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STOCK PURCHASE AGREEMENT

 

BY AND AMONG

 

BIO-TECH MEDICAL SOFTWARE, INC.,

 

HELIX TECHNOLOGIES, INC.

 

AND

 

BT ASSETS GROUP, INC.

 

DATED AS OF

FEBRUARY 10, 2023

 

 

 

 

STOCK PURCHASE AGREEMENT

 

THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is made as of February 10, 2023, by and among BT Assets Group, Inc., a Delaware corporation (“Buyer”), on the one hand, and each of Helix Technologies, Inc., a Delaware corporation (“Seller”), and Bio-Tech Medical Software, Inc. (d/b/a BioTrack), a Florida corporation and a wholly owned subsidiary of Seller (the “Company”), on the other hand.

 

WHEREAS, Seller owns all of the issued and outstanding shares of capital stock of the Company;

 

WHEREAS, the Company provides software products and services within the cannabis industry, including products and services marketed under the trade and product names BioTrack and Cannalytics^®;

 

WHEREAS, subject to the terms and conditions set forth in this Agreement, the parties desire to enter into and perform the transactions contemplated by the Transaction Agreements (the “Transactions”); and

 

WHEREAS, subject to the conditions to Closing being fulfilled by all parties to this Agreement, immediately following the Closing, the Buyer will own all of the issued and outstanding capital stock of the Company.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

SECTION 1

DEFINITIONS

 

1.1          Definitions. For purposes of this Agreement, the following terms shall have the meanings set forth below:

 

“2020 Merger Agreement” means that certain Agreement & Plan of Merger dated as of December 16, 2020 (as amended to date) between and among Seller, Parent and DNA Merger Sub, Inc.

 

“Accounting Principles” shall mean GAAP as in effect at the date of the financial statement to which it refers, or if there is no such financial statement, then as of the Closing, using and applying the same accounting principles, practices, procedures, policies and methods (with consistent classifications, judgments, elections, inclusions, exclusions and valuation and estimation methodologies) used and applied by the Company in the preparation of the Interim Financial Statements as set forth in Section 3.5 of the Disclosure Schedule; provided that Accounting Principles (a) shall not include any purchase accounting or other adjustment arising out of the consummation of the Transactions, (b) shall be based on facts and circumstances as they exist prior to the Closing and shall exclude the effect of any act, decision or event occurring at or after the Closing, and (c) shall follow the defined terms contained in this Agreement.

 

“Affiliate” means, with respect to any Person, any other Person controlling, controlled by or under common control with such particular Person, where “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person whether through the ownership of voting securities, as trustee, personal representative or executor, by contract, credit arrangement or otherwise.

 

“Agreement” has the meaning given to such term in the Preamble.

 

“Allocation Schedule” has the meaning given to such term in Section 6.2(d)(ii).

 

“Anti-Corruption Laws” has the meaning given to such term in Section 3.16(a).

 

“Blue Sky Laws” has the meaning given to such term in Section 3.4(b).

 

“Business Day” means any day that is not a Saturday, Sunday or other day on which banks are required or authorized by Law to be closed in the State of Delaware.

 

“Business Systems” means, with respect to a Person, all Software, information technology and computer systems (including the computers, computer software, databases, firmware, middleware, servers, workstations, routers, hubs, switches, interfaces, data communications lines, websites, applications and all other information technology equipment and software, and all associated documentation).

 

“Buyer” has the meaning given to such term in the Preamble.

 

“Buyer Parties” has the meaning given to such term in Section 8.2.

 

“Buyer’s Benefit Programs” has the meaning given to such term in Section 6.3(a).

 

“Cash” means the unrestricted cash and cash equivalents required to be reflected as cash and cash equivalents on the balance sheet of the Company prepared in accordance with GAAP applied on a basis consistent with the Accounting Principles, but excluding, for the avoidance of doubt, any Restricted Cash. For the avoidance of doubt, Cash shall be calculated net of issued but uncleared checks, wire transfers and drafts, but shall include checks, wire transfers and drafts deposited for the account of the Company.

 

 

“Closing” has the meaning given to such term in Section 2.2.

 

“Closing Date” has the meaning given to such term in Section 2.2.

 

“Closing Cash Amount” means the aggregate amount of Cash of the Company as of the Closing.

 

“Closing Cash Payment” means the cash payment in the amount equal to $20,030,179, which amount equals the sum of (i) Twenty Million Dollars ($20,000,000) plus (ii) the estimated Working Capital Overage, based on the Estimated Working Capital, less (iv) the Estimated Transaction Expenses.

 

“Closing Date Indebtedness” means the aggregate amount of Indebtedness of the Company as of immediately prior to the Closing.

 

“Closing Working Capital” means the aggregate amount of Working Capital of the Company as January 31, 2023.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

“Company” has the meaning given to such tern in the Preamble.

