Item 1.01 Entry Into a Definitive Material Agreement.
This section describes
the material provisions of the Business Combination Agreement (as defined below) and certain related documents, but does not purport to
describe all of the terms thereof. The following summary is qualified in its entirety by reference to the complete text of the Business
Combination Agreement, a copy of which is filed herewith as Exhibit 2.1. Unless otherwise defined herein, capitalized terms used below
have the meanings given to them in the Business Combination Agreement.
Business Combination Agreement
General Description of the Business Combination
Agreement
On December 9, 2022, Better
World Acquisition Corp., a Delaware corporation (“Better World”), announced the execution of a definitive business
combination agreement (the “Business Combination Agreement”) with Heritage Distilling Holding Company, Inc.,
a Delaware corporation (together with its successors, “Heritage”), HDH Newco, Inc., a Delaware corporation and
a wholly owned subsidiary of Better World (“Pubco” ), BWA Merger Sub, Inc., a Delaware corporation and a wholly
owned subsidiary of Pubco (“SPAC Merger Sub”), HD Merger Sub, Inc., a Delaware corporation and a wholly owned
subsidiary of Pubco (“Company Merger Sub” and, together with SPAC Merger Sub, the “Merger Subs”;
and the Merger Subs, collectively with Better World and Pubco, the “SPAC Parties”), BWA Holdings LLC, a Delaware
limited liability company, in the capacity as the representative for the stockholders of Better World and Pubco (other than the former
Heritage stockholders), and (vii) Justin Stiefel, in the capacity as the representative for certain security holders of Heritage (the
“Holder Representative”), for a proposed business combination among the parties (the “Business Combination”).
Pursuant to the Business Combination Agreement, Pubco is expected to change its name to Heritage Distilling Group, Inc. and will serve
as the parent company of each of Better World and Heritage following the consummation of the Business Combination. Pubco is sometimes
referred to herein as the “Combined Company” following the Closing (as defined below).
Under the Business Combination
Agreement, subject to the terms and conditions set forth therein, at the closing of the transactions contemplated by the Business Combination
Agreement (the “Closing”), among other matters, Merger Sub will merge with and into Heritage, with Heritage
continuing as the surviving entity in the merger, as a result of which, (i) SPAC Merger Sub will merge with and into Better World, with
Better World continuing as the surviving entity (the “SPAC Merger”), and, in connection therewith, (A) each
share of common stock of Better World (“SPAC Common Stock”) issued and outstanding immediately prior to the
Effective Time will be cancelled in exchange for the right of the holder thereof to receive, with respect to each share of SPAC Common
Stock that is not redeemed or converted in the Closing Redemption, one share of common stock of Pubco (“Pubco Common Stock”)
and one CVR (subject to the holders of Founder Shares and Representative Shares waiving their right to receive CVRs for such shares pursuant
to the CVR Funding and Waiver Letter), and (B) Pubco will assume all of the outstanding SPAC Warrants and each SPAC Warrant will become
a warrant to purchase the same number of shares of Pubco Common Stock at the same exercise price during the same exercise period and otherwise
on the same terms as the SPAC Warrant being assumed; (ii) Company Merger Sub will merge with and into Heritage, with Heritage continuing
as the surviving entity (the “Company Merger”, and, together with the SPAC Merger, the “Mergers”),
and, in connection therewith, (A) the shares of capital stock of Heritage issued and outstanding immediately prior to the Effective Time
will be cancelled in exchange for the right of the holders thereof to receive shares of Pubco Common Stock as set forth in the Business
Combination Agreement, (B) holders of Company Interim Notes of Heritage will receive shares of Pubco Common Stock separate from the Stockholder
Merger Consideration, (C) Pubco will assume all of the outstanding Company Financing/Interim Warrants and each Company Financing/Interim
Warrant will become a warrant to purchase shares of Pubco Common Stock with the number of shares and exercise price thereof equitably
adjusted in accordance with the Business Combination Agreement, (D) each Contributed Warrant shall be contributed to Pubco and exchanged
for the right to receive such number of shares of Pubco Common Stock as such holder of a Contributed Warrant would have received pursuant
to Section 1.14(a) of the Business Combination Agreement if such Contributed Warrant had been exercised immediately prior to the Effective
Time for the number of shares of Company Common Stock set forth in the Contribution Agreement, (E) each Restricted Stock Unit Award outstanding
immediately prior to the Effective Time, as amended in accordance with the Business Combination Agreement and the RSU Award Amendments,
will be assumed by Pubco, with the number of RSU Shares underlying such Restricted Stock Unit Award to be adjusted in accordance with
the Business Combination Agreement and the RSU Award Amendments, and (F) all other Company Convertible Securities will be terminated;
and (iii) as a result of such Mergers, Better World and Heritage each will become wholly owned subsidiaries of Pubco, and Pubco will become
a publicly traded company, all upon the terms and subject to the conditions set forth in the Business Combination Agreement and the documents
and agreements ancillary to the Business Combination Agreement (the “Ancillary Documents”) and in accordance
with applicable law (collectively, the “Transactions”).
