| Item 1.01 |
Entry Into A Material Definitive Agreement. |
Business Combination Agreement
On May 31, 2023, Pegasus Digital Mobility Acquisition
Corp., a Cayman Islands exempted company ("Pegasus"), 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 Pegasus, Gebr.
SCHMID GmbH, a German limited liability company ("Schmid"), Pegasus Topco B.V., a Dutch private limited liability company
and wholly-owned subsidiary of Pegasus ("TopCo") and Pegasus MergerSub Corp., a Cayman Islands exempted company and wholly-owned
subsidiary of TopCo ("Merger Sub").
The Business Combination Agreement and the transactions
contemplated thereby were approved by the boards of directors of each of Pegasus, TopCo and Merger Sub as well as by Anette Schmid and
Christian Schmid, the shareholders of Schmid (each a "Schmid Shareholder" and, collectively, the "Schmid Shareholders").
Capitalized terms used but not defined herein have the meaning given to them in the respective agreements indicated, copies of which are
attached as Exhibits hereto.
The Transactions
The Business Combination Agreement provides for,
among other things, the following transactions on the closing date, in each case, on the terms and subject to the conditions set forth
therein:
| · | Pegasus will merge with and into Merger Sub pursuant to Part XVI of the Cayman Companies Act (the "Merger"),
with Merger Sub as the surviving company in the Merger (the "Surviving Company"), and each issued and outstanding Eligible
Pegasus Share will be automatically cancelled and extinguished in exchange for the Merger Consideration as defined and detailed in the
Business Combination Agreement (such issuance, together with the Merger, the "Business Combination") and each warrant
issued by Pegasus (the "Pegasus Warrant") that is outstanding immediately prior to the Effective Time will, immediately
following the completion of the Business Combination, represent a warrant on the same contractual terms and conditions as were in effect
with respect to such Pegasus Warrant immediately prior to the Effective Time under the terms of the Warrant Agreement, as applicable,
that is exercisable for an equivalent number of TopCo Ordinary Shares, in each case, on the terms and subject to the conditions set forth
in the Business Combination Agreement; |
| · | Immediately after giving effect to the Business Combination, the Schmid Shareholders shall contribute
their shares of Company Common Stock to Topco in return for such number of TopCo Ordinary Shares equal to the number of shares defined
in the Business Combination (the "Exchange"); |
| · | Immediately after giving effect to the Exchange, a notarial deed will be executed by a Dutch notary in
order to change the legal form of TopCo from a private limited liability company to a public limited liability company and TopCo is currently
intended to be renamed to "Schmid Group N.V.". |
The Merger, the Business Combination, the Exchange,
and the other transactions contemplated by the Business Combination Agreement (together, the "Transactions") are expected
to close in the fourth quarter of 2023, following the receipt of the required approvals by Pegasus's shareholders and the fulfilment of
other closing conditions.
Representations and Warranties; Covenants
The Business Combination Agreement contains representations,
warranties and covenants of each of the parties thereto that are customary for transactions of this type. Each of Pegasus, the Schmid
Shareholders and Schmid have agreed to take all action within their power as may be necessary or appropriate such that, effective immediately
after the closing of the Transactions (the "Closing"), the board of directors of TopCo will be a "one-tier"
board of directors with a total of seven members, of which four members shall be independent board members. The appointment process of
the board of directors as well as the duration of terms are set forth in Clause 9.1 of the Business Combination Agreement.
Conditions to Each Party's Obligations
The obligations of Pegasus, TopCo, Schmid, and
Merger Sub (each a "Party" and, collectively, the "Parties") to consummate the Transactions are subject
to the satisfaction or, if permitted by applicable law, waiver by the Party for whose benefit such condition exists of various conditions,
including: (a) no legal restraint or prohibition preventing the consummation of the Transactions shall be in effect; (b) the Registration
Statement/Proxy Statement shall have become effective; (c) the Transaction Proposals shall have been approved by Pegasus's shareholders;
(d) the Required Company Shareholders' Consent shall continue to be in full force and effect; (e) after giving effect to the Transactions,
TopCo shall have at least U.S.$5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act)
immediately after the Closing; and (f) TopCo shall receive a minimum of U.S.$35,000,000 in cash from the Transaction (from cash held in
trust or PIPE investments).
Additional conditions to the obligations of the
Parties are set forth in Clause 10.2 and Clause 10.3 of the Business Combination Agreement.
