DEF 14A of USA Rare Earth, Inc.
Filed Oct 7, 20240001213900-24-085973
Q. What interests do the Sponsor and the Company’s directors and officers have in the approval of the proposals presented in this proxy statement?
Q. What interests do the Sponsor and the Company’s directors and officers have in the approval of the proposals presented in this proxy statement? A. The Sponsor and the Company’s directors and officers have interests in the proposals presented in this proxy statement that may be different from, or in addition to, your interests as a shareholder. These interests include, among others, ownership of Founder Shares and Private Placement Warrants. See the section entitled “Extraordinary General Meeting of Shareholders — Interests of the Sponsor and the Company’s Officers and Directors” in this proxy statement.
Executive Officer and Director Compensation
Executive Officer and Director Compensation None of our executive officers or directors have received any cash compensation for services rendered to us. However, pursuant the Services and Indemnification Agreement, we will pay an aggregate of $18,882.02 (as amended) per month to TVC, an affiliate of one of our directors, Nicholas Shekerdemian, for the services of Peter Ondishin, Chief Financial Officer, and Kevin Shannon, Chief of Staff. Pursuant to the initial terms of the Services and Indemnification Agreement, signed on May 24, 2023, we agreed to pay TVC an aggregate $27,083.33. This was later amended on March 28, 2024, when the parties agreed to reduce the monthly fee to $17,708.33 for the period from January 1, 2024 to January 31, 2024, and to $24,091.00 for the period after February 1, 2024. Recently, on August 13, 2024, we amended the terms of the agreement again, effective as of April 1, 2024, to reduce the monthly fee from $24,091.00 to an aggregate of $18,882.02. In addition, our Sponsor, executive officers and directors, or any of their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Further, we may pay consulting, success or finder fees to our independent directors, our advisors, or their respective affiliates in connection with the consummation of our initial business combination. We have agreed, pursuant to the Services and Indemnification Agreement with our Sponsor, TVC, Peter Ondishin and Kevin Shannon relating to the monthly payment for the services of Peter Ondishin and Kevin Shannon described above, that we will indemnify our Sponsor and TVC from any claims arising out of or relating to the IPO or the Company’s operations or conduct of the Company’s business or any claim against our Sponsor and/or TVC alleging any expressed or implied management or endorsement by our Sponsor and/or TVC of any of the Company’s activities or any express or implied association between our Sponsor and/or TVC, on the one hand, and the Company or any of its other affiliates, on the other hand, which agreement provides that the indemnified parties cannot access the funds held in our Trust Account. The Services and Indemnification Agreement also provides that Peter Ondishin and Kevin Shannon cannot access the funds held in our Trust Account. Pursuant to a Securities Purchase Agreement, dated as of August 21, 2024, by and among the Company, Michael Blitzer (our Chairman and Chief Executive Officer) and USARE, the Company has agreed to issue at the closing of the Proposed Business Combination, $1,250,000 in stated value of the post-combination company’s 12% Series A Cumulative Convertible Preferred Stock, par value $0.0001 per share to Mr. Blitzer in exchange for his forgiveness of 50% of the then-outstanding balance of the convertible promissory note issued to him by us on August 13, 2024. In addition, pursuant to a Securities Purchase Agreement, dated as of August 21, 2024, by and between USARE and Mr. Blitzer, USARE issued 122,549 USARE Class A-2 convertible preferred units and a warrant to purchase up to 31,250 USARE Class A units in exchange for Mr. Blitzer’s promise to forgive, at the closing of the Proposed Business Combination, 50% of the then-outstanding balance of the convertible promissory note issued to him by us on August 13, 2024 We may also engage our Sponsor or an affiliate of our Sponsor as an advisor or otherwise in connection with our initial business combination and certain other transactions and pay such person or entity a salary or fee in an amount that constitutes a market standard for comparable transactions. Our audit committee reviews on a quarterly basis all payments that were made to our Sponsor, executive officers or directors, or our or their affiliates. Any such payments prior to an initial business combination will be made from funds held outside the Trust Account. Other than quarterly audit committee review of such reimbursements, we do not expect to have any additional controls in place governing our reimbursement payments to our directors and executive officers for their out-of-pocket expenses incurred in connection with our activities on our behalf in connection with identifying and consummating an initial business combination. Other than these payments and reimbursements, no compensation of any kind, including finder’s and consulting fees, will be paid by the Company to our Sponsor, executive officers and directors, or any of their respective affiliates, prior to completion of our initial business combination. After the completion of our initial business combination, directors or members of our management team who remain with the combined company may be paid consulting or management fees from the combined company. All of these fees will be fully disclosed to shareholders, to the extent then known, in the proxy solicitation materials or tender offer materials furnished to our shareholders in connection with a proposed initial business combination. We have not established any limit on the amount of such fees that may be paid by the combined company to our directors or members of management. It is unlikely the amount of such compensation will be known at the time of the proposed initial business combination, because the directors of the post-combination business will be responsible for determining executive officer and director compensation. Any compensation to be paid to our executive officers will be determined, or recommended to the board of directors for determination, either by a compensation committee constituted solely by independent directors or by a majority of the independent directors on our board of directors. We do not intend to take any action to ensure that members of our management team maintain their positions with the combined company after the consummation of our initial business combination, although it is possible that some or all of our officers and directors may negotiate employment or consulting arrangements to remain with the combined company after our initial business combination. The existence or terms of any such employment or consulting arrangements to retain their positions with us may influence our management’s motivation in identifying or selecting a target business but we do not believe that the ability of our management to remain with us after the consummation of our initial business combination will be a determining factor in our decision to proceed with any potential business combination. We are not party to any agreements with our officers and directors that provide for benefits upon termination of employment.