Exhibit 10.1

 

NOTE PURCHASE AGREEMENT

 

THIS NOTE PURCHASE AGREEMENT (this “Agreement”), dated as of September 1, 2021, is made by and among Forian Inc., a Delaware corporation (the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors and permitted assigns, a “Purchaser” and collectively, the “Purchasers”).

 

BACKGROUND

 

A.         The Company and the Purchasers are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act (as defined below) and Rule 506 of Regulation D as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the Securities Act.

 

B.          Each Purchaser, severally and not jointly, desires to lend the Company, upon the terms and conditions stated in this Agreement, the amount set forth opposite such Purchaser’s name on the Schedule of Purchasers attached as Exhibit A to this Agreement (each, a “Loan Amount”) against the issuance and delivery by the Company of a convertible promissory note for such amount, in substantially the form attached hereto as Exhibit B to this Agreement (each, a “Note” and collectively, the “Notes”).

 

AGREEMENT

 

In consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Purchasers (severally and not jointly) agree as follows:

 

ARTICLE 1

DEFINITIONS

 

1.1         Definitions.  As used in this Agreement and the Notes, and unless the context requires a different meaning, the following terms have the meanings indicated:

 

“Agreement” has the meaning set forth in the preamble.

 

“Affiliate” means, with respect to any Person (as defined below), any other Person controlling, controlled by or under direct or indirect common control with such Person (for the purposes of this definition “control,” when used with respect to any specified Person, shall mean the power to direct the management and policies of such person, directly or indirectly, whether through ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” shall have meanings correlative to the foregoing).

 

“Board” means the Board of Directors of the Company.

 

“Business Day” means a day Monday through Friday on which banks are generally open for business in New York City.

 

“Bylaws” means the Bylaws of the Company, effective as of October 15, 2020.

 

“Certificate of Incorporation” means the Company’s Certificate of Incorporation, dated October 15, 2020.

 

“Change of Control” means: (i) the Company becomes aware (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) that any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), is or has become the “beneficial owner” (as such term is used in Rules 13d-3 and 13d-5 under the Exchange Act) of more than 50% of the Voting Stock of the Company; provided, however, that for purposes of this clause (i) such person or group shall be deemed to have “beneficial ownership” of all shares that any such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time, directly or indirectly; and provided, further, that a transaction will not be deemed to involve a Change of Control under this clause (i) if (a) the Company becomes a direct or indirect wholly owned subsidiary of a holding company and (b)(1) the direct or indirect holders of the Voting Stock of such holding company immediately following that transaction are substantially the same as the holders of the Voting Stock of the Company immediately prior to that transaction; or (2) immediately following that transaction, no “person” or “group” (other than a holding company satisfying the requirements of this sentence) is the beneficial owner, directly or indirectly, of more than 50% of the Voting Stock of such holding company; or (ii) the Company sells, conveys, transfers or leases (either in one transaction or a series of related transactions) all or substantially all assets of the Company and its Subsidiaries taken as a whole to, or merges or consolidates with, a Person (other than the Company or any of its Subsidiaries) where the shares of Common Stock outstanding immediately prior to such transaction constitute, or are converted into or exchanged for, a majority of the Voting Stock of the surviving person or parent entity thereof immediately after giving effect to such transaction.

 

“Closing” has the meaning set forth in Section 2.2.

 

“Closing Date” has the meaning set forth in Section 2.2.

 

“Common Stock” means the common stock, $0.0001 par value per share, of the Company.

 

“Company” has the meaning set forth in the preamble.

 

“Company Party” has the meaning set forth in Section 6.7(b).

 

“Disclosure Materials” has the meaning set forth in Section 3.6.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Financial Statements” means the financial statements of the Company included in the SEC Documents.

 

“Governmental Authority” means any foreign, domestic, federal, territorial, state or local governmental authority, quasi-governmental authority, instrumentality, court, government or self-regulatory organization, commission, tribunal or organization or any regulatory, administrative or other agency, or any political or other subdivision, department or branch of any of the foregoing.

 

“Indemnifying Party” has the meaning set forth in Section 6.7(c)(i).

 

“Indemnified Party” has the meaning set forth in Section 6.7(c)(i).

 

“Investment Company Act” means the Investment Company Act of 1940, as amended.

 

“Losses” has the meaning set forth in Section 6.7(a).

 

“Material Adverse Effect” means any material adverse effect on the business, prospects, management, properties, assets, operations, stockholders’ equity, results of operations or financial condition of the Company or on the transactions contemplated hereby, or on the authority or ability of the Company to perform its obligations under this Agreement; provided, however, that none of the following shall be deemed to constitute a Material Adverse Effect: (i) a change in the market price or trading volume of the Common Stock; (ii) any effect resulting from entering into this Agreement or the announcement of the transactions contemplated by this Agreement; (iii) changes in United States generally accepted accounting principles; (iv) changes in law, regulation or other binding directives or orders issued by any Governmental Authority so long as such changes do not have a materially disproportionate effect on the Company; or (v) changes in general economic conditions or changes affecting the industry in which the Company operates generally (as opposed to Company specific changes) so long as such changes do not have a materially disproportionate effect on the Company.

 

“Note” or “Notes” has the meaning set forth in the Recitals.

 

“Offering” means the private placement of the Notes contemplated by the Private Placement Memorandum and this Agreement.

 

“Person” means any person, individual, corporation, limited liability company, partnership, trust or other nongovernmental entity or any governmental agency, court, authority or other body (whether foreign, federal, state, local or otherwise).

 

“Principal Market” has the meaning set forth in Section 3.5(a).

 

“Private Placement Memorandum” means that certain Confidential Private Placement Memorandum, dated August 29, 2021, relating to the offering of the Notes by the Company.

 

“Purchasers” has the meaning set forth in the preamble.

 

“Purchaser Party” has the meaning set forth in Section 6.7(a).

 

The terms “register,” “registered” and “registration” refer to the registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement.

 

“Registrable Securities” has the meaning set forth in Section 5.1.

 

“Registration Statement” has the meaning set forth in Section 5.1.

 

“Required Holders” means (1) prior to the Closing, the Purchasers entitled to purchase at least sixty percent (60%) of the then outstanding principal balance of the Notes issuable hereunder, and (2) after the Closing, the holders of at least sixty percent (60%) of the Registrable Securities, assuming conversion of all outstanding Notes and the exercise of all Warrants.

 

“Rule 144” means Rule 144 promulgated under the Securities Act, or any successor rule.

 

“SEC” has the meaning set forth in the Recitals.

 

“SEC Documents” has the meaning set forth in Section 3.6.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute.

 

“Subsidiary” of the Company means any corporation, association, partnership or other business entity of which more than fifty percent (50%) of the total voting power of shares of capital stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, general partners or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) the Company; (ii) the Company and one or more of its Subsidiaries; or (iii) one or more Subsidiaries of the Company.

 

“Suspension Event” has the meaning set forth in Section 5.2.

 

“Third Party Proceedings” has the meaning set forth in Section 6.7(c)(ii).

 

“Voting Stock” of a Person means all classes of capital stock or other interests (including partnership interests) of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof.

 

“Warrants” means those certain warrants to purchase Common Stock issuable upon conversion of the Notes.

 

ARTICLE 2

PURCHASE AND SALE OF NOTES

 

2.1         Closing.  At the Closing, the Company shall deliver to each Purchaser an executed Note in the amount of such Purchaser’s Loan Amount, in each case against payment of the Loan Amount by wire transfer to a bank account designated by the Company and each Purchaser shall execute and delivery a counterpart signature page to this Agreement.

 

2.2        Closing Date.  The closing of the transactions contemplated by this Agreement (the “Closing”) will take place remotely via the electronic exchange of documents and signatures following the satisfaction or waiver of all conditions to Closing set forth in Article 7 on the date hereof (the “Closing Date”), or at such other time and place as shall be agreed upon by the Company and the Purchasers.

 

2.3        Closing Deliveries. At the Closing, the Company shall deliver to each Purchaser an executed Note in the amount of such Purchaser’s Loan Amount, in each case against payment of the Loan Amount by wire transfer to a bank account designated by the Company and each Purchaser shall execute and delivery a counterpart signature page to this Agreement.

 

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company hereby represents and warrants to the Purchasers that:

 

3.1         Organization and Qualification.  The Company is duly incorporated and validly existing in good standing under the laws of the State of Delaware, and has the requisite power and authorization to own its properties and to carry on its business as now being conducted.  The  Company is duly qualified as a foreign entity to do business and is in good standing or its equivalent under any applicable foreign jurisdiction in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect.

 

3.2          Authorization; Enforcement.  The Company has all requisite corporate power and authority to enter into and to perform its obligations under this Agreement, to consummate the transactions contemplated hereby and to issue the Notes in accordance with the terms hereof.  The execution, delivery and performance of this Agreement by the Company and the consummation by it of the transactions contemplated hereby (including the issuance of the Notes) have been duly authorized by the Board or an authorized committee thereof, and no further consent or authorization of the Company, its Board, or its stockholders is required.  This Agreement has been duly executed by the Company and constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, or moratorium or similar laws affecting creditors’ and contracting parties’ rights generally and except as enforceability may be subject to general principles of equity and except as rights to indemnity and contribution may be limited by state or federal securities laws or public policy underlying such laws.

 

3.3         Capitalization.  The number of shares and type of all authorized, issued and outstanding capital stock, options and other securities of the Company (whether or not presently convertible into or exercisable or exchangeable for shares of capital stock of the Company) has been set forth in Schedule 3.3.  All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and non-assessable, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase any capital stock of the Company.  Other than as described in the Disclosure Materials, (a) none of the Company’s capital stock is subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company; (b) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares of capital stock of the Company, or contracts, commitments, understandings or arrangements by which the Company is or may become bound to issue additional shares of capital stock of the Company or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares of capital stock of the Company; (c) there are no outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing indebtedness of the Company or by which the Company is or may become bound; (d) there are no financing statements securing obligations in any material amounts, either singly or in the aggregate, filed in connection with the Company; and (e) there are no outstanding securities or instruments of the Company which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company is or may become bound to redeem a security of the Company.

 

3.4          Issuance of Notes.  The issuance of the Notes is duly authorized and, upon issuance in accordance with the terms hereof, the Notes shall be validly issued, fully paid and nonassessable. The shares of Common Stock issuable upon conversion of the Notes and exercise of the Warrants have been duly reserved for issuance, and upon issuance in accordance with the terms of the Certificate of Incorporation of the Company, will be validly issued, fully paid and nonassessable and free of restrictions on transfer other than applicable federal and state securities laws and restrictions, and liens or encumbrances created by or imposed by a Purchaser and will not have been issued in violation of, and will not be subject to, any preemptive or subscription rights. Based in part upon the representations of the Purchasers in this Agreement, the shares of Common Stock issuable upon conversion of the Notes and exercise of the Warrants will be issued in compliance with all applicable federal and state securities laws.

 

3.5          No Conflicts; Government Consents and Permits.

 

(a)          The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated (including the issuance of the Notes) will not (i) result in a violation of the Certificate of Incorporation or the Bylaws; (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) in any respect under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material agreement, indenture or instrument to which the Company is a party; or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including foreign, federal and state securities laws and regulations and the rules and regulations of any self-regulatory organizations to which the Company or its securities are subject, including The Nasdaq Stock Market LLC (the “Principal Market”) and laws of the State of Delaware) applicable to the Company or by which any property or asset of the Company or is bound or affected except, in the cases of (ii) above, to the extent such violations would not reasonably be expected to have a Material Adverse Effect.

 

(b)          The Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any Governmental Authority or any other Person in order for it to execute, deliver or perform any of its obligations under or contemplated by this Agreement in accordance with the terms hereof other than such as have been made or obtained, and except for the registration of the Notes under the Securities Act pursuant to Article 5, any filings required to be made under federal or state securities laws, and any filings or notifications required to be made after the Closing regarding the issuance and listing of additional shares with the Principal Market. The issuance by the Company of the Notes shall not have the effect of delisting or suspending the Common Stock from the Principal Market.

 

3.6          SEC Documents, Financial Statements.  The Company has filed all reports, schedules, forms, and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Exchange Act, as amended, and all exhibits included therein and financial statements and schedules thereto and documents (other than exhibits) incorporated by reference therein that were filed prior to the date hereof (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Documents” and together with this Agreement, the Schedules to this Agreement (if any) and the Private Placement Memorandum, the “Disclosure Materials”).  As of their respective dates, the SEC Documents complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  As of their respective dates, the Financial Statements and the related notes complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto.  The audited Financial Statements and the related notes have been prepared in accordance with accounting principles generally accepted in the United States, consistently applied, during the periods involved (except as may be otherwise indicated in the Financial Statements or the notes thereto) and fairly present in all material respects the consolidated financial position of the Company as of the dates thereof and the consolidated results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal and recurring year-end audit adjustments).

