Item 1.01 Entry into a Material Definitive Agreement
Convertible Promissory Note
On June 20, 2023, Tempo
Automation Holdings, Inc. (the “Company”) entered into a Convertible Promissory Note (the “Note”) with
Asia-IO Advanced Manufacturing Partners, L.P., a Cayman Islands limited partnership (“Asia-IO”). The Note is a general
unsecured obligation of the Company. Up to $4.0 million in aggregate principal under the Note in an aggregate principal amount up to
$7.0 million may be drawn from time to time prior to the Maturity Date (as defined below) upon one or more written requests from the
Company to Asia-IO. Up to an additional $3.0 million may be drawn from time to time prior to the Maturity Date one or more written
requests from the Company to Asia-IO so long as such additional amounts drawn down are used for purposes of paying amounts
payable by the Company in connection with the Company’s previously announced proposed acquisition of Optimum Design
Associates, Inc. Amounts drawn under the Note will be loaned to the Company at an original issue discount of 3.0%. The unpaid
principal balance of each drawdown under the Note will bear simple interest at the rate of 12.0% per annum from the date of the
applicable drawdown until repayment of such drawdown amount. Interest on any drawdown under the Note will be computed on the basis
of a 365-day year and actual number of days elapsed.
Unless earlier converted
into shares of common stock, par value $0.0001 per share, of the Company (“Common Stock”) in accordance with the terms
of the Note or accelerated as a result of an event of default under the Note, the entire unpaid principal balance, together with all
accrued but unpaid interest on the Note will be due and payable on June 20, 2024 (the “Maturity Date”). All or any
portion of any amount drawn under the Note may be prepaid by the Company at any time and from time to time within 120 days of such
drawdown without the prior written consent of Asia-IO. Concurrently with such prepayment, the Company will be required pay to
Asia-IO an additional amount equal to 4.0% of such prepayment amount. Any payments will be applied first to any accrued and unpaid
interest and then to reduction of the unpaid principal balance of the Note.
The Note includes customary
representations, warranties and covenants with respect to the Company and Asia-IO. The Note also includes customary events of default.
Subject to certain limited exceptions, upon any event of default, the Note will be accelerated and all amounts outstanding under the Note
will become due and payable immediately. Upon the occurrence of any event of default, the Company will be prohibited from making any additional
drawdown requests under the Note except with the prior written consent of Asia-IO and Asia-IO shall not be required to fund any such additional drawdown request.
With respect to any
amount drawn by the Company that the Company has not prepaid within 120 days of such drawdown, Asia-IO may, at any time and from
time to time following such 120-day period upon written notice to the Company, convert all or any portion of such drawdown amount
(including any accrued and unpaid interest thereon, calculated as of the date of such written notice) equal to or greater than
$500,000 (the “Voluntary Conversion Amount”), into a number of shares of Common Stock equal to (x) the Voluntary
Conversion Amount divided by (y) an amount equal to the greater of (i) $0.55 and (ii) the last reported closing sale price (or if no closing sale price is reported, the average of the last bid price and the last ask price per share or, if more than one
in either case, the average of the average last bid prices and the average last ask prices) (the “Last Reported Sale Price”) of a
share of Common Stock as of the date of notice relating to such voluntary conversion.
Subject to the
satisfaction or waiver of certain customary conditions, if (i) (A) the Last Reported Sale Price of a share of Common Stock as of the
trading day immediately preceding the Maturity Date is equal to or greater than $1.10 or (B) the volume-weighted average price of a
share of Common Stock for a period of at least 40 calendar days out of any 60 consecutive calendar day period following the date of
the Note and ending on the Maturity Date is equal to or greater than $1.10 (such date, the “VWAP Trigger Date”), then
the Company may, upon written notice to Asia-IO, convert the entire unpaid principal balance of the Note, together with all accrued
and unpaid interest, if any, thereon (the “Mandatory Conversion Amount”) as of the date of such notice into a number of
shares of Common Stock at a conversion price equal to (x) the Mandatory Conversion Amount as of the date of such notice divided by
(y) the average volume-weighted average price of a share of Common Stock during the 20 trading day period ending on, (z) in the case
of a conversion pursuant to clause (i)(A) above, the trading day immediately prior to the Maturity Date, and (B) in the case of a
conversion pursuant to clause (i)(B) above, the VWAP Trigger Date.
The foregoing description
of the Note does not purport to be complete and is qualified in its entirety by the terms and conditions of the Note, a copy of which
is attached hereto as Exhibit 10.1 and incorporated herein by reference.
Registration Rights Agreement
On June 20, 2023,
contemporaneously with issuance of the Note, the Company and Asia-IO entered into a Registration Rights Agreement (the
“Registration Rights Agreement”) pursuant to which the Company agreed to register for resale, pursuant to Rule 415 in
accordance with the U.S. Securities Act of 1933, as amended, certain shares of Tempo common stock and other equity securities of the Company that are
held by Asia-IO and/or its permitted transferees from time to time (collectively, the “Holders,” including any shares of
Common Stock received upon conversion of any drawdown amount under the Note). On the terms and subject to the conditions set forth
in the Registration Rights Agreement, the Holders will be entitled to certain rights to demand underwritten offerings and piggyback
registration rights.
The foregoing description
of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of
the Registration Rights Agreement, which is filed as Exhibit 10.2 to this Report and is incorporated herein by reference.
First Amended and Restated Loan and Security
Agreement
On June 20, 2023, in connection
with the issuance of the Note, the Company and Tempo Automation, Inc., a Delaware corporation and a wholly owned subsidiary of the Company
(“Legacy Tempo”), entered into that certain Forbearance Agreement and First Amendment to First Amended and Restated Loan and
Security Agreement, dated as of June 20, 2023 (the “LSA Amendment”), by and among the Company, Legacy Tempo, Structural Capital
Investments III, LP (“SCI”), Series Structural DCO II series of Structural Capital DCO, LLC (“DCO”), CEOF
Holdings LP (“CEOF”), SQN Tempo Automation, LLC (“SQNTA”), SQN Venture Income Fund II, LP (“SQNVIFII”
and, together with SCI, DCO, CEOF and SQNTA, the “Lenders” and each a “Lender”), and Ocean II PLO LLC, as administrative
and collateral agent for the Lenders (the “Agent”), which amended that certain First Amended and Restated Loan and Security
Agreement, dated as of November 22, 2022 (as amended by the LSA Amendment, the “LSA”), by and among the Company, Legacy Tempo,
the Lenders and the Agent. Pursuant to the LSA Amendment, the parties thereto agreed, among other things, that (a) the Lenders will forbear
from exercising any available remedies as a result of Legacy Tempo’s non-compliance with the requirement under the LSA to maintain
unrestricted cash of not less than $5,000,000 (the “Unrestricted Cash Default”) until the earlier of (i) November 30, 2023
and (ii) the occurrence of any event of default (other than the Unrestricted Cash Default) (such period, the “Forbearance Period”),
(b) to capitalize interest payments due under the LSA from May 1, 2023 through December 1, 2023 and (c) permit the issuance of the Note.
In connection with entry into the Note and LSA Amendment, the parties agreed that the payment of any and all amounts owed under the Note
(subject to certain exceptions) will be subordinate and subject in right and time of payment, to the prior payment in full of the Company’s
senior debt owed to the Agent or any Lender under the LSA.
The foregoing description
of the LSA Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the LSA Amendment,
which is filed as Exhibit 10.3 to this Report and is incorporated herein by reference.