Exhibit 10.4

 

October 13, 2020

 

5:01 Acquisition Corp.
501 Second Street, Suite 350
San Francisco, CA 94107

 

Re: Initial Public Offering

 

Ladies and Gentlemen:

 

This letter (this “Letter Agreement”) is being delivered to you in accordance
with the Underwriting Agreement (the “Underwriting Agreement”) entered into by
and among 5:01 Acquisition Corp., a Delaware corporation (the “Company”), and
BofA Securities, Inc., as the underwriter (the “Underwriter”), relating to an
underwritten initial public offering (the “Public Offering”), of 8,000,000
shares, or up to 9,200,000 shares if the Underwriter’s over-allotment option is
exercised in full (collectively, the “Offering Shares”), of the Company’s Class
A common stock, par value $0.0001 per share (the “Class A Common Stock”). The
Offering Shares will be sold in the Public Offering pursuant to a registration
statement on Form S-1 and a prospectus (the “Prospectus”) filed by the Company
with the U.S. Securities and Exchange Commission (the “Commission”), and the
Company has applied to have the Offering Shares listed on The Nasdaq Capital
Market.

 

In order to induce the Company and the Underwriter to enter into the
Underwriting Agreement and to proceed with the Public Offering and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each of 5:01 Acquisition LLC (the “Sponsor”) and the undersigned
individuals, each of whom is a member of the Company’s board of directors (the
“Board”) and/or management team (each of the undersigned individuals, an
“Insider” and collectively, the “Insiders”), hereby agrees with the Company as
follows:

 

1.As used herein, (i) “Business Combination” shall mean a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or similar business
combination, involving the Company and one or more businesses; (ii) “Charter”
shall mean the Company’s amended and restated certificate of incorporation (as
it may be amended from time to time); (iii) “Common Stock” shall mean the Class
A common stock and Class B common stock of the Company; (iv) “Founder Shares”
shall mean the 2,300,000 shares of Class B common stock issued and outstanding
(up to 300,000 shares of which are subject to forfeiture if the over-allotment
option is not exercised by the Underwriter); (v) “Initial Stockholders” shall
mean the Sponsor and any Insider that holds Founder Shares; (vi) “Private
Placement Shares” shall mean the 360,000 shares of Class A Common Stock (or up
to 384,000 shares of Class A Common Stock if the over-allotment option is
exercised in full by the Underwriter) that the Sponsor has agreed to purchase at
per share purchase price of $10.00 for an aggregate purchase price of $3,600,000
(or $3,840,000 if the over-allotment option is exercised in full by the
Underwriter) in a private placement that shall occur simultaneously with the
consummation of the Public Offering and any exercise of the over-allotment
option by the Underwriter; (vii) “Public Stockholders” shall mean the holders of
Offering Shares issued in the Public Offering, other than the Sponsor or any
Insiders; (viii) “Trust Account” shall mean the trust fund into which a portion
of the net proceeds of the Public Offering and the sale of the Private Placement
Shares shall be deposited; and (ix) “Transfer” shall mean the (a) sale of, offer
to sell, contract or agreement to sell, hypothecate, pledge, grant of any option
to purchase or otherwise dispose of or agreement to dispose of, directly or
indirectly, or establishment or increase of a put equivalent position or
liquidation with respect to or decrease of a call equivalent position within the
meaning of Section 16 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and the rules and regulations of the Commission promulgated
thereunder with respect to, any security, (b) entry into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of any security, whether any such transaction is to be
settled by delivery of such securities, in cash or otherwise, or (c) public
announcement of any intention to effect any transaction specified in clause (a)
or (b).

 

1

 

 

2.Representations and warranties; Business combination vote.

 

a.The Sponsor and each Insider, with respect to itself, herself or himself,
represents and warrants to the Company that it, she or he has the full right and
power, without violating any agreement to which it, she or he is bound
(including, without limitation, any non-competition or non-solicitation
agreement with any employer or former employer), to enter into this Letter
Agreement, and, as applicable, to serve as an officer of the Company and/or a
director on the Board, as applicable, and each Insider hereby consents to being
named in the Prospectus, road show and any other materials as an officer and/or
director of the Company, as applicable.

