SNWV SANUWAVE Health Inc (QB)

Execution Version

AGREEMENT AND PLAN OF MERGER

 

by and among

 

SEP ACQUISITION CORP.,

as the Purchaser,

 

SEP ACQUISITION HOLDINGS INC.,

as Merger Sub,

 

and

 

SANUWAVE HEALTH, INC.,

as the Company

 

Dated as of August 23, 2023

 

TABLE OF CONTENTS

 

 

AGREEMENT AND PLAN OF MERGER

 

This Agreement and Plan of Merger (this “Agreement”) is made and entered into as of August 23, 2023 by and among (i) SEP Acquisition Corp., a Delaware corporation (the “Purchaser”), (ii) SEP Acquisition Holdings Inc., a Nevada corporation and a wholly-owned subsidiary of the Purchaser (“Merger Sub”), and (iii) SANUWAVE Health, Inc., a Nevada corporation (the “Company”). The Purchaser, Merger Sub and the Company are sometimes referred to herein individually as a “Party” and, collectively, as the “Parties”.

 

RECITALS:

 

A.          The Company, directly and indirectly through its Subsidiaries, operates a medical technology company focused on the commercialization of its patented, FDA-approved, non-invasive medical devices focused on wound healing and the repair and regeneration of skin, musculoskeletal tissue, and vascular structures;

 

B.        The Purchaser owns all of the issued and outstanding capital stock of Merger Sub, which was formed for the sole purpose of the Merger (as defined below) pursuant to the applicable provisions of the Nevada Business Corporation Act (as amended, the “BCA”);

 

C.        The Parties intend to effect the merger of Merger Sub with and into the Company, with the Company continuing as the surviving entity (the “Merger”), as a result of which, among other things (i)  all of the issued and outstanding capital stock of the Company immediately prior to the Effective Time shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, in exchange for conversion of the shares of capital stock of the Company into shares of Purchaser Class A Common Stock (as defined herein) at the Conversion Ratio (as defined herein), and (ii) outstanding Company Convertible Securities will be, prior to the Effective Time, exercised, exchanged or converted, as applicable, into shares of Company Common Stock or assumed (with equitable adjustments to the number and exercise price of such assumed Company Convertible Securities) at the Effective Time by Purchaser with the result that the right to obtain shares of Company Common Stock pursuant to such assumed Company Convertible Securities shall be converted into the right to receive Purchaser Class A Common Stock, all upon the terms and subject to the conditions set forth in this Agreement and in accordance with the applicable provisions of the BCA;

 

D.         The board of directors of the Purchaser has unanimously (i) determined that this Agreement and the Transactions, including the Merger, approval of the Purchaser Charter Amendments (as defined herein), the issuance of shares of Purchaser Class A Common Stock in connection with the Merger, and the approval and adoption of the Purchaser Equity Plan, is fair, advisable and in the best interests of Purchaser and the Purchaser Stockholders, (ii) approved the Purchaser Charter Amendments, (iii) approved this Agreement and the Transactions, including the Merger, the issuance of shares of Purchaser Class A Common Stock in connection with the Merger, and the approval and adoption of the Purchaser Equity Plan, upon the terms and subject to the conditions set forth herein, (iv) directed that approval of this Agreement and adoption of the Transaction, including the Merger, the issuance of shares of Purchaser Class A Common Stock, and the approval and adoption of the Purchaser Equity Plan, be submitted to a vote at a meeting of Purchaser Stockholders, and (v) recommended to Purchaser Stockholders that they approve and adopt the Purchaser Charter Amendments, this Agreement and the Transactions, including the Merger, the issuance of shares of Purchaser Class A Common Stock, and the approval and adoption of the Purchaser Equity Plan;

 

E.          The board of directors of the Company (the “Company Board”) has unanimously (i) determined that this Agreement and the Transactions, including the Merger, is fair, advisable and in the best interests of the Company and the Company Stockholders, (ii) approved this Agreement and the Transactions, including the Merger, upon the terms and subject to the conditions set forth herein, (iii) directed that approval of this Agreement and adoption of the Transactions, including the Merger, be submitted to a vote at a meeting of the Company Stockholders, and (iv) recommended to Company Stockholders that they approve and adopt this Agreement and the Transactions, including the Merger (the “Company Board Recommendation”);

 

F.          The board of directors of Merger Sub has unanimously approved and declared advisable this Agreement and the Transactions, including the Merger, on the terms and subject to the conditions set forth in this Agreement, and Purchaser, in its capacity as the sole stockholder of Merger Sub, has adopted and approved this Agreement and the Transactions, including the Merger;

 

G.       The Purchaser has received voting support agreements in the form attached as Exhibit A hereto (collectively, the “Company Voting Agreements”) signed by the Company and each of the Significant Company Holders (as defined herein);

 

H.         The Company has received a voting support agreement in the form attached as Exhibit B hereto signed by the Sponsor (the “Sponsor Voting Agreement”);

 

I.         Simultaneously with the execution and delivery of this Agreement, the Significant Company Holders have each entered into a lock-up agreement with the Purchaser, in the form attached as Exhibit C (each, a “Company Lock-Up Agreement”), which agreements will become effective as of the Closing;

 

J.          After the date of this Agreement, each of the Purchaser and the Company intends for the Purchaser to enter into subscription agreements on terms reasonably acceptable to the Purchaser and the Company (the “Subscription Agreements”) with investors (the “PIPE Investors”) to purchase shares of Purchaser Class A Common Stock in connection with a private equity investment in the Purchaser (the “PIPE Investment”), which PIPE Investment shall be consummated immediately prior to the Closing on the Closing Date;

 

K.         Simultaneously with the execution and delivery of this Agreement, the Purchaser and the Sponsor have entered into a debt conversion agreement (the “Sponsor Debt Conversion Agreement”) in the form attached as Exhibit D pursuant to which the Sponsor has agreed to cause the Sponsor Note to be converted into an investment in the PIPE Investment, with such agreement being contingent and effective upon the Closing;

 

L.         The Parties intend (i) that the Merger will qualify as a tax-free “reorganization” within the meaning of Section 368(a) of the Code (as defined herein) to which the Purchaser and the Company are parties within the meaning of Section 368(b) of the Code and, depending on the facts at the time of the Closing, intend that the Merger and the PIPE Investment shall be considered part of an overall plan in which the Company Stockholders exchange their shares of Company Common Stock for the Stockholder Merger Consideration in an exchange described in Section 351 of the Code, and (ii) this Agreement be adopted as a “plan of reorganization” for purposes of Section 368 of the Code and Treasury Regulations Sections 1.368-2(g) and 1.368-3(a) (clauses (i) and (ii), the “Intended Tax Treatment”); and

 

M.         Certain capitalized terms used herein are defined in Article X hereof.

 

 

NOW, THEREFORE, in consideration of the premises set forth above, which are incorporated in this Agreement as if fully set forth below, and the representations, warranties, covenants and agreements contained in this Agreement, and intending to be legally bound hereby, the Parties hereto agree as follows:

 

ARTICLE I

 

1.1        Merger. At the Effective Time, and subject to and upon the terms and conditions of this Agreement, and in accordance with the applicable provisions of the BCA, Merger Sub and the Company shall consummate the Merger, pursuant to which Merger Sub shall be merged with and into the Company, following which the separate corporate existence of Merger Sub shall cease and the Company shall continue as the surviving corporation. The Company, as the surviving corporation after the Merger, is hereinafter sometimes referred to as the “Surviving Corporation” (provided, that references to the Company for periods after the Effective Time shall be deemed to refer to the Surviving Corporation).

 

1.2         Effective Time. The Parties hereto shall cause the Merger to be consummated by filing the Articles of Merger for the merger of Merger Sub with and into the Company (the “Articles of Merger”) with the Secretary of State of the State of Nevada in accordance with the relevant provisions of the BCA and with the terms and conditions hereof (the time of such filing, or such later time as may be specified in the Articles of Merger, being the “Effective Time”).

 

1.3        Effect of the Merger. At the Effective Time, the effect of the Merger shall be as provided in this Agreement, the Articles of Merger and the applicable provisions of the BCA. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the property, rights, privileges, agreements, powers and franchises, debts, Liabilities, duties and obligations of Merger Sub and the Company shall become the property, rights, privileges, agreements, powers and franchises, debts, Liabilities, duties and obligations of the Surviving Corporation, which shall include the assumption as a matter of law by the Surviving Corporation of any and all agreements, covenants, duties and obligations of Merger Sub and the Company set forth in this Agreement to be performed after the Effective Time.

 

1.4         Tax Treatment. The Parties intend that this Agreement is and the Parties hereby adopt this Agreement as a “plan of reorganization” within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the Treasury Regulations.

 

1.5        Articles of Incorporation and Bylaws. At the Effective Time, the Articles of Incorporation and Bylaws of the Company, each as in effect immediately prior to the Effective Time, shall automatically be amended and restated in their entirety to read identically to the Articles of Incorporation and Bylaws of Merger Sub as in effect immediately prior to the Effective Time, except that the name of the Surviving Corporation in such Articles of Incorporation and Bylaws shall be amended to be “SANUWAVE Health, Inc.”, and such amended and restated Articles of Incorporation and Bylaws shall become the respective Articles of Incorporation and Bylaws of the Surviving Corporation.

 

1.6        Directors and Officers of the Surviving Corporation. At the Effective Time, the board of directors and executive officers of the Surviving Corporation shall be the board of directors and executive officers of the Company, after giving effect to Section 5.14, each to hold office in accordance with the Articles of Incorporation and Bylaws of the Surviving Corporation until their respective successors are duly elected or appointed and qualified or their earlier death, resignation or removal.

 

1.7        Company Convertible Notes. Each Company Convertible Note that is outstanding and unexercised, and has not been exchanged for shares of Company Common Stock, as of immediately prior to the Effective Time shall, to the extent permitted by the terms of such Company Convertible Note, automatically, without any action on the part of the holder thereof and without the issuance of a new convertible note with respect thereto, be assumed by the Purchaser and converted into a convertible note (each such assumed Company Convertible Note, an “Assumed Convertible Note”) to purchase that number of shares of Purchaser Class A Common Stock reserved for issuance from the Merger Consideration equal to the product of (i) the number of shares of Company Stock subject to such Company Convertible Note as of immediately prior to the Effective Time multiplied by (ii) the Conversion Ratio. Each Assumed Convertible Note shall be subject to the same terms and conditions as were applicable under the respective Company Convertible Note immediately prior to the Effective Time, except that each Assumed Convertible Note shall have an conversion price per share equal to the quotient obtained by dividing (x) the per share conversion price of the Company Convertible Note by (y) the Conversion Ratio (which price per share shall be rounded up to the nearest whole cent). Upon exercise of any Assumed Convertible Note, no evidence of book-entry shares representing fractional shares of Purchaser Class A Common Stock shall be issuable thereunder; in lieu of the issuance of any such fractional share, the issuable shares of Purchaser Class A Common Stock shall be rounded up to the nearest whole share of Purchaser Class A Common Stock.

 

1.8       Merger Consideration. As consideration for the Merger, the Company Security Holders collectively shall be entitled to receive from the Purchaser, in the aggregate, an amount equal to 7,793,000 shares of Purchaser Class A Common Stock (the “Merger Consideration”). The Merger Consideration shall be paid, or reserved for issuance and payable, as follows:

 

(a)        Each Company Stockholder shall receive for each share of Company Common Stock held (excluding any Company Securities described in Section 1.9(b)), a number of shares of Purchaser Class A Common Stock equal to the Conversion Ratio (the aggregate portion of the Merger Consideration amount payable to all Company Stockholders in respect of shares of Company Stock (but excluding Merger Consideration payable in respect of Company Options, Assumed Warrants and Assumed Convertible Notes) in accordance with this Agreement is also referred to herein as the “Stockholder Merger Consideration”).

 

(b)         The holders of Company Options shall receive, from the Merger Consideration, such number of Purchaser Options as described in Section 1.9(d), with such terms and conditions as described in Section 1.9(d).

 

(c)         The holders of Company Warrants that are outstanding immediately prior to the Effective Time shall have the rights described in Section 1.9(e) with respect to such Assumed Warrants, with such terms and conditions as described in Section 1.9(e).

 

(d)         The holders of Company Convertible Notes that are outstanding immediately prior to the Effective Time shall have the rights set forth in Section 1.7 with respect to such Assumed Convertible Notes, with such terms and conditions as described in Section 1.7.

 

1.9         Effect of Merger on Company Securities. At the Effective Time, by virtue of the Merger and without any action on the part of any Party or the holders of any Company Securities or the holders of any shares of capital stock of the Purchaser or Merger Sub:

 

(a)         Company Stock. Subject to Section 1.9(b), all shares of Company Stock issued and outstanding immediately prior to the Effective Time will automatically be cancelled and cease to exist in exchange for the right to receive the Stockholder Merger Consideration, with each share of Company Common Stock being entitled to receive that number of shares of Purchaser Class A Common Stock equal to the Conversion Ratio, without interest, upon delivery of the Transmittal Documents in accordance with Section 1.10(f). As of the Effective Time, each Company Stockholder shall cease to have any other rights in and to the Company or the Surviving Corporation (other than the rights set forth in Section 1.13 below).

 

(b)         Treasury Stock. Notwithstanding Section 1.9(a) or any other provision of this Agreement to the contrary, at the Effective Time, if there are any Company Securities that are owned by the Company as treasury shares or any Company Securities owned by any direct or indirect Subsidiary of the Company immediately prior to the Effective Time, such Company Securities shall be canceled and shall cease to exist without any conversion thereof or payment therefor.

 

(c)         Dissenting Shares. Each of the Dissenting Shares issued and outstanding immediately prior to the Effective Time shall be cancelled and cease to exist in accordance with Section 1.13 and shall thereafter represent only the right to receive the applicable payments set forth in Section 1.13.

 

(d)          Company Options.

 

(i)         At the Effective Time, each outstanding Company Option (whether vested or unvested, exercisable or unexercisable) that is outstanding as of immediately prior to the Effective Time shall, without any further action on the part of the holder thereof, be assumed by the Purchaser and automatically converted into the right to receive an option (each, a “Purchaser Option”) to acquire shares of Purchaser Class A Common Stock reserved for issuance from the Merger Consideration, as described further below. Subject to the subsequent sentence, each Purchaser Option that corresponds to a Company Option that was originally granted pursuant to the Company Equity Plan will continue to be subject to the same terms and conditions set forth in the Company Equity Plan and the applicable award agreement as in effect immediately prior to the Effective Time (including, without limitation, the vesting and acceleration provisions therein), except any references therein to the Company or Company Common Stock will instead mean the Purchaser and Purchaser Class A Common Stock, respectively. Each Purchaser Option shall: (i)  represent the right to acquire a number of shares of Purchaser Class A Common Stock reserved for issuance from the Merger Consideration equal to (as rounded up to the nearest whole number) the product of (A) the number of shares of Company Common Stock that were subject to the corresponding Company Option immediately prior to the Effective Time, multiplied by (B) the Conversion Ratio; and (ii) have an exercise price equal to (as rounded up to the nearest whole cent) the quotient of (A) the exercise price of the corresponding Company Option, divided by (B) the Conversion Ratio.

 

(ii)       The Purchaser shall take all corporate action necessary to reserve for future issuance a sufficient number of shares of Purchaser Class A Common Stock for delivery upon the exercise of Purchaser Options, and shall maintain such reserve for so long as any of the Purchaser Options remain outstanding. From and after the Effective Time, the Company shall not issue any new awards under the Company Equity Plan. Within a reasonably practicable period (subject to SEC rules and guidelines for a former shell company) after the Closing, the Purchaser shall file with the SEC a registration statement on Form S-8 (or any successor form, or, if Form S-8 is not available, other appropriate forms as may be required under applicable Law) relating to the shares of Purchaser Class A Common Stock issuable with respect to the Purchaser Options, and shall maintain the effectiveness of such registration statement for as long as required to issue Purchaser Class A Common Stock pursuant to the Purchaser Options.

 

(e)        Company Warrants.  Each Company Warrant that is outstanding and unexercised, and has not been exchanged for shares of Company Common Stock, as of immediately prior to the Effective Time shall to the extent permitted by the terms of such Company Warrant, automatically, without any action on the part of the holder thereof and without the issuance of a new warrant with respect thereto, be assumed by the Purchaser and converted into a warrant (each such warrant, an “Assumed Warrant”) to purchase that number of shares of Purchaser Class A Common Stock reserved for issuance from the Merger Consideration equal to the product of (1) the number of shares of Company Stock subject to such Company Warrant multiplied by (2) the Conversion Ratio. Each Assumed Warrant shall be subject to the same terms and conditions (including as to vesting and exercisability) as were applicable under the respective Company Warrant immediately prior to the Effective Time, except that each Assumed Warrant shall have an exercise price per share equal to the quotient obtained by dividing (x) the per share exercise price of the Company Warrant by (y) the Conversion Ratio (which price per share shall be rounded up to the nearest whole cent). Upon exercise of any Assumed Warrant, no evidence of book-entry shares representing fractional shares of Purchaser Class A Common Stock shall be issuable thereunder; in lieu of the issuance of any such fractional share, the issuable shares of Purchaser Class A Common Stock shall be rounded up to the nearest whole share of Purchaser Class A Common Stock.

 

(f)         Equitable Adjustment.  If at any time during the period between the date of this Agreement and the Effective Time, any change in the outstanding shares of capital stock of Purchaser or the Company shall occur as a result of any reclassification, recapitalization, reorganization, stock split (including a reverse stock split) or combination, exchange or readjustment of shares, or any stock dividend or stock distribution is declared with a record date during such period, the Merger Consideration, as applicable, shall be equitably adjusted to reflect such change without any increase in aggregate amounts payable; provided, that this Section 1.9(f) shall not be construed to permit Purchaser, Merger Sub, or the Company to take any action with respect to their respective securities that is prohibited by the terms and conditions of this Agreement.

 

1.10       Surrender of Company Securities and Disbursement of Merger Consideration.

 

(a)         Prior to the Effective Time, the Purchaser shall appoint its transfer agent, Continental Stock Transfer & Trust Company, or another agent reasonably acceptable to the Company (the “Exchange Agent”), for the purpose of exchanging the shares of Company Common Stock represented by certificates (“Company Certificates”) or book-entry shares (the “Company Book-Entry Shares”) for Stockholder Merger Consideration. On or prior to the Effective Time, the Purchaser shall deposit, or cause to be deposited, with the Exchange Agent, in trust for the benefit of the holders of Company Common Stock, the Stockholder Merger Consideration. All book-entry shares representing Purchaser Class A Common Stock deposited by Purchaser with the Exchange Agent for distribution pursuant to this Article I are referred to in this Agreement as the “Exchange Fund”. The Exchange Fund shall be subject to the terms of this Agreement and the Exchange Agent Agreement.  The Exchange Fund will not be used for any other purpose.