Consideration; CVRs; Earnouts
The total consideration to
be paid by Pubco to Heritage’s security holders (other than the holders of Heritage warrants that are assumed by Pubco, which will
not affect the consideration) at the Closing (the “Participant Consideration”) will be an amount equal to $77,500,000,
less the amount of Closing Net Debt and the aggregate amount of any Company Transaction Bonuses, which Participant Consideration will
payable in new shares of Pubco Common Stock, each valued at a price per share of $10.00; provided that such shares of Pubco Common Stock
payable to holders of Company Interim Notes shall be valued at a price per share equal to seventy five percent (75%) of the Redemption
Price. Any such shares of Pubco Common Stock payable to holders of Company Interim Notes shall reduce the shares of Pubco Common Stock
allocable to Heritage shareholders, and therefore will not affect the total consideration payable by the Pubco. The portion of the Participant
Consideration payable to Heritage security holders is set forth in the Business Combination Agreement.
Better World public stockholders
who do not redeem their shares of SPAC Common Stock in connection with the Transactions will receive one contingent value right (“CVR”)
in the SPAC Merger in addition to one share of Pubco Common Stock. At the Closing, BWA Holdings LLC, Better World’s sponsor (the
“Sponsor”), will place 1,000,000 shares of Pubco Common Stock (the “Founder CVR Escrow Shares”),
and certain Heritage security holders will place 3,000,000 shares of Pubco Common Stock from the Participant Consideration less the number
of RSU CVR Shares (the “Company CVR Escrow Shares”) into escrow, for an aggregate of 4,000,000 shares of Pubco
Common Stock to support the CVR, pursuant to a contingent value rights agreement (the “CVR Agreement”) to be
entered into prior to the Closing, by and among the Holder Representative (on behalf of the Heritage stockholders), Pubco, the Sponsor
and Continental Stock Transfer & Trust Company, as rights agent. Upon the date that is 18 months from Closing (which date may be extended
to 24 months following the Closing at the option of the Sponsor), CVR holders will be entitled to receive a number of escrowed shares
(and earnings thereon other than ordinary dividends) designed to provide the CVR holders with a simple annual rate of return of 10% on
the redemption price for their SPAC Common Stock based on the price of the Pubco Common Stock as of such 18 or 24 month anniversary and
any amounts that they have received with respect to their shares of Pubco Common Stock through such time, including if the stock price
drops below the price in the Closing Redemption, but solely to the extent of the escrowed shares and earnings thereon other than ordinary
dividends, and up to a maximum of the equivalent of two shares of Pubco Common Stock for each CVR. The number of shares to be released
to the CVR holders will be allocated from the Heritage security holders’ and the Sponsor’s escrowed shares on a pro-rata basis,
and any escrowed shares not released to CVR holders by the end of the CVR term will be released to the contributing Heritage security
holders and the Sponsor on a pro-rata basis.