 

3.7          Absence of Litigation.  There is no action, suit, proceeding, inquiry or investigation before or by the Principal Market, any Governmental Authority, self-regulatory organization or body pending or, to the Company’s knowledge, threatened against or affecting the Company, the Common Stock or any of the Company’s officers or directors in their capacities as such that if determined adversely to the Company or other such party would reasonably be expected to have a Material Adverse Effect or would reasonably be expected to impair the ability of the Company to perform its obligations under this Agreement.

 

3.8          Compliance with Applicable Laws.  The Company has not violated or infringed, nor is it in violation or infringement of, any order, writ, injunction or decree of any Governmental Authority in connection with its activities or use or operation of its real properties, except where such violation or infringement would not reasonably be expected to have a Material Adverse Effect on the Company.  The Company is in compliance with all applicable laws, except where such non-compliance would not reasonably be expected to have a Material Adverse Effect on the Company.  Except to the extent resolved, dismissed or withdrawn, (i) to the Company’s knowledge, no claims have been filed against the Company alleging a violation of any applicable law and (ii) the Company has not received any written notice of non-compliance with any applicable laws.

 

3.9          Investment Company.  The Company is not and, after giving effect to the offering and sale of the Notes, will not be an “investment company” or a “promoter” or “principal underwriter” for, an “investment company” as such terms is defined in the Investment Company Act.

 

3.10          The Principal Market.  The Common Stock is listed on the Principal Market, and, to the Company’s knowledge, there are no proceedings to revoke or suspend such listing. The Company is in compliance with the requirements of the Principal Market for continued listing of the Common Stock thereon, and the execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby (including the issuance of the Notes) will not result in any noncompliance by the Company with any such requirements.

 

3.11          Private Placement.  Neither the Company, nor any Affiliates of the Company, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Notes.  None of the Company, its Affiliates, and any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of any of the Notes under the Securities Act, whether through integration with prior offerings or otherwise, or cause this offering of the Notes to require approval of stockholders of the Company for purposes of the Securities Act or any applicable stockholder approval provisions, including, without limitation, under the rules and regulations of the Principal Market or any other exchange or automated quotation system on which any of the securities of the Company are listed or designated.  Except as required pursuant to Article 5, none of the Company, its Affiliates and any Person acting on their behalf will take any action or steps referred to in the preceding sentence that would require registration of any of the Notes under the Securities Act or cause the offering of the Notes to be integrated with other offerings for purposes of any such applicable stockholder approval provisions.  Assuming the accuracy of the representations and warranties of the Purchasers contained in Article 4, the issuance of the Notes are exempt from registration under the Securities Act.

 

3.12          Disclosure.  All disclosure to the Purchasers regarding the Company, its business and the transactions contemplated hereby, including the disclosure schedules to this Agreement, furnished by or on behalf of the Company is true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.  The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Article 4.

 

ARTICLE 4

PURCHASER’S REPRESENTATIONS AND WARRANTIES

 

Each Purchaser represents and warrants to the Company, severally and not jointly, with respect to itself only that:

 

4.1          Organization; Authority.  Purchaser is either an individual or an entity duly organized, validly existing under the laws of the jurisdiction of its organization with the requisite legal capacity, power, and authority or corporate or partnership power and authority, as applicable, to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder.  The execution and delivery by such Purchaser of this Agreement and the performance by such Purchaser of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate or, if such Purchaser is not a corporation, such partnership, limited liability company or other applicable like action, on the part of such Purchaser. This Agreement has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application.

 

4.2          No Conflicts.  The execution, delivery and performance by such Purchaser of this Agreement and the consummation by such Purchaser of the transactions contemplated hereby will not (i) result in a violation of the organizational documents of such Purchaser, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such Purchaser is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment  or decree (including federal and state securities laws) applicable to such Purchaser, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Purchaser to perform its obligations hereunder.

 

4.3          Investment Purpose.  Such Purchaser understands that the Notes are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Notes as principal for its own account and not with a view to, or for distributing or reselling such Notes or any part thereof in violation of the Securities Act or any applicable state securities laws; provided, however, that by making the representations herein, such Purchaser does not agree to hold any of the Notes for any minimum period of time and reserves the right, subject to the provisions of this Agreement, at all times to sell or otherwise dispose of all or any part of such Notes pursuant to an effective registration statement under the Securities Act or under an exemption from such registration and in compliance with applicable federal and state securities laws.  Such Purchaser is acquiring the Notes hereunder in the ordinary course of its business. Such Purchaser does not presently have any agreement, plan or understanding, directly or indirectly, with any Person to distribute or effect any distribution of any of the Notes (or any securities which are derivatives thereof) to or through any person or entity; such Purchaser is not a registered broker-dealer under Section 15 of the Exchange Act or an entity engaged in a business that would require it to be so registered as a broker-dealer.

 

4.4          Purchaser Status.  At the time such Purchaser was offered the Notes, it was, and at the date hereof it is, an “accredited investor” as defined in Rule 501(a) of the Securities Act.

 

4.5          General Solicitation.  Such Purchaser is not purchasing the Notes as a result of any advertisement, article, notice or other communication regarding the Notes published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general advertisement.

 

4.6          Reliance on Exemptions.  Such Purchaser understands that the Notes being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such Purchaser’s compliance with, the representations, warranties, agreements, acknowledgements and understandings of such Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of such Purchaser to acquire the Notes.

 

4.7          Acknowledgement of Risk.  Such Purchaser: (i) understands that its investment in the Notes involves a high degree of risk, including the risks set forth in the SEC Documents and Private Placement Memorandum; (ii) either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Notes, and has so evaluated the merits and risks of such investment; (iii) is able to bear the economic risk of an investment in the Notes and, at the present time, is able to afford a complete loss of such investment; and (iv) has, in connection with such Purchaser’s decision to purchase Notes, not relied upon any representations or other information (whether oral or written) other than as set forth in the representations and warranties of the Company contained herein, the SEC Documents and the Private Placement Memorandum.

 

4.8          Access to Information.  Such Purchaser acknowledges that it has had the opportunity to review the Disclosure Materials and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Notes and the merits and risks of investing in the Notes; (ii) access to information about the Company and the subsidiaries and their respective financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Neither such inquiries nor any other investigation conducted by or on behalf of such Purchaser or its representatives or counsel shall modify, amend or affect such Purchaser’s right to rely on the truth, accuracy and completeness of the Disclosure Materials and the Company’s representations and warranties contained in this Agreement. Such Purchaser has sought such accounting, legal and tax advice as it has considered necessary to make an informed decision with respect to its acquisition of the Notes.

 

4.9          Independent Investment Decision.  Such Purchaser has independently evaluated the merits of its decision to purchase Notes pursuant to this Agreement, and such Purchaser confirms that it has not relied on the advice of any other Purchaser’s business and/or legal counsel in making such decision. Such Purchaser understands that nothing in this Agreement or any other materials presented by or on behalf of the Company to the Purchaser in connection with the purchase of the Notes constitutes legal, tax or investment advice. Such Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Notes.

 

4.10          Governmental Review.  Such Purchaser understands that no United States federal or state agency or any other government or Governmental Authority has passed on or made any recommendation or endorsement of the Notes or the fairness or suitability of the investment in the Notes nor have such authorities passed upon or endorsed the merits of the offering of the Notes.

 

4.11          Transfer or Resale.  Such Purchaser understands that: (i) the Notes have not been and, except as provided in Article 5, are not being registered under the Securities Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) pursuant to an effective registration statement pursuant to the Securities Act, (B) such Purchaser shall have delivered to the Company an opinion of counsel, in a form reasonably acceptable to the Company, to the effect that such Notes to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) such Purchaser provides the Company with reasonable assurance (in the form of seller and, if applicable, broker representation letters) that such Notes can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the Securities Act, as amended (or a successor rule thereto); (ii) any sale of the Notes made in reliance on Rule 144 or Rule 144A may be made only in accordance with the terms of Rule 144 or Rule 144A, as applicable, and further, if neither Rule 144 nor Rule 144A is applicable, any resale of the Notes under circumstances in which the seller (or the Person (as defined below) through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the Securities Act) may require compliance with some other exemption under the Securities Act or the rules and regulations of the SEC thereunder; and (iii) except as provided in Article 5, neither the Company nor any other Person is under any obligation to register the Notes under the Securities Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder.

 

4.12          Residency.  Such Purchaser’s residence (if an individual) or offices in which its investment decision with respect to the Notes was made (if an entity) are located at the address immediately below such Purchaser’s name on its signature page hereto.

 

4.13          Brokers and Finders.  No Person will have, as a result of the transactions contemplated by this Agreement, any valid right, interest or claim against or upon the Company or any Purchaser for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of the Purchaser.

 

ARTICLE 5

REGISTRATION STATEMENT

 

5.1          Registration Statement. The Company will use its reasonable commercial efforts to file a Registration Statement on Form S-3 (the “Registration Statement”) covering the resale of the Notes, the shares of Common Stock issuable upon conversion of the Notes, the Warrants issuable upon conversion of the Notes and the shares of Common Stock issuable upon exercise of the Warrants (the “Registrable Securities”) as soon as practicable after the later of (i) the date on which the Company becomes eligible to use a Registration Statement on Form S-3 and (ii) six (6) months from the Closing Date. The Company shall cause such Registration Statement to be declared effective by the SEC as soon as practicable, and maintain the effectiveness of the Registration Statement at all times through the date on which the Purchasers shall have sold all of the Registrable Securities covered by such Registration Statement; provided, however, that the Company shall not be obligated to effect any such registration, qualification or compliance pursuant to this Section 5.1 if the Company shall furnish to the Purchasers a certificate signed by the Executive Chairman of the Board stating that in the good faith and reasonable judgment of the Board, it would be seriously detrimental to the Company and its shareholders for such Form S-3 registration to be effected at such time (but excluding any detriment to the Company and its shareholders solely as a result of its effect on the share price), in which event the Company shall have the right to defer the filing of the Form S-3 registration statement for a period of not more than 90 days. Notwithstanding anything to the contrary in this Agreement, the Company’s obligations to include such shares held by a Purchaser in the Registration Statement are contingent upon such Purchaser furnishing in writing to the Company such information regarding such Purchaser and its Affiliates, the securities of the Company held by Purchaser and its Affiliates and the intended method of disposition of the Registrable Securities as shall be reasonably requested by the Company to effect the registration of the Registrable Securities, and such Purchaser and such Affiliates shall execute such documents in connection with such registration as the Company may reasonably request that are customary of a selling shareholder in similar situations, including providing that the Company shall be entitled to postpone and suspend the effectiveness or use of the Registration Statement during any customary blackout or similar period or as permitted hereunder but for no longer than 60 days at a time and no more than twice during any calendar year. Notwithstanding the foregoing, if the SEC prevents the Company from including any or all of the shares proposed to be registered under the Registration Statement due to limitations on the use of Rule 415 of the Securities Act for the resale of the Registrable Securities by the applicable shareholders or otherwise, such Registration Statement shall register for resale such number of Registrable Securities which is equal to the maximum number of Registrable Securities as is permitted by the SEC.  In such event, the number of Registrable Securities to be registered for each selling shareholder named in the Registration Statement shall be reduced pro rata among all such selling shareholders. Notwithstanding anything herein to the contrary, the Company shall have no obligation to file or maintain the effectiveness of a Registration Statement if at the time the Registrable Securities may be sold pursuant to Rule 144 without being subject to any volume limit or manner of sale limitations.

 

5.2          Suspensions. Notwithstanding anything to the contrary in this Agreement, the Company shall be entitled to delay or postpone the effectiveness of the Registration Statement, and from time to time to require the Purchasers not to sell under the Registration Statement or to suspend the effectiveness thereof, if the negotiation or consummation of a transaction by the Company or its subsidiaries is pending or an event has occurred, which negotiation, consummation or event the Board reasonably believes, upon the advice of legal counsel (which may be in-house legal counsel), would require additional disclosure by the Company in the Registration Statement of material information that the Company has a bona fide business purpose for keeping confidential and the non-disclosure of which in the Registration Statement would be expected, in the reasonable determination of the Board, upon the advice of legal counsel (which may be in-house legal counsel), to cause the Registration Statement to fail to comply with applicable disclosure requirements (each such circumstance, a “Suspension Event”). Upon receipt of any written notice from the Company of the happening of any Suspension Event during the period that the Registration Statement is effective or if as a result of a Suspension Event the Registration Statement or related prospectus contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made (in the case of the prospectus) not misleading, each Purchaser agrees that (i) such Purchaser will immediately discontinue offers and sales of the Notes under the Registration Statement (excluding, for the avoidance of doubt, sales conducted pursuant to Rule 144) until such Purchaser receives copies of a supplemental or amended prospectus that corrects the misstatement(s) or omission(s) referred to above and receives notice that any post-effective amendment has become effective or unless otherwise notified by the Company that it may resume such offers and sales, and (ii) such Purchaser will maintain the confidentiality of any information included in such written notice delivered by the Company unless (a) otherwise required by law or subpoena or (b) disclosed to such Purchaser’s employees, agents and professional advisors (as applicable) who need to know such information and are obligated to keep it confidential. If so directed by the Company, each Purchaser will deliver to the Company or, in such Purchaser’s sole discretion destroy, all copies of the prospectus covering the Notes in such Purchaser’s possession; provided, however, that this obligation to deliver or destroy all copies of the prospectus covering the Notes shall not apply (i) to the extent such Purchaser is required to retain a copy of such prospectus (a) in order to comply with applicable legal, regulatory, self-regulatory or professional requirements or (b) in accordance with a bona fide pre-existing document retention policy or (ii) to copies stored electronically on archival servers as a result of automatic data back-up.