 

(b)         On or prior to the Effective Time, the Purchaser shall send, or shall cause the Exchange Agent to send, to each Company Stockholder, a letter of transmittal for use in such exchange (a “Letter of Transmittal”) in a form to be mutually agreed upon by the Company and the Purchaser.

 

(c)        Subject to Section 1.10(d), at the Closing, Purchaser shall cause to be issued from the Exchange Fund to each holder of Company Common Stock immediately prior to the Effective Time who has, at least three (3) Business Days prior to the Closing Date, delivered a completed and duly executed Letter of Transmittal to the Exchange Agent, evidence of book-entry shares representing the number of whole shares of the aggregate Purchaser Class A Common Stock in respect of such Company Common Stock held by such holder.

 

(d)       Each Company Stockholder shall be entitled to receive the number of shares of Purchaser Class A Common Stock with respect to such shares of Company Common Stock held by such Company Stockholder (excluding any Company Securities described in Sections 1.9(b) or 1.9(c)), on or as soon as reasonably practicable after the Effective Time, but subject to the delivery by such Company Stockholder to the Exchange Agent of the following items prior thereto (collectively, the “Transmittal Documents”) in forms to be mutually agreed by the Purchaser and the Company prior to the Closing: (i) a properly completed and duly executed Letter of Transmittal; and (ii) such other related documents as may be reasonably requested by the Exchange Agent or the Purchaser. Until so surrendered, each Company Certificate or Company Book-Entry Share shall represent after the Effective Time for all purposes only the right to receive such portion of the Stockholder Merger Consideration attributable to such Company Certificate or Company Book-Entry Share.

 

(e)        If any portion of the Stockholder Merger Consideration is to be delivered or issued to a Person other than the Person in whose name the surrendered Company Certificate or Company Book-Entry Share is registered immediately prior to the Effective Time, it shall be a condition to such delivery that (i) with respect to Company Certificates, such Company Certificate shall be properly endorsed or shall otherwise be in proper form for transfer, (ii) the recipient of such portion of the Stockholder Merger Consideration, or the Person in whose name such portion of the Stockholder Merger Consideration is delivered or issued, shall have already executed and delivered such Transmittal Documents as are reasonably deemed necessary by the Exchange Agent or the Purchaser, and (iii) the Person requesting such delivery shall pay to the Exchange Agent any transfer or other Taxes required as a result of such delivery to a Person other than the registered holder of such Company Certificate or Company Book-Entry Share or establish to the satisfaction of the Exchange Agent that such Tax has been paid or is not payable.

 

(f)       After the Effective Time, there shall be no further registration of transfers of Company Stock. If, after the Effective Time, Company Certificates or Company Book-Entry Shares are presented to the Surviving Corporation, the Purchaser or the Exchange Agent, they shall be canceled and exchanged for the applicable portion of the Stockholder Merger Consideration provided for, and in accordance with the procedures set forth in this Section 1.10(f). No dividends or other distributions declared or made after the date of this Agreement with respect to Purchaser Class A Common Stock with a record date after the Effective Time will be paid to the holders of any Company Certificates or Company Book-Entry Shares that have not yet been surrendered with respect to Purchaser Class A Common Stock to be issued upon surrender thereof until the holders of record of such Company Certificates or Company Book-Entry Shares shall provide the other Transmittal Documents. Subject to applicable Law, following delivery of the other Transmittal Documents, the Purchaser shall promptly deliver to the record holders thereof, without interest, book-entry shares representing Purchaser Class A Common Stock issued in exchange therefor and the amount of any such dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such Purchaser Class A Common Stock.

 

(g)       All securities issued upon the surrender of Company Securities in accordance with the terms hereof shall be deemed to have been issued in full satisfaction of all rights pertaining to such Company Securities. Any Company Stockholder who has not exchanged its Company Stock for the applicable portion of the Merger Consideration in accordance with this Section 1.10(g) prior to the date that is four (4) years after the Effective Time shall thereafter look only to the Purchaser for payment of the portion of the applicable Merger Consideration in respect of such Company Securities without any interest thereon (but with any dividends paid with respect thereto). Notwithstanding the foregoing, none of the Surviving Corporation, the Purchaser or any Party hereto shall be liable to any Person for any amount properly paid to a public official pursuant to any applicable abandoned property, escheat or similar Law.

 

(h)        Notwithstanding anything to the contrary contained herein, no fraction of a share of Purchaser Class A Common Stock will be issued by virtue of the Merger or the Transactions, and each Person who would otherwise be entitled to a fraction of a share of Purchaser Class A Common Stock (after aggregating all fractional shares of Purchaser Class A Common Stock that otherwise would be received by such holder) shall instead have the number of shares of Purchaser Class A Common Stock issued to such Person rounded up in the aggregate to the nearest whole share of Purchaser Class A Common Stock.

 

1.11       Effect of Transaction on Merger Sub Stock. At the Effective Time, by virtue of the Merger and without any action on the part of any Party or the holders of any Company Securities or the holders of any shares of capital stock of the Purchaser or Merger Sub, each share of Merger Sub Common Stock outstanding immediately prior to the Effective Time shall be converted into an equal number of shares of common stock of the Surviving Corporation, with the same rights, powers and privileges as the shares so converted and shall constitute the only outstanding shares of capital stock of the Surviving Corporation.

 

1.12       Taking of Necessary Action; Further Action. If, at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest the Surviving Corporation with full right, title and possession to all assets, property, rights, privileges, powers and franchises of the Company and Merger Sub, the officers and directors of the Company and Merger Sub are fully authorized in the name of their respective corporations or otherwise to take, and will take, all such lawful and necessary action, so long as such action is not inconsistent with this Agreement.

 

1.13      Appraisal Rights. No Company Stockholder who has validly exercised and perfected its appraisal rights pursuant to NRS 92A.300 et seq. of the BCA (a “Dissenting Stockholder”) with respect to its Company Stock (such shares, “Dissenting Shares”) shall be entitled to receive any portion of the Stockholder Merger Consideration with respect to the Dissenting Shares owned by such Dissenting Stockholder unless and until such Dissenting Stockholder shall have effectively withdrawn or lost its appraisal rights under the BCA. Each Dissenting Stockholder shall be entitled to receive only the payment resulting from the procedure set forth in NRS 92A.300 et seq. of the BCA with respect to the Dissenting Shares owned by such Dissenting Stockholder. Such Company Stockholders shall be entitled to receive payment of the appraised value of such shares of Company Common Stock held by them in accordance with the BCA, unless and until such Company Stockholders fail to perfect or effectively withdraw or otherwise lose their appraisal rights under the BCA.  All Dissenting Shares held by Company Stockholders who shall have failed to perfect or who effectively shall have effectively withdrawn or lost their right to appraisal of such shares of Company Common Stock under the BCA (whether occurring before, at or after the Effective Time) shall thereupon be deemed to be converted into and to have become exchangeable for, as of the Effective Time, the right to receive the Stockholder Merger Consideration, without interest, attributable to such Dissenting Shares upon their surrender in the manner provided in Section 1.10.  The Company shall give the Purchaser prompt notice of any written demands for appraisal, attempted withdrawals of such demands, and any other instruments served pursuant to applicable Laws that are received by the Company relating to any Dissenting Stockholder’s rights of appraisal; provided that the Company shall direct all negotiations and proceedings with respect to demand for appraisal under the BCA. The Company shall not, except with the prior written consent of the Purchaser, voluntarily make any payment with respect to any demands for appraisal, offer to settle or settle any such demands or approve any withdrawal of any such demands.

 

1.14      Withholding. Each of the Purchaser, Merger Sub, the Company, the Surviving Corporation and their respective Affiliates shall be entitled to deduct and withhold from any amounts otherwise deliverable, issuable or payable under this Agreement such amounts that any such Persons are required to deduct and withhold with respect to any of the deliveries, issuances and payments contemplated by this Agreement under the Code or any other applicable Law; provided that before making any deduction or withholding pursuant to this Section 1.14 other than with respect to amounts treated as compensation for applicable Tax purposes, the Purchaser shall use commercially reasonable efforts to give prior written notice to the Company at least five (5) days’ prior to the applicable date of such anticipated deduction or withholding, in order to provide the Company with a reasonable opportunity to provide any forms or other documentation from the applicable equity holders or take such other steps in order to avoid such deduction or withholding, and the Purchaser shall reasonably consult and cooperate with the Company in good faith to attempt to reduce or eliminate any amounts that would otherwise be deducted or withheld pursuant to this Section 1.14, in all events, subject to the requirement of applicable Law.  To the extent that the Purchaser, Merger Sub, the Company, the Surviving Corporation or any of their respective Affiliates deducts and withholds any such amounts with respect to any Person and properly and timely remits such deducted and withheld amounts to the applicable Governmental Authority, such deducted and withheld amounts shall be treated as having been paid to or on behalf of such Person for all purposes.

 

ARTICLE II

 

2.1        Closing. Subject to the satisfaction or waiver of the conditions set forth in Article VI, the consummation of the Transactions (the “Closing”) shall take place remotely, through the exchange of documents via electronic mail or facsimile, on a date and at a time to be agreed upon by the Purchaser and the Company, which date shall be no later than the second (2nd) Business Day after all the Closing conditions to this Agreement have been satisfied or waived (other than any conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions), or at such other date, time or place (including remotely) as the Purchaser and the Company may agree (the date and time at which the Closing is actually held being the “Closing Date”). All actions to be taken and all documents to be executed or delivered at Closing will be deemed to have been taken, executed and delivered simultaneously, and no action will be deemed taken and no document will be deemed executed or delivered until all have been taken, delivered and executed, except in each case to the extent otherwise stated in any such document.

 

ARTICLE III

 

Except as set forth in (i) the disclosure schedules delivered by the Purchaser to the Company on the date hereof (the “Purchaser Disclosure Schedules”), or (ii) the Purchaser SEC Reports that are available on the SEC’s website through EDGAR at least two (2) Business Days prior to the date hereof (it being acknowledged that nothing disclosed in such a SEC Report under the headings “Risk Factors” or “Forward-Looking Statements” will be deemed to modify or qualify and representations or warranties set forth in Article III), the Purchaser represents and warrants to the Company as follows:

 

3.1        Organization and Standing. The Purchaser is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of Delaware. The Purchaser has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted, except where the failure to have such requisite power or authority would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Purchaser is duly qualified or licensed and in good standing in each jurisdiction in which the character of the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so qualified or licensed or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Purchaser has heretofore made available to the Company accurate and complete copies of its Organizational Documents, as amended to date and as currently in effect. The Purchaser is not in violation of any provision of its Organizational Documents in any material respect.

 

3.2         Authorization; Binding Agreement.

 

(a)        The Purchaser has all requisite corporate power and authority to execute and deliver this Agreement and each Ancillary Document to which it is or is required to be a party, to perform the Purchaser’s obligations hereunder and thereunder and to consummate the Transactions, subject to obtaining the Required Purchaser Stockholder Approval. The execution and delivery of this Agreement and each Ancillary Document to which it is or is required to be a party and the consummation of the Transactions (i) have been duly and validly authorized by the board of directors of the Purchaser in accordance with the Purchaser’s Organizational Documents, the DGCL, any other applicable Law or any Contract to which the Purchaser is a party or by which it or its securities are bound, and (ii) other than the Required Purchaser Stockholder Approval, no other corporate proceedings on the part of the Purchaser are necessary to authorize the execution and delivery of this Agreement and each Ancillary Document to which it is a party or to consummate the Transactions. This Agreement has been, and each Ancillary Document to which the Purchaser is or is required to be a party shall be when delivered, duly and validly executed and delivered by the Purchaser and, assuming the due authorization, execution and delivery of this Agreement and Ancillary Documents by the other Parties hereto and thereto, constitutes, or when delivered shall constitute, the legal, valid and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms, except to the extent that enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization and moratorium Laws and other Laws of general application affecting the enforcement of creditors’ rights generally or by any applicable statute of limitation or by any valid defense of set-off or counterclaim, and the fact that equitable remedies or relief (including the remedy of specific performance) are subject to the discretion of the court from which such relief may be sought (collectively, the “Enforceability Exceptions”).

 

(b)         The Purchaser’s board of directors has unanimously (i) determined that this Agreement and the Transactions, including the Merger, approval of the Purchaser Charter Amendments, the issuance of shares of Purchaser Class A Common Stock in connection with the Merger, and the approval and adoption of the Purchaser Equity Plan, is fair, advisable and in the best interests of Purchaser and the Purchaser Stockholders, (ii) approved the Purchaser Charter Amendments, (iii) approved this Agreement and the Transactions, including the Merger, the issuance of shares of Purchaser Class A Common Stock in connection with the Merger, and the approval and adoption of the Purchaser Equity Plan, upon the terms and subject to the conditions set forth herein, (iv) directed that approval of this Agreement and adoption of the Transaction, including the Merger, the issuance of shares of Purchaser Class A Common Stock, and the approval and adoption of the Purchaser Equity Plan, be submitted to a vote at a meeting of Purchaser Stockholders, and (v) recommended to Purchaser Stockholders that they approve and adopt the Purchaser Charter Amendments, this Agreement and the Transactions, including the Merger, the issuance of shares of Purchaser Class A Common Stock, and the approval and adoption of the Purchaser Equity Plan.

 

(c)         Merger Sub’s board of directors, by resolutions duly adopted, has approved and declared advisable, this Agreement and the Merger and the other Transactions on the terms and subject to the conditions set forth in this Agreement, and the Purchaser, in its capacity as the sole stockholder of Merger Sub, has adopted and approved this Agreement and the Merger and the other Transactions.

 

3.3        Governmental Approvals. Except as otherwise described in Schedule 3.3, no Consent of or with any Governmental Authority on the part of the Purchaser is required to be obtained or made in connection with the execution, delivery or performance by the Purchaser of this Agreement and any Ancillary Documents to which it is or is required to be a party or the consummation by the Purchaser of the Transactions, other than (a) such filings as contemplated by this Agreement, (b) any filings required with Nasdaq or the SEC with respect to the Transactions, (c) applicable requirements, if any, of the Securities Act, the Exchange Act, and/or any state “blue sky” securities Laws, and the rules and regulations thereunder, and (d) where the failure to obtain or make such Consents or to make such filings or notifications would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Purchaser.

 

3.4        Non-Contravention. Except as otherwise described in Schedule 3.4, the execution and delivery by the Purchaser of this Agreement and each Ancillary Document to which it is or is required to be a party or otherwise bound, and the consummation by the Purchaser of the Transactions, and compliance by the Purchaser with any of the provisions hereof and thereof, will not (a) conflict with or violate any provision of the Purchaser’s Organizational Documents, (b) subject to obtaining the Consents from Governmental Authorities referred to in Section 3.3 hereof, the waiting periods referred to therein having expired, and any condition precedent to such Consent or waiver having been satisfied, conflict in any manner with or violate in any respect any Law, Order or Consent applicable to the Purchaser or any of its material properties or assets, or (c) (i) violate, conflict with or result in a breach of, (ii) constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, (iii) result in the termination, withdrawal, suspension, cancellation or modification of, (iv) accelerate the performance required by the Purchaser under, (v) result in a right of termination or acceleration under, (vi) give rise to any obligation to make payments or provide compensation under, (vii) result in the creation of any Lien upon any of the properties or assets of the Purchaser under (other than Permitted Liens), (viii) give rise to any obligation to obtain any third party Consent or provide any notice to any Person, or (ix) give any Person the right to declare a default, exercise any remedy, claim a rebate, chargeback, penalty or change in delivery schedule, accelerate the maturity or performance, cancel, terminate or modify any right, benefit, obligation or other term under, any of the terms, conditions or provisions of any Purchaser Material Contract, except for any deviations from any of the foregoing clauses (a), (b) or (c) that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Purchaser.

 

3.5         Capitalization.

 

(a)        The Purchaser is authorized to issue (i) 150,000,000 shares of Purchaser Class A Common Stock, (ii) 20,000,000 shares of Purchaser Class B Common Stock, and (iii) 1,000,000 shares of Purchaser Preferred Stock. The issued and outstanding Purchaser Securities as of the date of this Agreement are set forth on Schedule 3.5(a). As of the date of this Agreement, there are no issued or outstanding shares of Purchaser Preferred Stock. There are no outstanding or authorized equity appreciation, phantom equity or similar rights with respect to the Purchaser. All outstanding Purchaser Class A Common Stock and Purchaser Class B Common Stock is duly authorized, validly issued, fully paid and non-assessable and is not subject to or issued in violation of any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the DGCL, any other applicable Law, the Purchaser’s Organizational Documents or any Contract to which the Purchaser is a party or by which it or its securities are bound. The Purchaser holds no shares or other equity interests of the Purchaser in its treasury. None of the outstanding Purchaser Securities has been issued in violation of any applicable securities Laws. The rights, privileges and preferences of the Purchaser Preferred Stock are as stated in the Purchaser’s Organizational Documents and as provided by the DGCL.

 

(b)        Prior to giving effect to the Merger, Merger Sub is authorized to issue 1,000 shares of Merger Sub Common Stock, of which 1,000 shares are issued and outstanding, and all of which are owned by the Purchaser. Prior to giving effect to the Transactions, other than Merger Sub, the Purchaser does not have any Subsidiaries or own any equity interests in any other Person.

 

(c)      Except as set forth in Schedule 3.5(a) or Schedule 3.5(c), there are no (i) outstanding options, warrants, puts, calls, convertible securities, rights of first refusal, preemptive or similar rights other than the Redemption, (ii) bonds, debentures, notes or other Indebtedness having general voting rights or that are convertible or exchangeable into securities having such rights, or (iii) subscriptions or other rights, agreements, arrangements, Contracts or commitments of any character (other than this Agreement and the Ancillary Documents), (A) relating to the issued or unissued shares of the Purchaser, (B) obligating the Purchaser to issue, transfer, deliver, offer or sell or cause to be issued, transferred, delivered, offered or sold any options or shares or securities convertible into or exchangeable for such shares, (C) obligating the Purchaser to grant, extend or enter into any such option, warrant, call, subscription, convertible securities, right of first refusal, preemptive right or other similar right, agreement or arrangement or commitment for such shares, or (D) other than the Redemption or as expressly set forth in this Agreement, obligating the Purchaser to redeem, repurchase or otherwise acquire any such shares or other equity interests, or provide an amount of funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in the Purchaser or any other Person. Except as set forth in Schedule 3.5(c), there is no agreement or commitment by the Purchaser relating to the voting or registration of, or restricting any Person from purchasing, selling, pledging or otherwise disposing of (or granting any option or similar right with respect to), any shares of the Purchaser.