In addition, certain security
holders of Heritage (the “Company Earnout Participants”) will have the contingent right to receive to up to
an aggregate of 3,000,000 additional shares of Pubco Common Stock (the “Earnout Shares”), including amounts
attributable to Restricted Stock Unit Awards, as contingent consideration after the Closing based on Pubco’s net revenue performance
for the years 2023, 2024 and 2025 and stock price performance during the three (3)-year period following the Closing (the “Earnout
Period”), as follows:
| (i) | an aggregate of 500,000 Earnout Shares will be issued to the Company Earnout Participants in the event
that Pubco reports net revenue in its audited financial statements for the fiscal year ended December 31, 2023, equal to or in excess
of $18,100,000 (the “2023 Net Revenue Earnout Milestone”); |
| | | |
| (ii) | an aggregate of 500,000 Earnout Shares will be issued to the Company Earnout Participants in the event
that the VWAP of the Pubco Common Stock equals or exceeds $12.50 per share for 20 out of 30 consecutive trading days during the Earnout
Period (the “First Price Earnout Milestone”); |
| | | |
| (iii) | an aggregate of 750,000 Earnout Shares will be issued to the Company Earnout Participants in the event
that Pubco reports net revenue in its audited financial statements for the fiscal year ended December 31, 2024, equal to or in excess
of $29,300,000 (the “2024 Net Revenue Earnout Milestone”) (provided that if the 2023 Net Revenue Earnout Milestone
was not met and such Earnout Shares were not issued, an aggregate of 1,250,000 Earnout Shares will be issued to the Company Earnout Participants); |
| | | |
| (iv) | an aggregate of 750,000 Earnout Shares will be issued to the Company Earnout Participants in the event
that the VWAP of the Pubco Common Stock equals or exceeds $15.00 per share for 20 out of 30 consecutive trading days during the Earnout
Period (the “Second Price Earnout Milestone”) (provided that if the First Price Earnout Milestone was not met
and such Earnout Shares were not issued, an aggregate of 1,250,000 Earnout Shares will be issued to the Earnout Participants); and |
| | | |
| (v) | an aggregate of 500,000 Earnout Shares will be issued to the Company Earnout Participants in the event
that Pubco reports net revenue in its audited financial statements for the fiscal year ended December 31, 2025, equal to or in excess
of $46,500,000 (the “2025 Net Revenue Earnout Milestone”) (provided that if any prior Earnout Shares were not
previously earned and issued, the Company Earnout Participants will be entitled to receive all unissued Earnout Shares). |
In the event of a Change of Control during the
Earnout Period, the Company Earnout Participants will be entitled to receive all Earnout Shares with respect to the Earnout Year in which
such Change of Control is consummated plus all Earnout Shares with respect to each Earnout Year subsequent to the Earnout Year in which
the Change of Control was consummated.
At the Closing, the Sponsor
will also contribute 500,000 of its Founder Shares (the “Sponsor Escrow Shares”) into an escrow account (the
“Sponsor Escrow Account”), which shares will be released as set forth below based on Pubco’s achievement
of the earnout milestones set forth above (with any Sponsor Escrow Shares remaining in escrow at the end of the Earnout Period to be forfeited)
(the “Sponsor Earnout”):
| (i) | 100,000 of the Sponsor Escrow Shares will vest, no longer be subject to forfeiture and be released from
the Sponsor Escrow Account at such time (if any) that the Company Earnout Participants are issued any Earnout Shares based upon the achievement
of the 2023 Net Revenue Earnout Milestone; |
| | | |
| (ii) | 100,000 of the Sponsor Escrow Shares will vest, no longer be subject to forfeiture and be released from
the Sponsor Escrow Account at such time (if any) that the Company Earnout Participants are issued any Earnout Shares based upon the achievement
of the First Price Earnout Milestone; |
| | | |
| (iii) | 150,000 of the Sponsor Escrow Shares shall vest, no longer be subject to forfeiture and be released from
the Sponsor Escrow Account at such time (if any) that the Company Earnout Participants are issued any Earnout Shares based upon the achievement
of the 2024 Net Revenue Earnout Milestone; |
| | | |
| (iv) | 150,000 of the Sponsor Escrow Shares will vest, no longer be subject to forfeiture and be released from
the Sponsor Escrow Account at such time (if any) that the Company Earnout Participants are issued any Earnout Shares based upon the achievement
of the Second Price Earnout Milestone; and |
| | | |
| (v) | in the event that fewer than all of the Sponsor Escrow Shares have been released from the Sponsor Escrow
Account based upon the achievement of the foregoing events, then any such remaining Sponsor Escrow Shares in the Sponsor Escrow Account
will vest, no longer be subject to forfeiture and be released from the Sponsor Escrow Account at such time (if any) that the Company Earnout
Participants are issued any Earnout Shares based upon the achievement of the 2025 Net Revenue Milestone. |
In addition, all of the Sponsor Escrow Shares
will vest, no longer be subject to forfeiture and be released from the Sponsor Escrow Account to the Sponsor upon the first to occur of
certain “Triggering Events” described in the sponsor earnout letter agreement to be entered into by and among Better World,
Pubco, Heritage and the Sponsor prior to the Closing (the “Sponsor Earnout Letter”).
