Item 1.01 Entry into a Material Definitive Agreement.
On March 7, 2023, Lionheart III Corp, a Delaware corporation (“Lionheart”), Security Matters Limited, a formerly publicly traded company on the Australian Securities Exchange (“SMX Australia”), SMX (Security Matters) Public Limited Company (f/k/a Empatan Public Limited Company), a public limited company incorporated in Ireland (the “SMX PLC”), and Aryeh Merger Sub, Inc., a Delaware corporation (“Merger Sub”) consummated the previously announced business combination (the “Business Combination”), pursuant to the terms of the Business Combination Agreement (the “BCA”) and the Scheme Implementation Deed (the “SID”), dated July 26, 2022, as amended, by and among Lionheart, SMX Australia, SMX PLC and, in the case of the BCA, Merger Sub. Capitalized terms used but not defined herein shall have the respective meanings set forth in the Business Combination Agreement.
Subject to the terms of the BCA and the SID, all SMX Australia shares were cancelled in return for the issuance of Class A ordinary shares, nominal value of $0.0001, of SMX PLC (the “Ordinary Shares”), to all SMX Australia shareholders, and SMX PLC received one share in SMX Australia (resulting in SMX Australia becoming a wholly owned subsidiary of SMX PLC). Additionally, Merger Sub merged with and into Lionheart, with Lionheart surviving as a wholly owned subsidiary of SMX PLC, with each non-redeemed share of Lionheart Class A common stock, par value $0.0001 per share (“Class A Common Stock”), and each share of Lionheart Class B common stock being exchanged for one Ordinary Shares. Each Lionheart warrant to purchase Class A Common Stock was automatically adjusted to become exercisable in respect of Ordinary Shares instead of Class A Common Stock.
Registration Rights Agreement
In connection with closing of the Business Combination, on February 23, 2023, Lionheart Equities, LLC (the “Sponsor”), SMX PLC and the Original Holders listed on Schedule A therein, entered into an Amended and Restated Registration Rights Agreement pursuant to which, the Sponsor and the Original Holders have customary demand and piggyback registration rights in connection with the Ordinary Shares issued to them in exchange for each share of Class A Common Stock and Lionheart Class B common stock.
The foregoing description of the Amended and Restated Registration Rights is qualified in its entirety by reference to the full text of the Amended and Restated Registration Rights Agreement, the form of which is included as Exhibit 10.1 to this Current Report on Form 8-K, and incorporated herein by reference.
Lock-Up Agreement
In connection with closing of the Business Combination, on February 23, 2023, SMX PLC and certain shareholders entered into a Lock-up Agreement pursuant to which, among other things, such shareholders agreed not to offer, sell, contract to sell or otherwise dispose of, directly or indirectly, any Ordinary Shares beneficially owned by such shareholders immediately following the closing of the Business Combination (the “Lock-Up”), subject to certain exceptions set forth in each Lock-up Agreement, including the ability of the shareholders to pledge any such Ordinary Shares in connection with securing financing or otherwise. Certain directors and officers of SMX Australia and Lionheart entered into Lock-up Agreements that terminate upon the earlier to occur of (a) fourteen months after the closing of the Business Combination and (b) if, subsequent to the closing of the Business Combination, SMX PLC consummates a liquidation, merger, stock exchange or other similar transaction which results in all of SMX PLC’s shareholders having the right to exchange their Ordinary Shares for cash, securities or other property, provided that 10% of the Ordinary Shares will not be subject to the Lock-Up and 25% of the Ordinary Shares that are subject to the Lock-Up will no longer be subject to the Lock-Up if the Ordinary Shares trade at or above $12.50 per share for twenty (20) Nasdaq Stock Market trading days in any 30-day period commencing after the closing of the Business Combination. Sponsor and its members (other than those members that entered into the fourteen month Lock-up Agreement referenced above) entered into Lock-up Agreements that terminate upon the earlier to occur of (a) six months after the closing of the Business Combination and (b) if, subsequent to the closing of the Business Combination, SMX PLC consummates a liquidation, merger, stock exchange or other similar transaction which results in all of SMX PLC’s shareholders having the right to exchange their Ordinary Shares for cash, securities or other property provided that 10% of the Ordinary Shares will not be subject to the Lock-Up and 25% of the Ordinary Shares will no longer be subject to the Lock-Up if the Ordinary Shares trade at or above $12.50 per share for twenty (20) Nasdaq Stock Market trading days in any 30-day period commencing after the closing of the Business Combination.