 

(d)        All Indebtedness of the Purchaser as of the date of this Agreement is disclosed on Schedule 3.5(d). No Indebtedness of the Purchaser contains any restriction upon (i) the prepayment of any of such Indebtedness, (ii) the incurrence of Indebtedness by the Purchaser, or (iii) the ability of the Purchaser to grant any Lien on its properties or assets.

 

(e)        Since the date of formation of the Purchaser, and except as contemplated by this Agreement (including any redemptions that may occur in connection with an Extension, if any) or as set forth on Schedule 3.5(e), the Purchaser has not declared or paid any distribution or dividend in respect of its shares and has not repurchased, redeemed or otherwise acquired any of its shares, and the Purchaser’s board of directors has not authorized any of the foregoing.

 

3.6         SEC Filings and Purchaser Financials.

 

(a)        Except as set forth on Schedule 3.6(a)(i), the Purchaser, since the IPO, has filed all forms, reports, schedules, statements, registration statements, prospectuses and other documents required to be filed or furnished by the Purchaser with the SEC under the Securities Act and the Exchange Act, together with any amendments, restatements or supplements thereto, and will file all such forms, reports, schedules, statements and other documents required to be filed subsequent to the date of this Agreement. Except to the extent available on the SEC’s website through EDGAR for at least two (2) days prior to the date of this Agreement, the Purchaser has delivered to the Company copies in the form filed with the SEC of all of the following: (i) the Purchaser’s annual reports on Form 10-K for each fiscal year of the Purchaser beginning with the first year the Purchaser was required to file such a form; (ii) the Purchaser’s quarterly reports on Form 10-Q for each fiscal quarter that the Purchaser filed such reports to disclose its quarterly financial results in each of the fiscal years of the Purchaser referred to in clause (i) above; (iii) all other forms, reports, registration statements, prospectuses and other documents (other than preliminary materials) filed by the Purchaser with the SEC since the beginning of the first fiscal year referred to in clause (i) above (the forms, reports, registration statements, prospectuses and other documents referred to in clauses (i), (ii) and (iii) above, whether or not available through EDGAR, are, collectively, the “Purchaser SEC Reports”); and (iv) all certifications and statements required by (A) Rules 13a-14 or 15d-14 under the Exchange Act, and (B) 18 U.S.C. §1350 (Section 906 of SOX) with respect to any report referred to in clause (i) above (collectively, the “Public Certifications”). Except for any changes (including any required restatements of the Purchaser Financials (defined below) or the Purchaser SEC Reports) to the Purchaser’s historical accounting of the Purchaser Warrants as equity rather than as liabilities that may be required as a result of the Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies that was issued by the SEC on April 12, 2021, and related guidance by the SEC (the “SEC April Warrant Statement”), the Purchaser SEC Reports (x) were prepared in all material respects in accordance with the requirements of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations thereunder and (y) did not, as of their respective effective dates (in the case of Purchaser SEC Reports that are registration statements filed pursuant to the requirements of the Securities Act) and at the time they were filed with the SEC (in the case of all other Purchaser SEC Reports), contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. The Public Certifications are each true as of their respective dates of filing. As of the date of this Agreement, there are no outstanding or unresolved comments in comment letters received from the SEC with respect to any Purchaser SEC Reports. None of the Purchaser SEC Reports filed on or prior to the date of this Agreement is subject to ongoing SEC review or investigations as of the date of this Agreement. As used in this Section 3.6(a), the term “file” shall be broadly construed to include any manner permitted by SEC rules and regulations in which a document or information is furnished, supplied or otherwise made available to the SEC. As of the date of this Agreement, except as set forth on Schedule 3.6(a)(ii), (A) the Purchaser Units, the Purchaser Class A Common Stock and the Purchaser Warrants are listed on Nasdaq, (B) the Purchaser has not received any written deficiency notice from Nasdaq relating to the continued listing requirements of such Purchaser Securities, (C) there are no Actions pending or, to the Knowledge of the Purchaser, threatened against the Purchaser by the Financial Industry Regulatory Authority with respect to any intention by such entity to suspend, prohibit or terminate the quoting of such Purchaser Securities on Nasdaq, and (D) such Purchaser Securities are in compliance with all of the applicable corporate governance rules of Nasdaq.

 

(b)        Except for any changes (including any required restatements of the Purchaser Financials (defined below) or the Purchaser SEC Reports) to the Purchaser’s historical accounting of the Purchaser Warrants as equity rather than as liabilities that may be required as a result of the SEC April Warrant Statement, the financial statements and notes of the Purchaser contained or incorporated by reference in the Purchaser SEC Reports (the “Purchaser Financials”) are complete and accurate in all material respects and fairly present in all material respects the financial position and the results of operations, changes in shareholders’ equity, and cash flows as of the respective dates of, and for the periods referred to in, such Purchaser Financials, all in accordance with (i) GAAP methodologies applied on a consistent basis throughout the periods involved, (ii) with all applicable accounting requirements under the Securities Act and the rules and regulations of the SEC thereunder, including Regulation S-X or Regulation S-K, as applicable (except as may be indicated in the notes thereto and for the omission of notes and audit adjustments in the case of unaudited quarterly financial statements to the extent permitted by Regulation S-X or Regulation S-K, as applicable), and (iii) the books and records of the Purchaser as of the times and for the periods referred to therein.

 

(c)        Except for any changes (including any required restatements of the Purchaser Financials or the Purchaser SEC Reports) to the Purchaser’s historical accounting of the Purchaser Warrants as equity rather than as liabilities that may be required as a result of the SEC April Warrant Statement and except as specifically disclosed, reflected or fully reserved against in the Purchaser Financials, the Purchaser has not incurred any Liabilities or obligations of the type required to be reflected on a balance sheet in accordance with GAAP that are not adequately reflected or reserved against the Purchaser Financials, other than Liabilities of the type required to be reflected on a balance sheet in accordance with GAAP that have been incurred since the most recent Purchaser Financials.

 

3.7        Absence of Certain Changes. As of the date of this Agreement, except as set forth on Schedule 3.7, (a) the Purchaser has, since its formation, conducted no business other than its formation, the public offering of its securities (and the related private offerings), public reporting and its search for an initial Business Combination as described in the IPO Prospectus (including the investigation of the Target Companies and the negotiation and execution of this Agreement) and related activities, (b) since December 31, 2022, the Purchaser has not been subject to any event or occurrence, that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Purchaser, and (c) since December 31, 2022, the Purchaser has not taken any action or committed or agreed to take any action that would be prohibited by Section 5.4(b) (without giving effect to Schedule 5.4) if such action were taken on or after the date hereof without the consent of the Company.

 

3.8        Compliance with Laws. The Purchaser is, and has since its formation been, in compliance with all Laws applicable to it and the conduct of its business and, to the Knowledge of the Purchaser, is not under investigation with respect to any violation or alleged violation of any applicable Laws, except for such noncompliance or investigation that would not reasonably be expected to have a Material Adverse Effect on the Purchaser, and the Purchaser has not received written notice alleging any violation of applicable Law in any material respect by the Purchaser. To the Knowledge of the Purchaser, the Purchaser is not under investigation with respect to any violation or alleged violation of any applicable Laws, except for such noncompliance or investigation that would not reasonably be expected to have a Material Adverse Effect on the Purchaser, and the Purchaser has not received written notice in the last three (3) years alleging any violation of applicable Law in any material respect by the Purchaser.

 

3.9        Purchaser Permits. The Purchaser holds all material Permits necessary to lawfully conduct its business as presently conducted, and to own, lease and operate its assets and properties, all of which are in full force and effect, except where the failure for such Permits to be in full force and effect would not reasonably be expected to have a Material Adverse Effect on the Purchaser.

 

3.10      Actions; Orders. As of the date of this Agreement, there is (a) no Action of any nature currently pending or, to the Knowledge of the Purchaser, threatened in writing that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Purchaser (and no such Action has been brought in the past three (3) years, or to the Knowledge of the Purchaser, threatened in the past three (3) years) and (b) no material Order now pending or outstanding or that was rendered by a Governmental Authority in the past three (3) years, in either case of (a) or (b), by or against the Purchaser or any of its business, equity securities or assets. In the past three (3) years to the date of this Agreement, none of the current or former officers, senior management or directors of the Purchaser have been charged with, indicted for, arrested for, or convicted of any felony or any crime involving fraud.

 

3.11       Taxes and Returns.

 

(a)        The Purchaser and Merger Sub have each timely filed, or caused to be timely filed, all income Tax Returns and all other material Tax Returns required to be filed by it (taking into account all available extensions), which such Tax Returns are true, correct and complete in all material respects, and has timely paid, or caused to be timely paid, all income Taxes and other material Taxes required to be paid, other than such Taxes that are not yet due and payable for which adequate reserves in the Purchaser Financials have been established in accordance with GAAP. No written claim has been made within the last thirty-six (36) months by any Governmental Authority in a jurisdiction where Purchaser or Merger Sub do not currently file Tax Returns that Purchaser or Merger Sub is or may be subject to taxation by that jurisdiction, which such claim has not been resolved. There are no claims, assessments, audits, examinations, investigations or other Actions pending against the Purchaser or Merger Sub in respect of any material amount of Tax, and neither the Purchaser nor the Merger Sub has not been notified in writing of any proposed material Tax claims or assessments against the Purchaser or Merger Sub (other than, in each case, claims or assessments for which adequate reserves in the Purchaser Financials have been established in accordance with GAAP). There are no Liens with respect to any Taxes upon any of the Purchaser’s or Merger Sub’s assets, other than Permitted Liens. Neither the Purchaser nor the Merger Sub has any outstanding waivers, extensions, or requests for extensions of any applicable statute of limitations to assess any material amount of Taxes. There are no outstanding requests by the Purchaser or Merger Sub for any extension of time within which to file any material Tax Return or within which to pay any material Taxes shown to be due on any material Tax Return.

 

(b)       Neither the Purchaser nor the Merger Sub has taken any action, or has any current plan, intention or obligation to take any action, that would reasonably be expected to prevent the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code. To the Knowledge of the Purchaser, there are no facts or circumstances that would reasonably be expected to prevent the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code.

 

(c)        Each of the Purchaser and the Merger Sub has collected or withheld all material Taxes currently required to be collected or withheld by it, and all such material Taxes have been paid to or deposited with the appropriate Governmental Authorities or set aside in appropriate accounts for future payment when due.

 

(d)        Within the last thirty-six (36) months, neither the Purchaser nor the Merger Sub has made any changes in any Tax accounting method (except as required by a change in Law) that would reasonably be expected to have a material impact on Purchaser or the Merger Sub’s Taxes following Closing.

 

(e)        Neither the Purchaser nor the Merger Sub has engaged in or entered into any “listed transaction,” as defined in Treasury Regulations Section 1.6011-4(b)(2).

 

(f)         Neither the Purchaser nor the Merger Sub has Liability for the material Taxes of another Person that are not adequately reflected in the Purchaser Financials (i) under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or foreign applicable Law), (ii) as a transferee or successor, or (iii) by contract or indemnity (excluding commercial contracts and agreements entered into in the ordinary course of business the primary purpose of which is not the sharing of Taxes). Neither the Purchaser nor the Merger Sub is a party to or bound by any Tax indemnity agreement, Tax sharing agreement or Tax allocation agreement or similar agreement (excluding commercial agreements entered into in the ordinary course of business the primary purpose of which is not the sharing of Taxes).

 

(g)         Neither the Purchaser nor the Merger Sub has requested, or is the subject of or bound by any private letter ruling, technical advice memorandum, closing agreement, or similar ruling, memorandum, or agreement with any Governmental Authority with respect to any Taxes, nor is any such request outstanding, except, in each case, to the extent that the effect of such ruling, memorandum, or agreement would not reasonably be expected to be material to the Taxes of Purchaser or Merger Sub after Closing.

 

(h)         Neither the Purchaser nor the Merger Sub nor any predecessor thereof: (i) has constituted either a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of securities qualifying for, or intended to qualify for, Tax-free treatment under Section 355 of the Code (A) within the two-year period ending on the date hereof or (B) in a distribution which constitutes part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in conjunction with the Transactions; or (ii) (A) is, or has during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code been, a U.S. real property holding corporation within the meaning of Section 897(c)(2) of the Code, or (B) is or has been a member of any consolidated, combined, unitary or affiliated group for any Tax purposes other than a group of which the Purchaser is the common parent.

 

3.12      Employees and Employee Benefit Plans. The Purchaser does not (a) have any employees (including service providers that would be considered employees under common law) or (b) maintain, sponsor, contribute to or otherwise have any Liability under, any Benefit Plans. Neither the execution and delivery of this Agreement or the Ancillary Documents nor the consummation of the Transactions will (i) result in any payment or benefit (including severance, unemployment compensation, golden parachute, bonus or otherwise) from the Purchaser or its Subsidiaries becoming due to any director, officer or employee of the Purchaser or (ii) result in the acceleration of the time of payment or vesting of any such payment or benefit. There is no arrangement with respect to any employee of the Purchaser that would result in the payment of any amount that by operation of Sections 280G or 162(m) of the Code would not be deductible by the Purchaser and no arrangement exists pursuant to which the Purchaser will be required to “gross up” or otherwise compensate any person because of the imposition of any excise Tax on a payment to such person.

 

3.13       Properties. The Purchaser does not own, license or otherwise have any right, title or interest in any material Intellectual Property. The Purchaser does not own or lease any material real property or material Personal Property.

 

3.14       Material Contracts.

 

(a)        Except as set forth on Schedule 3.14(a), other than this Agreement and the Ancillary Documents, there are no Contracts to which the Purchaser is a party or by which any of its properties or assets may be bound, subject or affected, which (i) creates or imposes a Liability greater than $200,000, (ii) may not be cancelled by the Purchaser on less than sixty (60) days’ prior notice without payment of a material penalty or termination fee or (iii) prohibits, prevents, restricts or impairs in any material respect any business practice of the Purchaser as its business is currently conducted, any acquisition of material property by the Purchaser, or restricts in any material respect the ability of the Purchaser to engage in business as currently conducted by it or compete with any other Person (each, a “Purchaser Material Contract”). All Purchaser Material Contracts have been made available to the Company other than those that are exhibits to the Purchaser SEC Reports.

 

(b)         With respect to each Purchaser Material Contract: (i) the Purchaser Material Contract was entered into at arms’ length and in the ordinary course of business; (ii) the Purchaser Material Contract is legal, valid, binding and enforceable in all material respects against the Purchaser and, to the Knowledge of the Purchaser, the other parties thereto, and is in full force and effect (except, in each case, as such enforcement may be limited by the Enforceability Exceptions); (iii) the Purchaser is not in breach or default in any material respect, and no event has occurred that with the passage of time or giving of notice or both would constitute such a breach or default in any material respect by the Purchaser, or permit termination or acceleration by the other party, under such Purchaser Material Contract; and (iv) to the Knowledge of the Purchaser, no other party to any Purchaser Material Contract is in breach or default in any material respect, and no event has occurred that with the passage of time or giving of notice or both would constitute such a breach or default by such other party, or permit termination or acceleration by the Purchaser under any Purchaser Material Contract.

 

3.15     Transactions with Affiliates. Schedule 3.15 sets forth a true, correct and complete list of the Contracts and arrangements that are in existence as of the date of this Agreement under which there are any existing or future Liabilities or obligations between the Purchaser and any (a) present or former director, officer or employee or Affiliate of the Purchaser, or any immediate family member of any of the foregoing, or (b) record or beneficial owner of more than five percent (5%) of the Purchaser’s outstanding capital stock as of the date hereof.

 

3.16     Merger Sub Activities. Since its formation, Merger Sub has not engaged in any business activities other than as contemplated by this Agreement, does not own directly or indirectly any ownership, equity, profits or voting interest in any Person and has no assets or Liabilities except those incurred in connection with this Agreement and the Ancillary Documents to which it is a party and the Transactions, and, other than this Agreement and the Ancillary Documents to which it is a party, Merger Sub is not party to or bound by any Contract.

 

3.17      Investment Company Act. The Purchaser is not an “investment company” or a Person directly or indirectly “controlled” by or acting on behalf of an “investment company”, or required to register as an “investment company”, in each case within the meaning of the Investment Company Act of 1940, as amended.

 

3.18      Finders and Brokers. Except as set forth on Schedule 3.18, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission from the Purchaser, the Target Companies or any of their respective Affiliates in connection with the Transactions based upon arrangements made by or on behalf of the Purchaser.

 

3.19      Ownership of Stockholder Merger Consideration. All shares of Purchaser Class A Common Stock to be issued and delivered to the Company Stockholders as Stockholder Merger Consideration in accordance with Article I shall be, upon issuance and delivery of such Purchaser Class A Common Stock, fully paid and non-assessable, free and clear of all Liens, other than restrictions arising from applicable securities Laws, any applicable Company Lock-Up Agreement, and any Liens incurred by any Company Stockholder, and the issuance and sale of such Purchaser Class A Common Stock pursuant hereto will not be subject to or issued in violation of any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the DGCL or any other applicable Law, the Purchaser’s Organizational Documents or any Contract to which Purchaser is a party. All of the outstanding Purchaser Securities have been granted, offered, sold and issued in compliance with all applicable securities Laws.

 

3.20       Certain Business Practices.

 

(a)        Neither the Purchaser, nor any of its Representatives acting on its behalf, has (i) used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees, to foreign or domestic political parties or campaigns or violated any provision of the U.S. Foreign Corrupt Practices Act of 1977 or any other local or foreign anti-corruption or bribery Law, (iii) made any other unlawful payment, or (iv) since the formation of the Purchaser, directly or indirectly, given or agreed to give any unlawful gift or similar benefit in any material amount to any customer, supplier, governmental employee or other Person who is or may be in a position to help or hinder the Purchaser or assist it in connection with any actual or proposed transaction.

 

(b)        The operations of the Purchaser are and have been conducted at all times in material compliance with money laundering statutes in all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Authority, and no Action involving the Purchaser with respect to any of the foregoing is pending or, to the Knowledge of the Purchaser, threatened.