Representations and Warranties of the Parties
The Business Combination Agreement
contains a number of representations and warranties made by the parties as of the date of such agreement or other specific dates solely
for the benefit of certain of the parties to the Business Combination Agreement, in each case relating to, among other things, organization
and qualification, governing documents, capitalization, authority, no conflicts and absence of litigation. These representations and warranties,
in certain cases, are subject to specified exceptions and materiality, Material Adverse Effect (as defined below), knowledge and other
qualifications contained in the Business Combination Agreement or in information provided pursuant to certain disclosure schedules to
the Business Combination Agreement. “Material Adverse Effect” as used in the Business Combination Agreement
means, with respect to any specified person or entity, any fact, event, occurrence, change or effect that has had or would reasonably
be expected to have, individually or in the aggregate, a material adverse effect on the business, assets, liabilities, results of operations,
prospects or condition (financial or otherwise) of such person and its subsidiaries, taken as a whole, or the ability of such person or
any of its subsidiaries on a timely basis to consummate the transactions contemplated by the Business Combination Agreement or the Ancillary
Documents to which it is a party or bound or to perform its obligations thereunder, in each case subject to certain customary exceptions.
The representations and warranties made by the parties are customary for transactions similar to the Transactions.
The representations and warranties
of the parties contained in the Business Combination Agreement terminate as of, and do not survive, the Closing, and there are no indemnification
rights for another party’s breach thereof.
Covenants of the Parties
Each party agreed in the Business
Combination Agreement to use its commercially reasonable efforts to effect the Closing. The Business Combination Agreement also contains
certain customary and other covenants by each of the parties during the period between the signing of the Business Combination Agreement
and the earlier of the Closing or the termination of the Business Combination Agreement in accordance with its terms, including covenants
regarding: (i) the provision of access to the parties’ respective properties, books and personnel; (ii) the operation of the parties’
respective businesses in the ordinary course of business; (iii) the provision by Heritage of PCAOB-audited financial statements of Heritage
and its subsidiaries (collectively, the “Heritage Companies”); (iv) Better World’s public filings; (v)
no solicitation of, or entering into, any alternative competing transactions; (vi) no insider trading; (vii) notifications of certain
breaches, consent requirements or other matters; (viii) efforts to consummate the Closing and obtain third party and regulatory approvals
and efforts; (ix) further assurances; (x) public announcements; (xi) confidentiality; (xii) indemnification of directors and officers
and tail insurance; (xiii) use of trust proceeds after the Closing; (xiv) efforts to support a transaction financing; (xv) efforts to
amend the terms of outstanding Restricted Stock Unit Awards of Heritage; (xvi) causing Pubco to enter into employment agreements with
certain employees of Heritage prior to the Closing; (xvii) approving a new equity incentive plan for Pubco to take effect following the
Closing; and (xviii) Heritage using commercially reasonable efforts to cause each holder of Company Interim Notes to enter into a lock-up
agreement prior to the Closing.
The parties also agreed to
take all necessary actions to cause Pubco’s board of directors immediately following the Closing to consist of nine individuals,
as follows: (i) one individual that is designated by Better World prior to the Closing, in its sole discretion, which director will qualify
as an independent director under the rules of The Nasdaq Stock Market LLC (“Nasdaq”), (ii) four individuals
that are designated by Heritage prior to the Closing, and (iii) four individuals that are mutually agreed by Heritage and Better World
prior to the Closing, all four of whom will be required to qualify as an independent director under Nasdaq rules.
Better World and Pubco also
agreed to jointly prepare, and Pubco will file with the SEC, a registration statement on Form S-4 (as amended, the “Registration
Statement”) in connection with the registration under the Securities Act of 1933, as amended (the “Securities
Act”), of the securities of Pubco to be issued to the stockholders of Better World and security holders of Heritage, and
containing a proxy statement/prospectus for the purpose of soliciting proxies from the stockholders of Better World for the approval of
the Business Combination Agreement and the matters relating to the Transactions to be acted on at the special meeting of the stockholders
of Better World and providing such stockholders an opportunity to have their shares of SPAC Common Stock redeemed in the Closing Redemption.
The covenants and agreements
of the parties contained in the Business Combination Agreement do not survive the Closing, except those covenants and agreements to be
performed after the Closing, which covenants and agreements will survive until fully performed.