 

b.Each Insider represents and warrants, with respect to herself or himself, that
such Insider’s biographical information furnished to the Company (including any
such information included in the Prospectus) is true and accurate in all
material respects and does not omit any material information with respect to
such Insider’s background. The Insider’s questionnaire furnished to the Company
and the Underwriter is true and accurate in all material respects. Each Insider
represents and warrants, with respect to herself or himself, that such Insider
is not subject to or a respondent in any legal action for, any injunction,
cease-and-desist order or order or stipulation to desist or refrain from any act
or practice relating to the offering of securities in any jurisdiction; such
Insider has never been convicted of, or pleaded guilty to, any crime (i)
involving fraud, (ii) relating to any financial transaction or handling of funds
of another person, or (iii) pertaining to any dealings in any securities and
such Insider is not currently a defendant in any such criminal proceeding; and
such Insider has never been suspended or expelled from membership in any
securities or commodities exchange or association or had a securities or
commodities license or registration denied, suspended or revoked.

 

c.It is acknowledged and agreed that the Company shall not enter into a
definitive agreement regarding a proposed Business Combination without the prior
consent of the Sponsor. The Sponsor and each Insider, with respect to itself or
herself or himself, agrees that if the Company seeks stockholder approval of a
proposed initial Business Combination, then in connection with such proposed
initial Business Combination, it, she or he, as applicable, shall vote all
Founder Shares, Private Placement Shares and any Offering Shares held by it, her
or him, as applicable, in favor of such proposed initial Business Combination
(including any proposals recommended by the Board in connection with such
Business Combination) and not redeem any Offering Shares held by it, her or him,
as applicable, in connection with such shareholder approval. If the Company
seeks to consummate a proposed Business Combination by engaging in a tender
offer, the Sponsor and each Insider agrees that it, he or she will not sell or
tender any Founder Shares, Private Placement Shares and Offering Shares owned by
it, him or her in connection therewith.

 

2

 

 

3.The Sponsor and each Insider hereby agrees that in the event that the Company
fails to consummate an initial Business Combination within the time period set
forth in the Charter, the Sponsor and each Insider shall take all reasonable
steps to cause the Company to (i) cease all operations except for the purpose of
winding up, (ii) as promptly as reasonably possible but not more than ten
business days thereafter (subject to the Company’s Charter), redeem 100% of the
Offering Shares (including any Offering Shares sold in the Public Offering or
any Offering Shares that the Sponsor, Insiders or their affiliates purchased in
the Public Offering or later acquired in the open market or in private
transactions) at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the Trust Account, including interest earned on the
funds held in the Trust Account and not previously released to the Company to
pay income taxes (less up to $100,000 of interest to pay dissolution expenses),
divided by the number of then outstanding Offering Shares, which redemption will
completely extinguish all Public Stockholders’ rights as stockholders (including
the right to receive further liquidating distributions, if any), and (iii) as
promptly as reasonably possible following such redemption, subject to the
approval of the Company’s remaining stockholders and the Board, liquidate and
dissolve, subject in the case of clauses (ii) and (iii) of this paragraph 3, to
the Company’s obligations under Delaware law to provide for claims of creditors
and other requirements of applicable law. The Sponsor and each Insider agrees to
not propose any amendment to the Charter (A) that would modify the substance or
timing of the Company’s obligation to redeem 100% of the Offering Shares if the
Company does not complete an initial Business Combination within the required
time period set forth in the Charter or (B) with respect to any other provision
relating to stockholders’ rights or pre-initial Business Combination activity,
unless, in each case, the Company provides its Public Stockholders with the
opportunity to redeem their Offering Shares in conjunction with any such
amendment at a per-share price, payable in cash, equal to the aggregate amount
then on deposit in the Trust Account, including interest earned on the funds
held in the Trust Account and not previously released to the Company to pay
income taxes, divided by the number of then outstanding Offering Shares.