 

(c)         None of the Purchaser or any of its directors or officers, or, to the Knowledge of the Purchaser, any other Representative acting on behalf of the Purchaser is currently identified on the specially designated nationals or other blocked person list or otherwise currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”), and the Purchaser has not, in the last three (3) fiscal years directly or knowingly indirectly, used any funds, or loaned, contributed or otherwise made available such funds to any Subsidiary, joint venture partner or other Person, in connection with any sales or operations in any country sanctioned by OFAC or for the purpose of financing the activities of any Person currently subject to, or otherwise in violation of, any U.S. sanctions administered by OFAC.

 

3.21      Insurance. Schedule 3.21 lists all insurance policies (by policy number, insurer, coverage period, coverage amount, annual premium and type of policy) held by the Purchaser relating to the Purchaser or its business, properties, products, products liability, assets, directors, officers and employees, copies of which have been provided to the Company. All premiums due and payable under all such insurance policies have been timely paid and the Purchaser is otherwise in material compliance with the terms of such insurance policies. All such insurance policies are in full force and effect, and, to the Knowledge of the Purchaser, there is no threatened termination of, or material premium increase with respect to, any of such insurance policies. There have been no insurance claims made by the Purchaser. The Purchaser has each reported to its insurers all claims and pending circumstances that would reasonably be expected to result in a claim, except where such failure to report such a claim would not be reasonably likely to have a Material Adverse Effect on the Purchaser.

 

3.22      Purchaser Trust Account. As of June 30, 2023, the Trust Account has a rounded off balance of no less than $13,634,402. Such monies are invested solely in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act or money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act, and held in trust by Continental Stock Transfer & Trust Company pursuant to the Trust Agreement. The Trust Agreement is valid and in full force and effect and enforceable in accordance with its terms (subject to the Enforceability Exceptions) and has not been amended or modified. There are no separate agreements, side letters or other agreements that would cause the description of the Trust Agreement in the Purchaser SEC Reports to be inaccurate in any material respect and/or that would entitle any Person (other than the underwriters of the IPO, Public Stockholders who shall have elected to redeem their Purchaser Class A Common Stock (or in connection with an extension of the Purchaser’s deadline to consummate a Business Combination) or Governmental Authorities for Taxes) to any portion of the proceeds in the Trust Account. Prior to the Closing, none of the funds held in the Trust Account may be released except as described in the second sentence of Section 8.1.

 

3.23      Takeover Statutes. The Purchaser board of directors has taken all necessary action to ensure that the restrictions on business combinations contained in Section 203 of the DGCL or contained in Section 78.411 through Section 78.444 of the BCA will not apply to this Agreement, the Transactions, including by approving this Agreement, the Mergers and the other Transactions. There is no stockholder rights plan, “poison pill” anti-takeover plan or other similar plan, device or arrangement to which the Purchaser is a party or by which it or they are bound with respect to any capital stock of the Purchaser.

 

3.24      Opinion of Purchaser Financial Advisor. ValueScope, Inc. (the “Purchaser Financial Advisor”) has delivered to the board of directors of the Purchaser as of the date hereof an opinion to the effect that, as of the date of such opinion, and based on and subject to the assumptions, limitations, qualifications and other matters set forth therein, the Merger is fair, from a financial point of view, to holders of Purchaser Class A Common Stock and Purchaser Class B Common Stock. A copy of the written opinion has been provided to the Company, solely for informational purposes (it being understood and agreed that such written opinion may not be relied upon by the Company or its Affiliates).

 

3.25     Independent Investigation. The Purchaser has conducted its own independent investigation, review and analysis of the business, results of operations, prospects, condition (financial or otherwise) or assets of the Target Companies, and acknowledges that it has been provided adequate access to the personnel, properties, assets, premises, books and records, and other documents and data of the Target Companies for such purpose. The Purchaser acknowledges and agrees that: (a) in making its decision to enter into this Agreement and to consummate the Transactions, it has relied solely upon its own investigation and the express representations and warranties of the Company set forth in this Agreement (including the related portions of the Company Disclosure Schedules) and in any certificate delivered to the Purchaser pursuant hereto, and the information provided by or on behalf of the Company for the Registration Statement; and (b) neither the Company nor its respective Representatives have made any representation or warranty as to the Target Companies, or this Agreement, except as expressly set forth in this Agreement (including the related portions of the Company Disclosure Schedules) or in any certificate delivered to Purchaser pursuant hereto, or with respect to the information provided by or on behalf of the Company for the Registration Statement.

 

3.26      Information Supplied. None of the information supplied or to be supplied by the Purchaser expressly for inclusion or incorporation by reference: (a) in any current report on Form 8-K, and any exhibits thereto or any other report, form, registration or other filing made with any Governmental Authority or stock exchange with respect to the Transactions; (b) in the Registration Statement; or (c) in the mailings or other distributions to the Purchaser Stockholders and/or prospective investors with respect to the consummation of the Transactions or in any amendment to any of documents identified in (a) through (c), will, when filed, made available, mailed or distributed, as the case may be, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. None of the information supplied or to be supplied by the Purchaser expressly for inclusion or incorporation by reference in any of the press releases or filings with the SEC relating to the Transactions will, when filed or distributed, as applicable, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. Notwithstanding the foregoing, the Purchaser makes no representation, warranty or covenant with respect to any information supplied by or on behalf of the Company or its Affiliates.

 

3.27       No Other Representations. Except for the representations and warranties expressly made by the Purchaser in this Article III (as modified by the Purchaser Schedules) or as expressly set forth in an Ancillary Document, neither the Purchaser, nor any other Person on its behalf makes any express or implied representation or warranty with respect to any of the Purchaser, the Purchaser Securities, the business of the Purchaser, or the Transactions, and the Purchaser hereby expressly disclaims any other representations or warranties, whether implied or made by the Purchaser or any of its respective Representatives. Except for the representations and warranties expressly made by the Purchaser in this Article III (as modified by the Purchaser Disclosure Schedules) or in an Ancillary Document, the Purchaser hereby expressly disclaims all liability and responsibility for any representation, warranty, projection, forecast, statement or information made, communicated or furnished (orally or in writing) to the Target Companies, the Company Security Holders or any of their respective Representatives (including any opinion, information, projection or advice that may have been or may be provided to the Target Companies, the Company Security Holders or any of their respective Representatives by any Representative of the Purchaser), including any representations or warranties regarding the probable success or profitability of the businesses of the Purchaser.

 

ARTICLE IV

 

Except as set forth in (i) the disclosure schedules delivered by the Company to the Purchaser on the date hereof (the “Company Disclosure Schedules”) or (ii) the Company SEC Reports that are available on the SEC’s website through EDGAR at least two (2) Business Days prior to the date hereof (it being acknowledged that nothing disclosed in such a SEC Report under the headings “Risk Factors” or “Forward-Looking Statements” will be deemed to modify or qualify and representations or warranties set forth in Article IV), the Company hereby represents and warrants to the Purchaser as follows:

 

4.1        Organization and Standing. The Company is a corporation duly incorporated, validly existing and in good standing under the BCA. The Company has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted, except where the failure to have such requisite power or authority would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each Subsidiary of the Company is a corporation or other entity duly formed, validly existing and in good standing under the Laws of its jurisdiction of organization and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted, except where the failure to have such requisite power or authority would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each Target Company is duly qualified or licensed and in good standing in each jurisdiction in which the character of the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so qualified or licensed or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Schedule 4.1 lists all jurisdictions in which any Target Company is qualified to conduct business as of the date of this Agreement and all names other than its legal name under which any Target Company does business as of the date of this Agreement. The Company has provided to the Purchaser accurate and complete copies of its Organizational Documents and the Organizational Documents of each of its Subsidiaries, each as amended to date and as currently in effect. No Target Company is in violation of any provision of its Organizational Documents in any material respect.

 

4.2         Authorization; Binding Agreement.

 

(a)        The Company has all requisite corporate power and authority to execute and deliver this Agreement and each Ancillary Document to which it is or is required to be a party, to perform the Company’s obligations hereunder and thereunder and to consummate the Transactions, subject to obtaining the Required Company Stockholder Approval. The execution and delivery of this Agreement and each Ancillary Document to which the Company is or is required to be a party and the consummation of the Transactions, (a) have been duly and validly authorized by the Company’s board of directors in accordance with the Company’s Organizational Documents, the BCA, any other applicable Law or any Contract to which the Company is a party or by which it or its securities are bound and (b) other than the Required Company Stockholder Approval, no other corporate proceedings on the part of the Company are necessary to authorize the execution and delivery of this Agreement and each Ancillary Document to which it is a party or to consummate the Transactions. This Agreement has been, and each Ancillary Document to which the Company is or is required to be a party shall be when delivered, duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery of this Agreement and Ancillary Documents by the other Parties hereto and thereto, constitutes, or when delivered shall constitute, the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to the Enforceability Exceptions.

 

(b)       The Company’s board of directors, by resolutions duly adopted, has unanimously (i) determined that this Agreement and the Transactions, including the Merger, is fair, advisable and in the best interests of the Company and the Company Stockholders, (ii) approved this Agreement and the Transactions, including the Merger, upon the terms and subject to the conditions set forth herein, (iii) directed that approval of this Agreement and adoption of the Transactions, including the Merger, be submitted to a vote at a meeting of the Company Stockholders, and (iv) recommended to Company Stockholders that they approve and adopt this Agreement and the Transactions, including the Merger.

 

4.3         Capitalization.

 

(a)       The Company is authorized to issue (i) 2,500,000,000 shares of Company Common Stock, par value $0.001 per share, of which 1,026,078,464 shares as of August 18, 2023 are issued and outstanding, and (ii) 5,000,000 shares of Company Preferred Stock, par value $0.0001 per share, of which no shares as of the date hereof are issued and outstanding. With respect to the Company Preferred Stock, the Company has designated (A) 6,175 shares as Company Series A Preferred Stock, of which no shares are outstanding, (B) 293 shares as Company Series B Preferred Stock, of which no shares are outstanding, (C) 90 shares as Company Series C Preferred Stock, of which no shares are outstanding, and (D) 8 shares as Company Series D Preferred Stock, of which no shares are outstanding. All of the outstanding shares and other equity interests of the Company have been duly authorized, are fully paid and non-assessable and not in violation of any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the BCA, any other applicable Law, the Company Articles or any Contract to which the Company is a party or by which it or its securities are bound. The Company holds no shares or other equity interests of the Company in its treasury. None of the outstanding shares or other equity interests of the Company were issued in violation of any applicable securities Laws. The rights, privileges and preferences of the Company Preferred Stock are as stated in the Company Articles and as provided by the BCA.

 

(b)        As of the date of this Agreement, the Company has reserved 35,000,000 shares of Company Common Stock for issuance pursuant to the Company Equity Plan, which was duly adopted by the Company’s board of directors and approved by the Company’s stockholders. As of the date of this Agreement, of such shares of Company Common Stock reserved for issuance under the Company Equity Plan, (x) 19,136,150 of such shares are reserved for issuance upon exercise of Company Options that are outstanding as of the date of this Agreement, and (y) 15,863,850 of such shares remain available for future awards permitted under the Company Equity Plan. Except as set forth on Schedule 4.3(b), as of the date of this Agreement, there are no (i) outstanding options, warrants, puts, calls, convertible securities, rights of first refusal, preemptive or similar rights, (ii) bonds, debentures, notes or other Indebtedness having general voting rights or that are convertible or exchangeable into securities having such rights or (iii) subscriptions or other rights, agreements, arrangements, Contracts or commitments of any character (other than this Agreement and the Ancillary Documents) to which the Company is a party, (A) relating to the issued or unissued shares of the Company, (B) obligating the Company to issue, transfer, deliver, offer or sell or cause to be issued, transferred, delivered, offered or sold any options or shares or securities convertible into or exchangeable for such shares, (C) obligating the Company to grant, extend or enter into any such option, warrant, call, subscription, convertible securities, right of first refusal, preemptive right or other similar right, agreement or arrangement or commitment for such shares, (D) obligating the Company to redeem, repurchase or otherwise acquire any such shares or other equity interests, or (E) to provide an amount of funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in the Company or any other Person. Except as set forth on Schedule 4.3(b), as of the date of this Agreement, there is no agreement or commitment by the Company relating to the voting or registration of, or restricting any Person from purchasing, selling, pledging or otherwise disposing of (or granting any option or similar right with respect to), any shares of the Company. As a result of the consummation of the Transactions, no equity interests of the Company are issuable and no rights in connection with any interests, warrants, rights, options or other securities of the Company accelerate or otherwise become triggered (whether as to vesting, exercisability, convertibility or otherwise).

 

(c)        Except as disclosed in the Company Financials, since January 1, 2023, the Company has not declared or paid any distribution or dividend in respect of its equity interests and has not repurchased, redeemed or otherwise acquired any equity interests of the Company, and the board of directors of the Company has not authorized any of the foregoing.

 

4.4        Subsidiaries. Schedule 4.4 sets forth, as of the date of this Agreement, the name of each Subsidiary of the Company, and with respect to each Subsidiary, (a) its jurisdiction of organization, (b) its authorized shares or other equity interests (if applicable), and (c) the number of issued and outstanding shares or other equity interests and the record holders and beneficial owners thereof. All of the outstanding equity securities of each Subsidiary of the Company are duly authorized and validly issued, fully paid and non-assessable (if applicable), were offered, sold and delivered in compliance with all applicable securities Laws, are owned by one or more of the Company or its Subsidiaries free and clear of all Liens (other than those, if any, imposed by such Subsidiary’s Organizational Documents) and no depositary receipts have been issued for or in respect of any equity securities issued by any Subsidiary. There are no Contracts to which the Company or any of its Affiliates is a party or bound with respect to the voting (including voting trusts or proxies) of the equity interests of any Subsidiary of the Company other than the Organizational Documents of any such Subsidiary. There are no outstanding or authorized options, warrants, rights, agreements, subscriptions, convertible securities or commitments to which any Subsidiary of the Company is a party or which are binding upon any Subsidiary of the Company providing for the issuance or redemption of any equity interests of any Subsidiary of the Company. There are no outstanding equity appreciation, phantom equity, profit participation or similar rights granted by any Subsidiary of the Company. No Subsidiary of the Company has any limitation, whether by Contract, Order or applicable Law, on its ability to make any distributions or dividends to its equity holders or repay any debt owed to another Target Company. Except for the equity interests of the Subsidiaries listed on Schedule 4.4, the Company does not own or have any rights to acquire, directly or indirectly, any equity interests of, or otherwise Control, any Person. None of the Company or its Subsidiaries is a participant in any joint venture, partnership or similar arrangement. There are no outstanding contractual obligations of the Company or its Subsidiaries to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any other Person.

 

4.5       Governmental Approvals. Except as otherwise described in Schedule 4.5, no Consent of or with any Governmental Authority on the part of any Target Company is required to be obtained or made in connection with the execution, delivery or performance by the Company of this Agreement or any Ancillary Documents or the consummation by the Company of the Transactions, other than (a) such filings as contemplated by this Agreement, (b) any filings required with OTC Market or the SEC with respect to the Transactions, (c) applicable requirements, if any, of the Securities Act, the Exchange Act, and/or any state “blue sky” securities Laws, and the rules and regulations thereunder, and (d) where the failure to obtain or make such Consents or to make such filings or notifications would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

4.6        Non-Contravention. Except as otherwise described in Schedule 4.6, the execution and delivery by the Company (or any other Target Company, as applicable) of this Agreement and each Ancillary Document to which any Target Company is or is required to be a party or otherwise bound, and the consummation by any Target Company of the Transactions and compliance by any Target Company with any of the provisions hereof and thereof, will not (a) conflict with or violate any provision of any Target Company’s Organizational Documents, (b) subject to obtaining the Consents from Governmental Authorities referred to in Section 4.5 hereof, the waiting periods referred to therein having expired, and any condition precedent to such Consent or waiver having been satisfied, conflict in any manner with or violate in any respect any Law, Order or Consent applicable to any Target Company or any of its material properties or assets, or (c) (i) violate, conflict with or result in a breach of, (ii) constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, (iii) result in the termination, withdrawal, suspension, cancellation or modification of, (iv) accelerate the performance required by any Target Company under, (v) result in a right of termination or acceleration under, (vi) give rise to any obligation to make payments or provide compensation under, (vii) result in the creation of any Lien upon any of the properties or assets of any Target Company under (other than Permitted Liens), (viii) give rise to any obligation to obtain any Third Party Consent or provide any notice to any Person, or (ix) give any Person the right to declare a default, exercise any remedy, claim a rebate, chargeback, penalty or change in delivery schedule, accelerate the maturity or performance, cancel, terminate or modify any right, benefit, obligation or other term under, any of the terms, conditions or provisions of any Company Material Contract, except for any deviations from any of the foregoing clauses (a), (b) or (c) that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

4.7         SEC Filings and Company Financial Statements.

 

(a)        The Company has filed all forms, reports, schedules, statements, registration statements, prospectuses and other documents required to be filed or furnished by the Company with the SEC under the Securities Act and/or the Exchange Act, together with any amendments, restatements or supplements thereto, and will file all such forms, reports, schedules, statements and other documents required to be filed subsequent to the date of this Agreement. Except to the extent available in full without redaction on the SEC’s website through EDGAR for at least two (2) days prior to the date of this Agreement, the Company has delivered to the Purchaser copies in the form filed with the SEC of all of the following: (i) the Company’s annual reports on Form 10-K for the past three (3) fiscal years; (ii) the Company’s quarterly reports on Form 10-Q for each fiscal quarter from and after January 1, 2023, that the Company filed such reports to disclose its quarterly financial results in each of the fiscal years of the Company referred to in clause (i) above; (iii) all other forms, reports, registration statements, prospectuses and other documents (other than preliminary materials) filed by the Company with the SEC since the beginning of the first fiscal year referred to in clause (i) above (the forms, reports, registration statements, prospectuses and other documents referred to in clauses (i), (ii) and (iii) above, whether or not available through EDGAR, are, collectively, the “Company SEC Reports”); and (iv) all certifications and statements required by (A) Rules 13a-14 or 15d-14 under the Exchange Act, and (B) 18 U.S.C. §1350 (Section 906 of SOX) with respect to any report referred to in clause (i) above (collectively, the “Company Public Certifications”). The Company SEC Reports (x) were prepared in all material respects in accordance with the requirements of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations thereunder and (y) did not, as of their respective effective dates (in the case of Company SEC Reports that are registration statements filed pursuant to the requirements of the Securities Act) and at the time they were filed with the SEC (in the case of all other Company SEC Reports) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading, and the Company Public Certifications are each true as of their respective dates of filing. Except as otherwise described in Schedule 4.7(a), as of the date of this Agreement, there are no outstanding or unresolved comments in comment letters received from the SEC with respect to any Company SEC Reports. None of the Company SEC Reports filed on or prior to the date of this Agreement is subject to ongoing SEC review or investigations as of the date of this Agreement. As used in this Section 4.7(a), the term “file” shall be broadly construed to include any manner permitted by SEC rules and regulations in which a document or information is furnished, supplied or otherwise made available to the SEC. As of the date of this Agreement, (A) the Company Common Stock is listed on the OTCQB, (B) the Company has not received any written deficiency notice from the OTCQB relating to the continued listing requirements of such Company Common Stock, (C) there are no Actions pending or, to the Company’s Knowledge, threatened in writing against the Company by the Financial Industry Regulatory Authority with respect to any intention by such entity to suspend, prohibit or terminate the quoting of such Company Common Stock on the OTCQB, and (D) such Company Common Stock is compliance with all of the applicable corporate governance rules of the OTCQB.