Conditions to Closing
The obligations of the parties
to consummate the Transactions are subject to various conditions, including the following mutual conditions of the parties, unless waived:
(i) the approval of the Business Combination Agreement and the Transactions and related matters by the requisite vote of Better World’s
stockholders; (ii) Heritage stockholder approval (although Heritage stockholders with sufficient ownership to approve the Transactions
have entered into Voting Agreements (as defined below) in support of the Transactions concurrently with the execution of the Business
Combination Agreement); (iii) obtaining any material regulatory approvals and third-party consents; (iv) no law or order preventing or
prohibiting the Transactions; (v) either Better World (immediately prior to the Closing) or Pubco (upon the consummation of the Closing)
having at least $5,000,001 in net tangible assets as of the Closing, after giving effect to the completion of the Closing Redemption and
any transaction financing; (vi) appointment of the post-closing board of directors of Pubco in accordance with the Business Combination
Agreement; (vii) the effectiveness of the Registration Statement; (viii) the Pubco Common Stock to be issued in connection with the Transactions
having been approved for listing on Nasdaq; (ix) the CVR Agreement having been duly executed by the parties thereto; and (x) the CVR Escrow
Agreement having been duly executed by the parties thereto.
In addition, unless waived
by Heritage, the obligations of Heritage to consummate the Transactions are subject to the satisfaction of the following Closing conditions,
amongst others, in addition to customary certificates and other closing deliveries: (i) the representations and warranties of the SPAC
Parties being true and correct on and as of the Closing (subject to Material Adverse Effect); (ii) each of the SPAC Parties having performed
in all material respects its obligations and complied in all material respects with its covenants and agreements under the Business Combination
Agreement required to be performed or complied with by it on or prior the date of the Closing; (iii) absence of any Material Adverse Effect
with respect to Better World since the date of the Business Combination Agreement which is continuing and uncured; (iv) Pubco having amended
and restated its Organizational Documents in the form agreed by the parties; (v) Better World and Pubco having cash and cash equivalents,
including funds remaining in Better World’s trust account (after giving effect to the completion and payment of the Closing Redemption)
and the proceeds of any transaction financing, following the payment or deduction of Better World’s and Pubco’s unpaid transaction
expenses and indebtedness and other outstanding liabilities due and payable at the Closing and the Heritage Companies’ transaction
expenses at least equal to $10,000,000; (vi) receipt by Heritage of the Founders Registration Rights Amendment (as defined below); and
(vii) Heritage having received from Pubco a registration rights agreement covering shares of Pubco Common Stock held by certain Heritage
security holders, duly executed by Pubco.
Unless waived by Better World,
the obligations of the SPAC Parties to consummate the Transactions are subject to the satisfaction of the following Closing conditions,
amongst others, in addition to customary certificates and other closing deliveries: (i) the representations and warranties of Heritage
being true and correct on and as of the Closing (subject to Material Adverse Effect on the Heritage Companies, taken as a whole); (ii)
Heritage having performed in all material respects the respective obligations and complied in all material respects with their respective
covenants and agreements under the Business Combination Agreement required to be performed or complied with on or prior the date of the
Closing; (iii) absence of any Material Adverse Effect with respect to the Heritage Companies (taken as a whole) since the date of the
Business Combination Agreement which is continuing and uncured; (iv) certain Ancillary Documents being in full force and effect from the
Closing; (v) receipt by Better World of the Founders Registration Rights Agreement Amendment duly executed by the parties thereto; (vi)
any issued and outstanding convertible securities of Heritage (except as otherwise specified in the Business Combination Agreement) having
been terminated without any consideration or liability; (vii) the Restricted Stock Unit Awards of Heritage having been amended in accordance
with the terms of the Business Combination Agreement; (viii) the holders of Company Interim Notes having executed and delivered to Better
World lock-up agreements; and (ix) if applicable, certain contracts involving the Heritage Companies having been terminated with no obligation
or liability.
Termination
The Business Combination Agreement
may be terminated at any time prior to the Closing by either Better World or Heritage if the conditions to the Closing set forth in the
Business Combination Agreement (the majority of which are summarized above) are not satisfied or waived by February 17, 2023 (the “Outside
Date”), provided, that (a) if Better World seeks and obtains an extension to consummate its business combination beyond
Better World’s current deadline of February 17, 2023, Better World has the right by providing written notice thereof to Heritage
to extend the Outside Date for one or more additional periods equal in the aggregate to the shortest of (i) three additional months, (ii)
the period ending on the last date for Better World to consummate its business combination pursuant to such extension (after giving effect
to any automatic extension rights that Better World may obtain in such extension where it can extend its deadline to consummate a business
combination without requiring an amendment to its organizational documents), and (iii) such period as determined by Better World.