 

ARTICLE 6

COVENANTS; ADDITIONAL AGREEMENTS

 

6.1          Expenses.  Each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.  The Company shall pay all transfer agent fees, stamp taxes and other taxes and duties levied in connection with the sale and issuance of the applicable Notes.

 

6.2          Securities Laws Disclosure; Publicity.  On or before 9:00 a.m., New York City time, on the Business Day immediately following the date hereof, the Company shall issue a press release, reasonably acceptable to the Purchasers, announcing the signing of this Agreement and describing the terms of the transactions contemplated by this Agreement.  On or before the fourth Business Day after the date of this Agreement, the Company shall file a Current Report on Form 8-K with the SEC describing the terms of the transactions contemplated by this Agreement and including as an exhibit to such Current Report on Form 8-K this Agreement, in the form required by the Exchange Act.

 

6.3          Sales by Purchasers.  Each Purchaser will sell any Notes held by it in compliance with applicable prospectus delivery requirements, if any, or otherwise in compliance with the requirements for an exemption from registration under the Securities Act and the rules and regulations promulgated thereunder.  No Purchaser will make any sale, transfer or other disposition of the Notes in violation of federal or state securities laws.

 

6.4          Conduct of Business.  Until the Closing or the Termination of this Agreement, the Company shall conduct its business in the ordinary course and its business shall not be conducted in violation of any law, ordinance or regulation of any Governmental Authority, except where such violations would not result, either individually or in the aggregate, in a Material Adverse Effect.

 

6.5          Form D and Blue Sky; Rule 144.  The Company agrees to file a Form D with respect to the Notes as required under Regulation D.  The Company shall, on or promptly after the Closing Date, take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for or to qualify the Notes for sale to the Purchasers at the Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an exemption from such qualification). The Company shall make all filings and reports relating to the offer and sale of the Notes required under applicable securities or “Blue Sky” laws of the states of the United States following the Closing Date. The Company shall take such action as the Company shall reasonably determine is necessary (including the issuance of legal opinions) in order to facilitate the sales pursuant to Rule 144 of the Securities Act.

 

6.6          Non-Public Information.  Except with respect to the material terms and conditions of the transactions contemplated by this Agreement, or as expressly required by any applicable securities law, the Company covenants and agrees that neither it, nor any other Person acting on its behalf, will provide any Purchaser or its agents (other than any Person that serves on the Board or that serves on the Board as a designee of any Purchaser) or counsel with any information regarding the Company that the Company believes constitutes material non-public information without the express written consent of such Purchaser, unless prior thereto such Purchaser shall have executed a written agreement regarding the confidentiality and use of such information. The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.

 

6.7          Indemnification.

 

(a)          Indemnification by the Company.  The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Purchaser (to the extent a seller under, or named as a selling shareholder in, the Registration Statement), its directors, officers, stockholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, stockholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling person (each, a “Purchaser Party”) to the fullest extent permitted by applicable law, from and against all reasonable losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation (collectively, “Losses”) that any such Purchaser Party may suffer or incur arising out of, resulting from or based upon:

 

(i)          any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement, except that the Company will not be liable to any Purchaser Party under this Agreement to the extent, but only to the extent that a Loss is attributable solely to any of such Purchaser Party’s material breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement; or

 

(ii)          any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any prospectus included in the Registration Statement or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus or form of prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, except to the extent that such untrue statements, alleged untrue statements, omissions or alleged omissions are based upon information regarding the Purchaser furnished in writing to the Company by the Purchaser expressly for use therein, or that such Losses result from the use of the Registration Statement during a notified blackout period and the Company has complied with all of its obligations under this Agreement with respect thereto;

 

provided, however, that the indemnification contained in this Section 6.7(a) shall not apply to amounts paid in settlement of any Losses if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld, conditioned or delayed).

 

(b)          Indemnification by the Purchasers.  Each Purchaser shall, severally and not jointly with any other Purchaser, indemnify and hold harmless the Company, its directors, officers, stockholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, stockholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling person (each, a “Company Party”), to the fullest extent permitted by applicable law, from and against all Losses that any such Company Party may suffer or incur arising out of, resulting from or based upon:

 

(i)          any breach of any of the representations, warranties, covenants or agreements made by such Purchaser in this Agreement, except that such Purchaser will not be liable to any Company Party under this Agreement to the extent, but only to the extent that a Loss is attributable to the Company’s breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement; or

 

(ii)          any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any prospectus included in the Registration Statement, or any form of prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus, or any form of prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading to the extent, but only to the extent, that such untrue statements or omissions are based upon information regarding the Purchaser furnished in writing to the Company by the Purchaser expressly for use therein;

 

provided, however, that the indemnification contained in this Section 6.7(b) shall not apply to amounts paid in settlement of any Losses if such settlement is effected without the consent of the Purchaser (which consent shall not be unreasonably withheld, conditioned or delayed).

 

(c)          Indemnification Proceedings.

 

(i)          For the purposes of this Agreement, “Indemnifying Party” shall mean the party with an obligation to indemnify another party pursuant to Section 6.7(a) or Section 6.7(b) (as applicable) and “Indemnified Party” shall mean the party seeking indemnification pursuant to Section 6.7(a) or Section 6.7(b) (as applicable).

 

(ii)          The Indemnified Party shall promptly notify the Indemnifying Party in writing of the institution, threat or assertion of any proceeding against the Indemnified Party that the Indemnified Party believes relates to Losses the subject of indemnification pursuant to Section 6.7(a) or Section 6.7(b) (as applicable) and of which such Indemnified Party is aware (“Third Party Proceedings”). In the case of any delay or failure by an Indemnified Party to provide the notice required by the preceding sentence, the obligation of the Indemnifying Party to indemnify the Indemnified Party shall be reduced to the extent that such Indemnifying Party is prejudiced by such delay or failure. The Indemnifying Party will be entitled to participate in any Third Party Proceeding and to assume the defense thereof with counsel it elects, in its sole discretion, and in the event the Indemnifying Party assumes such defense, the Indemnifying Party will not be liable to the Indemnified Party for any legal or other expenses subsequently incurred by the Indemnified Party in connection with the defense thereof other than reasonable costs of investigation.

 

(iii)          If the indemnification provided under Section 6.7(a) or Section 6.7(b) from the Indemnifying Party is unavailable or insufficient to hold harmless an Indemnified Party in respect of any Losses referred to herein, then the Indemnifying Party, in lieu of indemnifying the Indemnified Party, shall contribute to the amount paid or payable by the Indemnified Party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and the Indemnified Party, as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the Indemnifying Party’s and Indemnified Party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the Losses referred to above shall be subject to the limitations set forth in Section 6.7(a) or Section 6.7(b) and deemed to include any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant to this Section 6.7(c)(iii) from any person who was not guilty of such fraudulent misrepresentation.  Each Indemnifying Party’s obligation to make a contribution pursuant to this Section 6.7(c)(iii) shall be individual, not joint and several, and in no event shall the liability of any Purchaser hereunder exceed the net proceeds received by Purchaser upon the sale of the shares giving rise to such indemnification obligation.

 

ARTICLE 7

CONDITIONS TO CLOSING

 

7.1          Conditions to Purchasers’ Obligations at the Closing.  Each Purchaser’s obligation to complete the purchase and sale of the Notes is subject to the waiver by such Purchaser or fulfillment as of the Closing Date of the following conditions:

 

(a)          Representations and Warranties.  The representations and warranties made by the Company in Article 3 shall be true and correct (i) in all respects as of the date hereof, and (ii) in all material respects as of the Closing Date (if different than the date hereof) (except for those representations and warranties which are qualified as to materiality, in which case such representations and warranties shall be true and correct in all respects), as though made on the Closing Date, except, in the case of clauses (i) and (ii) above, (y) for representations and warranties that speak as of a specific date, which shall be required to be true and correct (to the extent specified above) only as of such specific date and (z) for the representations and warranties continued in Sections 3.1, 3.2 and 3.3, which shall be true and correct in all respects).

 

(b)          Performance.  All covenants, agreements and conditions contained in this Agreement to be performed by the Company on or prior to the Closing Date shall have been performed or complied with in all material respects.

 

(c)          Adverse Changes.  Since the date of execution of this Agreement, no event or series of events shall have occurred that has had or reasonably would be expected to have or result in a Material Adverse Effect.

 

(d)          No Governmental Prohibition or Injunction.  No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated, endorsed or threatened in writing by any Governmental Authority of competent jurisdiction that prohibits or, if threatened in writing, could reasonably be expected to prohibit, the consummation of any of the transactions contemplated by this Agreement.

 

7.2          Conditions to Obligations of the Company.  The Company’s obligation to complete the purchase and sale of the Notes and deliver the Notes to each Purchaser is subject to the waiver by the Company or fulfillment as of the Closing Date of the following conditions:

 

(a)          Receipt of Funds.  The Company shall have received immediately available funds in the full amount of the Purchase Price for the Notes being purchased hereunder as set forth below such Purchaser’s name on the signature page of this Agreement.

 

(b)          Representations and Warranties.  The representations and warranties made by each Purchaser in Article 4 shall be true and correct (i) in all respects as of the date hereof, and (ii) in all material respects as of the Closing Date (if different than the date hereof) (except for those representations and warranties which are qualified as to materiality, in which case such representations and warranties shall be true and correct in all respects), as though made on the Closing Date, except, in the case of clauses (i) and (ii) above, for representations and warranties that speak as of a specific date, which shall be required to be true and correct (to the extent specified above) only as of such specific date.

 

(c)          Performance.  All covenants, agreements and conditions contained in this Agreement to be performed by such Purchaser on or prior to the Closing Date shall have been performed or complied with in all material respects.

 

(d)          No Governmental Prohibition.  The sale of the Notes by the Company shall not be prohibited by any law or order or regulation of a Governmental Authority.

 

(e)          Closing Purchase Deliverables.  Each Purchaser shall have delivered its Closing Purchaser Deliverables in accordance with Section 2.3.

 

ARTICLE 8

TERMINATION

 

8.1          Termination.  This Agreement may be terminated at any time prior to the Closing:

 

(a)          by mutual written consent of the Company and each Purchaser; or

 

(b)          by either the Company or any Purchaser (with respect to itself only) if the Closing has not occurred by 4:00 p.m., New York City time, on September 10, 2021; provided, however, that the right to terminate this Agreement under this Section 8.1(b) shall not be available to any Person whose failure to comply with its obligations under this Agreement has been the cause of or resulted in the failure of the Closing to occur on or before such time.

 

8.2          Effect of Termination.  Each party’s right of termination under Section 8.1 is in addition to any other right it may have under this Agreement or otherwise, and the exercise of a party’s right to terminate this Agreement in accordance with Section 8.1 will not constitute an election of remedies.  If this Agreement is terminated pursuant to Section 8.1, this Agreement will be of no further force or effect; provided, however, that (i) this Section 8.2 and Article 9 shall survive the termination of this Agreement and will remain in full force and effect, and (ii) the termination of this Agreement will not relieve any party from any liability for any breach of this Agreement occurring prior to termination.

 

ARTICLE 9

MISCELLANEOUS

 

9.1          Governing Law.  THIS AGREEMENT, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE AND ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE) DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER ANY APPLICABLE PRINCIPLES OF CHOICE OR CONFLICTS OF LAWS OF THE STATE OF DELAWARE.

 

9.2          Jurisdiction; Venue.  Each of the parties hereto irrevocably agrees that any legal action or proceeding arising out of or relating to this Agreement brought by any party or its Affiliates against any other party or its Affiliates shall be brought and determined in the Court of Chancery of the State of Delaware; provided, however, that if jurisdiction is not then available in the Court of Chancery of the State of Delaware, then any such legal action or proceeding may be brought in any federal court located in the State of Delaware or any other Delaware state court. Each of the parties hereby irrevocably submits to the jurisdiction of the aforesaid courts for itself and with respect to its property, generally and unconditionally, with regard to any such action or proceeding arising out of or relating to this Agreement and the Reorganization and the other transactions contemplated by this Agreement.  Each of the parties agrees not to commence any action, suit or proceeding relating thereto except in the courts described above in Delaware, other than actions in any court of competent jurisdiction to enforce any Order rendered by any such court in Delaware as described herein.  Each of the parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any action or proceeding arising out of or relating to this Agreement or the Reorganization or the other transactions contemplated by this Agreement, (a) any claim that it is not personally subject to the jurisdiction of the courts in Delaware as described herein for any reason, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.

 

9.3          Waiver of Jury Trial.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT OR THE REORGANIZATION.  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, SUIT OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION 9.3.

 

9.4          Execution.  This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that all parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile transmission, or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof.