 

The Sponsor and each Insider acknowledges that it, he or she has no right,
title, interest or claim of any kind in or to any monies held in the Trust
Account or any other asset of the Company as a result of any liquidation of the
Company with respect to the Founder Shares or the Private Placement Shares held
by it, him or her. The Sponsor and each Insider hereby further waives, with
respect to any shares of Common Stock held by it, him or her, if any, any
redemption rights it, he or she may have in connection with (A) the consummation
of a Business Combination, including, without limitation, any such rights
available in the context of a stockholder vote to approve such Business
Combination, or (B) a stockholder vote to approve an amendment to the Charter
(i) that would modify the substance or timing of the Company’s obligation to
redeem 100% of the Offering Shares if the Company has not consummated a Business
Combination within the time period set forth in the Charter or (ii) with respect
to any other provision relating to stockholders’ rights or pre-initial Business
Combination activity or in the context of a tender offer made by the Company to
purchase Offering Shares (although the Sponsor, the Insiders and their
respective affiliates shall be entitled to redemption and liquidation rights
with respect to any Offering Shares it or they hold if the Company fails to
consummate a Business Combination within the time period set forth in the
Charter).

 

4.Lock-up provisions.

 

a.Subject to the provisions of paragraph 4(c), hereof, during the period
commencing on the effective date of the Underwriting Agreement and ending 180
days after such date, the Sponsor and each Insider shall not, without the prior
written consent of the Underwriter, Transfer any shares of Common Stock
(including, but not limited to, Founder Shares and the Private Placement Shares)
or any securities convertible into, or exchangeable for, or exercisable, or
repayable with, shares of Common Stock owned by it, him or her, whether any such
transaction is to be settled by delivery of such securities, in cash or
otherwise, or publicly announce any intention to effect any such Transfer.

 

3

 

 

b.Subject to the provisions of paragraph 4(c), (i) the Sponsor and each Insider
agrees that it, he or she shall not Transfer any Founder Shares (or any shares
of Class A Common Stock issuable upon conversion thereof) or Private Placement
Shares until the earlier of (A) one year after the completion of the Company’s
initial Business Combination and (B) the date subsequent to the initial Business
Combination on which (x) the closing price of the Class A Common Stock equals or
exceeds $12.00 per share (as adjusted for stock splits, stock dividends,
reorganizations, recapitalizations and other similar transactions) for any 20
trading days within any 30-trading day period commencing at least 150 days after
the Company’s initial Business Combination or (y) the Company completes a
liquidation, merger, capital stock exchange, reorganization or other similar
transaction that results in all of the Company’s stockholders having the right
to exchange their shares of Class A Common Stock for cash, securities or other
property (such period, the “Lock-up Period”).

 

c.Notwithstanding the provisions of paragraphs 4(a) and 4(b) hereof, the
following Transfers of the Founder Shares, Private Placement Shares and any
other securities are permitted by the Sponsor and each Insider: (i) to any
persons (including their affiliates and stockholders) who purchase Private
Placement Shares, to such holder’s affiliates, or to the officers, directors,
stockholders, employees and members of the Sponsor and its affiliates, (ii)
amongst the Sponsor, the Insiders or to the Company’s officers, directors and
employees, (iii) if a holder is an entity, as a distribution to its partners,
stockholders, or members upon its liquidation, (iv) by bona fide gift to a
member of the holder’s immediate family or to a trust, the beneficiary of which
is a holder or a member of a holder’s immediate family, for estate planning
purposes, (v) by virtue of the laws of descent and distribution upon death, (vi)
pursuant to a qualified domestic relations order, (vii) in connection with a
pledge to secure obligations of the holder incurred in connection with the
holder’s purchase of the Company’s securities, (viii) in a private sale at a
price per share or other security no greater than the price per share or other
security at which the applicable shares or securities were originally purchased
from the Company, (ix) to the Company for the cancellation of up to 300,000
Founder Shares in accordance with paragraph 6 of this Letter Agreement, (x) to
the Company for no value for cancellation in connection with the consummation of
its initial Business Combination, (xi) in the event of the Company’s liquidation
prior to the completion of its initial Business Combination; or (xii) in the
event of completion of a liquidation, merger, share exchange or other similar
transaction which results in all of the Company’s Public Stockholders having the
right to exchange their Offering Shares for cash, securities or other property
subsequent to the completion of an initial Business Combination provided, that,
except for clauses (ix), (x), (xi) and (xii) or with the Company’s prior written
consent, in each case the applicable transferee shall agree in writing to be
subject to the terms of this Letter Agreement, including the provisions of this
paragraph 4.