The Business Combination Agreement
may also be terminated under certain other customary and limited circumstances at any time prior to the Closing, including, among other
reasons: (i) by mutual written consent of Better World and Heritage; (ii) by either Better World or Heritage if a governmental authority
of competent jurisdiction has issued an order or taken any other action permanently restraining, enjoining or otherwise prohibiting the
Transactions, and such order or other action has become final and non-appealable; (iii) by Heritage for the uncured breach of the Business
Combination Agreement by a SPAC Party, such that the related Closing condition would not be met; (iv) by Better World for the uncured
breach of the Business Combination Agreement by Heritage, such that the related Closing condition would not be met; (v) by either Better
World or Heritage if Better World holds its stockholder meeting to approve the Business Combination Agreement and the Transactions, and
such approval is not obtained; (vi) by either Better World or Heritage, if the stockholders of Heritage have not approved the Business
Combination Agreement and the Transactions; (vi) by Better World if there has been a Material Adverse Effect on the Heritage Companies
(taken as a whole) which is uncured or continuing; and (vii) by Heritage if there has been a Material Adverse Effect on SPAC Parties (taken
as a whole) which is uncured or continuing.
If the Business Combination
Agreement is terminated, all further obligations of the parties under the Business Combination Agreement (except for certain obligations
related to confidentiality, effect of termination, fees and expenses, trust fund waiver, miscellaneous and definitions to the foregoing)
will terminate, no party to the Business Combination Agreement will have any further liability to any other party thereto except for liability
for fraud or for willful breach of the Business Combination Agreement prior to termination.
Trust Account Waiver
Heritage and the Company Representative
have agreed that they and their affiliates will not have any right, title, interest or claim of any kind in or to any monies in Better
World’s trust account held for its public stockholders, and have agreed not to, and waived any right to, make any claim against
the trust account (including any distributions therefrom).
SPAC Representative and Holder Representative
BWA Holdings LLC is serving
as the SPAC Representative under the Business Combination Agreement and, in such capacity, will represent the interests of Pubco’s
stockholders after the Closing (other than the Heritage security holders) with respect to certain matters under the Business Combination
Agreement. Justin Stiefel is serving as the Holder Representative under the Business Combination Agreement and, in such capacity, will
represent the interests of the Company Earnout Participants with respect to certain matters under the Business Combination Agreement,
including with respect to the determination of any earnout due to the Company Earnout Participants thereunder.
Governing Law
The Business Combination Agreement
is governed by Delaware law and, subject to the required arbitration provisions, the parties are subject to exclusive jurisdiction of
the Delaware Court of Chancery (and if such court lacks jurisdiction, any other state or federal court located in the State of Delaware).
Any disputes under the Business Combination Agreement, other than claims for injunctive or temporary equitable relief or enforcement of
an arbitration award, will be subject to arbitration by the American Arbitration Association, to be held in the State of Delaware.
The Business Combination
Agreement contains representations, warranties and covenants that the respective parties made to each other as of the date of such agreement
or other specific dates. The assertions embodied in those representations, warranties, covenants and agreements 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 Business Combination Agreement has been filed to provide investors with information regarding its
terms, but it is not intended to provide any other factual information about Better World, Pubco, Heritage or any other party to the Business
Combination Agreement. In particular, the representations and warranties, covenants and agreements contained in the Business Combination
Agreement, which were made only for purposes of such agreement and as of specific dates, were solely for the benefit of the parties to
the Business Combination Agreement, may be subject to limitations agreed upon by the contracting parties (including being qualified by
confidential disclosures made for the purposes of allocating contractual risk between the parties to the Business Combination Agreement
instead of establishing these matters as facts) and may be subject to standards of materiality applicable to the contracting parties that
differ from those applicable to investors and reports and documents filed with the SEC. Investors should not rely on the representations,
warranties, covenants and agreements, or any descriptions thereof, as characterizations of the actual state of facts or condition of any
party to the Business Combination Agreement. In addition, the representations, warranties, covenants and agreements and other terms of
the Business Combination Agreement may be subject to subsequent waiver or modification. Moreover, information concerning the subject matter
of the representations and warranties and other terms may change after the date of the Business Combination Agreement, which subsequent
information may or may not be fully reflected in Better World’s or Pubco’s public disclosures.