 

9.5          Severability.  If any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision will be deemed modified in order to conform with such statute or rule of law.  Any provision hereof that may prove invalid or unenforceable under any law will not affect the validity or enforceability of any other provision hereof.

 

9.6          Entire Agreement; Amendment; Waiver.  This Agreement supersedes all other prior oral or written agreements between the Purchasers, the Company, their respective Affiliates and Persons acting on their behalf with respect to the matters discussed herein, and this Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor any Purchaser makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be amended or waived other than by an instrument in writing signed by the Company and the Required Holders, and any amendment or waiver to this Agreement made in conformity with the provisions of this Section 9.6 shall be binding on all Purchasers and holders of Notes and the Company; provided that any such amendment or waiver that complies with the foregoing but that disproportionately, materially and adversely affects the rights and obligations of any Purchaser relative to the comparable rights and obligations of the other Purchasers shall require the prior written consent of such adversely affected Purchaser.

 

9.7          Notices.  All notices required or permitted hereunder shall be in writing and shall be deemed effectively given:  (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed email if sent during normal business hours of the recipient, if not, then on the next Business Day, or (iii) one Business Day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt.  The addresses for such communications are:

 

If to the Company:

 

Forian Inc.

41 University Drive, Suite 400

Newtown, PA 18940

Email: dan.barton@forian.com

Attn: Daniel Barton, Chief Executive Officer

 

with a copy (which shall not constitute notice) to:

Forian Inc.

41 University Drive, Suite 400

Newtown, PA 18940

Email: legal@forian.com

Attn: Legal Notice

 

If to a Purchaser:  To the address set forth immediately below such Purchaser’s name on the signature pages hereto, with a copy to its legal representative, if any, set forth below such Purchaser’s name on the signature page of this Agreement.  Each party will provide written notice to the other parties of any change in its address in accordance with this Section 9.7.

 

9.8          Successors and Assigns.  This Agreement is binding upon and inures to the benefit of the parties and their successors and assigns.  The Company will not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Required Holders, and no Purchaser may assign this Agreement or any rights or obligations hereunder without the prior written consent of the Company.  Any attempted assignment in violation of this Section 9.8 shall be null and void.

 

9.9          No Third Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto, their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

 

9.10          Further Assurances.  Each party will do and perform, or cause to be done and performed, all such further acts and things, and will execute and deliver all other agreements, certificates, instruments and documents, as another party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

9.11          Interpretation.  When a reference is made in this Agreement to an Article, a Section, an Exhibit or a Schedule, such reference shall be to an Article, a Section, an Exhibit or a Schedule of or to this Agreement unless otherwise indicated.  The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  Any capitalized term used in any Exhibit or Schedule but not otherwise defined therein shall have the meaning assigned to such term in this Agreement.  Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”  The words “hereof,” “hereto,” “hereby,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  The term “or” is not exclusive.  The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if.”  The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms.  All pronouns and all variations thereof shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person or persons or entity may require.  Any agreement, instrument or law defined or referred to herein means such agreement, instrument or law as from time to time amended, modified or supplemented, unless otherwise specifically indicated.  References to a Person are also to its permitted successors and assigns.  Unless otherwise specifically indicated, all references to “dollars” and “$” will be deemed references to the lawful money of the U.S.  The parties hereto have participated jointly in the negotiation and drafting of this Agreement.  In the event an ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring by virtue of the authorship of any provisions of this Agreement.  Any reference to “days” means calendar days unless Business Days are expressly specified. When calculating the period of time before which, within which or following which any act is to be done pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded and if the last day of such period is not a Business Day, the period shall end on the next succeeding Business Day.

 

9.12          Equitable Relief.  The Company recognizes that, if it fails to perform or discharge any of its obligations under this Agreement, any remedy at law may prove to be inadequate relief to the Purchasers.  The Company therefore agrees that the Purchasers are entitled to seek temporary and permanent injunctive relief in any such case.  Each Purchaser also recognizes that, if it fails to perform or discharge any of its obligations under this Agreement, any remedy at law may prove to be inadequate relief to the Company.  Each Purchaser therefore agrees that the Company is entitled to seek temporary and permanent injunctive relief in any such case.

 

9.13          Survival of Representations and Warranties.  Notwithstanding any investigation made by any party to this Agreement, all representations and warranties made by the Company and the Purchasers herein shall survive the Closing Date.

 

9.14          Independent Nature of Purchasers’ Obligations and Rights.  The obligations of each Purchaser under this Agreement are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under this Agreement.  Nothing contained herein and no action taken by any Purchaser pursuant thereto shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group, or are deemed Affiliates with respect to such obligations or the transactions contemplated by this Agreement.  Each Purchaser shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose.  Nothing contained in this Section 9.14 shall be deemed to adversely affect the other provisions in this Agreement providing for action of the Required Holders to bind all of the Purchasers

 

9.15          Adjustments in Share Numbers and Prices.  In the event of any stock split, subdivision, dividend or distribution payable in shares of Common Stock (or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly shares of Common Stock), combination or other similar recapitalization or event occurring after the date hereof, each reference in this Agreement to a number of shares or a price per share shall be deemed to be amended to appropriately account for such event.

 

9.16          Exculpation.  Each Purchaser acknowledges that it is not relying upon any person, firm or corporation, other than the Company and its officers and directors, in making its investment or decision to invest in the Company.  Each Purchaser agrees that no other Purchaser nor the respective controlling persons, officers, directors, partners, agents or employees of any other Purchaser shall be liable to any other Purchaser for any action heretofore or hereafter taken or omitted to be taken by any of them in connection with the purchase of the Notes.

 

[Signatures Follow]

 

IN WITNESS WHEREOF, the parties hereto have caused this Note Purchase Agreement to be duly executed as of the date first above written.

 

IN WITNESS WHEREOF, the parties hereto have caused this Note Purchase Agreement to be duly executed as of the date first above written.

 

	FORIAN INC.

By:

	Name: Daniel Barton
	Title: Chief Executive Officer

Warrant Shares: [•]

[Insert Date of Issuance]

	FORIAN INC.

	By:
		Name:
		Title:

Holder:
(Print Legal Name (signature must correspond to name as written
on the signature page of the Note))
(Signature of Holder or Duly Authorized Representative of Holder)
Holder Address:
Holder Phone:
Holder Email:

Principal Amount of Note Retained (if any): $

Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (this “Agreement”) is made as of September 2, 2021, by and between Forian Inc., a Delaware corporation (the “Company”), and Michael Vesey  (“Executive”).

 

The Company and Executive desire to enter into this Agreement to establish and govern the terms and conditions of Executive’s employment by the Company or any parent or subsidiary as may exist after the Effective Date, as determined by the Board of Directors of the Company (the “Board”) in its reasonable sole discretion (the Company, together with each such subsidiary and/or parent, the “Company Group”).

 

NOW THEREFORE, in consideration of the promises and mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:

 

1.          Employment.  Subject to the approval of the Board, the Company agrees to employ Executive and Executive agrees to be employed by the Company as of the date hereof (the “Effective Date”) until the termination of Executive’s employment hereunder pursuant to Section 4, on the terms specified in this Agreement.  The period from the Effective Date through the date of Executive’s termination of employment shall be referred to as the “Employment Period.”

 

2.          Position and Duties.  During the Employment Period, Executive shall serve as the Chief Financial Officer of the Company or such other entity within the Company Group as determined by the Board in its reasonable sole discretion to the extent the Company elects to conduct its operations through the Company Group.  Executive shall report to the Company’s Chief Executive Officer, and Executive shall exercise such powers and comply with and perform, faithfully and to the best of Executive’s ability, such directions and duties in relation to the business and affairs of the Company Group, consistent with Executive’s position, as may from time to time be vested in or requested of him.  During the Employment Period, Executive shall devote Executive’s full business time and attention to the business and affairs of the Company Group, and shall not, without the prior written consent of the Board, accept other employment or perform other services for compensation; provided, however, that Executive may engage in educational, charitable, political, professional and civic activities or serve as an executor, trustee or in another similar fiduciary capacity, as long as such activities do not, individually or in the aggregate, interfere with Executive’s obligations hereunder.

 

3.           Compensation and Benefits.

 

(a)          Base Salary.  Executive’s base salary for the Employment Period initially shall be Three Hundred Thousand Dollars ($300,000) per annum (the “Base Salary”), which shall be payable by the Company in regular installments in accordance with the Company’s payroll practices in effect from time to time.  The Base Salary may be subject to increase periodically, as determined by the Compensation Committee of the Board (the “Compensation Committee”) in its reasonable sole discretion; provided, that the Board shall consider any such increase at least annually.  For any partial year during the Employment Period, the Base Salary shall be prorated to reflect the period of time in such calendar year for which Executive is actually employed by the Company Group pursuant to this Agreement.

 

(b)          Annual Bonus.  In addition to the Base Salary, for each calendar year completed during the Employment Period, Executive shall be eligible to receive an annual incentive bonus (the “Annual Bonus”), as determined by the Board and/or Compensation Committee in its sole discretion.  The target amount of the Annual Bonus for each year during the Employment Period shall be fifty percent (50%) of the Base Salary in effect for such calendar year (or based on a weighted average of the Base Salary if it is adjusted within a calendar year).  For the Company’s fiscal year ending December 31, 2021, the Annual Bonus shall be prorated to reflect the period of time in such calendar year for which Executive is actually employed by the Company Group pursuant to this Agreement; provided that, except as set forth in Section 4(b)(ii), in order to receive the Annual Bonus, Executive must be continuously employed by the Company Group through the date that the Annual Bonus is paid.  Any Annual Bonus hereunder shall be paid not later than March 15 of the calendar year following the calendar year to which such Annual Bonus relates.

 

(c)           Equity Awards. Subject to the approval of the Compensation Committee, Executive will be granted equity interests in the Company comprised of restricted stock units and nonqualified stock options to purchase common stock of the Company. The equity will be comprised of 40,000 Restricted Stock Units and 350,000 Non-Qualified Options. The nonqualified stock options will have a per share exercise price equal to the fair market value of the common stock as determined under the Equity Plan (as defined below) and will vest as follows: (i) twenty-five percent (25%) shall vest on the one (1)-year anniversary of the Effective Date and (ii) seventy-five percent (75%) shall vest in equal quarterly installments thereafter through the four (4)-year anniversary of the Effective Date, subject to Executive’s continued employment on each applicable vesting date.  The restricted stock units will be granted under the Equity Plan and will vest in equal annual installments of 25% on each anniversary of the Effective Date through the four (4)-year anniversary of the Effective Date, subject to Executive’s continued employment on each applicable vesting date. The Non-Qualified Options will serve as an inducement for Executive to accept employment and will be granted pursuant to Nasdaq Listing Rule 5635(c)(4) outside of the Company’s 2020 Equity Incentive Plan (the “Equity Plan”), but will otherwise contain substantially the same terms as those contained in the Equity Plan and the standard form of award agreement thereunder. Subject to applicable securities laws, the Company shall use commercially reasonable efforts to file a Form S-8 registration statement covering the Non-Qualified Options (and the shares of common stock received upon exercise) prior to vesting.

 

(d)          Employee Benefits.  Executive shall be eligible to participate in all of the Company Group’s employee benefit plans and programs for which senior executive employees of the Company Group are generally eligible, as in effect from time to time; provided, that Executive shall not be entitled to participate in any equity or severance program, plan or policy of the Company Group other than as specifically set forth herein.  Nothing in this Agreement will preclude the Company Group from changing, altering or terminating any of the plans or programs for which employees of the Company Group are eligible, in whole or in part, in the Company’s sole discretion.

 

(e)           Paid Time Off.  Executive will be entitled to paid vacation days in accordance with the Company’s paid time off policies as may be in effect from time to time. The Company currently has an unlimited paid time off policy and encourages employees to schedule vacations with due regard to the business needs of the Company; provided, however, that such policy is in all respects subject to statutory leave laws.  For the avoidance of doubt, (i) there is no accrual of vacation time, (ii) there is no rollover of unused vacation days and (iii) there is no payout of vacation upon the termination of employment for any reason.

 

(f)          Expense Reimbursement.  During the Employment Period, and subject to Section 22(c), the Company shall reimburse Executive for all reasonable and necessary travel, entertainment and similar business expenses incurred by Executive in the course of performing Executive’s duties and responsibilities under this Agreement which are consistent with the Company Group’s policies in effect from time to time, subject to the Company Group’s requirements with respect to reporting and documentation of such expenses.

 

(g)           Tax Matters. All forms of compensation referred to in this Agreement are subject to reduction to reflect applicable tax withholdings and other deductions to the extent required by law.

 

4.           Notice of Termination; Company’s Obligations Upon Cessation of Employment Period.

 

(a)          Notice of Termination.  Subject to the terms of this Agreement, the Employment Period, and accordingly Executive’s employment with the Company Group, may be terminated by either party at any time and for any or no reason.  Any termination of employment by the Company Group or by Executive shall be communicated by a written notice to the other party indicating the specific termination provision in this Agreement relied upon.

 

(b)           Company Group’s Obligations Upon Cessation of the Employment Period.