 

(b)        As used herein, the term “Company Financials” means the (i) audited consolidated financial statements of the Target Companies (including, in each case, any related notes thereto), consisting of the consolidated balance sheets of the Target Companies as of December 31, 2021 and December 31, 2022 and the related consolidated audited income statements, changes in stockholder equity and statements of cash flows as of the respective dates of, and for the fiscal years then ended, each audited by a PCAOB qualified auditor in accordance with GAAP and PCAOB standards and (ii) the unaudited consolidated financial statements of the Target Companies, consisting of the consolidated balance sheet of the Target Companies as of June 30, 2023 (the “Interim Balance Sheet Date”), and the related unaudited consolidated income statement, changes in shareholder equity and statement of cash flows for the six (6) month period then ended. The Company Financials are complete and accurate in all material respects and fairly present in all material respects the financial position and the results of operations, changes in shareholders’ equity, and cash flows as of the respective dates of, and for the periods referred to in, such Company Financials, all in accordance with (x) GAAP methodologies applied on a consistent basis throughout the periods involved, (y) with all applicable accounting requirements under the Securities Act and the rules and regulations of the SEC thereunder, including Regulation S-X or Regulation S-K, as applicable (except as may be indicated in the notes thereto and for the omission of notes and audit adjustments in the case of unaudited quarterly financial statements to the extent permitted by Regulation S-X or Regulation S-K, as applicable), and (z) the books and records of the Target Companies as of the times and for the periods referred to therein.

 

(c)        Each Target Company maintains accurate books and records reflecting its assets and Liabilities and maintains proper and adequate internal accounting controls that provide reasonable assurance that (i) such Target Company does not maintain any off-the-book accounts and that such Target Company’s assets are used only in accordance with such Target Company’s management directives, (ii) transactions are executed with management’s authorization, (iii) transactions are recorded as necessary to permit preparation of the financial statements of such Target Company and to maintain accountability for such Target Company’s assets, (iv) access to such Target Company’s assets is permitted only in accordance with management’s authorization, (v) the reporting of such Target Company’s assets is compared with existing assets at regular intervals and verified for actual amounts, and (vi) accounts, notes and other receivables and inventory are recorded accurately, and proper and adequate procedures are implemented to effect the collection of accounts, notes and other receivables on a current and timely basis. All of the financial books and records of the Target Companies are complete and accurate in all material respects and have been maintained in the ordinary course consistent with past practice and in accordance with applicable Laws. No Target Company has been subject to or involved in any material fraud that involves management or other employees who have a significant role in the internal controls over financial reporting of any Target Company. In the past three (3) years, no Target Company or its Representatives has received any written complaint, allegation, assertion or claim regarding the accounting or auditing practices, procedures, methodologies or methods of any Target Company or its internal accounting controls, including any material written complaint, allegation, assertion or claim that any Target Company has engaged in questionable accounting or auditing practices.

 

(d)        The Target Companies do not have any Indebtedness other than the Indebtedness set forth on Schedule 4.7(d), which schedule sets for the amounts (including principal and any accrued but unpaid interest or other obligations) with respect to such Indebtedness. Except as disclosed on Schedule 4.7(d), no Indebtedness of any Target Company contains any restriction upon (i) the prepayment of any of such Indebtedness, (ii) the incurrence of Indebtedness by any Target Company, or (iii) the ability of the Target Companies to grant any Lien on their respective properties or assets.  The Company Convertible Notes set forth on Annex A represent all of the convertible promissory notes of the Company that are convertible into shares of Company Common Stock.

 

(e)       Except as set forth on Schedule 4.7(e), no Target Company is subject to any Liabilities or obligations required to be reflected on a balance sheet prepared in accordance with GAAP, except for those that (i) are adequately reflected or reserved on or provided for in the consolidated balance sheet of the Company and its Subsidiaries as of the Interim Balance Sheet Date contained in the Company Financials, (ii) are incurred after the Interim Balance Sheet Date in the ordinary course of business (other than Liabilities for breach of any Contract or violation of any Law), or (iii) would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

4.8        Absence of Certain Changes. Except as set forth on Schedule 4.8, since December 31, 2022 to the date of this Agreement, each Target Company has (a) conducted its business only in the ordinary course of business, (b) not been subject to any event or occurrence, that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company, and (c) has not taken any action that would be prohibited by Sections 5.2(b)(i)-(iv), (xiii), (xv)-(xvi), or (xviii) (without giving effect to Schedule 5.2) if such action were taken on or after the date hereof without the consent of the Purchaser.

 

4.9        Compliance with Laws. During the past three (3) years, no Target Company is or has been in conflict or noncompliance with, or in default or violation of (nor has any Target Company received, during the three (3) years prior to the date of this Agreement, any written notice of any conflict or non-compliance with, or default or violation of) any applicable Laws by which it or any of its properties, assets, employees, business or operations are or were bound or affected, except for such conflict, noncompliance, default or violation that would not reasonably be expected to have a Material Adverse Effect.  To the Knowledge of the Company, no Target Company is under investigation with respect to any violation or alleged violation of any applicable Laws, except for such noncompliance or investigation that would not reasonably be expected to have a Material Adverse Effect on such Target Company, and no Target Company has received written notice in the last three (3) years alleging any violation of applicable Law in any material respect by such Target Company.

 

4.10      Company Permits. Each Target Company (and its employees who are legally required to be licensed by a Governmental Authority in order to perform his or her duties with respect to his or her employment with any Target Company), holds all material Permits (including those administered by the FDA or by any Governmental Authority performing functions similar to those performed by the FDA that governs the business of a Target Company) necessary to lawfully conduct in all material respects its business as presently conducted, and to own, lease and operate its assets and properties (collectively, the “Company Permits”), except where the failure to possess such Company Permit would not have, and would not reasonably be expected to have, a Material Adverse Effect on the Target Companies. The Company has made available to the Purchaser true, correct and complete copies of all material Company Permits as of the date of this Agreement, all of which material Company Permits are listed on Schedule 4.10. All of the Company Permits are in full force and effect, except where the failure for such Consent to be in full force and effect would not reasonably be expected to have a Material Adverse Effect on the Company. No suspension or cancellation of any of the material Company Permits is pending or, to the Company’s Knowledge, threatened in writing. No Target Company is in violation in any material respect of the terms of any material Company Permit and, as of the date of this Agreement, no Target Company has received any written notice of any Actions relating to the revocation or material modification of any material Company Permit.

 

4.11      Actions; Orders. Except as described on Schedule 4.11, as of the date of this Agreement, there is no (a) Action of any nature currently pending or, to the Company’s Knowledge, threatened in writing that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company (and no such Action has been brought in the past three (3) years or, to the Company’s Knowledge, threatened in the past three (3) years), or (b) material Order now pending or outstanding or that was rendered by a Governmental Authority in the past three (3) years to the date of this Agreement, in either case of (a) or (b) by or against any Target Company, or any Target Company’s business, equity securities or assets. The items listed on Schedule 4.11, if finally determined adversely to the Target Companies, will not have, either individually or in the aggregate, a Material Adverse Effect upon any Target Company. In the past three (3) years to the date of this Agreement, none of the current or former officers, senior management or directors of any Target Company have been charged with, indicted for, arrested for, or convicted of any felony or any crime involving fraud.

 

4.12       Material Contracts.

 

(a)         Schedule 4.12(a) sets forth a true, correct and complete list of, and the Company has made available to the Purchaser (including written summaries of oral Contracts), true, correct and complete copies of, each Contract to which any Target Company is a party or by which any Target Company, or any of its properties or assets are bound or affected as of the date of this Agreement (each Contract required to be set forth on Schedule 4.12(a), other than a Company Benefit Plan, a “Company Material Contract”) that:

 

(i)        contains covenants that materially limit the ability of any Target Company (A) to compete in any line of business or with any Person or in any geographic area or to sell, or provide any service or product, including any non- competition covenants, exclusivity restrictions, rights of first refusal or most-favored pricing clauses or (B) to purchase or acquire an interest in any other Person;

 

(ii)      involves any joint venture, profit sharing, partnership, limited liability company or other similar agreement or arrangement relating to the formation, creation, operation, management or control of any partnership or joint venture;

 

(iii)       involves any exchange traded, over the counter or other swap, cap, floor, collar, futures contract, forward contract, option or other derivative financial instrument or Contract, based on any commodity, security, instrument, asset, rate or index of any kind or nature whatsoever, whether tangible or intangible, including currencies, interest rates, foreign currency and indices;

 

(iv)       evidences Indebtedness (whether incurred, assumed, guaranteed or secured by any asset) of any Target Company having an outstanding principal amount in excess of $500,000;

 

(v)        involves the acquisition or disposition, directly or indirectly (by merger or otherwise), of assets with an aggregate value in excess of $500,000 (other than in the ordinary course of business) or shares or other equity interests of any Target Company or another Person;

 

(vi)        relates to any merger, consolidation or other business combination with any other Person or the acquisition or disposition of any other entity or its business or material assets or the sale of any Target Company, its business or material assets, in each case with ongoing or future rights or obligations on behalf of any Target Company;

 

(vii)      by its terms, individually or with all related Contracts, calls for aggregate payments or receipts by the Target Companies under such Contract or Contracts of at least $500,000 in the 12-month period ended December 31, 2022, or during the 12-month period ending December 31, 2023 (on an annualized basis);

 

(viii)      is with any Top Customer or Top Supplier;

 

(ix)     is between any Target Company and any Related Person of a Target Company, including all non-competition, severance and indemnification agreements (other than at-will employment or consulting arrangements, confidentiality, non-solicitation, non-competition, or Intellectual Property assignment agreements with employees and contractors entered into in the ordinary course of business);

 

(x)        obligates the Target Companies to make any capital commitment or expenditure in excess of $500,000 (including pursuant to any joint venture);

 

(xi)      relates to a material settlement in excess of $500,000 entered into within two (2) years prior to the date of this Agreement or under which any Target Company has outstanding obligations (other than customary confidentiality obligations);

 

(xii)       provides another Person (other than another Target Company or any manager, director or officer of any Target Company) with a power of attorney;

 

(xiii)     relates to the development, ownership, licensing or use of any material Intellectual Property by, to or from any Target Company, other than (A) “shrink wrap,” “click wrap,” and “off the shelf” software agreements and other agreements for Software commercially available on reasonable terms to the public generally with license, maintenance, support and other fees of less than $20,000 per year, (B) employee or consultant invention assignment agreements entered into on a Target Company’s standard form of such agreement, (C) confidentiality agreements entered into in the ordinary course of business, (D) non-exclusive licenses from customers or distributors to any Target Company entered into in the ordinary course of business, or (E) feedback and ordinary course trade name or logo rights that are not material to any Target Company (each such scheduled Contract, a “Company IP License”); or

 

(xiv)      that will be required to be filed with the Registration Statement under applicable SEC requirements or would otherwise be required to be filed by the Company as an exhibit for a Form S-1 pursuant to Items 601(b)(1), (2), (4), (9) or (10) of Regulation S-K under the Securities Act as if the Company was the registrant.

 

(b)        Except as disclosed in Schedule 4.12(b), with respect to each Company Material Contract, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect: (i) such Company Material Contract is valid and binding and enforceable against the Target Company party thereto and, to the Knowledge of the Company, as of the date of this Agreement each other party thereto, and is in full force and effect (except, in each case, as such enforcement may be limited by the Enforceability Exceptions); (ii) the consummation of the Transactions will not affect the validity or enforceability of any Company Material Contract; (iii) no Target Company is in breach or default, and no event has occurred that with the passage of time or giving of notice or both would constitute a breach or default by any Target Company, or permit termination or acceleration by the other party thereto, under such Company Material Contract; (iv) to the Knowledge of the Company as of the date of this Agreement, no other party to such Company Material Contract is in breach or default, and no event has occurred that with the passage of time or giving of notice or both would constitute such a breach or default by such other party, or permit termination or acceleration by any Target Company, under such Company Material Contract; (v) as of the date of this Agreement no party under any Company Material Contract has given written notice of its intent to terminate or otherwise seek a material amendment to such Company Material Contract, other than modifications in the ordinary course of business; and (vi) no Target Company has waived any rights under any such Company Material Contract.

 

4.13       Intellectual Property.

 

(a)         A Target Company owns, is licensed to use pursuant to valid, enforceable and binding Contracts, or otherwise has the right to use all Intellectual Property used, held for use or necessary for the operation of the business of the Target Companies (collectively, the “Company Intellectual Property”) free and clear of all Liens (other than Permitted Liens), except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on a Target Company.  Schedule 4.13(a) sets forth a true and complete list of the following, which are owned or purported to be owned by a Target Company: (i) Patents and Patent applications; (ii) registered Trademarks and applications therefor; (iii) registered Copyrights and applications therefor; and (iv) domain name registrations ((i) – (iv),  the “Registered IP”). Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on a Target Company, the execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the Transactions do not and will not encumber, impair or extinguish any of the Company Intellectual Property.

 

(b)        Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on a Target Company, (i) none of the Company Intellectual Property owned or purported to be owned by a Target Company (“Company Owned Intellectual Property”) (A) has been adjudged invalid or unenforceable in whole or in part, or (B) is the subject of any cancellation or reexamination proceeding or any other proceeding challenging its ownership, use, registrability, validity and enforceability, and (ii) all Registered IP is subsisting, in full force and effect, and, to the Knowledge of the Company, valid and enforceable, and all renewal fees and other maintenance fees have been paid.  There exist no material contractual restrictions on the disclosure, use, license or transfer of any Company Owned Intellectual Property.

 

(c)        Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on a Target Company, (i) the conduct of the business of the Target Companies does not infringe upon, misappropriate or otherwise violate, and has not, since January 1, 2021, infringed upon, misappropriated, or otherwise violated, the Intellectual Property rights of any Third Party and (ii) no Legal Action is pending, asserted in writing, or to the Knowledge of the Company, threatened against any Target Company that the conduct of the business of any Target Company infringes upon, misappropriates or otherwise violates the Intellectual Property rights of any Third Party.  To the Knowledge of the Company, no Person is infringing upon, misappropriating or otherwise violating, or has, since January 1, 2021, infringed upon, misappropriated, or otherwise violated, any Intellectual Property owned or purported to be owned by a Target Company.

 

(d)       Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on a Target Company, each Target Company has taken reasonable steps in accordance with normal industry practice to maintain and protect the confidentiality of all Company Intellectual Property that is material to the business of such Target Company and the value of which is contingent upon maintaining the confidentiality thereof. Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on a Target Company, none of the Company Owned Intellectual Property that is material to the business of a Target Company and the value of which is contingent upon maintaining the confidentiality thereof, has been disclosed other than to third parties that are bound by customary, written confidentiality agreements entered into in the ordinary course of business and that are, to the Knowledge of the Company, valid and enforceable.

 

(e)        Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on a Target Company, all Persons who have contributed, developed or conceived any Company Owned Intellectual Property have done so pursuant to a valid and enforceable Contract (subject to enforceability exceptions for bankruptcy and insolvency and subject to principles of equity) that protects the confidential information of the Target Companies and assigns to a Target Company exclusive ownership of the Person’s contribution, development or conception, other than Intellectual Property excluded by law or non-assignable moral rights.

 

(f)         To the Knowledge of the Company as of the date of this Agreement, no Person has obtained unauthorized access to Third Party information and data (including personally identifiable information) in the possession of a Target Company, nor has there been any other material compromise of the security, confidentiality or integrity of such information or data, and no written or, to the Knowledge of the Company, oral complaint relating to an improper use or disclosure of, or a breach in the security of, any such information or data has been received by a Target Company. Each Target Company has complied in all material respects with all applicable Laws and Contract requirements relating to privacy, personal data protection, and the collection, processing and use of personal information and its own privacy policies and guidelines. The operation of the business of the Target Companies as currently conducted does not violate any right to privacy or publicity of any third person, or constitute unfair competition or trade practices under applicable Law.

 

(g)        Except as may be set forth in Schedule 4.13(g) or as contained in license, distribution and service Contracts entered into in the ordinary course of business by the Target Companies, (i) no Target Company is bound by any Contract to indemnify, defend, hold harmless, or reimburse any other Person with respect to any Intellectual Property infringement, misappropriation, or similar claim which is material to the Target Company taken as a whole, and (ii) no Target Company has assumed, or agreed to discharge or otherwise take responsibility for, any existing or potential Liability of another Person for infringement, misappropriation, or violation of any Intellectual Property right, which assumption, agreement or responsibility remains in force as of the date of this Agreement.

 

(h)        Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on a Target Company, (i) to the Knowledge of the Company, there have been no unauthorized intrusions or breaches of the security of the information technology systems currently used to provide material products to customers in the conduct of a Target Company as it is currently conducted (the “IT Systems”) during the two (2) year period preceding and up to the date of this Agreement, (ii) the Target Companies have in place adequate security controls and disaster recovery plans and procedures for the IT Systems, and (iii) to the Knowledge of the Company, there have been no unauthorized intrusions or breaches of the security of the IT Systems in the two (2) year period preceding and up to the date of this Agreement that, pursuant to any legal requirement, would require a Target Company to notify customers or employees of such breach or intrusion.

 

(i)        The consummation of any of the Transactions will not result in the material breach, material modification, cancellation, termination, suspension of, or acceleration of any payments with respect to, or release of source code because of any Contract providing for the license or other use of Intellectual Property to or from a Target Company. Following the Closing, the Surviving Corporation shall be permitted to exercise, directly or indirectly through its Subsidiaries, all of the Target Companies’ rights under such Contracts or Company IP Licenses to the same extent that the Target Companies would have been able to exercise had the Transactions not occurred, without the payment of any additional amounts or consideration other than ongoing fees, royalties or payments which the Target Companies would otherwise be required to pay in the absence of such transactions.