Key Ancillary Documents
This section describes
the material provisions of certain Ancillary Documents, but does not purport to describe all of the terms thereof. The following summary
is qualified in its entirety by reference to the complete text of each of these Ancillary Documents, copies of each of which are filed
herewith as exhibits. Stockholders and other interested parties are urged to read such Ancillary Documents in their entirety.
Voting Agreements
Simultaneously with the execution
and delivery of the Business Combination Agreement, Better World and Heritage have entered into voting agreements (collectively, the “Voting
Agreements”) with directors, officers and certain Heritage significant security holders required to approve the Transactions.
Under the Voting Agreements, each such Heritage security holder party thereto agreed, among other matters, to vote all of such Heritage
security holder’s shares of Heritage in favor of the Business Combination Agreement and the Transactions, and to otherwise take
(or not take, as applicable) certain other actions in support of the Business Combination Agreement and the Transactions and the other
matters to be submitted to the Heritage security holders for approval in connection with the Transactions, in the manner and subject to
the conditions set forth in the Voting Agreements, and provide a proxy to Better World to vote such shares accordingly in the event that
such security holder fails to perform or otherwise comply with the covenants, agreements or other obligations set forth in the Voting
Agreement. The Voting Agreements prevent transfers of the Heritage shares held by such Heritage security holder party thereto between
the date of the Voting Agreement and the date of Closing, except for certain permitted transfers where the recipient also agrees to comply
with the terms of the Voting Agreement.
The foregoing description
of the Voting Agreements is subject to and qualified in its entirety by reference to the full text of the form of the Voting Agreement,
a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
Lock-Up Agreements
Simultaneously with the execution
and delivery of the Business Combination Agreement, certain directors, officers and certain significant security holders of Heritage entered
into a lock-up agreement with Pubco, Better World, and Heritage (the “Lock-Up Agreements”). The Business Combination
Agreement includes a closing condition requiring certain additional significant security holders of Heritage to enter into Lock-Up Agreements
prior to Closing. Pursuant to the Lock-Up Agreements, the Heritage security holders agreed not to, during the period commencing from the
Closing and ending on the 12-month anniversary of the Closing (subject to early release if Pubco consummates a liquidation, merger, share
exchange or other similar transaction with an unaffiliated third party): (i) lend, offer, pledge, hypothecate, encumber, donate, assign,
sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant
to purchase, or otherwise transfer or dispose of, directly or indirectly, any restricted securities, (ii) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such restricted securities,
or (iii) publicly disclose the intention to do any of the foregoing, whether any such transaction described in clauses (i) or (ii) above
is to be settled by delivery of the restricted securities or other securities, in cash or otherwise (in each case, subject to certain
limited permitted transfers, provided that the transferred shares shall continue to be subject to the Lock-Up Agreement). Notwithstanding
the foregoing, fifty percent (50%) of the restricted securities shall be released in the event that the closing price of Pubco Common
Stock on Nasdaq (or other principal stock exchange or quotation service on which such shares then trade) equals or exceeds $12.50 per
share for any 20 out of 30 consecutive trading days.
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 filed as Exhibit 10.2 to this Current Report on Form 8-K.
Non-Competition Agreements
Simultaneously with the execution
and delivery of the Business Combination Agreement, directors, officers and certain significant Heritage security holders entered into
non-competition and non-solicitation agreements (the “Non-Competition Agreements”) in favor of Heritage, Better
World and Pubco and their direct and indirect subsidiaries and their respective present and future successors and direct and indirect
subsidiaries (“Covered Parties”), to be effective as of the Closing. Under the Non-Competition Agreements, the
signatory thereto agrees not to compete with the Covered Parties during the two-year period following the Closing and, during such two-year
restricted period, not to solicit employees or customers of such entities. The Non-Competition Agreements also contain customary confidentiality
and non-disparagement provisions.
The foregoing description
of the Non-Competition Agreement is subject to and qualified in its entirety by reference to the full text of the form of Non-Competition
Agreement, a copy of which is filed as Exhibit 10.3 to this Current Report on Form 8-K.
Registration Rights Agreement
At or prior to the Closing,
certain Heritage security holders will enter into a registration rights agreement (the “Registration Rights Agreement”)
with Pubco and Better World, pursuant to which, among other matters, Pubco will agree to undertake certain registration obligations in
accordance with the Securities Act and such security holders will be granted customary demand and piggyback registration rights.