 

 (i)              Accrued Benefits.  Upon any termination of the Employment Period, Executive shall be entitled to receive: (A) Base Salary earned for services rendered by Executive through the date of termination, which shall be paid on the next succeeding payroll date; (B) any unpaid expense reimbursement owed to Executive under Section 3(f), which shall be paid within thirty (30) days of the date of termination; and (C) any amount earned, accrued and arising from Executive’s participation in, or benefits accrued under, any Company Group employee benefit plan or program, which amounts shall be payable in accordance with the terms and conditions of such employee benefit plans and programs (collectively, the “Accrued Benefits”).

 

 (ii)             Termination Without Cause or For Good Reason.  If the Employment Period is terminated by the Company Group without Cause or by Executive as a result of a resignation for Good Reason, in addition to the Accrued Benefits, Executive shall be entitled to receive (1) continuation of the Base Salary (as in effect immediately prior to termination of employment) for a period of twelve (12) months following the date of termination (but subject to the immediately following paragraph) in accordance with the payroll schedule in effect at the time; (2) the Annual Bonus for the calendar year immediately preceding the year of termination to the extent earned in full and unpaid as of the effective date of such termination; and (3) if Executive timely and properly elects to continue participation in any group medical, dental, vision and/or prescription drug plan benefits to which Executive and/or Executive’s eligible dependents would be entitled under 29 U.S.C. § 1161 et seq. (commonly known as “COBRA”) following the termination of the Employment Period, then Executive shall be entitled to continuation of group health plan benefits, with the cost of the regular premium for such benefits shared in the same relative proportion by the Company Group and Executive as in effect on the date of termination until the earliest of (A) the expiration of the twelve (12) month period following the date of termination; (B) the expiration of Executive’s continuation coverage under COBRA; and (C) the date of commencement of any employment or self-employment in which comparable benefits are available to the Executive as a result of such employment or self-employment (items (1) through (3) collectively, the “Severance Benefits”); provided, however, that the Company Group’s obligation to provide the Severance Benefits to Executive pursuant to this Section 4(b)(ii) shall be conditioned upon Executive’s execution and the irrevocability of a release in a form acceptable to the Company within thirty (30) days (or 60 days if the termination was a “group termination” for purposes of the age discrimination laws) after Executive’s last day of employment with the Company Group (the “Release”).  Executive shall not be entitled to any other salary, compensation or other benefits after termination of the Employment Period, except as specifically provided for in the Company Group’s employee benefit plans, the post-termination exercise period applicable to options that have vested as of the date of termination provided in any option agreement or as otherwise expressly required by applicable law.  Notwithstanding the foregoing, nothing in this Section 4(b)(ii) shall be construed to affect Executive’s right to receive the COBRA continuation entirely at Executive’s own cost to the extent that Executive may continue to be entitled to the COBRA continuation after Executive’s right to cost-sharing under the Severance Benefits ceases.

 

Any Severance Payments payable pursuant to this Section 4(b)(ii) shall not be paid until the first scheduled payment date following the date the Release is executed and no longer subject to revocation, with the first such payment being in an amount equal to the total amount to which Executive would otherwise have been entitled during the period following the date of termination if such deferral had not been required; provided, however, that any such amounts that constitute nonqualified deferred compensation within the meaning of Internal Revenue Code Section 409A and the regulations and guidance promulgated thereunder (“Section 409A”) shall not be paid until the first payroll after the 60th day following such termination to the extent necessary to avoid adverse tax consequences under Section 409A, and, if such payments are required to be so deferred, the first payment shall be in an amount equal to the total amount to which Executive would otherwise have been entitled during the period following the date of termination if such deferral had not been required; provided further that, if Executive is a “specified employee” within the meaning of Section 409A, any Severance Payments payable to Executive under this Section 4(b)(ii) during the six months and one day following the date of termination pursuant to this Section 4(b)(ii) that constitute nonqualified deferred compensation within the meaning of Section 409A shall not be paid until the date that is six (6) months and one day following such termination to the extent necessary to avoid adverse tax consequences under Section 409A, and, if such payments are required to be so deferred, the  payment shall be in an amount equal to the total amount to which Executive would otherwise have been entitled to during the period following the date of termination if such deferral had not been required.

 (iii)          Termination for Death or Incapacity.  If the Employment Period is terminated for death or Incapacity, in addition to the Accrued Benefits, Executive (or Executive’s estate, if applicable) shall be entitled to receive the Annual Bonus for the year immediately preceding the year of termination to the extent earned in full and unpaid as of the effective date of such termination; provided, however, that, in the case of termination for Incapacity, the Company Group’s obligation to provide the benefits described above shall be conditioned upon Executive’s (or his guardian’s or authorized representative’s) execution of the Release and Executive’s continued compliance with Section 7 of this Agreement.  Executive (or Executive’s estate, as applicable) shall not be entitled to any other salary, compensation or other benefits after termination of the Employment Period, except as specifically provided for in the Company Group’s employee benefit plans, the post-termination exercise period applicable to options that have vested as of the date of termination provided in any option agreement or as otherwise expressly required by applicable law.

 

 (iv)            Termination for Cause or Resignation for Other Than Good Reason, or as a Result of Death or Incapacity.  If the Employment Period is terminated by the Company Group for Cause or by Executive upon Executive’s resignation other than resignation for Good Reason, Executive  shall only be entitled to receive the Accrued Benefits, and shall not be entitled to any other salary, compensation or benefits from the Company Group after termination of the Employment Period, except as otherwise specifically provided for under the Company Group’s employee benefit plans, the post-termination exercise period applicable to options that have vested as of the date of termination provided in any option agreement in the case of a resignation without Good Reason only, or as otherwise expressly required by applicable law.

 

 (v)           No Other Payments.  Except as otherwise expressly provided herein, all of Executive’s rights to salary, bonuses, employee benefits and other compensation hereunder which would have accrued or become payable after the termination of the Employment Period shall cease upon such termination, other than those expressly required under applicable law (such as Executive’s rights under the COBRA).  The Company Group may offset any amounts Executive owes the Company Group against any amounts the Company Group owes Executive hereunder to the extent permitted by applicable law.

 

 (vi)           Limitation.  Notwithstanding any provision of this Agreement, in the event that the Employment Period is terminated, payments described in this Section 4(b) are conditioned on the Company being financially solvent at the time that each such payment becomes due, and further provided that the payment of any such amounts would not cause the Company to become insolvent.  For purposes of this paragraph, the Company shall be considered solvent if the Company is able to pay its debts as they become due.

 

(e)           Cause.  For purposes of this Agreement, “Cause” shall mean with respect to Executive one or more of the following: (i) Executive’s conviction for/of, or plea of nolo contendere to, a felony or of any crime involving moral turpitude, dishonesty or fraud that, in the reasonable opinion of the Company, renders Executive’s continued employment damaging or detrimental to the Company Group or potentially damaging or detrimental to the Company Group; (ii) any act or omission by Executive that the Board determines causes or could reasonably be expected to cause, material injury, monetarily or otherwise, to the Company Group; (iii) Executive’s failure to perform the material duties of Executive’s position beyond thirty (30) days after a written demand for substantial performance is delivered to Executive by the Company; (iv) Executive’s breach of fiduciary duty or duty of loyalty to the Company Group; (v) Executive’s material failure to observe and comply with any of the Company Group’s rules, policies and/or procedures, including the Company Group’s policies prohibiting discrimination, harassment or retaliation, in the Company’s reasonable sole discretion; (vi) Executive’s commission of willful misconduct, fraud, misappropriation, embezzlement or theft; or (vii) Executive’s breach of any of the covenants in Section 5 through Section 7.

 

(f)           Good Reason.  For purposes of this Agreement, “Good Reason” shall mean if Executive resigns from employment with the Company Group because the Company: (i) reduces the amount of the Base Salary or the Annual Bonus target (other than in connection with an across-the-board reduction for similarly-situated executive employees of the Company Group or, in the case of Annual Bonus, with an equivalent increase in Base Salary) or breaches its material obligations under this Agreement; (ii) materially reduces Executive’s authority, duties or responsibilities or assigns Executive to report into someone other than the Company’s Chief Executive Officer, Chief Strategy Officer or Executive Chairman (it being understood that no longer serving as the Chief Financial Officer due to the business needs of the Company shall not constitute Good Reason and that the transition to a different member of the Company Group shall not be deemed Good Reason) or (iii) changes Executive’s principal place of employment more than thirty-five (35) miles from the Company’s headquarters as of the Effective Date; provided, however, that notice of Executive’s resignation for Good Reason must be delivered in writing to the Company within thirty (30) days after the occurrence of any such event, and such event must remain uncured by the Company during the thirty (30) days immediately following such notice, in order for Executive’s resignation with Good Reason to be effective hereunder and Executive shall actually resign within 30 days after the expiration of the cure period.

 

(c)           Incapacity.  For purposes of this Agreement, “Incapacity” shall be deemed to occur if the Board, in its good faith judgment, determines that Executive is mentally or physically disabled or incapacitated such that Executive cannot perform Executive’s duties and responsibilities under this Agreement and, within thirty (30) days of receipt of the Board’s good faith determination, either (i) Executive fails to undertake a physical and/or mental examination by a physician reasonably acceptable to the Board or (ii) after Executive undertakes a physical and/or mental examination by a physician reasonably acceptable to the Board, such physician fails to certify to the Board that Executive is physically and mentally able and capable of performing Executive’s duties and responsibilities under this Agreement.  Notwithstanding the foregoing, the Company Group shall be required to comply at all times with applicable laws relating to medical leaves of absence and accommodation of individuals with disabilities.

 

(d)          Condition for Continuation.  If, after the termination of the Employment Period, Executive breaches any provision of Section 5 through Section 7, the Company Group (i) shall no longer be obligated to make any payments or provide any other benefits pursuant to this Section 4, and (ii) shall be entitled to reimbursement of any Severance Payments made to Executive pursuant to Section 4(b)(ii).

 

(e)          Return of Company Group Materials.  Either at termination or upon the Company’s request, both during and after the Employment Period, Executive will promptly return to the Company or destroy (with destruction to be certified by Executive) all Company Group materials that came into Executive’s possession (and any copies thereof, in any form or media), custody or control in connection with Executive’s employment with the Company Group.  As used in this Agreement, the term “materials” includes all documents, notes, computer and physical files, records of Inventions, keys and key cards, access codes, manuals, customer lists, phones, computers, tablets, credit cards, tapes, disks and other electronic, optical, magnetic or other computer-readable media, and all other Company Group property in Executive’s possession or control (whether or not it contains, refers to or was derived from Confidential Information).  Executive agrees that any information, files, email, social media accounts, or other items relating to completion of Executive’s duties for the Company Group completed away from the physical offices of the Company, whether stored on a computer that is the property of the Company Group or not, or which is stored on other electronic media storage, or otherwise in physical or electronic format, including passwords or access codes to such items, are the property of the Company Group and subject to the provisions of this Agreement.  The foregoing shall not limit Executive’s entitlement to retain documents reasonably related to Executive’s equity interest in the Company and received or generated by Executive in such capacity.

 

5.           Confidential Information.

 

(a)          Definition.  For purposes of this Agreement, “Confidential Information” means all trade secrets, proprietary information and confidential information belonging to the Company Group not generally known to the public, whether accessed prior to or during Executive’s employment with the Company Group, including information concerning business plans, financial information, operating practices and methods, technical information, knowledge, methodologies, computer programs, work processes, research and development, expansion plans, strategic plans, marketing plans, contracts, customer/supplier/licensor lists, personal information such as organizational charts, employee and contractor lists, skill sets, and personnel files, information provided to the Company Group by third parties that the Company Group has agreed to keep confidential and other business documents which the Company Group treats as confidential, in any format whatsoever (including oral, written, electronic or any other form or medium).

 

(b)         Obligation.  During the Employment Period and at all times thereafter, unless authorized in writing by the Company (or, with respect to clauses (ii) and (iii), if in Executive’s proper performance of Executive’s job duties and responsibilities during the Employment Period), Executive will not:

 

 (i)          use for Executive’s benefit or advantage the Confidential Information;

 

 (ii)         use the Confidential Information for the benefit of any third party;

 

 (iii)        disclose or cause to be disclosed the Confidential Information, or authorize or permit disclosure of the Confidential Information, to any third party; or

 

 (iv)        use the Confidential Information in any way which would be detrimental to the Company Group.

 

(c)           Defend Trade Secrets Act Notice.  The Defend Trade Secrets Act of 2016 provides that:

 

 (i)           An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret under the Act that: (A) is made – (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal; and

 

 (ii)         An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual: (A) files any document containing the trade secret under seal; and (B) does not disclose the trade secret, except pursuant to court order.

