On July 6, 2022, the Company received a non-binding proposal from FF Top for a transaction that would involve FF Top, along with other parties, providing the Company with financing in the form of senior secured convertible notes. The terms of the proposal required (but no longer expressly require) certain corporate governance changes, including Mr. Krolicki’s resignation from the Board. From July 6 through August 8, 2022, the Company and FF Top have been engaged in negotiations with respect to FF Top’s proposal. Also on July 6, 2022, the Board determined to suspend any preparation for the Special Meeting, pending financing discussions with FF Top and other potential investors.
On July 7, 2022, in response to FF Top's July 5 letter, the Company delivered a letter to FF Top, reiterating the legal positions set forth in the Company’s June 24 and July 1 letters, expressing disagreement with FF Top's interpretation of the Shareholder Agreement in FF Top's June 27 and July 5 letters, and stating that the Board is evaluating both the financing proposal in the July 6 letter and the possibility of holding the Special Meeting.
On July 8, 2022, the Company received an email from FF Top's legal counsel reiterating FF Top's desire for Mr. Krolicki to resign from the Board or for the Company to promptly call the Special Meeting to remove Mr. Krolicki, and making a number of demands with respect to the Special Meeting.
Also on July 8, 2022, representatives of the Company contacted representatives of FF Top to discuss whether FF Top would consider identifying an alternative candidate to Ms. Han as a replacement for Mr. Krolicki in the event Mr. Krolicki were to resign or be removed from the Board, given the concerns about Ms. Han's qualifications to serve as a director.
On July 19, 2022, the Company received an email from FF Global, threatening to file a lawsuit against the Company unless a special meeting of stockholders regarding the removal of Mr. Krolicki was announced immediately.
On July 25, 2022, FF Top sent the Company an email stating that FF Top would “initiate legal proceedings” on July 26, 2022 unless Mr. Krolicki resigned from the Board or the Company publicly announced a special meeting of stockholders to determine whether to remove Mr. Krolicki, along with other demands. From July 25, 2022 to August 8, 2022, representatives of FF Top and the Company engaged in various negotiations regarding the threatened litigation and the proposed financing; these negotiations included the execution, on July 31, 2022, of a financing term sheet, which is non-binding except for limited exclusivity and expense reimbursement provisions.
On July 26, 2022, FF Top again threatened to sue regarding the removal of Mr. Krolicki, but extended the deadline in its July 25 letter to 1:00 p.m. Eastern Time on July 29, 2022. Also on July 26, 2022, the Company received an email from FF Top, identifying Adam He as a potential alternative to Ms. Han to replace Mr. Krolicki.
On July 31, 2022, the Board approved resuming preparation for the Special Meeting.
Under the Shareholder Agreement, FF Top is entitled to nominate a number of directors based on its voting power with respect to the outstanding FF Common Stock, initially entitling FF Top to nominate four out of nine directors to the Board. Based on FF Top having voting power over [•]% of our issued and outstanding Common Stock as of [•], 2022, FF Top currently has the right to nominate four out of nine directors on the Board. Susan G. Swenson, Edwin Goh, Brian K. Krolicki and Lee Liu are the four FF Top director designees under the Shareholder Agreement. FF Top also has the right for its nominees to serve on each committee of the Board proportionate to the number of nominees it has on the Board, subject to compliance with applicable law and stock exchange listing rules. In the event of a removal or resignation of any FF Top designee to the Board, FF Top has the exclusive right under the Shareholder Agreement to nominate a replacement designee to fill the vacancy created by any such removal or resignation, subject to the prior and reasonable approval of the Nominating and Corporate Governance Committee as described in more detail in “Proposal” below.
Under the Shareholder Agreement, the Company and FF Top also agreed (a) to take all reasonably necessary action (subject to applicable Board fiduciary duties and subject to the approval of the Nominating and Corporate Governance Committee) to cause each of the current Board members (including Mr. Krolicki) to be nominated for another one-year term at the 2022 Annual Meeting and (b) that Susan G. Swenson, Edwin Goh, Brian K. Krolicki and Lee Liu are deemed the FF Top designees for both the 2022 Annual Meeting and 2023 Annual Meeting of Stockholders (the “2023 Annual Meeting”) absent their earlier resignation (which agreements would still exist under the Shareholder Agreement if the Removal Proposal is approved and the Company does not obtain a waiver from