 

4.14       Taxes and Returns.

 

(a)        Each Target Company has timely filed, or caused to be timely filed, all income Tax Returns and all other material Tax Returns required to be filed by it (taking into account all available extensions), which Tax Returns are true, correct, and complete in all material respects, and has timely paid, or caused to be timely paid, all income Taxes and other material Taxes required to be paid, other than such Taxes that are not yet due and payable and for which adequate reserves in the Company Financials have been established in accordance with GAAP.

 

(b)         No written claim has been made within the last thirty-six (36) months by any Governmental Authority in any jurisdiction in which a Target Company does not currently file a Tax Return that such Target Company is or may be subject to taxation in that jurisdiction, which claim has not been resolved.

 

(c)        There are no claims, assessments, audits, examinations, investigations, or other Actions pending against the Target Companies in respect of any material amount of Tax, and no Target Company has been notified in writing of any proposed material Tax claims or assessments against such Target Company (other than, in each case, claims or assessments for which adequate reserves in the Company Financials have been established in accordance with GAAP).

 

(d)         There are no Liens with respect to any Taxes upon any Target Company’s assets, other than Permitted Liens.

 

(e)        Each Target Company has collected or withheld all material Taxes currently required to be collected or withheld by it, and all such material Taxes have been paid to or deposited with the appropriate Governmental Authorities or set aside in appropriate accounts for future payment when due.

 

(f)         No Target Company has any outstanding waivers, extensions, or requests for extensions of any applicable statute of limitations to assess any material amount of Taxes. There are no outstanding requests by a Target Company for any extension of time within which to file any material Tax Return or within which to pay any material Taxes shown to be due on any material Tax Return.

 

(g)        Within the last thirty-six (36) months, no Target Company has made any changes in any Tax accounting method (except as required by a change in Law) that would reasonably be expected to have a material impact on such Target Company’s Taxes following Closing.

 

(h)         No Target Company has engaged in or entered into any “listed transaction,” as defined in Treasury Regulations Section 1.6011-4(b)(2).

 

(i)         No Target Company has any Liability for the material Taxes of another Person (other than another Target Company) that are not adequately reflected in the Company Financials (i) under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or foreign applicable Law), (ii) as a transferee or successor, or (iii) by contract or indemnity (excluding commercial contracts and agreements entered into in the ordinary course of business the primary purpose of which is not the sharing of Taxes). No Target Company is a party to or bound by any Tax indemnity agreement, Tax sharing agreement or Tax allocation agreement or similar agreement (excluding commercial agreements entered into in the ordinary course of business the primary purpose of which is not the sharing of Taxes).

 

(j)         No Target Company has requested, or is the subject of or bound by any private letter ruling, technical advice memorandum, closing agreement, or similar ruling, memorandum, or agreement with any Governmental Authority with respect to any Taxes, nor is any such request outstanding, except, in each case, to the extent that the effect of such ruling, memorandum, or agreement would not reasonably be expected to be material to the Taxes of such Target Company after Closing.

 

(k)        No Target Company: (i) has constituted either a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of securities qualifying for, or intended to qualify for, Tax-free treatment under Section 355 of the Code (A) within the two (2) year period ending on the date hereof or (B) in a distribution which constitutes part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in conjunction with the Transactions; or (ii) (A) is, or has during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code been, a U.S. real property holding corporation within the meaning of Section 897(c)(2) of the Code, or (B) is or has been a member of any consolidated, combined, unitary or affiliated group for any Tax purposes other than a group of which the Company is the common parent.

 

(l)         No Target Company has taken any action, or has any current plan, intention or obligation to take any action, that could reasonably be expected to prevent the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code. To the Knowledge of the Company, there are no facts or circumstances that would reasonably be expected to prevent the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code.

 

4.15      Real Property. Schedule 4.15 contains a complete and accurate list of all premises leased or subleased or otherwise used or occupied by a Target Company for the operation of the business of a Target Company as of the date of this Agreement (collectively, the “Leased Real Property”), as well as the current annual rent and term under each Company Real Property Lease. The Company has made available to the Purchaser a true and complete copy of all leases, lease guarantees, agreements and documents related thereto, including all amendments, terminations and modifications thereof or waivers thereto in effect as of the date of this Agreement for the Leased Real Property (collectively, the “Company Real Property Leases”), and in the case of any oral Company Real Property Lease, a written summary of the material terms of such Company Real Property Lease.  Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, the Company Real Property Leases are valid, binding and enforceable in accordance with their terms and are in full force and effect, subject to Enforceability Exceptions. To the Knowledge of the Company, (i) no event has occurred which (whether with or without notice, lapse of time or both or the happening or occurrence of any other event) would constitute a default on the part of a Target Company or, as of the date of this Agreement, any other party under any of the Company Real Property Leases, and, (ii) as of the date of this Agreement, no Target Company has received notice of any such condition. No Target Company owns or has ever owned any real property or any interest in real property (other than the leasehold interests in the Company Real Property Leases).

 

4.16      Personal Property. Each item of Personal Property which is owned, used or leased by a Target Company as of the date of this Agreement with a book value or fair market value of greater than $100,000 is set forth on Schedule 4.16, along with, to the extent applicable, a list of lease agreements, lease guarantees, security agreements and other agreements related thereto, including all amendments, terminations and modifications thereof or waivers thereto (“Company Personal Property Leases”). Except as set forth in Schedule 4.16, as of the date of this Agreement all such items of Personal Property are in good operating condition and repair (reasonable wear and tear excepted consistent with the age of such items), and are suitable for their intended use in the business of the Target Companies. The operation of each Target Company’s business as it is now conducted is not in any material respect dependent upon the right to use the Personal Property of Persons other than a Target Company, except for such Personal Property that is owned, leased or licensed by or otherwise contracted to a Target Company. The Company has provided to the Purchaser a true and complete copy of each of the Company Personal Property Leases, and in the case of any oral Company Personal Property Lease, a written summary of the material terms of such Company Personal Property Lease. The Company Personal Property Leases are valid, binding and enforceable in accordance with their terms and are in full force and effect. To the Knowledge of the Company, no event has occurred which (whether with or without notice, lapse of time or both or the happening or occurrence of any other event) would constitute a default on the part of a Target Company or, as of the date of this Agreement, any other party under any of the Company Personal Property Leases, and as of the date of this Agreement, no Target Company has received notice of any such condition.

 

4.17      Title to and Sufficiency of Assets. Each Target Company has good and marketable title to, or a valid leasehold interest in or right to use, all of its tangible assets, free and clear of all Liens other than, (a) Permitted Liens, (b) the rights of lessors under leasehold interests, (c) Liens specifically identified on the balance sheet as of the Interim Balance Sheet Date included in the Company Financials, and (d) Liens set forth on Schedule 4.17. The material assets (including Intellectual Property rights and contractual rights) of the Target Companies constitute all of the material assets, rights and properties that are used in the operation of the businesses of the Target Companies as it is now conducted or that are used or held by the Target Companies for use in the operation of the businesses of the Target Companies, and taken together, are adequate and sufficient for the operation of the businesses of the Target Companies as currently conducted.

 

4.18       Employee Matters.

 

(a)        Except as set forth in Schedule 4.18(a), no Target Company is a party to any collective bargaining agreement or other Contract covering any group of employees, labor organization or other representative of any of the employees of any Target Company, and the Company has no Knowledge of any activities or proceedings of any labor union or other party to organize or represent such employees. There has not occurred or, to the Knowledge of the Company, been threatened any strike, slow-down, picketing, work-stoppage, or other similar labor activity with respect to any such employees. As of the date hereof, no current officer of a Target Company has provided any Target Company written notice of his or her plan to terminate his or her employment with any Target Company.

 

(b)        Except as set forth in Schedule 4.18(b), and except as would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect on, or with respect to, the Purchaser, each Target Company since January 1, 2020, (i) is and has been in compliance in all material respects with all applicable Laws respecting employment and employment practices, terms and conditions of employment, health and safety and wages and hours, and other Laws relating to discrimination, disability, labor relations, hours of work, payment of wages and overtime wages, pay equity, immigration, workers compensation, working conditions, employee scheduling, occupational safety and health, family and medical leave, and employee terminations, (collectively, “Employment Laws”), (ii) has not incurred any Liability that remains unsatisfied as of the date of this Agreement for any material past due arrears of wages or any material penalty for failure to comply with any Employment Law, and (iii) has not incurred any Liability that remains unsatisfied as of the date of this Agreement for any material past due arrears of wages or any material penalty for failure to comply with payment of wages. As of the date of this Agreement, there are no Actions pending or, to the Knowledge of the Company, threatened against a Target Company brought by or on behalf of any applicant for employment, any current or former employee, any Person alleging to be a current or former employee, or any Governmental Authority, relating to any Employment Law, or alleging breach of any express or implied contract of employment, wrongful termination of employment, or alleging any other discriminatory, wrongful or tortious conduct in connection with the employment relationship.

 

(c)        Schedule 4.18(c) sets forth a complete and accurate list as of the date hereof of all employees of the Target Companies showing for each as of such date the employee’s name, job title, employer, location, salary level (including any bonus, commission, deferred compensation or other remuneration eligible (other than any such arrangements under which payments are at the discretion of the Target Companies)). Except as set forth on Schedule 4.18(c), no employee is a party to a written employment Contract with a Target Company and each is employed “at will”. Except as set forth in Schedule 4.18(c), each Target Company employee has entered into the Company’s standard form of employee non-disclosure, inventions and restrictive covenants agreement with a Target Company (whether pursuant to a separate agreement or incorporated as part of such employee’s overall employment agreement), a copy of which has been made available to the Purchaser by the Company.

 

(d)        Schedule 4.18(d) sets forth a list of all individual independent contractors (including consultants) currently engaged by any Target Company as of the date hereof, along with a high-level description of the services provided, the entity engaging such Person, date of retention and rate of remuneration for each such Person. Except as set forth on Schedule 4.18(d), all of such independent contractors are a party to a written Contract with a Target Company. Except as set forth on Schedule 4.18(d), and to the extent permissible under applicable Laws, each such independent contractor has entered into customary covenants regarding confidentiality, restrictive covenants and assignment of Intellectual Property rights in inventions developed in connection with such contractor’s work for any Target Company in such Person’s agreement with a Target Company, a copy of which has been provided to the Purchaser by the Company. Each such independent contractor is terminable on thirty (30) days’ notice or less, without any obligation of any Target Company to pay severance or a termination fee.

 

4.19       Benefit Plans.

 

(a)         Set forth on Schedule 4.19(a) is a true and complete list of each material Benefit Plan of a Target Company as of the date hereof (each, a “Company Benefit Plan”). With respect to each Company Benefit Plan, there are no funded benefit obligations for which contributions have not been made or properly accrued and there are no unfunded benefit obligations that have not been accounted for by reserves, or otherwise properly footnoted in accordance with GAAP on the Company Financials, except to the extent that such amount would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect on, or with respect to, the Purchaser. No Target Company is or has in the past been a member of a “controlled group” for purposes of Section 414(b), (c), (m) or (o) of the Code with respect to any person or entity other than another Target Company, nor does any Target Company have any Liability with respect to any collectively-bargained for benefit plans, whether or not subject to the provisions of ERISA.

 

(b)        Each Company Benefit Plan is and has been operated in compliance with all applicable Laws, including ERISA and the Code, except for any noncompliance that, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect on, or with respect to, the Purchaser. Each Company Benefit Plan which is intended to be “qualified” within the meaning of Section 401(a) of the Code has received a determination letter from the IRS and its related trust has been determined to be exempt from taxation under Section 501(a) of the Code (or is based on a pre-approved plan for which the pre-approved plan sponsor has received a favorable opinion letter). To the Company’s Knowledge, no fact exists that would reasonably be expected to adversely affect the qualified status of such Company Benefit Plans or the exempt status of such trusts.

 

(c)       With respect to each Company Benefit Plan that covers any current or former officer, director, consultant or employee (or beneficiary thereof) of a Target Company, the Company has made available to Purchaser accurate and complete copies, if applicable, of: (i) the current plan documents and related trust agreements or annuity Contracts (including any amendments, modifications or supplements thereto); (ii) the current summary plan descriptions and material modifications thereto; (iii) the three (3) most recent Forms 5500, if applicable, and annual report, including all schedules thereto; (iv) the most recent annual accounting of plan assets; (v) the three (3) most recent nondiscrimination testing reports; (vi) the most recent determination or opinion letter received from the IRS, if any; (vii) the most recent actuarial valuation, if any; and (viii) all material communications with any Governmental Authority within the last three (3) years.

 

(d)       With respect to each Company Benefit Plan: (i) to the Knowledge of the Company, no breach of fiduciary duty that could reasonably be expected to result in a Material Adverse Effect to any Target Company has occurred; (ii) no Action is pending, or to the Company’s Knowledge, threatened (other than routine claims for benefits arising in the ordinary course of administration); and (iii) no prohibited transaction, as defined in Section 406 of ERISA or Section 4975 of the Code, has occurred that would reasonably be likely to result in a Material Adverse Effect to any Target Company, excluding transactions effected pursuant to a statutory or administration exemption.

 

(e)        During the six (6) year period preceding the Effective Time, no Target Company or any of their ERISA Affiliates has maintained, contributed to, or had an obligation to contribute to (i) a “defined benefit plan” (as defined in Section 414(j) of the Code), (ii) a “multiemployer plan” (as defined in Section 3(37) of ERISA), or (iii) a “multiple employer plan” (as described in Section 413(c) of the Code). No Company Benefit Plan is subject to Title IV of ERISA or Section 412 of the Code, and neither the Target Company nor any ERISA Affiliate has incurred any Liability, contingent or otherwise, under Title IV of ERISA and, to the Company’s Knowledge, no condition presently exists that is expected to cause such Liability to be incurred. No Company Benefit Plan will become a multiple employer plan with respect to any Target Company immediately after the Closing Date. No Target Company currently maintains or has ever maintained, or is required currently or has ever been required to contribute to or otherwise participate in, a multiple employer welfare arrangement or voluntary employees’ beneficiary association as defined in Section 501(c)(9) of the Code.

 

(f)        With respect to each Company Benefit Plan that is a “welfare plan” (as described in Section 3(1) of ERISA): (i) no such plan provides medical or death benefits with respect to current or former employees of a Target Company beyond their termination of employment (other than coverage mandated by Law); and (ii) each Target Company has complied in all material respects with the provisions of Section 601 et seq. of ERISA and Section 4980B of the Code.

 

(g)        The consummation of the Transactions will not, by itself: (i) entitle any individual to severance pay, unemployment compensation or other benefits or compensation or (ii) accelerate the time of payment or vesting, or increase the amount of any compensation due, or in respect of, any individual. No Target Company has incurred any Liability for any Tax imposed under Chapter 43 of the Code or civil liability under Section 502(i) or (l) of ERISA.

 

(h)        Each Company Benefit Plan that is subject to Section 409A of the Code has been administered in compliance, and is in documentary compliance, in each case in all material respects, with the applicable provisions of Section 409A of the Code, the regulations thereunder and other official guidance issued thereunder. There is no Contract or plan to which any Target Company is a party or by which it is bound to compensate any employee, consultant or director for any Taxes or interest imposed pursuant to Section 409A of the Code.

 

(i)         Each Company Option intended to qualify as an “incentive stock option” under the Code so qualifies. Each grant of a Company Option was duly authorized no later than the date on which the grant of such Company Option was by its terms to be effective by all necessary corporate action, and: (i) the stock option agreement governing such grant was duly executed and delivered by each party thereto (including electronic execution and delivery); (ii) each such grant was made in accordance with the terms of the Company Equity Plan and all other applicable Laws; (iii) the per share exercise price of each Company Option was equal or greater than the fair market value (within the meaning of Section 409A of the Code) of a share of Company Common Stock on the applicable grant date; and (iv) each such grant was properly accounted for in accordance with GAAP in the financial statements (including the related notes) of the Company.

 

4.20      Environmental Matters. Except as set forth in Schedule 4.20 and except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect:

 

(a)        Each Target Company is and has been since January 1, 2020, in compliance in all material respects with all applicable Environmental Laws, including obtaining, maintaining in good standing, and complying in all material respects with all Permits required for its business and operations by Environmental Laws (“Environmental Permits”), no Action is pending or, to the Company’s Knowledge, threatened to revoke, modify, or terminate any such Environmental Permit.

 

(b)         No Target Company is the subject of any outstanding Order with any Governmental Authority or other Person in respect of any (i) Environmental Laws, (ii) Remedial Action, or (iii) Release or threatened Release of a Hazardous Material. Except for any Company Real Property Lease, no Target Company has assumed, contractually or by operation of Law, any Liabilities or obligations under any Environmental Laws.

 

(c)         No Action has been commenced or is pending, or to the Company’s Knowledge, threatened against any Target Company or any assets of a Target Company alleging either or both that a Target Company may be in material violation of any Environmental Law or Environmental Permit or may have any material Liability under any Environmental Law.

 

(d)         No Target Company has manufactured, treated, stored, disposed of, arranged for or permitted the disposal of, generated, handled or released any Hazardous Material, or owned or operated any property or facility, in a manner that has given or would reasonably be expected to give rise to any material Liability or obligation under applicable Environmental Laws. To the Company’s Knowledge, no fact, circumstance, or condition exists in respect of any Target Company or any property currently or formerly operated or leased by any Target Company or any property to which a Target Company arranged for the disposal or treatment of Hazardous Materials that could reasonably be expected to result in a Target Company incurring any material Environmental Liabilities.

 

(e)        To the Knowledge of the Company, there is no investigation of the business, operations, or currently operated or leased property of a Target Company or previously owned, operated, or leased property of a Target Company pending or, to the Company’s Knowledge, threatened that could lead to the imposition of any Liens under any Environmental Law or material Environmental Liabilities.

 

(f)        The Company has made available to the Purchaser all environmentally related site assessments, audits, studies, reports, analysis and results of investigations that have been performed in respect of the currently or previously owned, leased, or operated properties of any Target Company, in each case that are in the Company’s possession.