 

d.Notwithstanding anything herein to the contrary, nothing in this paragraph 4
shall restrict the Sponsor or any Insider or any transferee subject to the
provisions of this paragraph 4 from entering into a 10b5-1 trading plan during
the lock-up periods described in this paragraph 4, provided that such 10b5-1
trading plan does not permit any direct or indirect sale of any securities of
the Company during the applicable lock-up periods under paragraphs 4(a) and 4(b)
hereof.

 

4

 

 

e.Each of the Insiders and the Sponsor acknowledges and agrees that, prior to
the effective date of any release or waiver, of the restrictions set forth in
this paragraph 4, the Company shall announce the impending release or waiver by
press release through a major news service at least two business days before the
effective date of the release or waiver. Any release or waiver granted shall
only be effective two business days after the publication date of such press
release. The provisions of this paragraph will not apply if the release or
waiver is effected solely to permit a transfer not for consideration and the
transferee has agreed in writing to be bound by the same terms described in this
Letter Agreement to the extent and for the duration that such terms remain in
effect at the time of the transfer.

 

f.Notwithstanding the foregoing, nothing in Sections 4(a) or (b) will prohibit
(i) the issuance and sale of the Private Placement Shares, (ii) the issuance and
sale of additional shares of Class A Common Stock to cover the Underwriter’s
option to purchase additional shares of Class A Common Stock pursuant to the
Underwriting Agreement (if any), (iii) the registration with the Commission by
the Company of the Founder Shares or Private Placement Shares pursuant to the
terms of that certain Registration and Stockholder Rights Agreement to be
entered into on or around the date of this Letter Agreement and (iv) the
issuance of securities in connection with a Business Combination.

 

5.In the event of the liquidation of the Trust Account upon the failure of the
Company to consummate its initial Business Combination within the time period
set forth in the Charter, the Sponsor (the “Indemnitor”) agrees to indemnify and
hold harmless the Company against any and all loss, liability, claim, damage and
expense whatsoever (including, but not limited to, any and all legal or other
expenses reasonably incurred in investigating, preparing or defending against
any litigation, whether pending or threatened) to which the Company may become
subject as a result of any claim by (i) any third party for services rendered or
products sold to the Company or (ii) any prospective target business with which
the Company has entered into a written letter of intent, confidentiality or
other similar agreement or Business Combination agreement (a “Target”);
provided, however, that such indemnification of the Company by the Indemnitor
(x) shall apply only to the extent necessary to ensure that such claims by a
third party or a Target do not reduce the amount of funds in the Trust Account
to below the lesser of (i) $10.00 per Offering Share and (ii) the actual amount
per Offering Share held in the Trust Account as of the date of the liquidation
of the Trust Account, if less than $10.00 per Offering Share is then held in the
Trust Account due to reductions in the value of the trust assets, less taxes
payable, (y) shall not apply to any claims by a third party or a Target which
executed a waiver of any and all rights to the monies held in the Trust Account
(whether or not such waiver is enforceable) and (z) shall not apply to any
claims under the Company’s indemnity of the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
The Indemnitor shall have the right to defend against any such claim with
counsel of its choice reasonably satisfactory to the Company if, within 15 days
following written receipt of notice of the claim to the Indemnitor, the
Indemnitor notifies the Company in writing that it shall undertake such defense.