Termination
The
Business Combination Agreement may be terminated, and the Transactions may be abandoned, at any time prior to the Closing (a) by mutual
written consent of Schmid, TopCo, and Pegasus; (b) by written notice to Schmid from Pegasus and TopCo, if any of the representations or
warranties set forth in Clause 4 shall not be true and correct or if Schmid has failed to perform any covenant or agreement set forth
in the Agreement such that certain conditions to closing cannot be satisfied and the breach or breaches of such representations or warranties
or the failure to perform such covenant or agreement, as applicable, are not cured or cannot be cured within certain specified time periods;
(c) by written notice to Pegasus and Topco from Schmid, if any of the representations or warranties set forth in Clause 5 or Clause 6
shall not be true and correct or if Pegasus, TopCo, or Merger Sub have failed to perform any covenant or agreement set forth in the Agreement
such that certain conditions to closing cannot be satisfied and the breach or breaches of such representations or warranties or the failure
to perform such covenant or agreement, as applicable, are not cured or cannot be cured within certain specified time periods; (d) by written
notice to the other Parties from Pegasus or Schmid, if the Transactions have not been consummated on or prior to the earlier of (i) the
date by which Pegasus must have consummated a business combination in accordance with the Pegasus Memorandum and Articles of Associations,
as amended or (ii) the Termination Date; (e) by written notice from either Pegasus or Schmid if any Governmental Authority has issued
a Governmental Order or taken any other action enjoining, restraining or otherwise prohibiting the Transactions beyond the Termination
Date and such Governmental Order or other action shall have become final and non-appealable; (f) by written notice from either Pegasus
or TopCo if the Required Pegasus Shareholder Approval is not obtained; (g) by written notice to Pegasus and TopCo from Schmid if (i) the
Pegasus Board does not make the Pegasus Board Recommendation or (ii) makes any other transaction proposal that is not in favor of, or
does not support, the Transactions; (h) by written notice to Pegasus and TopCo from Schmid, if Pegasus and/or TopCo do not take
all such action as may be necessary or reasonably appropriate such that effective as of the Change of Legal Form Anette Schmid, Christian
Schmid, Sir Ralf Speth and another person proposed by Schmid will become members of the TopCo Board of Directors; or (i) by written notice
to Schmid and TopCo from Pegasus, if the Required Company Shareholders' Consent is, at any time, no longer valid or is otherwise revoked
or rescinded at any time.
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 is qualified
in its entirety by reference to the full text of the Agreement. The Agreement contains representations, warranties, and covenants that
the respective parties made to each other as of the date of the Agreement or other specific dates, as specified therein. 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 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 shareholders and
were used for the purpose of allocating risk among the Parties rather than establishing matters as facts. Pegasus does not believe that
these schedules contain information that is material to an investment decision.
Schmid Shareholders' Undertaking
Concurrently with the execution of the Business
Combination Agreement and the fulfilment of the conditions precedent set forth the Business Combination Agreement, each of the Schmid
Shareholders irrevocably and unconditionally undertakes and agrees in each case to the extent legally possible and permissible (a) to
fully support and implement the Transactions in relation to which such Schmid Shareholders' support or participation is required or appropriate,
(b) to omit any actions which could be of detriment to the implementation of the Transactions, (c) to vote or cause to be voted all of
such Schmid Shareholder's Company Shares as defined in the Schmid Shareholders' Undertakings against any resolution that would reasonably
be expected to impede or adversely affect the Transactions in any way, or result in a breach of any undertaking, representation or warranty
of such Shareholder contained in the Schmid Shareholders' Undertakings, and (d) to contribute its respective Company Shares to TopCo in
exchange for TopCo Shares substantially in accordance with the Exchange Table and the exchange ratio as set forth therein, in each case,
on the terms and subject to the conditions set forth in the Schmid Shareholders' Undertakings.
A copy of the Schmid Shareholders' Undertakings
is filed with this Current Report on Form 8-K as Exhibit 10.1 and is incorporated by reference, and the foregoing description is qualified
in its entirety by reference to the full text of the Schmid Shareholders' Undertakings.
Company and Schmid Shareholder Lock-Up Agreement
Concurrently with the execution of the Business
Combination Agreement, each Schmid Shareholder will enter into a Lock-Up Agreement, pursuant to which they will agree not to, without
the prior written consent of the board of directors of TopCo, effect any transaction or enter into any arrangement which is designed to
or which reasonably could be expected to lead to or result in a sale or disposition of any ordinary shares in the share capital of TopCo
held by them immediately after the Closing, nor to publicly announce any intention to effect or enter the same, during the period beginning
on the Closing and ending on the date that is one year after the Closing (the "Lock-Up Period") on the terms and subject
to the conditions set forth in the Lock-Up Agreement.