 

4.21     Transactions with Related Persons. Except as set forth on Schedule 4.21, no Target Company nor any of its Affiliates, nor any officer, director, manager, employee, trustee or beneficiary of a Target Company or any of its Affiliates, nor any immediate family member of any of the foregoing (whether directly or indirectly through an Affiliate of such Person) (each of the foregoing, a “Related Person”) is presently, or in the past two (2) years, has been, a party to any transaction with a Target Company, including any Contract or other arrangement (a) providing for the furnishing of services by (other than as officers, directors, managers, employees or trustees of the Target Company), (b) providing for the rental of real property or Personal Property from, or (c) otherwise requiring payments to (other than for services or expenses as officers, directors, managers, employees or trustees of the Target Company in the ordinary course of business) any Related Person or any Person in which any Related Person has an interest as an owner, officer, manager, director, trustee or partner or in which any Related Person has any direct or indirect interest (other than the ownership of securities representing no more than two percent (2%) of the outstanding voting power or economic interest of a publicly traded company). Except as set forth on Schedule 4.21, no Related Person owns any real property, Personal Property, or right, tangible or intangible (including Intellectual Property) that is used in the business of any Target Company and no Related Person has a right to any of the foregoing property. The assets of the Target Companies do not include any material receivable or other obligation from a Related Person, and the liabilities of the Target Companies do not include any material payable or other obligation or commitment to any Related Person.

 

4.22       Insurance.

 

(a)        Schedule 4.22(a) lists all insurance policies (by policy number, insurer, coverage period, coverage amount, annual premium and type of policy) held by a Target Company as of the date hereof relating to a Target Company or its business, products, properties, assets, liabilities, directors, officers and employees (other than insurance policies associated with Company Benefit Plan), copies of which have been provided to the Purchaser. All premiums due and payable under all such insurance policies have been timely paid and the Target Companies are otherwise in material compliance with the terms of such insurance policies. Each such insurance policy (i) is legal, valid, binding, enforceable and in full force and effect and (ii) will continue to be legal, valid, binding, enforceable, and in full force and effect on identical terms following the Closing. No Target Company has any self-insurance or co-insurance programs. To the Knowledge of the Company, there is no threatened termination of, or material premium increase with respect to, any of such insurance policies.  In the two (2) years preceding the date of this Agreement, no Target Company has received any notice from, or on behalf of, any insurance carrier relating to or involving any adverse change or any change other than in the ordinary course of business, in the conditions of insurance, any refusal to issue an insurance policy or non-renewal of a policy.

 

(b)        Schedule 4.22(b) identifies each individual insurance claim in excess of $200,000 made by a Target Company in the past three (3) years. Each Target Company has reported to its insurers all claims and pending circumstances that would reasonably be expected to result in a claim, except where such failure to report such a claim would not be reasonably likely to be material to a Target Company. No event has occurred, and, to the Knowledge of the Company, no condition or circumstance exists, that would reasonably be expected to (with or without notice or lapse of time) give rise to or serve as a basis for the denial of any such insurance claim. In the three (3) years, no Target Company has made any claim against an insurance policy as to which the insurer has denied coverage.

 

4.23      Books and Records. All of the financial books and records of the Target Companies are complete and accurate in all material respects and have been maintained in the ordinary course of business consistent with past practice and in accordance with applicable Laws.

 

4.24      Top Customers and Suppliers. Schedule 4.24 lists, by dollar volume received or paid, as applicable, for each of (a) the twelve (12) months ended on December 31, 2022, and (b) the period from January 1, 2023 through the Interim Balance Sheet Date, the ten (10) largest customers of the Target Companies on a consolidated basis (the “Top Customers”) and the ten (10) largest suppliers of goods or services to the Target Companies on a consolidated basis (the “Top Suppliers”) along with the amounts of such dollar volumes. As of the date of this Agreement, (i) no Top Supplier or Top Customer within the last twelve (12) months has cancelled or otherwise terminated, or, to the Company’s Knowledge, intends to cancel or otherwise terminate, any material relationships of such Person with a Target Company, (ii) no Top Supplier or Top Customer has during the last twelve (12) months decreased materially or, to the Company’s Knowledge, threatened to stop, decrease or limit materially, or intends to modify materially its material relationships with a Target Company, (iii) to the Company’s Knowledge, no Top Supplier or Top Customer intends to refuse to pay any amount due to any Target Company or seek to exercise any remedy against any Target Company, (iv) no Target Company has within the past two (2) years been engaged in any material dispute with any Top Supplier or Top Customer, and (v) to the Company’s Knowledge, the consummation of the Transactions will not adversely affect the relationship of any Target Company with any Top Supplier or Top Customer in any material respect.

 

4.25       Certain Business Practices.

 

(a)        No Target Company, nor any of their respective Representatives acting on their behalf has (i) used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees, to foreign or domestic political parties or campaigns or violated any provision of the U.S. Foreign Corrupt Practices Act of 1977 or any other local or foreign anti-corruption or bribery Law, or (iii) made any other unlawful payment. No Target Company, nor any of their respective Representatives acting on their behalf, has directly or indirectly given or agreed to give any unlawful gift or similar benefit in any material amount to any customer, supplier, governmental employee or other Person who is or may be in a position to help or hinder any Target Company or assist any Target Company in connection with any actual or proposed transaction.

 

(b)        The operations of each Target Company are and have been conducted at all times in compliance with money laundering statutes in all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Authority, and no Action involving a Target Company with respect to any of the foregoing is pending or, to the Knowledge of the Company, threatened.

 

(c)       No Target Company or any of their respective directors or officers, or, to the Knowledge of the Company, any other Representative acting on behalf of a Target Company is currently identified on the specially designated nationals or other blocked person list or otherwise currently subject to any U.S. sanctions administered by the OFAC, and no Target Company has in the last three (3) fiscal years, directly or knowingly indirectly, used any funds, or loaned, contributed or otherwise made available such funds to any Subsidiary, joint venture partner or other Person, in connection with any sales or operations in Cuba, Iran, Syria, Sudan, Myanmar or any other country sanctioned by OFAC or for the purpose of financing the activities of any Person currently subject to, or otherwise in violation of, any U.S. sanctions administered by OFAC.

 

4.26      Investment Company Act. No Target Company is an “investment company” or a Person directly or indirectly “controlled” by or acting on behalf of an “investment company”, or required to register as an “investment company”, in each case within the meaning of the Investment Company Act of 1940, as amended.

 

4.27      Finders and Brokers. Except as set forth in Schedule 4.27, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission from the Purchaser, any Target Company or any of their respective Affiliates in connection with the Transactions based upon arrangements made by or on behalf of any Target Company.

 

4.28       Healthcare Industry Matters.

 

(a)         Each Target Company is, and has been since January 1, 2021, in compliance in all material respects with all applicable healthcare Laws, including: (i) the Federal Food, Drug, and Cosmetic Act; (ii) all federal or state criminal or civil fraud and abuse Laws (including the federal Anti-Kickback Statute (42 U.S.C. §1320a-7(b)), the Civil Monetary Penalties Law (42 U.S.C. §1320a-7(a)), the Sunshine Act (42 U.S.C. §1320a-7(h)), the Exclusion Law (42 U.S.C. §1320a-7), the Criminal False Statements Law (42 U.S.C. §1320a-7b(a)), Stark Law (42 U.S.C. §1395nn), the False Claims Act (31 U.S.C. §§3729 et seq., 42 U.S.C. §1320a-7b(a)), the Health Insurance Portability and Accountability Act of 1996 and all amendments thereto (“HIPAA”), laws governing billing and submission of a claim for reimbursement to any federal health care program as defined in 42 U.S.C. § 1320a-7b(f) including Medicare, Medicaid, TRICARE, worker’s compensation, and all other government contracting agencies, and any comparable state or local Laws) and; (iii) any applicable state licensing, disclosure and reporting requirements (all of the foregoing, collectively, “Healthcare Laws”). No Target Company has received written notification of any pending Action from the FDA or any other similar regulatory authority alleging that any operation or activity of any Target Company is in material violation of any applicable Healthcare Law.

 

(b)       All material preclinical and clinical investigations conducted or sponsored by any Target Company and intended to be submitted to a regulatory authority to support a regulatory approval are being conducted in compliance in all material respects with all applicable Healthcare Laws administered or issued by the applicable Governmental Authority, including, as applicable, (i) the FDA regulations for conducting non-clinical laboratory studies contained in Title 21 part 58 of the Code of Federal Regulations, (ii) applicable FDA requirements for the design, conduct, performance, monitoring, auditing, recording, analysis and reporting of clinical trials contained in Title 21 parts 50, 54, 56 and 312 of the Code of Federal Regulations, and (iii) applicable federal, state and foreign Healthcare Laws restricting the use and disclosure of individually identifiable health information, including HIPAA.

 

(c)       All material reports, documents, claims, Permits and notices required to be filed, maintained or furnished to the FDA or any other regulatory authority by each Target Company have been so filed, maintained or furnished. To the Knowledge of the Company, all such reports, documents, claims, Permits and notices were materially complete and accurate on the date filed (or were corrected in or supplemented by a subsequent filing). Neither any Target Company nor, to the Knowledge of the Company, any officer, employee or agent of any Target Company has (i) made an untrue statement of a material fact or any fraudulent statement to the FDA or any other regulatory authority, (ii) failed to disclose a material fact required to be disclosed to the FDA or any other regulatory authority, or (iii) committed an act, made a statement, or failed to make a statement that, at the time such disclosure was made, would reasonably be expected to provide a reasonable basis for the FDA or any other regulatory authority to invoke its policy respecting “Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities”, set forth in 56 Fed. Reg. 46191 (September 10, 1991) or any similar policy. Neither any Target Company nor, to the Knowledge of the Company, any officer, employee or agent of any Target Company has been convicted of any crime or engaged in any conduct for which debarment is mandated by 21 U.S.C. §335a(a) or any similar Healthcare Law or authorized by 21 U.S.C. §335a(b) or any similar Healthcare Law. Neither any Target Company nor, to the Knowledge of the Company, any officer, employee or agent of any Target Company has been convicted of any crime or engaged in any conduct for which such person could be excluded from participating in the federal health care programs under Section 1128 of the Social Security Act of 1935 or any Healthcare Law. As of the date of this Agreement, no Actions that would reasonably be expected to result in material debarment or exclusion are pending or threatened in writing against any Target Company or, to the Company’s Knowledge, any officer, employee, contractor, supplier (in their capacities as such) or other entities or individuals performing research or work on behalf of any Target Company. No Target Company is a party to any corporate integrity agreements, monitoring agreements, consent decrees, settlement orders, or similar agreements with or imposed by any Governmental Authority.

 

(d)        No Target Company has received any written notice, correspondence or other communication from the FDA or any other regulatory authority or from any institutional review board requiring the termination, suspension or material modification of any ongoing or planned clinical trials conducted by, or on behalf of, any Target Company.

 

(e)        As of the date of this Agreement, no data generated by any Target Company with respect to its products is the subject of any written regulatory Action, either pending or threatened in writing, by any Governmental Authority relating to the truthfulness or scientific integrity of such data.

 

(f)         To the Company’s Knowledge, no product manufactured or distributed by any Target Company is (i) adulterated within the meaning of 21 U.S.C. §351 (or any similar Healthcare Law), or (ii) misbranded within the meaning of 21 U.S.C. §352 (or any similar Healthcare Law). Since January 1, 2021, neither any Target Company nor, to the Company’s Knowledge, any of their respective contract manufacturers has received any FDA Form 483, warning letter, untitled letter, or other similar written correspondence or written notice from the FDA or any other regulatory authority alleging or asserting material noncompliance with any applicable Healthcare Laws or Permits issued to the Company by the FDA or any other regulatory authority. No manufacturing site owned by any Target Company or, to the Company’s Knowledge, any of their respective contract manufacturers, is or has been since January 1, 2019, subject to a shutdown or import or export prohibition imposed by the FDA or another regulatory authority.

 

4.29       Product Liability.

 

(a)         Each product manufactured, sold or delivered by any Target Company in conducting its business has been in all material respects in conformity with all product specifications all express and implied warranties and all applicable Laws. To the Company’s Knowledge, no Target Company has any material Liability for replacement or repair of any such products or other damages in connection therewith or any other customer or product obligations not reserved against in the Company Financials. No Target Company has sold any products or delivered any services that included a warranty for a period of longer than one year.

 

(b)         To the Company’s Knowledge, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on a Target Company, no Target Company has any Liability arising out of any injury to individuals or property as a result of the ownership, possession, or use of any product designed, manufactured, assembled, repaired, maintained, delivered, sold or installed, or services rendered, by or on behalf of a Target Company. Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on a Target Company, no Target Company has committed any act or omission which would reasonably be expected to result in, and there has been no occurrence which would reasonably be expected to give rise to or form the basis of, any product Liability or Liability for breach of warranty (whether covered by insurance or not) on the part of a Target Company with respect to products designed, manufactured, assembled, repaired, maintained, delivered, sold or installed or services rendered by or on behalf of a Target Company.

 

4.30     Takeover Statutes.  The Company Board has taken all necessary action to ensure that the restrictions on business combinations that are contained in Section 78.411 through Section 78.444 of the BCA and Section 203 of the DGCL will not apply to this Agreement, the Transactions, including by approving this Agreement, the Merger and the other Transactions.  There is no stockholder rights plan, “poison pill” anti-takeover plan or other similar plan, device or arrangement to which the Company or any of its Subsidiaries is a party or by which it or they are bound with respect to any capital stock of the Company or any of its Subsidiaries.

 

4.31      Independent Investigation. The Company has conducted its own independent investigation, review and analysis of the business, results of operations, prospects, condition (financial or otherwise) or assets of the Purchaser, and acknowledges that it has been provided adequate access to the personnel, properties, assets, premises, books and records, and other documents and data of the Purchaser for such purpose. The Company acknowledges and agrees that: (a) in making its decision to enter into this Agreement and to consummate the Transactions, it has relied solely upon its own investigation and the express representations and warranties of the Purchaser set forth in this Agreement (including the related portions of the Purchaser Disclosure Schedules) and in any certificate delivered to the Company pursuant hereto; and (b) neither the Purchaser nor any of its Representatives have made any representation or warranty as to the Purchaser or this Agreement, except as expressly set forth in this Agreement (including the related portions of the Purchaser Disclosure Schedules) or in any certificate delivered to the Company pursuant hereto.

 

4.32     Information Supplied. None of the information supplied or to be supplied by the Company expressly for inclusion or incorporation by reference: (a) in any current report on Form 8-K, and any exhibits thereto or any other report, form, registration or other filing made with any Governmental Authority or stock exchange with respect to the Transactions; (b) in the Registration Statement; or (c) in the mailings or other distributions to the Purchaser Stockholders and/or prospective investors with respect to the consummation of the Transactions or in any amendment to any of documents identified in (a) through (c), will, when filed, made available, mailed or distributed, as the case may be, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. None of the information supplied or to be supplied by the Company expressly for inclusion or incorporation by reference in any of the press releases or filings with the SEC relating to the Transactions will, when filed or distributed, as applicable, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. Notwithstanding the foregoing, the Company makes no representation, warranty or covenant with respect to any information supplied by or on behalf of the Purchaser or its Affiliates.

 

4.33     No Other Representations. Except for the representations and warranties expressly made by the Company in this Article IV (as modified by the Company Disclosure Schedules) or as expressly set forth in an Ancillary Document, no Target Company nor any other Person on its behalf makes any express or implied representation or warranty with respect to any of the Target Companies, the Company Security Holders, the Company Securities, the business of the Target Companies, or the Transactions, and the Company hereby expressly disclaims any other representations or warranties, whether implied or made by any Target Company or any of its Representatives. Except for the representations and warranties expressly made by the Company in this Article IV (as modified by the Company Disclosure Schedules) or in an Ancillary Document, the Company hereby expressly disclaims all liability and responsibility for any representation, warranty, projection, forecast, statement or information made, communicated or furnished (orally or in writing) to the Purchaser or any of its Representatives (including any opinion, information, projection or advice that may have been or may be provided to the Purchaser or any of its Representatives by any Representative of the Company), including any representations or warranties regarding the probable success or profitability of the businesses of the Target Companies.

 

ARTICLE V

 

5.1         Access and Information.

 

(a)         During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement in accordance with Section 7.1 or the Closing (the “Interim Period”), the Company shall give, and shall cause its Representatives to give, the Purchaser and its Representatives, at reasonable times during normal business hours and upon reasonable intervals and notice, reasonable access to all offices and other facilities and to all employees, properties, Contracts, agreements, commitments, books and records, financial and operating data and other information (including Tax Returns, internal working papers, client files, client Contracts and director service agreements), of or pertaining to the Target Companies, as the Purchaser or its Representatives may reasonably request regarding the Target Companies and their respective businesses, assets, Liabilities, financial condition, prospects, operations, management, employees and other aspects (including unaudited quarterly financial statements, including a consolidated quarterly balance sheet and income statement, a copy of each material report, schedule and other document filed with or received by a Governmental Authority pursuant to the requirements of applicable securities Laws, and independent public accountants’ work papers (subject to the consent or any other conditions required by such accountants, if any)) and cause each of the Company’s Representatives to reasonably cooperate with the Purchaser and its Representatives in their investigation; provided, however, that the Purchaser and its Representatives shall conduct any such activities in such a manner as not to unreasonably  interfere with the business or operations of the Target Companies.

 

(b)         During the Interim Period, the Purchaser shall give, and shall cause its Representatives to give, the Company and its Representatives, at reasonable times during normal business hours and upon reasonable intervals and notice, reasonable access to all offices and other facilities and to all employees, properties, Contracts, agreements, commitments, books and records, financial and operating data and other information (including Tax Returns, internal working papers, client files, client Contracts and director service agreements), of or pertaining to the Purchaser or its Subsidiaries, as the Company or its Representatives may reasonably request regarding the Purchaser, its Subsidiaries and their respective businesses, assets, Liabilities, financial condition, prospects, operations, management, employees and other aspects (including unaudited quarterly financial statements, including a consolidated quarterly balance sheet and income statement, a copy of each material report, schedule and other document filed with or received by a Governmental Authority pursuant to the requirements of applicable securities Laws, and independent public accountants’ work papers (subject to the consent or any other conditions required by such accountants, if any)) and cause each of the Purchaser’s Representatives to reasonably cooperate with the Company and its Representatives in their investigation; provided, however, that the Company and its Representatives shall conduct any such activities in such a manner as not to unreasonably interfere with the business or operations of the Purchaser or any of its Subsidiaries.