 

6.To the extent that the Underwriter does not exercise its over-allotment option
to purchase up to an additional 1,200,000 Offering Shares within 45 days from
the date of the Prospectus (and as further described in the Prospectus), the
Sponsor agrees to forfeit, at no cost, a number of Founder Shares in the
aggregate equal to 300,000 multiplied by a fraction, (i) the numerator of which
is 1,200,000 minus the number of Offering Shares purchased by the Underwriter
upon the exercise of its over-allotment option, and (ii) the denominator of
which is 1,200,000. The forfeiture will be adjusted to the extent that the
over-allotment option is not exercised in full by the Underwriter so that the
Founder Shares will represent an aggregate of 20.0% of the Company’s issued and
outstanding shares Common Stock, on an as-converted basis, after the Public
Offering (not including the Private Placement Shares). The Company further
agrees that to the extent that the size of the Public Offering is increased or
decreased, the Company will effect a share repurchase or share capitalization,
as applicable, with respect to the Founder Shares immediately prior to the
consummation of the Public Offering in such amount as to maintain the ownership
of the initial stockholders of the Company as an aggregate of 20.0% of the
Company’s issued and outstanding shares Common Stock, on an as-converted basis,
after the Public Offering (not including the Private Placement Shares or
Offering Shares purchased by such stockholders in the Public Offering).

 

5

 

 

7.The Sponsor and each Insider hereby agrees and acknowledges that: (i) the
Underwriter and the Company would be irreparably injured in the event of a
breach by such Sponsor or an Insider of its, his or her obligations under
paragraphs 2(c), 3, 4, 5 and 6, as applicable, of this Letter Agreement (ii)
monetary damages may not be an adequate remedy for such breach and (iii) the
non-breaching party shall be entitled to injunctive relief, in addition to any
other remedy that such party may have in law or in equity, in the event of such
breach.

 

8.Except as disclosed in the Prospectus, neither the Sponsor nor any officer,
nor any affiliate of the Sponsor or any officer, nor any director of the
Company, shall receive from the Company any finder’s fee, reimbursement,
consulting fee, non-cash payments, monies in respect of any repayment of a loan
or other compensation prior to, or in connection with any services rendered in
order to effectuate, the consummation of the Company’s initial Business
Combination (regardless of the type of transaction that it is), other than the
following, none of which will be made from the proceeds held in the Trust
Account prior to the completion of the initial Business Combination: repayment
of a loan and advances up to an aggregate of $300,000 made to the Company by the
Sponsor; reimbursement for any reasonable out-of-pocket expenses related to
identifying, investigating, negotiating and completing an initial Business
Combination, and repayment of loans, if any, and on such terms as to be
determined by the Company from time to time, made by the Sponsor or an affiliate
of the Sponsor or any of the Company’s officers or directors to finance
transaction costs in connection with an intended initial Business Combination,
provided, that, if the Company does not consummate an initial Business
Combination, a portion of the working capital held outside the Trust Account may
be used by the Company to repay such loaned amounts so long as no proceeds from
the Trust Account are used for such repayment.

 

9.The Company will maintain an insurance policy or policies providing directors’
and officers’ liability insurance, and each member of the Board shall be covered
by such policy or policies, in accordance with its or their terms, to the
maximum extent of the coverage available for any of the Company’s directors or
officers.

 

10.This Letter Agreement constitutes the entire agreement and understanding of
the parties hereto in respect of the subject matter hereof and supersedes all
prior understandings, agreements, or representations by or among the parties
hereto, written or oral, to the extent they relate in any way to the subject
matter hereof or the transactions contemplated hereby. This Letter Agreement may
not be changed, amended, modified or waived (other than to correct a
typographical error) as to any particular provision, except by a written
instrument executed by all parties hereto.