A copy of the form of the Lock-Up Agreement is
filed with this Current Report on Form 8-K as Exhibit 10.2 and is incorporated herein by reference, and the foregoing description is qualified
in its entirety by reference to the full text of the Lock-Up Agreement.
Sponsor Agreement and Sponsor and Insider Lock-up
Concurrently with the execution of the Business
Combination Agreement, Pegasus, Pegasus Digital Mobility Sponsor LLC (the "Sponsor"), Schmid and certain individuals
party thereto (comprising the officers and directors of Pegasus) (each, an "Insider") have entered into a Sponsor Agreement,
pursuant to which, among other things, the Sponsor and the Insiders agreed to (i) vote in favor of all of the transaction proposals to
be voted upon at the meeting of Pegasus shareholders, including approval of the Agreement and the Transactions, (ii) waive certain adjustments
to the conversion ratio and other anti-dilution protections set forth in the governing documents of Pegasus with respect to the Pegasus
Class B Shares owned by such Sponsor and Insider, (iii) be bound by certain transfer restrictions with respect to their Pegasus shares
prior to the Closing, (iv) to use 2,812,500 of the existing Pegasus Class B Shares (half of the existing Pegasus Class B Shares) to negotiate
non-redemption agreements with certain holders of Pegasus Class A Shares or to enter into PIPE subscription agreements with investors,
and (v) be bound by certain lock-up provisions during the Lock-Up Period with respect to any shares or warrants of TopCo received in exchange
for holdings in Pegasus in connection with the Transactions, in each case on the terms and subject to the conditions set forth therein.
A copy of the form of the Sponsor Agreement is
filed with this Current Report on Form 8-K as Exhibit 10.3 and is incorporated herein by reference, and the foregoing description is qualified
in its entirety by reference to the full text of the Sponsor Agreement.
PIPE Subscription Agreements
Pegasus and TopCo are in ongoing discussions with
investors as part of potential PIPE transactions.
In case PIPE investors are committing to subscribe
shares or instruments convertible into shares, the issuance of subscribed shares or such other instruments by such PIPE investors are
intended to be completed substantially concurrent to the Transactions.
A copy of the form of a PIPE Subscription Agreement
is filed with this Current Report on Form 8-K as Exhibit 10.4 and is incorporated herein by reference, and the foregoing description is
qualified in its entirety by reference to the full text of the PIPE Subscription Agreement.
Registration Rights Agreement
At the Closing, Pegasus, the Sponsor, TopCo, and
Anette Schmid and Christian Schmid will enter into an amended restated registration rights agreement (the "Registration Rights
Agreement"), pursuant to which, among other things, the Sponsor and Anette Schmid and Christian Schmid will be granted certain
customary registration rights with respect to their TopCo Ordinary Shares, in each case, on the terms and subject to the conditions set
forth in the Registration Rights Agreement.
A copy of the form of the Registration Rights
Agreement is filed with this Current Report on Form 8-K as Exhibit 10.5 and is incorporated herein by reference, and the foregoing description
is qualified in its entirety by reference to the full text of the Registration Rights Agreement.
Warrant Assumption Agreement
TopCo, Pegasus and Continental Stock Transfer
& Trust Company, Pegasus' warrant agent, will enter into a warrant assumption agreement (the "Warrant Assumption Agreement")
immediately following the completion of the Transactions, pursuant to which, among other things, Pegasus will assign all of Pegasus's
right, title and interest in and to, and TopCo will assume all of Pegasus's liabilities and obligations under, the Warrant Agreement.
As a result of such assumption, following the execution of the Warrant Assumption Agreement, each Pegasus Warrant will be exchanged for
a warrant to purchase TopCo Ordinary Shares on the terms and conditions of the Warrant Assumption Agreement.
A copy of the form of the Warrant Assumption Agreement
is filed with this Current Report on Form 8-K as Exhibit 10.6 and is incorporated herein by reference, and the foregoing description is
qualified in its entirety by reference to the full text of the Warrant Assumption Agreement.
Warrant Grant Agreement
Concurrently with the execution of the Business
Combination Agreement, the Sponsor and certain Pegasus directors and officers have entered into a warrant grant agreement, transferring
1,775,000 private warrants held by the Sponsor to such Pegasus directors and officers subject to certain conditions.
Information incorporated by reference
The information set forth under Item 2.03 to this
Current Report on Form 8-K is hereby incorporated by reference herein.