 

6.           Inventions.

 

(a)         Disclosure.  Executive shall promptly and fully disclose to the Company, with all necessary detail, all developments, know-how, discoveries, inventions, modifications, improvements, concepts, ideas, formulae, processes, methods, techniques, designs, developments, software, trade secrets, works of authorship (whether patentable, copyrightable or otherwise) made, created, discovered, invented, received, conceived, reduced to practice, acquired or written by Executive (whether or not at the request or upon the suggestion of the Company), solely or jointly with others, (i) during the period of Executive’s employment with the Company Group that relate to any line of business, activities or fields of interest or investigation with respect to which Executive renders services to the Company Group or in which the Company Group is engaged during the time that Executive renders services to the Company Group; or (ii) that are otherwise made through the use of the Company Group’s time, facilities or properties (the foregoing being hereinafter referred to collectively as the “Inventions”).  To the extent that any such Inventions qualify under applicable law as “works made for hire,” Executive and the Company hereby agree that such Inventions shall in fact be works made for hire.  Executive agrees to waive, and hereby waives, all moral rights which Executive may have in or to any Inventions and, to the extent that such rights may not be waived, Executive agrees not to assert such rights against the Company Group or its successors, assigns, and licensees.

 

(b)          Assignment and Transfer.  To the extent not already owned by the Company Group (such as in the case of a work made for hire), Executive hereby assigns and transfers to the Company, and to the extent any such assignment and transfer cannot be made at present, agrees to assign, all of Executive’s right, title and interest in and to each of the Inventions.  Executive further agrees to deliver to the Company any and all drawings, notes, notebooks, research materials, specifications, data and other materials and documents relating to each of the Inventions, and to sign, acknowledge and deliver all such further papers, including applications for and assignments of intellectual property, including patents and copyrights, and all renewals thereof, as may be necessary to obtain, register, formalize, or perfect intellectual property, including patents and copyrights, for any and all of the Inventions in any and all countries and to vest title thereto in the Company and its respective successors and assigns, and to otherwise protect the Company Group’s interests therein.  Executive will, during and after the Employment Period, at the request and cost of the Company, promptly sign, execute, make, and do all such deeds, documents, acts and things as the Company and its duly authorized agents may reasonably require relating to any judicial, opposition or other proceedings or petitions or applications relating to the Inventions.

 

(c)          Power of Attorney.  If the Company is unable, after reasonable effort, to secure the signature of Executive on any application or registration relating to intellectual property, including for patent, copyright, trademark or other analogous registration, or other documents regarding any legal protection or defense relating to an Invention, whether because of Executive’s physical or mental incapacity or for any other reason whatsoever, Executive hereby irrevocably designates and appoints Company’s legal counsel as Executive’s agent and attorney-in-fact, to act for and in Executive’s behalf and stead to execute and file any such application, registration, or other documents and to do all other lawfully permitted acts to further the prosecution and issuance of patents, the registration of copyrights and trademarks, and any other legal protection or defense with respect to an Invention with the same legal force and effect as if executed by Executive.

 

(d)          Records.  Executive agrees that, in connection with any research, development or other services performed for the Company Group, Executive will maintain careful, adequate and contemporaneous written records of all Inventions, which records shall be the property of the Company Group.  Executive shall hold for the benefit of the Company Group all documentation, disks, programs, data, records, drawings, manuals, reports, sketches, blueprints, letters, notes, notebooks and all other writings, electronic data, graphics and tangible information and materials relating to the Company Group or the Company Group’s business that are in the possession or under the control of Executive.

 

(e)          License.  If during the period of Executive’s employment or other service with the Company Group or during the six (6)-month period next succeeding the termination of such employment or other service, Executive incorporates into any Invention, any proprietary information or material owned by Executive or in which Executive has an interest, Executive hereby grants, and to the extent any such grant cannot be made at the present, Executive agrees to grant to the Company, a non-exclusive, royalty-free, irrevocable, perpetual, transferable worldwide license, with the right to sublicense, to make, use, refrain from using, sell, offer for sale, import, modify, delete, add to, reproduce, create derivative works based upon, distribute, perform, display or exploit in any way, such proprietary information or material, in whole or in part, by any means, now known or later developed, in all languages, as part of or in connection with any such Inventions.

 

7.           Non-Competition; Non-Solicitation.

 

(a)          Non-Competition.  During the Employment Period and for the twelve  (12) month period following the termination of the Employment Period (the “Restricted Period”), Executive shall not, directly or indirectly, anywhere within North America, whether as owner, consultant, employee, partner, venturer, agent, through stock ownership, investment of capital, lending of money or property, rendering of services, or otherwise, with or without compensation, engage or participate in any company or business that is engaged in any business in which the Company Group is engaged or is developing while Executive is employed by the Company Group, including the research, development, marketing and commercialization of healthcare and wellness business intelligence solutions; provided, that nothing herein shall prevent Executive from acquiring, solely as a passive investment and through market purchases, less than five percent (5%) in the aggregate of the outstanding publicly-traded equity securities of any entity that is registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended, so long as Executive is not part of any control group of such entity.

 

(b)           Non-Solicitation.  During the Employment Period and the Restricted Period, Executive shall not, directly or indirectly:

 

 (i)           induce or attempt to induce any customer, supplier, licensee, licensor or other business relation of the Company Group to cease doing business with the Company Group;

 

 (ii)         interfere with the relationship between the Company Group and any customer, supplier, licensee, licensor or other business relation of the Company Group (including making any negative or disparaging statements or communications regarding the Company Group); or

 

 (iii)        induce or attempt to induce any person who is, or was at any time within the immediately preceding six (6) months, an employee, contractor or consultant of the Company Group, to leave the employ of the Company Group, terminate a business relationship with the Company Group, or in any way interfere with the relationship between the Company Group and any employee, contractor or consultant thereof, or hire/engage or facilitate the hiring/engagement of any such employee, contractor or consultant of the Company Group; provided, that nothing herein shall prohibit Executive from hiring any such employee, contractor or consultant in the event that such Person shall have responded to a general solicitation for employment/engagement not otherwise aimed or targeted at employees, contractors or consultants of any member of the Company Group.

 

8.          Reasonable Restrictive Covenants.  Executive agrees that the restrictive covenants contained in Section 5 through Section 7 are necessary and reasonable in terms of time, geography and scope.  If any of the restrictive covenants contained in Section 5 through Section 7 are subsequently determined to be too expansive in terms of time, geography or scope, or otherwise invalid or unenforceable, in whole or in part, such covenants shall not be void or voidable, but shall be deemed to be modified or restricted to the extent and in a manner necessary to render the same valid and enforceable, or shall be deemed excised from this Agreement, as the case may require, and this Agreement shall be construed and enforced to the maximum extent permitted by law as if such provision had been originally incorporated herein as so modified or restricted, or as if such provision had not been originally incorporated herein, as the case may be.  The parties specifically empower a court of competent jurisdiction to reform any restrictive covenant that the court deems unnecessarily broad taking into account Company Group’s protectable interests.  Executive further acknowledges that Executive can obtain suitable employment otherwise than in violation of the restrictive covenants contained in Section 5 through Section 7 and that, accordingly, the enforcement of these restrictive covenants will not prevent Executive from earning a livelihood or otherwise cause Executive undue hardship.

 

9.           Remedies.

 

(a)          Equitable Relief; Fees and Expenses.  Executive acknowledges that Executive’s compliance with the restrictions set forth in Section 5 through Section 7 is necessary to protect the goodwill, customer relations, trade secrets, confidential information and other proprietary and legitimate business interests of the Company Group.  Executive acknowledges that any breach of Section 5 through Section 7 will result in irreparable and continuing damage to the Company Group’s business for which there will be no adequate remedy at law and Executive agrees that, in the event of any such breach or threatened breach of Section 5 through Section 7, the Company Group and its successors and assigns shall be entitled to seek injunctive relief and to such other and further relief as may be available at law or in equity.  Accordingly, Executive expressly agrees that upon any breach, or threatened breach, of the terms of this Agreement, the Company Group shall be entitled as a matter of right, in any court of competent jurisdiction in equity or otherwise to enforce the specific performance of Executive’s obligations under this Agreement, to obtain temporary and permanent injunctive relief without the necessity of proving actual damage to the Company Group or the inadequacy of a legal remedy.  In addition, in the event a Court orders the Company Group to post a bond in order to obtain such injunctive relief for a claim under this Agreement, Executive agrees that the Company Group will be required to post only a nominal bond.  The rights conferred upon the Company Group in this paragraph shall not be exclusive of any other rights or remedies that the Company Group may have at law, in equity or otherwise.  Executive acknowledges that any claim or cause of action of Executive against the Company Group shall not constitute a defense to the enforcement by the Company Group of the terms of this Agreement.  In the event the Company Group obtains any such injunction, order, decree or other relief, in law or in equity, Executive shall be responsible for reimbursing the Company Group for all costs associated with obtaining the relief, including reasonable attorneys’ fees and expenses and costs of suit.

 

(b)          Tolling.  In the event that Executive violates any of the covenants contained in Section 7 and the Company Group commences legal action for injunctive or other relief, then if it prevails after the injunction hearing, the Company shall have the benefit of the full period of the covenants such that the covenants shall have the duration of twelve (12) months computed from the date Executive ceased violation of the covenants, either by order of the Court or otherwise.

 

10.        Executive’s Representations and Warranties.  Executive hereby represents and warrants to the Company that: (a) the execution, delivery and performance of this Agreement by Executive do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which Executive is bound; (b) except as was disclosed in writing by Executive to the Company prior to the Effective Date, Executive is not a party to or bound by any employment agreement, noncompete agreement or confidentiality agreement with any other person or entity; (c) upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of Executive, enforceable in accordance with its terms; and (d) Executive is authorized to work in the United States without restriction.  Executive hereby acknowledges and represents that Executive has consulted with independent legal counsel regarding Executive’s rights and obligations under this Agreement and that Executive fully understands the terms and conditions contained herein.

 

11.         Survival.  Section 4 through Section 22, inclusive, shall survive and continue in full force in accordance with their terms notwithstanding the termination of the Employment Period.

 

12.         Notices.  All notices, authorizations, and requests in connection with this Agreement must be in writing and will be deemed given: (a) on the day they are hand delivered directly to the individual designated by the receiving party as set forth below; (b) on the day receipt is confirmed by a nationally-recognized express courier (postage prepaid, signature required) or the United States Post Office (postage prepaid, certified mail receipt requested); or (c) on the day of transmittal if sent by .pdf electronic format via electronic mail provided that the recipient confirms such receipt within one business day thereafter (and receiving party shall use its commercially reasonable efforts to confirm such receipt).  In each case, any notice must be addressed to the receiving party as follows (or, in either such case, to such other address as specified upon proper notice):

 

Notices to Executive:

####

####

####

Notices to the Company Group (or any member thereof):

Attn: Chief Executive Officer

Forian Inc.

41 University Drive, Suite 400

Newton, PA 18940

dbarton@forian.com

with a copy to: legal@forian.com

13.        Severability.  Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any action in any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

 

14.         Complete Agreement.  This Agreement together with the documents expressly referred to herein embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

 

15.         Construction.  The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party.  When used in this Agreement, the words “include” and “including” and their syntactical variants shall be deemed to be followed by the words “without limitation.”

 

16.         Counterparts.  This Agreement may be executed in separate counterparts (including by means of telecopied signature pages or electronic transmission in portable document format (pdf)), each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

 

17.         Successors and Assigns.  This Agreement, including the terms in Section 5 through Section 7, shall inure to the benefit of, and be binding upon, the heirs, executors, administrators, successors and assigns of the respective parties hereto, but in no event may Executive assign or delegate Executive’s rights, duties or obligations under this Agreement (and any attempt to do so is null and void).  Executive further hereby consents and agrees that the Company may assign this Agreement (including Section 5 through Section 7) and any of the rights or obligations hereunder to any member of the Company Group or to any third party in connection with the sale, merger, consolidation, reorganization, liquidation or transfer, in whole or in part, of the Company’s control and/or ownership of its assets or business.  In such event, Executive agrees to continue to be bound by the terms of this Agreement.

 

18.         Governing Law and Venue.  This Agreement shall be construed and enforced under the substantive laws of the State of New York, without reference to its conflict of laws principles.  The parties agree that in any action under this Agreement, including, but not limited to, any action to challenge or to enforce any provision in this Agreement, the federal and/or state courts in the State of New York shall be designated as the exclusive venue.  Executive expressly agrees that such courts shall be the sole proper venue and forum for the hearing of any such case, agrees that such courts shall have personal jurisdiction over Executive, and consents to the exercise of such personal jurisdiction over Executive.  Executive further expressly and irrevocably waives any objection to the personal jurisdiction or venue of such courts.

 

19.         Amendment and Waiver.  The provisions of this Agreement may be amended or waived only with the prior written consent of the Company and Executive, and no course of conduct or course of dealing or failure or delay by any party hereto in enforcing or exercising any of the provisions of this Agreement (including the Company’s right to terminate the Employment Period with or without Cause) shall affect the validity, binding effect or enforceability of this Agreement or be deemed to be an implied waiver of any provision of this Agreement.

 

20.        Waiver of Jury Trial.  AS A SPECIFICALLY BARGAINED FOR INDUCEMENT FOR EACH OF THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT (AFTER HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL), EACH PARTY HERETO EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN ANY WAY FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.