 

11.Other than as provided in paragraph 4 of this Letter Agreement, no party
hereto may assign either this Letter Agreement or any of its rights, interests,
or obligations hereunder without the prior written consent of the other parties.
Any purported assignment in violation of this paragraph shall be void and
ineffectual and shall not operate to transfer or assign any interest or title to
the purported assignee. This Letter Agreement shall be binding on the Sponsor
and each Insider and their respective successors, heirs and assigns and
permitted transferees.

 

6

 

 

12.Nothing in this Letter Agreement shall be construed to confer upon, or give
to, any person or corporation other than the parties hereto any right, remedy or
claim under or by reason of this Letter Agreement or of any covenant, condition,
stipulation, promise or agreement hereof. All covenants, conditions,
stipulations, promises and agreements contained in this Letter Agreement shall
be for the sole and exclusive benefit of the parties hereto and their
successors, heirs, personal representatives and assigns and permitted
transferees.

 

13.This Letter Agreement may be executed in one or more counterparts, all of
which when taken together shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission or any other form of electronic delivery, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
signature page were an original thereof. Counterparts may be delivered via
facsimile, electronic mail (including any electronic signature covered by the
U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act, the
Electronic Signatures and Records Act or other applicable law, e.g.,
www.docusign.com) or other transmission method and any counterpart so delivered
shall be deemed to have been duly and validly delivered and be valid and
effective for all purposes.

 

14.This Letter Agreement shall be deemed severable, and the invalidity or
unenforceability of any term or provision hereof shall not affect the validity
or enforceability of this Letter Agreement or of any other term or provision
hereof. Furthermore, in lieu of any such invalid or unenforceable term or
provision, the parties hereto intend that there shall be added as a part of this
Letter Agreement a provision as similar in terms to such invalid or
unenforceable provision as may be possible and be valid and enforceable.

 

15.This Letter Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York without giving effect to
conflicts of law principles that would result in the application of the laws of
another jurisdiction. The parties hereto (i) all agree that any action,
proceeding, claim or dispute arising out of, or relating in any way to, this
Letter Agreement shall be brought and enforced in the courts of New York City or
in the State of New York, and irrevocably submit to such jurisdiction and venue,
which jurisdiction and venue shall be exclusive and (ii) waive any objection to
such exclusive jurisdiction and venue or that such courts represent an
inconvenient forum.

 

16.Any notice, consent or request to be given in connection with any of the
terms or provisions of this Letter Agreement shall be in writing and shall be
sent by express mail or similar private courier service, by certified mail
(return receipt requested), by hand delivery or facsimile or electronic
transmission.

 

17.This Letter Agreement shall terminate on the earlier of (i) the expiration of
the Lock-up Period or (ii) the liquidation of the Company; provided, however,
that this Letter Agreement shall earlier terminate in the event that the Public
Offering is not consummated and closed by December 31, 2020; provided further
that paragraph 5 of this Letter Agreement shall survive any such termination.

 

[Signature Page Follows]

 

7

 

 

  Sincerely,       5:01 ACQUISITION LLC       By: /s/ Andrew J. Schwab     Name:
Andrew J. Schwab     Title: Manager       /s/ Andrew J. Schwab   Andrew Schwab  
    /s/ Kush Parmar   Kush Parmar       /s/ Galya Blachman   Galya Blachman    
  /s/ Rebecca Lucia   Rebecca Lucia       /s/ Jason Ruth   Jason Ruth       /s/
Daniella Beckman   Daniella Beckman       /s/ Martin Mackay   Martin Mackay    
  /s/ Matthew Patterson   Matthew Patterson

 

 

 

 

Acknowledged and Agreed:       5:01 ACQUISITION CORP.       By: /s/ Andrew J.
Schwab     Name: Andrew J. Schwab     Title: Co-Chief Executive Officer