The foregoing description
of the Registration Rights Agreement is subject to and qualified in its entirety by reference to the full text of the Registration Rights
Agreement, a copy of which is filed as Exhibit 10.4 to this Current Report on Form 8-K.
Founder Registration Rights Agreement Amendment
At or prior to the Closing,
Pubco, Better World and the Sponsor will enter into an amendment to the registration rights agreement (the “Founder Registration
Rights Agreement Amendment”) entered into by Better World and the Sponsor at the time of Better World’s initial public
offering (the “Founder Registration Rights Agreement”). Under the Founder Registration Rights Agreement Amendment,
the Founder Registration Rights Agreement will be amended to, among other things, add Pubco as a party and to reflect the issuance of
Pubco Common Stock and warrants pursuant to the Business Combination Agreement, and to reconcile with the provisions of the Registration
Rights Agreement, including making the registration rights of the Heritage security holders and the Sponsor pari passu with respect to
any underwriting cutbacks.
The foregoing description
of the Founder Registration Rights Agreement Amendment is subject to and qualified in its entirety by reference to the full text of the
Founder Registration Rights Agreement Amendment, a copy of which is filed as Exhibit 10.5 to this Current Report on Form 8-K.
CVR Agreement
Better World public stockholders
who do not redeem their shares of SPAC Common Stock in connection with the Transactions will receive one CVR in the SPAC Merger in addition
to one share of Pubco Common Stock. At the Closing, the Sponsor will place the 1,000,000 Founder CVR Escrow Shares and certain Heritage
security holders will place up to 3,000,000 Company CVR Escrow Shares into escrow, for an aggregate of up to 4,000,000 shares of Pubco
Common Stock to support the CVR, pursuant to the CVR Agreement. Upon the date that is 18 months from Closing (which date may be extended
to 24 months following the Closing at the option of the Sponsor), CVR holders will be entitled to receive a number of escrowed shares
(and earnings thereon other than ordinary dividends) designed to provide the CVR holders with a simple annual rate of return of 10% on
the redemption price for their SPAC Common Stock based on the price of the Pubco Common Stock as of such 18 or 24 month anniversary and
any amounts that they have received with respect to their shares of Pubco Common Stock through such time, including if the stock price
drops below the price in the Closing Redemption, but solely to the extent of the escrowed shares and earnings thereon other than ordinary
dividends, and up to a maximum of the equivalent of two shares of Pubco Common Stock for each CVR. The number of shares to be released
to the CVR holders will be allocated from the Heritage security holders’ and the Sponsor’s escrowed shares on a pro-rata basis,
and any escrowed shares not released to CVR holders by the end of the CVR term will be released to the contributing Heritage security
holders and the Sponsor on a pro-rata basis.
The foregoing description
of the CVR and the CVR Agreement is subject to and qualified in its entirety by reference to the full text of the CVR Agreement, a copy
of which is filed as Exhibit 10.6 to this Current Report on Form 8-K.
CVR Funding and Waiver Letter
Simultaneously with the execution
and delivery of the Business Combination Agreement, the Sponsor, EarlyBirdCapital, Inc., (the “IPO Underwriter”),
Better World, Heritage and Pubco entered into a letter agreement (the “CVR Funding and Waiver Letter”), pursuant
to which (i) the Sponsor agreed at the Closing to deposit into escrow an aggregate of 1,000,000 of its Founder Shares (the “Founder
CVR Escrow Shares”), with such Founder CVR Escrow Shares (together with the Company CVR Escrow Shares) to be held in escrow
in accordance with the terms and conditions of the Business Combination Agreement and the CVR Escrow Agreement and the CVR Agreement,
and (ii) the Sponsor and the IPO Underwriter have agreed to waive any rights to receive any CVRs for or with respect to their Founder
Shares and Representative Shares.
The foregoing description
of the CVR Funding and Waiver Letter is subject to and qualified in its entirety by reference to the full text of the CVR Funding and
Waiver Letter, a copy of which is filed as Exhibit 10.7 to this Current Report on Form 8-K.
Sponsor Earnout Letter
Simultaneously with the
execution and delivery of the Business Combination Agreement, the Sponsor, Better World, Pubco and Heritage entered into the
Sponsor Earnout Letter with respect to the Sponsor Earnout, the terms of which are described above.
The foregoing description
of the Sponsor Earnout and the Sponsor Earnout Letter is subject to and qualified in its entirety by reference to the full text of the
Sponsor Earnout Letter, a copy of which is filed as Exhibit 10.8 to this Current Report on Form 8-K.