 

21.         Executive’s Cooperation.  During the Employment Period and thereafter, Executive shall reasonably cooperate with the Company Group in any internal investigation or administrative, regulatory or judicial proceeding as reasonably requested by the Company (including Executive’s being reasonably available to the Company Group upon reasonable notice for interviews and factual investigations, appearing at the Company Group’s reasonable request to give testimony without requiring service of a subpoena or other legal process, volunteering to the Company Group all pertinent information and turning over to the Company all relevant documents which are or may come into Executive’s possession, all at times and on schedules that are reasonably consistent with Executive’s other permitted activities and commitments) at reasonable times.  In the event the Company Group requires Executive’s cooperation in accordance with this Section 21, the Company shall reimburse Executive solely for reasonable travel expenses (including lodging and meals, upon submission of receipts).  Nothing about the foregoing shall preclude Executive from testifying truthfully in any forum or from providing truthful information to any government agency or commission.

 

22.          409A Compliance.

 

(a)          Intent of Parties.  The intent of the parties is that payments and benefits under this Agreement comply with or be exempt from Section 409A and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted consistent with such intent.  In no event shall the Company Group or its affiliates be liable for any additional tax, interest or penalty that may be imposed on Executive under Section 409A or damages for failing to comply with Section 409A.

 

(b)          Separation from Service.  A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.”

 

(c)          Reimbursement of Expenses.  To the extent that reimbursements or other in-kind benefits under this Agreement constitute “nonqualified deferred compensation” for purposes of Section 409A, (i) all such expenses or other reimbursements hereunder shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by Executive, (ii) any such right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (iii) no such reimbursement, expenses eligible for reimbursement, or in-kind benefits provided in any taxable year shall in any way affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year.

 

(d)           Installments.  For purposes of Section 409A, Executive’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments.

 

(e)          Offset.  Notwithstanding any other provision of this Agreement to the contrary, in no event shall any payment under this Agreement that constitutes “nonqualified deferred compensation” for purposes of Section 409A be subject to offset by any other amount unless otherwise permitted by Section 409A.

 

23.        Work Authorization; Background Check.  Executive’s employment is conditioned on his delivery to the Company of legally required proof of his identity and authorization to work in the United States and completion of background and reference checks, the results of which are satisfactory to the Company.

 

IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the Effective Date.

 

15

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Exhibit 10.3

 

Forian Inc. 41 University Drive Suite 400 Newtown, PA 18940

September 2, 2021

 

Via Email

Cliff Farren

####

####

####

 

Re:  Transition and Release Agreement

 

Dear Cliff:

 

With our sincere thanks for your service, this letter (this “Agreement”) sets forth the terms of our mutual agreement regarding your transition and departure from the employ of Forian Inc. (including its subsidiaries, the “Company”) and your service as our Chief Financial Officer.

 

1.          Transition Period.  (a) Your last day of employment with the Company will be January 3, 2022 (the “Separation Date”); provided that commencing on the date on which the new Chief Financial Officer starts employment with the Company, your role and title will be changed to “Special Advisor”. During the period through the Separation Date (the “Transition Period”), you will continue to perform your duties in a satisfactory manner, assist with the transition of your duties and responsibilities and act in compliance with the policies and procedures of the Company.  Your agreement to provide satisfactory transition services through the Separation Date is a material inducement to the Company to enter into this Agreement with you. After the Separation Date, you will no longer have any authority to act on the Company’s behalf or otherwise bind the Company, and you may not represent yourself as being an officer, manager, employee, agent or representative of the Company (and you shall not give any third person the appearance that you have such authority with the Company) except that you will be permitted to disclose that you are continuing as a consultant to the Company through March 31, 2022 as provided in Section 4 below.   The Separation Date on January 3, 2022 is intended to be a “separation from service” for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

 

(b) If you breach this Agreement (which is not cured, if susceptible to cure, within ten (10) business days of written notice from the Company to you) or engage in conduct that constitutes Cause (as defined in your employment letter dated August 25, 2020 (the “Offer Letter”)),  the Company may accelerate the Separation Date without further obligation under this Agreement, including entering into the consulting arrangement set forth in Section 4 below (other than payment of your base salary through the date of termination and your rights to COBRA).  As your employment remains at will, if the Company terminates your employment before the Separation Date other than for the reasons set forth above in this Section 1(b), such date of termination will be treated as the Separation Date and you will be entitled to the payments and benefits (including the equity treatment) set forth in this Agreement as if you remain employed through January 3, 2022 and you acted as a consultant through the end of the Consulting Period, subject to your re-execution of this Agreement as provided below; provided that for the sake of clarity, this obligation will not apply if you voluntarily terminate your employment.

 

2.          Accrued Salary and Vacation Time.  The Company will continue to pay you your regular base salary through and including the Separation Date, which will be paid in accordance with the Company’s regular payroll practices, subject to standard payroll deductions and withholdings. As a result of the Company’s policy of unlimited vacation policy, no vacation time will be paid out in connection with your departure.

 

3.          Employee Benefits.  The Company will continue to provide you your regular employee benefits through the Separation Date, except that your medical, vision and dental coverage will continue through January 31, 2022, subject to the eligibility rules of the applicable benefit plans.  Thereafter, pursuant to COBRA, you will be eligible to continue your group health insurance benefits at your own expense.  Later, you may be able to convert to an individual policy through the provider of the Company’s health insurance, if you wish.  Additional information regarding your COBRA continuation rights, as well as COBRA continuation election forms, will be provided to you under separate cover following the Separation Date.

 

4.           Consulting Arrangement. For the period commencing on January 4, 2022 and ending March 31, 2022 (the “Consulting Period”), you will serve as a consultant and advise the Company on matters related to your experience and knowledge of the Company; provided that you will not be required to devote more than 20% of your business time to the Company (measured against the business time that you had spent on behalf of the Company during your employment). In consideration for such service and subject to you signing and returning this Agreement to the Company by the Expiration Date (as defined in Section 15 below), not revoking it, and timely re-executing the Agreement on or after the Separation Date without revocation, the Company agrees to provide you the following:

 

 (i) a consulting fee equal to $13,000 per month, payable within ten (10) business days of the end of the applicable month; provided that the Company may deduct from such consulting fee amounts you owe the Company for withholding taxes that arose on income realized as a result of the vesting of your shares of the Company’s restricted stock during your employment.

 

(ii) you will be treated as a “Key Advisor” for purposes of the equity grants described on Annex A attached hereto (“CF Equity”) and, accordingly, your shares of restricted stock  will remain outstanding and continue to vest during the Consulting Period.  Any shares of restricted stock that are not vested as of the last day of the Consulting Period will be forfeited without payment therefor.

 

You hereby acknowledge: (i) the monthly consulting fee and the income realized on the vesting of the restricted stock during the Consulting Period will be reported on a Form 1099 and will not be subject to withholding taxes and you will be responsible for all applicable taxes on such income; and (ii) you will not be permitted to participate in any employee benefit plan of the Company during the Consulting Period other than through COBRA.  In addition, you acknowledge that any information that you learn during the Consulting Period will be subject to the terms of that certain Proprietary Rights and Restrictive Covenant Agreement, dated August 26, 2020, and signed at the inception of your employment (the “Restrictive Covenant Agreement”) and you remain subject to its terms.

 

5.          Expense Reimbursements.  You agree that, prior to the Separation Date, you will submit your final documented expense reimbursement statement reflecting all business expenses you incurred through the Separation Date, if any, for which you seek reimbursement.  The Company will reimburse you for these expenses pursuant to its regular business practice. During the Consulting Period, the Company will reimburse your documented business expenses on behalf of the Company only to the extent they are pre-approved by the Company.

 

6.          No Other Compensation or Benefits.  You acknowledge that, except as expressly provided in this Agreement, you have not earned and will not receive from the Company any additional compensation or benefits, including without limitation, any base salary, wages, overtime, incentive or bonus compensation, equity, severance, time off (paid or unpaid) or benefits after the Separation Date.  In addition, you acknowledge that you have no known workplace injuries or occupational diseases and have been provided and/or have not been denied any leave under the Family and Medical Leave Act, the Families First Coronavirus Response Act, or similar laws, and have been provided and/or have not been denied any reasonable accommodations under the Americans with Disabilities Act or similar laws.

7.           Release of Claims.

 

(a)          General Release.  In exchange for the consideration provided to you under this Agreement to which you would not otherwise be entitled, you (including on behalf of your heirs, executors, representatives, agents, insurers, administrators, successors and assigns) hereby generally and completely release the Company and its current and former parent, subsidiary and affiliated companies, and each of their respective members, managers, directors, officers, employees, shareholders, agents, attorneys, insurers and plan administrators (in both their corporate and individual capacities), and each of their predecessors, successors, and assigns (collectively, the “Released Parties”) of and from any and all claims, liabilities and obligations, both known and unknown, that you may have arising out of or are in any way related to events, acts, conduct, or omissions occurring prior to the Effective Date of this Agreement (collectively, the “Released Claims”).

 

The Released Claims include, but are not limited to: (i) all claims arising out of or in any way related to your employment with the Company, or the termination of that employment; (ii) all claims related to your compensation or benefits from the Company, including salary, bonuses, commissions, incentive, equity or bonus compensation, vacation pay, sick pay, paid time off benefits, expense reimbursements, severance pay, notice pay, or fringe benefits; (iii) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (iv) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (v) all federal, state, and local statutory claims including those of where you work or reside, including without limitation, claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims, including without limitation, those arising under Title VII of the federal Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, the Age Discrimination in Employment Act (ADEA), the Older Workers Benefit Protection Act, the Family and Medical Leave Act, the Employee Retirement Income Security Act (except as it relates to vested benefits), the Equal Pay Act, the Families First Coronavirus Response Act and similar state and local COVID leave laws, the New Jersey Law Against Discrimination, the New Jersey Conscientious Employee Protection Act, the New Jersey Family Leave Act, the New Jersey Paid Family Leave Insurance Law, the New Jersey Paid Sick Leave Act, and the New Jersey Labor Code and all Pennsylvania labor and employment laws and regulations, including but not limited to the Pennsylvania Human Relations Act, the Pennsylvania Labor Law and the regulations of the Pennsylvania Department of Labor and Industry and Pennsylvania Human Rights Commission and the Pennsylvania Whistleblower Law.

You also agree to not file an arbitration, lawsuit or other legal proceeding against any of the Released Parties in connection with any Released Claims.  The Released Claims include all forms of relief and benefits, no matter how denominated, including, without limitation, physical or mental injury, pain and suffering, reinstatement, back pay, front pay, prejudgment interest, compensatory damages, punitive damages, and attorneys’ fees and costs.  You also agree that if anyone makes a claim or undertakes an investigation involving you, you waive any and all right and claim to financial recovery resulting from such claim or investigation.  You understand that this is a general release and it is to be broadly construed as a release of all claims, except those excluded under Section 7(b) below.

 

(b)          Excluded Claims. The following are not included in the Released Claims (the “Excluded Claims”):  (i) any rights or claims for indemnification you may have pursuant to the Company’s organizational documents or under applicable law and coverage under any applicable D&O liability insurance policy; (ii) any claims which cannot be waived as a matter of law, such as claims for unemployment benefits and workers’ compensation; (iii) any claims for breach of this Agreement by the Company; and (iv) your rights to vested benefits as of the Separation Date under the Company’s employee benefit plans and your rights to the Company’s common stock that you subscribed for or vested in prior to the Separation Date.  In addition, nothing in this Agreement prevents you from filing, cooperating with, or participating in any proceeding before the Equal Employment Opportunity Commission, the Department of Labor, the National Labor Relations Board, the Securities and Exchange Commission (SEC), the Occupational Safety and Health Administration (OSHA) or other federal, state or local governmental agency or commission charged with the enforcement of any laws (a “Governmental Proceeding”), except that you acknowledge and agree that you are hereby waiving your right to receive any financial benefits in connection with any such Governmental Proceeding (but not including a proceeding before the SEC or OSHA), regardless of who filed or initiated the Governmental Proceeding.  You hereby represent and warrant that, other than the Excluded Claims, you are not aware of any claims you have or might have against any of the Released Parties that are not included in the Released Claims.

 

(c)          Assignment and Consequences of a Breach.  If you breach your promises in this Section 7 and file an arbitration, lawsuit or other legal proceeding based on a Released Claim, you agree to pay for all liabilities and costs incurred by the Released Parties, including reasonable attorneys’ fees, in defending against such arbitration, lawsuit or proceeding; provided, however, that this provision will not apply to any arbitration, lawsuit or proceeding challenging the validity of this Agreement under the Older Workers Benefit Protection Act with respect to claims under the Age Discrimination in Employment Act.

(d)          Employee Representations.  You represent and warrant that you have not assigned or otherwise transferred (by way of subrogation, operation of law, or otherwise), any right to any other person to assert any Released Claims.  You agree to indemnify and hold the Released Parties harmless from and against any claims asserted by any other party against any of them, arising out of or in any way relating to any Released Claims that you may have assigned or transferred, including any claim for attorneys’ fees and costs.

You further represent and warrant that you have no claims, complaints or actions of any kind filed against the Company with any court of law, or federal, state or local government agency.

