in the case of cash, the product of (i)(x) 3.8 million shares less (y) the number of Terminated Shares and (ii) $2.00 (the “Maturity Cash Consideration”) and (b) in the case of shares, (i) the Maturity Cash Consideration divided by (ii) the VWAP Price for the 30 Scheduled Trading Days prior to the Maturity Date.
● | At any time prior to the Maturity Date (defined as the earlier of i) the third anniversary of the Closing of the Business Combination, ii) the shares are delisted from The Nasdaq Stock Market or (iii) during any 30 consecutive Scheduled Trading Day-period following the closing of the Business Combination, the Volume Weighted Average Share Price (VWAP) Price for 20 Scheduled Trading Days during such period shall be less than $3.00 per share), Midtown East, Verdun and Vellar may elect an optional early termination to sell some or all of the shares (the “Terminated Shares”) of Class A Stock in the open market. If Midtown East, Verdun and Vellar sell any shares prior to the Maturity Date, the pro-rata portion of the Reset Price will be released from the escrow account and paid to SHF. Midtown East, Verdun and Vellar shall retain any proceeds in excess of the Reset Price that is paid to SHF.
● | The trading value of the common stock combined with preferred shareholders electing to convert their preferred shares to common stock triggered a lower reset price embedded in the forward purchase agreement, or FPA. As of December 31, 2022, the Company had already called a special meeting to lower the make-whole price under the preferred share purchase agreement to $1.25/share. The Company, majority common shareholders and the preferred investors had entered into a voting agreement whereby the vote to approve the $1.25/share make-whole price was secured. Knowing the Company would ultimately be issuing shares to the preferred stockholders with a make whole issuance at $1.25/share compelled the company has recognized a reset price under the terms of the FPA of $1.25/share. These events significantly reduced the FPA receivable to approximately $4.6 million, from approximately $37.9 million reported at the end of the September 2022 quarter. The loss in value resulted not only in a compression of the balance sheet, but also $42.3 million charge to other expense on the statement of operations in the fourth quarter of 2022.
● | The reconciliation statement of the common stock held by the parties are as follows:
Schedule of Forward Purchase Agreement
|  |  |  | On the date of acquisition (September 28, 2022) |  |  | Share sold during the period September 29, 2022 to December 31, 2022 |  |  | As at December 31, 2022 |
S.no |  | Name of the party |  | Opening Shares (a) |  |  | Amount |  |  | Shares (b) |  |  | Amount |  |  | Shares (c=a-b) |  |  | Rest price (iii) |  |  | Amount (c x iii) |
1 |  | Vellar |  |  | 1,025,000 |  |  | $ | 10,583,246 |  |  |  | 53,796 |  |  | $ | 524,472 |  |  |  | 971,204 |  |  |  | 1.25 |  |  | $ | 1,214,005 |
2 |  | Midtown East |  |  | 1,599,496 |  |  |  | 16,514,986 |  |  |  | 81,572 |  |  |  | 832,850 |  |  |  | 1,517,924 |  |  |  | 1.25 |  |  |  | 1,897,405 |
3 |  | Verdun |  |  | 1,180,376 |  |  |  | 12,187,522 |  |  |  | 2,127 |  |  |  | 21,962 |  |  |  | 1,178,249 |  |  |  | 1.25 |  |  |  | 1,472,811 |
Grand total |  |  | 3,804,872 |  |  | $ | 39,285,754 |  |  |  | 137,495 |  |  | $ | 1,379,284 |  |  |  | 3,667,377 |  |  |  |  |  |  | $ | 4,584,221 |
|  |  |  | As at December 31, 2022 |  |  | Share sold during the three months |  |  | As at March 31, 2023 |
|  |  |  | Opening Shares |  |  |  |  |  | Shares |  |  |  |  |  | Shares |  |  | Rest price |  |  | Amount |
S.no |  | Name of the party |  | (a) |  |  | Amount |  |  | (b) |  |  | Amount |  |  | (c=a-b) |  |  | (iii) |  |  | (c x iii) |
1 |  | Vellar |  |  | 971,204 |  |  | $ | 1,214,005 |  |  |  | - |  |  |  | - |  |  |  | 971,204 |  |  |  | 1.25 |  |  | $ | 1,214,005 |
2 |  | Midtown East |  |  | 1,517,924 |  |  |  | 1,897,405 |  |  |  | - |  |  |  | - |  |  |  | 1,517,924 |  |  |  | 1.25 |  |  |  | 1,897,405 |
3 |  | Verdun |  |  | 1,178,249 |  |  |  | 1,472,811 |  |  |  | - |  |  |  | - |  |  |  | 1,178,249 |  |  |  | 1.25 |  |  |  | 1,472,811 |
Grand total |  |  | 3,667,377 |  |  | $ | 4,584,221 |  |  |  | - |  |  |  | - |  |  |  | 3,667,377 |  |  |  |  |  |  | $ | 4,584,221 |

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