 

(c)         Notwithstanding the foregoing, neither Purchaser nor the Company shall be required to provide such access if it reasonably determines that it would (i) cause a violation of any Contract, as applicable, (ii) constitute a violation of any applicable Law, or (iii) cause a material risk of disclosure of any information that in the reasonable judgment of Purchaser or the Company, as applicable, would result in the disclosure of any Trade Secrets of Third Parties.  Nothing herein shall require the Company or its Subsidiaries or Purchaser to disclose information to the extent such information would result in a waiver of attorney-client privilege, work product doctrine or similar privilege or violate any confidentiality obligation of such Person existing as of the date of this Agreement (provided that such party shall use reasonable best efforts to permit such disclosure to be made in a manner consistent with the protection of such privilege or to obtain any consent required to permit such disclosure to be made without violation of such confidentiality obligations, as applicable).

 

(d)         Parent and the Company shall comply with, and shall use their reasonable best efforts to cause their respective Representatives to comply with, all of their respective obligations under the Confidentiality Agreement.

 

5.2         Conduct of Business of the Company.

 

(a)         Unless the Purchaser shall otherwise consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), during the Interim Period, except as expressly contemplated by this Agreement or the Ancillary Documents or as set forth on Schedule 5.2, the Company shall, and shall cause its Subsidiaries to, (i) conduct their respective businesses, in all material respects, in the ordinary course of business consistent with past practice, (ii) comply in all material respects with all Laws applicable to the Target Companies and their respective businesses, assets and employees, and (iii) take commercially reasonable measures to preserve intact, in all material respects, their respective business organizations, to keep available the services of their respective managers, directors, officers, employees and consultants, and to preserve the possession, control and condition of their respective material assets, all as consistent with past practice.

 

(b)       Without limiting the generality of Section 5.2(a) and except as contemplated by the terms of this Agreement or the Ancillary Documents or as set forth on Schedule 5.2, during the Interim Period, without the prior written consent of the Purchaser (such consent not to be unreasonably withheld, conditioned or delayed), the Company shall not, and shall cause its Subsidiaries not to:

 

(i)          amend, waive or otherwise change, in any respect, its Organizational Documents, except as required by applicable Law;

 

(ii)        authorize for issuance, issue, grant, sell, pledge, dispose of or propose to issue, grant, sell, pledge or dispose of any of its equity securities or any options, warrants, commitments, subscriptions or rights of any kind to acquire or sell any of its equity securities, or other securities, including any securities convertible into or exchangeable for any of its shares or other equity securities or securities of any class and any other equity-based awards, other than (A) any issuance of Company Securities that does not increase the Merger Consideration and (B) the issuance of Company Common Stock upon the exercise of Company Options, Company Warrants and Company Convertible Notes outstanding as of the date hereof in accordance with their existing terms, or engage in any hedging transaction with a third Person with respect to such securities;

 

(iii)       split, combine, recapitalize or reclassify any of its shares or other equity interests or issue any other securities in respect thereof or pay or set aside any dividend or other distribution (whether in cash, equity or property or any combination thereof) in respect of its equity interests, or directly or indirectly redeem, purchase or otherwise acquire or offer to acquire any of its securities;

 

(iv)       incur, create, assume, prepay or otherwise become liable for any Indebtedness (directly, contingently or otherwise) in excess of $500,000 individually or $1,000,000 in the aggregate, make a loan or advance to or investment in any Third Party (other than advancement of expenses to employees in the ordinary course of business), or guarantee or endorse any Indebtedness, Liability or obligation of any Person in excess of $500,000 individually or $1,000,000 in the aggregate;

 

(v)        other than as required by applicable Law or pursuant to the terms of any Company Benefit Plans (A) increase the wages, salaries or compensation of its Senior Vice Presidents and above other than in the ordinary course of business, consistent with past practice, (B) make or commit to make any bonus payment (whether in cash, property or securities) other than in the ordinary course of business consistent with past practice, (C) materially increase other benefits of employees generally other than in the ordinary course of business, or (D) enter into, establish, materially amend or terminate any Company Benefit Plan with, for or in respect of any current consultant, officer, manager director or other employee, other than in the ordinary course of business consistent with past practice;

 

(vi)      make or rescind any material election relating to Taxes, settle any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to material Taxes, file any amended Tax Return or claim for refund, or make any material change in its method of Tax accounting, in each case except as required by applicable Law or in compliance with GAAP;

 

(vii)      (A) take any action, or knowingly fail to take any action, which action or failure to act would reasonably be expected to prevent or impede the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code (and the Treasury Regulations) or (B) except as contemplated by this Agreement, take any action, which action would reasonably be expected to prevent or impede any other aspect of the Intended Tax Treatment;

 

(viii)     transfer or license to any Person or otherwise extend, materially amend or modify, permit to lapse or fail to preserve any material Company Owned Intellectual Property (excluding lapses or terminations of Contracts pursuant to the terms thereof), or disclose to any Person who has not entered into a confidentiality agreement any Trade Secrets;

 

(ix)       terminate, or waive or assign any material right under, any Company Material Contract or enter into any Contract that would be a Company Material Contract, in any case outside of the ordinary course of business consistent with past practice;

 

(x)        fail to maintain its books, accounts and records in all material respects in the ordinary course of business consistent with past practice;

 

(xi)        establish any Subsidiary or enter into any new line of business;

 

(xii)      fail to use commercially reasonable efforts to keep in force material insurance policies or replacement or revised policies providing insurance coverage with respect to its assets, operations and activities in such amount and scope of coverage substantially similar to that which is currently in effect;

 

(xiii)     revalue any of its material assets or make any material change in accounting methods, principles or practices, except to the extent required to comply with GAAP and after consulting with the Company’s outside auditors;

 

(xiv)     waive, release, assign, settle or compromise any claim, action or proceeding (including any suit, action, claim, proceeding or investigation relating to this Agreement or the Transactions), other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages (and not the imposition of equitable relief on, or the admission of wrongdoing by, a Target Company or its Affiliates) not in excess of $500,000 individually or $1,000,000 in the aggregate;

 

(xv)       close or materially reduce its activities, or effect any layoff or other personnel reduction or change, at any of its facilities;

 

(xvi)    acquire, including by merger, consolidation, acquisition of equity interests or assets, or any other form of business combination, any corporation, partnership, limited liability company, other business organization or any division thereof, or any material amount of assets outside the ordinary course of business consistent with past practice;

 

(xvii)     make capital expenditures in excess of $500,000 (individually for any project (or set of related projects) or $1,000,000 in the aggregate);

 

(xviii)   voluntarily incur any Liability or obligation (whether absolute, accrued, contingent or otherwise) in excess of $1,000,000 individually or $2,000,000 in the aggregate (excluding the incurrence of any Expenses) other than pursuant to the terms of a Company Material Contract or Company Benefit Plan in existence as of the date of this Agreement or entered into in the ordinary course of business or in accordance with the terms of this Section 5.2;

 

(xix)     adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization;

 

(xx)       enter into any agreement, understanding or arrangement with respect to the voting of equity securities of the Company;

 

(xxi)     take any action that would reasonably be expected to significantly delay or impair the obtaining of any Consents of any Governmental Authority to be obtained in connection with this Agreement;

 

(xxii)    except as required by this Agreement, enter into, amend, waive or terminate (other than terminations in accordance with their terms) any transaction with any Related Person (other than compensation and benefits and advancement of expenses, in each case, provided in the ordinary course of business consistent with past practice); or

 

(xxiii)    authorize or agree to do any of the foregoing actions.

 

5.3       No Control of the Company’s Business. Purchaser acknowledges and agrees that: (a) nothing contained in this Agreement shall give Purchaser, directly or indirectly, the right to control or direct the Company’s operations prior to the Closing; (b) prior to the Closing, the Company shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries’ operations; and (c) notwithstanding anything to the contrary set forth in this Agreement, no consent of Purchaser shall be required with respect to any matter set forth in Section 5.1, Section 5.2, or elsewhere in this Agreement to the extent that the requirement of such consent could violate any applicable Law.

 

5.4         Conduct of Business of the Purchaser.

 

(a)        Unless the Company shall otherwise consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), during the Interim Period, except as expressly contemplated by this Agreement or the Ancillary Documents or as set forth on Schedule 5.4(a), the Purchaser shall, and shall cause its Subsidiaries to, (i) conduct their respective businesses, in all material respects, in the ordinary course of business, (ii) comply in all material respects with all Laws applicable to the Purchaser and its Subsidiaries and their respective businesses, assets and employees, and (iii) take commercially reasonable measures to preserve intact, in all material respects, their respective business organizations, to keep available the services of their respective managers, directors, officers, employees and consultants, and to preserve the possession, control and condition of their respective material assets, all as consistent with past practice. Notwithstanding anything to the contrary in this Section 5.4(a), nothing in this Agreement shall prohibit or restrict the Purchaser from extending, in accordance with the Purchaser’s Organizational Documents and the IPO Prospectus, the deadline by which it must complete its Business Combination (an “Extension”), and no consent of any other Party shall be required in connection therewith.

 

(b)       Without limiting the generality of Section 5.4(a) and except as contemplated by the terms of this Agreement or the Ancillary Documents (including as contemplated by any PIPE Investment consented to by the Company in accordance with Section 5.17) or as set forth on Schedule 5.4(a), during the Interim Period, without the prior written consent of the Company (such consent not to be unreasonably withheld, conditioned or delayed), the Purchaser shall not, and shall cause its Subsidiaries to not:

 

(i)          amend, waive or otherwise change, in any respect, its Organizational Documents except as required by applicable Law;

 

(ii)         authorize for issuance, issue, grant, sell, pledge, dispose of or propose to issue, grant, sell, pledge or dispose of any of its equity securities or any options, warrants, commitments, subscriptions or rights of any kind to acquire or sell any of its equity securities, or other securities, including any securities convertible into or exchangeable for any of its equity securities or other security interests of any class and any other equity-based awards, other than the issuance of Purchaser Securities issuable upon conversion or exchange of outstanding Purchaser Securities in accordance with their terms, the issuance of securities in connection with any PIPE Investment (or any other action or transaction by the Purchaser undertaken with the consent of the Company in accordance with Section 5.16) existing terms, or engage in any hedging transaction with a third Person with respect to such securities;

 

(iii)       split, combine, recapitalize or reclassify any of its shares or other equity interests or issue any other securities in respect thereof or pay or set aside any dividend or other distribution (whether in cash, equity or property or any combination thereof) in respect of its shares or other equity interests, or directly or indirectly redeem, purchase or otherwise acquire or offer to acquire any of its securities;

 

(iv)       incur, create, assume, prepay or otherwise become liable for any Indebtedness (directly, contingently or otherwise) in excess of $500,000 individually or $1,000,000 in the aggregate, make a loan or advance to or investment in any Third Party, or guarantee or endorse any Indebtedness, Liability or obligation of any Person;

 

(v)       make or rescind any material election relating to material Taxes, settle any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes, file any amended Tax Return or claim for refund, or make any material change in its method of Tax accounting, in each case except as required by applicable Law or in compliance with GAAP;

 

(vi)       (A) take any action, or knowingly fail to take any action, which action or failure to act would reasonably be expected to prevent or impede the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code (and the Treasury Regulations) or (B) except as contemplated by this Agreement, take any action, which action would reasonably be expected to prevent or impede any other aspect of the Intended Tax Treatment;

 

(vii)      amend, waive or otherwise change the Trust Agreement in any manner adverse to the Purchaser;

 

(viii)     terminate, waive or assign any material right under any Purchaser Material Contract;

 

(ix)       fail to maintain its books, accounts and records in all material respects in the ordinary course of business consistent with past practice;

 

(x)         establish any Subsidiary or enter into any new line of business;

 

(xi)       fail to use commercially reasonable efforts to keep in force material insurance policies or replacement or revised policies providing insurance coverage with respect to its assets, operations and activities in such amount and scope of coverage substantially similar to that which is currently in effect;

 

(xii)      revalue any of its material assets or make any material change in accounting methods, principles or practices, except to the extent required to comply with GAAP and after consulting the Purchaser’s outside auditors;

 

(xiii)     waive, release, assign, settle or compromise any claim, action or proceeding (including any suit, action, claim, proceeding or investigation relating to this Agreement or the Transactions), other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages (and not the imposition of equitable relief on, or the admission of wrongdoing by, the Purchaser or its Subsidiary) not in excess of $500,000 individually or $1,000,000 in the aggregate;

 

(xiv)    acquire, including by merger, consolidation, acquisition of equity interests or assets, or any other form of business combination, any corporation, partnership, limited liability company, other business organization or any division thereof, or any material amount of assets outside the ordinary course of business;

 

If to the Purchaser or Merger Sub at or prior to the Closing, to:   SEP Acquisition Corp. 3737 Buffalo Speedway Suite 1750 Houston, TX 77098 Attn: Andrew White Telephone No.: 713-715-6820 Email: info@seplp.com

with a copy (which will not constitute notice) to:   Baker Donelson, Bearman, Caldwell & Berkowitz, PC 1600 West End Avenue Suite 2000 Nashville, TN 37203 Attn: Tonya Mitchem Grindon Attn: Nathan Kibler Attn: Andrew Yonchak Telephone No.: 615-726-5600 Email: tgrindon@bakerdonelson.com Email: nkibler@bakerdonelson.com Email: dyonchak@bakerdonelson.com

If to the Company, to:   SANUWAVE Health, Inc. 11495 Valley View Road Eden Prairie, Minnesota 55344 Attn: Morgan C. Frank, Chief Executive Officer Email:		with a copy (which will not constitute notice) to:   Faegre Drinker Biddle & Reath LLP 2200 Wells Fargo Center 90 South Seventh Street Minneapolis, Minnesota 55402 Attn: Ben A. Stacke Attn:  Jonathan Nygren Email: ben.stacke@faegredrinker.com Email: jon.nygren@faegredrinker.com
If to the Purchaser after the Closing, to:   SANUWAVE Health, Inc. 11495 Valley View Road Eden Prairie, Minnesota 55344 Attn: Morgan C. Frank, Chief Executive Officer Email:		with a copy (which will not constitute notice) to:   Faegre Drinker Biddle & Reath LLP 2200 Wells Fargo Center 90 South Seventh Street Minneapolis, Minnesota 55402 Attn: Ben A. Stacke Attn:  Jonathan Nygren Email: ben.stacke@faegredrinker.com Email: jon.nygren@faegredrinker.com

Term	Section
Agreement	Preamble
Alternative Acquisition Agreement	5.6(c)(vi)
Articles of Merger	1.2
Assumed Convertible Note	1.7
Assumed Warrant	1.9(e)
BCA	Recitals
Business Combination	8.1

Closing Date	2.1
Closing	2.1
Class B Charter Amendment	5.20(a)
Company	Preamble
Company Adverse Recommendation Change	5.6(c)(v)
Company Benefit Plan	4.19(a)
Company Board	Recitals
Company Board Recommendation	Recitals
Company Book-Entry Shares	1.10(a)
Company Certificates	1.10(a)
Company D&O Tail Insurance	5.15(b)
Company Disclosure Schedules	Article IV
Company Financials	4.7(b)
Company Intellectual Property	4.13(a)
Company IP License	4.12(a)(xiii)
Company Lock-Up Agreement	Recitals
Company Material Contracts	4.12(a)
Company Owned Intellectual Property	4.13(b)
Company Permits	4.10
Company Personal Property Leases	4.16
Company Public Certifications	4.7(a)
Company Real Property Leases	4.15
Company SEC Reports	4.7(a)
Company Special Meeting	5.12(a)
Company Stockholder Approval Matters	5.12(a)(ii)
Company Voting Agreements	Recitals
D&O Indemnified Persons	5.15(a)
Dissenting Shares	1.13
Dissenting Stockholders	1.13
Effective Time	1.2
Employment Laws	4.18(b)
Enforceability Exceptions	3.2(a)
Environmental Permits	4.20(a)
Exchange Agent	1.10(a)
Exchange Fund	1.10(a)
Expenses	7.3(a)
Extension	5.4(a)
Healthcare Laws	4.28(a)
HIPAA	4.28(a)
Intended Tax Treatment	Recitals
Interim Balance Sheet Date	4.7(b)
Interim Period	5.1(a)
IT Systems	4.13(h)
Joint Proxy Statement	5.12(a)
Leased Real Property	4.15
Letter of Transmittal	1.10(b)
Merger Consideration	1.8
Merger Sub	Preamble
Merger	Recitals
Net Tangible Assets Charter Amendment	5.20(a)
OFAC	3.20(c)

Outside Date	7.1(b)
Party(ies)	Preamble
PIPE Investment	Recitals
PIPE Investors	Recitals
Post-Closing Purchaser Board	5.14(a)
Public Certifications	3.6(a)
Public Stockholders	8.1
Purchaser Amendment to Warrant Agreement	6.2(f)(v)
Purchaser Charter Amendments	5.20(a)
Purchaser Closing Date Charter Amendment	5.20(a)
Purchaser D&O Tail Insurance	5.15(b)
Purchaser Disclosure Schedules	Article III
Purchaser Financial Advisor	3.24
Purchaser Financials	3.6(b)
Purchaser Letter Agreement Amendment	6.2(f)(iv)
Purchaser Material Contract	3.14(a)
Purchaser Option	1.9(d)(i)
Purchaser SEC Reports	3.6(a)
Purchaser Special Meeting	5.12(a)(i)
Purchaser Stockholder Approval Matters	5.12(a)(i)
Purchaser	Preamble
Redemption	5.12(a)
Registered IP	4.13(a)
Registration Rights Agreement	5.20(b)
Registration Statement	5.12(a)
Related Person	4.21
Released Claims	8.1
Required Company Stockholder Approval	6.1(b)
Required Purchaser Shareholder Approval	6.1(a)
SEC April Warrant Statement	3.6(a)
Specified Courts	9.5
Sponsor Debt Conversion Agreement	Recitals
Sponsor Voting Agreement	Recitals
Stockholder Merger Consideration	1.8
Subscription Agreements	Recitals
Termination Fee	7.3(b)
Surviving Corporation	1.1
Top Customers	4.24
Top Suppliers	4.24
Transmittal Documents	1.10(d)

	The Purchaser:
	SEP ACQUISITION CORP.
	By:	/s/ R. Andrew White

		Name: R. Andrew White
		Title: Chief Executive Officer

	Merger Sub:
	SEP ACQUISITION HOLDINGS INC.
	By:	/s/ R. Andrew White

		Name: R. Andrew White
		Title: Chief Executive Officer

	The Company:
	SANUWAVE HEALTH, INC.
	By:	/s/ Morgan Frank
	Name: Morgan Frank
	Title: Chairman, Chief Executive Officer