 

You further represent and warrant that, except as expressly provided in this Agreement, you have been paid for all compensation owed to you (including salary, bonuses, commissions, incentive compensation, equity, severance) and for all time worked, you have received all the leave and leave benefits and protections for which you are eligible pursuant to applicable laws or Company policies, you have not suffered any work-related injury or illness for which you have not already filed a workers’ compensation claim, and you have not been denied any reasonable accommodations under the Americans with Disabilities Act or similar law.

 

8.         Return of Company Property.  By the Separation Date, you must return to the Company all Company property, including documents and copies thereof, whether in electronic or paper form, identification cards or badges, access codes or devices, keys, laptops, computers, telephones, mobile phones, hand-held electronic devices, credit cards, electronically stored documents or files, physical files and any other Company property in your possession or control.  In addition, if you have used any personally owned computer, server, or e-mail system to receive, store, review, prepare or transmit any confidential or proprietary information of the Company, then you agree to permanently delete and expunge such confidential or proprietary information from those systems without retaining any reproductions (in whole or in part); and you agree to provide the Company access to your system if requested to verify that the necessary deletion is done.

9.           Additional Covenants.

(a)          Confidentiality of Agreement.  Unless this Agreement is otherwise required to be publicly disclosed by the Company in accordance with applicable SEC or NASDAQ disclosure rules, the provisions of this Agreement shall be held in strictest confidence by you and shall not be publicized or disclosed in any manner whatsoever; provided, however, that: (a) you may disclose this Agreement in confidence to your immediate family; (b) you may disclose this Agreement in confidence to your attorneys, accountants, auditors, tax preparers, and financial advisors; (c) you may disclose this Agreement insofar as such disclosure may be necessary to enforce its terms or as otherwise required by law or valid court order; and (d) you may disclose this Agreement in connection with a Governmental Proceeding.  You acknowledge that this Agreement was not offered to you in connection with any claim of unlawful discrimination or harassment (sexual or otherwise).  You shall promptly provide written notice of any order to disclose confidential information to Ed Spaniel (with a copy to legal@forian.com), unless such notice is prohibited by law.

 

(b)          Cooperation. You covenant and agree to cooperate with and make yourself readily available to the Company, as the Company may reasonably request, to assist the Company in any matter, including, but not limited to, by providing information for compliance or other purposes, giving truthful testimony in any litigation or potential litigation which you may have knowledge, information or expertise, and signing routine documents for administrative purposes. You will be reimbursed for your reasonable expenses incurred in connection with such cooperation.

(c)           Nondisparagement.  You agree not to disparage, defame, or discredit the Company or its officers, directors, employees, agents, products or services or engage in any activity that would have the effect of disparaging, defaming or discrediting the Company or its officers, directors, employees, agents, products or services; provided that you may respond accurately and fully to any question, inquiry or request for information from a government regulator or when required by legal process.  This restriction applies to all formats and platforms now known or hereafter developed, whether written, printed, oral or electronic (including, without limitation, emails, blogs, internet and social media sites, chat or newsrooms, podcasts, webcasts, or any online forum).

10.        Ongoing Obligations.  Even though your employment is ending, you continue to have obligations to the Company after your employment ends, including those set forth in this Agreement and the Restrictive Covenant Agreement, and under applicable statutory and common law (the “Post-Termination Obligations”).  By signing below, you acknowledge you have complied with your Post-Termination Obligations and agree to continue to abide by same.  Should you violate any of the terms of your Post-Termination Obligations, the Company shall have all available remedies, including without limitation, accelerating the Separation Date, terminating the Consulting Period, and seeking recoupment of the income received on the vesting of the CF Equity.  In addition, to the extent permitted by applicable  law, you will be responsible for the payment of all reasonable attorneys’ fees and costs that the Company incurs in the course of enforcing the Post-Termination Obligations.  You agree to notify any prospective employer of your Post-Termination Obligations.

11.         No Admissions.  The promises and payments in consideration of this Agreement shall not be construed to be an admission of any liability or obligation by either party to the other party, and neither party makes any such admission.

 

12.         Code Section 409A.  It is intended that any amounts payable under this Agreement will either be exempt from Section 409A of the Code (including Treasury regulations and other published guidance related thereto) or will otherwise comply with such Section so as not to subject you to payment of any additional tax, penalty or interest imposed under Section 409A of the Code.  The provision of this Agreement will be construed and interpreted to avoid the imputation of any such additional tax, penalty or interest under Section 409A of the Code yet preserve (to the nearest extent reasonably possible) the intended benefit payable to you.  The termination of your employment with the Company on is intended to be a “separation from service” and an “involuntary termination” for purposes of Section 409A of the Code.  For purposes of Section 409A, your right to receive any installment payments under this Agreement (whether severance payments, reimbursements or otherwise) shall be treated as a right to receive a series of separate payments and, accordingly, each installment payment hereunder shall at all times be considered a separate and distinct payment.  Notwithstanding any provision to the contrary in this Agreement, if you are deemed by the Company at the time of your “separation from service” to be a “specified employee” for purposes of Code Section 409A(a)(2)(B)(i), and if any of the payments upon a “separation from service” set forth herein and/or under any other agreement with the Company are deemed to be “deferred compensation”, then to the extent delayed commencement of any portion of such payments is required in order to avoid a prohibited distribution under Code Section 409A(a)(2)(B)(i) and the related adverse taxation under Section 409A, such payments shall not be provided to you prior to the earliest of (i) the expiration of the six-month period measured from the date of your “separation from service” with the Company, (ii) the date of your death or (iii) such earlier date as permitted under Section 409A without the imposition of adverse taxation. Upon the first business day following the expiration of such applicable Code Section 409A(a)(2)(B)(i) period, all payments deferred pursuant to this section shall be paid in a lump sum to you, and any remaining payments due shall be paid as otherwise provided herein or in the applicable agreement. No interest shall be due on any amounts so deferred.  Notwithstanding the foregoing, the Company makes no representation or warranty and will have no liability to you or to any other person if any of the provisions of the Agreement are determined to constitute deferred compensation subject to Section 409A, but that do not satisfy an exemption from, or the conditions of, that section.

 

13.         Notices.  All notices under this Agreement must be given in writing by regular mail, overnight mail or e-mail at the addresses indicated in this Agreement or any other address designated in writing by either party. When providing written notice to the Company, a copy must be provided to the Company’s General Counsel at the address below.

 

Notice to the Company:

 

Ed Spaniel, EVP and General Counsel, Forian, Inc., 41 University Drive, Suite 400, Newtown, PA 18940; edward.spaniel@forian.com with a further copy to legal@forian.com

 

Notice to the Employee: at the address (home or email) at the top of this letter.

 

14.        Miscellaneous.  This Agreement (together with the equity documents related to the CF Equity and the Post-Termination Obligations), constitutes the complete, final and exclusive embodiment of the entire agreement between you and the Company with regard to the subject matter hereof.  It is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes any other agreements, promises, warranties or representations concerning its subject matter, including your Offer Letter.  This Agreement may not be modified or amended except in a writing signed by both you and a duly authorized officer of the Company.  This Agreement will bind the heirs, personal representatives, successors and assigns of both you and the Company, and inure to the benefit of both you and the Company, their heirs, successors and assigns.  If any provision of this Agreement is determined to be invalid or unenforceable, in whole or in part, this determination shall not affect any other provision of this Agreement and the provision in question shall be modified so as to be rendered enforceable in a manner consistent with the intent of the parties insofar as possible under applicable law; provided, however that if the release of claims set forth in Section 7 is declared invalid or unenforceable and cannot be modified to be enforceable, then the entire Agreement will be null and void, including the Company’s obligations to enter into a consulting arrangement as provided in Section 4, and to the extent payments have already been made, they shall be returned to the Company upon demand.  This Agreement shall be construed and enforced in accordance with the laws of the State of New York without regard to conflicts of law principles.  Any ambiguity in this Agreement shall not be construed against either party as the drafter.  Any waiver of a breach of this Agreement, or rights hereunder, shall be in writing and shall not be deemed to be a waiver of any successive breach or rights hereunder.  Only the Company can assign this Agreement, which can be done at any time.  This Agreement may be executed in counterparts which shall be deemed to be part of one original, and facsimile and scanned image copies of signatures shall be equivalent to original signatures.

 

15.         Period for Review and Revocation.  You may take twenty-one (21) days from your receipt of this Agreement to review and consider its terms, and you may use as much or as little of this period of time as you wish prior to reaching a decision regarding the signing of this Agreement.  If you do not sign, date, and return this Agreement within 21 days of receiving it (the “Expiration Date”), the Agreement will not be valid and you will not be engaged as a Key Advisor pursuant to Section 4 and the Company may terminate your employment prior to January 3, 2022.  You may revoke this Agreement at any time within seven (7) calendar days after the date you execute it (the “Revocation Period”).  The revocation must be in writing and delivered by written notice to Ed Spaniel at the Company by email before the expiration of the Revocation Period.

 

16.         Effective Date.  The “Effective Date” of this Agreement will be the day following the expiration of the Revocation Period, so long as you have not revoked this Agreement during the Revocation Period.

 

17.         Voluntary Assent and Additional Representations.  You affirm that you have read this Agreement, and you fully understand all of its terms, including the full and final release of claims set forth in Section 7.  You further acknowledge that:

 

(a)           you have voluntarily entered into this Agreement;

 

(b)           you have not relied upon any representation or statement, written or oral, not set forth in this Agreement;

 

(c)           the only consideration you are receiving for signing this Agreement is as set forth herein;

 

(d)           no other promise or agreement of any kind has been made to or with you to cause you to sign this Agreement;

 

(e)           other than the payments and other benefits set forth in this Agreement, you have received all wages, compensation, commissions, bonuses and other payments and benefits to which you are entitled as a result of your employment with the Company;

 

(f)           the payments and benefits you are receiving in consideration for executing this Agreement are greater than that to which you may otherwise be entitled;

 

(g)           you have specifically been advised and encouraged to consult and have this Agreement reviewed by your attorney;

 

(h)           you have been given at least twenty-one (21) days to review and consider this Agreement;

 

(i)            you have been given seven (7) days after executing it to revoke it in writing; and

 

(j)            you will be required to re-execute this Agreement (and not revoke it) in order to enter into the consulting arrangement as described in Section 4.

 

 If this Agreement is acceptable to you, please sign and date below within twenty-one (21) days after your receipt of this Agreement, and then send the fully signed Agreement to Ed Spaniel, EVP and General Counsel, at Forian Inc., 41 University Drive, Suite 400, Newtown, PA 18940; edward.spaniel@forian.com (with a copy to legal@forian.com) on or before the Expiration Date.  The Company’s offer contained herein will automatically expire if we do not receive the signed Agreement from you within this timeframe.

 

Reiterating our thanks for your contributions to the establishment of Forian! On behalf of our team, we wish you much success following your transition from Forian.

Sincerely,

UNDERSTOOD AND AGREED:

Re-execution of Agreement following the Separation Date.

By signing below, I, Cliff Farren, affirm that as of the Separation Date, I have re-read this Agreement, and fully understand all of its terms, including the full and final release of claims set forth in Section 7.  I further acknowledge that:

(a)           I have voluntarily executed this Agreement again following the Separation Date;

 

(b)           I have not relied upon any representation or statement, written or oral, not set forth in this Agreement;

 

(c)           the only consideration I am receiving for signing this Agreement is as set forth herein;

 

(d)           no other promise or agreement of any kind has been made to or with me to cause me to re-sign this Agreement;

 

(e)          other than the payments and equity treatment set forth in Section 4 of the Agreement, I have received all wages, compensation, commissions, bonuses and other payments and benefits to which I am entitled as a result of my employment with the Company;

 

(f)           the payments and benefits I am receiving in consideration for executing this Agreement are greater than that to which I may otherwise be entitled;

 

(g)           I have specifically been advised and encouraged to consult and have this Agreement reviewed by my attorney;

 

 

(j)           If I do not re-execute this Agreement, or revoke it after signing it in the same manner as provided by Section 15, then the Company will not enter into the consulting arrangement and I will not receive the consulting fees or the treatment as a “Key Advisor” as set forth in Section 4 of the Agreement.

 

UNDERSTOOD AND AGREED:

ANNEX A

CF EQUITY

130,480 shares of Company restricted common stock granted pursuant to that certain Unit Option Agreement dated September 30, 2020, further to the exchange in accordance with that certain Equity Interest Contribution Agreement, dated March 2, 2020, by and among the Company and you (the “Contribution Agreement”). As of the date of the Agreement, 97,860 shares remain unvested and will vest in equal monthly installments of 2,718 shares on the 25^th day of each month starting with September 25, 2021.

17,776 shares of Company restricted common stock granted pursuant to a Restricted Stock Unit Agreement dated September 30, 2020, further to the exchange in accordance with the Contribution Agreement. As of the date of the Agreement, 13,332 shares remain unvested and will vest in equal monthly installments of 370 shares on the 25^th day of each month starting with September 25, 2021.

23,757 shares of Company common stock pursuant to a subscription agreement dated October 15, 2020, further to the exchange in accordance with the Contribution Agreement. These shares are fully vested.

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