 

“Company Benefit Plan” means (i) an employee benefit plan within the meaning of Section 3(3) of ERISA whether or not subject to ERISA; (ii) stock option plans, stock purchase plans, bonus or incentive plans, severance pay plans, programs, agreements or arrangements, deferred compensation arrangements or agreements, employment agreements, compensation plans, programs, agreements or arrangements, change in control plans, programs, agreements or arrangements, supplemental income arrangements, vacation plans, fringe benefits and all other employee benefit plans, agreements, and arrangements, not described in (i) above; and (iii) plans or arrangements providing compensation to employee and non-employee directors, in each case in which the Company sponsors, contributes to, or provides benefits under or through such plan, or has any obligation to contribute to or provide benefits under or through such plan, or if such plan provides benefits to or otherwise covers any current or former employee, officer or director of the Company (or their spouses, dependents, or beneficiaries) or with respect to which the Company has or may have any Liability (contingent or otherwise, including be reason of being an ERISA Affiliate).

 

“Company Bonuses” means all Liabilities of the Company in relation to “stay” or other similar retention bonuses, change-in-control bonuses or other bonuses or compensation due or arising as a result of the execution, delivery or performance of the Transaction Agreements, whether or not vested as of Closing, to any of the Company’s employees, former employees, consultants, former consultants or retirees and any retention bonuses, in each case, based on or arising under employment or engagement with the Company.

 

“Company Business Data” has the meaning given to such term in Section 3.15(h).

 

“Company Business Systems” has the meaning given to such term in Section 3.15(f).

 

“Company Common Stock” means the Company’s common stock, par value $0.001 per share.

 

“Company Employee” has the meaning given to such term in Section 3.9(a).

 

“Company Governmental Contract” has the meaning given to such term in Section 13.13(a)(xiv).

 

“Company Inbound IP Contract” has the meaning given to such term in Section 3.13(a)(vi).

 

“Company IP” shall mean any Intellectual Property Rights used or held for use in the business as currently conducted by the Company.

 

“Company IP Contract” has the meaning given to such term in Section 3.13(a)(vii).

 

“Company Leased Real Property” has the meaning given to such term in Section 3.14(b).

 

“Company Material Adverse Effect” means, with respect to the Company or the business of the Company, any fact, event, change, development, circumstance or effect that (i) is or would, with the passage of time, be reasonably likely to be materially adverse to the financial condition, business, results of operations, assets, Liabilities or operations of the Company other than any fact, event, change, development, circumstance or effect, directly or indirectly arising out of or attributable to any of the following (or results thereof): (A) changes in general economic conditions; (B) general changes or developments in the industries in which the Company operates (including the cannabis and healthcare information technology services industries); (C) any fire, flood, hurricane, earthquake, tornado, windstorm or other similar calamity or act of God or man-made disaster; (D) any national or international political or social conditions, including the engagement by any country in hostilities, whether commenced before or after the Closing Date, and whether or not pursuant to the declaration of a national emergency or war, or the occurrence or threatened occurrence of any military action, terrorism, civil unrest, riots, curfews, public disorders or cyberattack; (E) changes in GAAP or any applicable Law or other binding directives issued by any Governmental Authority or the interpretation thereof; (F) any actions taken (or omitted to be taken) at the prior written request of Buyer or required to be taken (or omitted) by the express terms of this Agreement; (G) any epidemics, pandemics, disease outbreaks, or other public health emergencies (including COVID-19); (H) the implementation of any COVID-19 Measures by any national, state, regional or local government or governing authority; (I) any failure by the Company to achieve any earnings, budgets or other financial projections, forecasts, performance or results of operations for any period ending on or after the Closing Date (it being understood and agreed that the facts and circumstances giving rise to such failure may be taken into account in determining whether there has been a Company Material Adverse Effect, except to the extent such facts and circumstances are excluded from being taken into account by clauses (A) through (H) above); (J) the announcement or pendency of this Agreement; (K) any action taken or refrained from being taken (1) as expressly contemplated by the Transaction Agreements, in each case according to the terms hereof or thereof, or (2) to which Buyer has consented to in writing (or in accordance with this Agreement is deemed to have consented); except in the case of clauses (A) through (H) above to the extent such fact, event, change, development, circumstance or effect has had or reasonably would be expected to have a disproportionate effect on the Company relative to the other similarly situated Persons engaged in the same or substantially similar business as the Company, or (ii) materially impairs or materially delays or would, with the passage of time, be reasonably likely to materially impair or materially delay the ability of the Company to consummate the Transactions and/or to perform its obligations under the Transaction Agreements.

 

“Company Material Contract” has the meaning given to such term in Section 3.13(a).

 

“Company Material Customers” has the meaning given to such term in Section 3.18.

 

“Company Material Suppliers” has the meaning given to such term in Section 3.18.

 

“Company Outbound IP Contract” has the meaning given to such term in Section 3.13(a)(vii).

 

“Company Owned Software” has the meaning given to such term in Section 3.15(k).

 

“Company Products and Services” has the meaning given to such term in Section 3.15(c).

 

“Company Real Property Leases” has the meaning given to such term in Section 3.14(b).

 

“Company Registered IP” has the meaning given to such term in Section 3.15(a).

 

“Company Related Party” has the meaning given to such term in Section 3.21(a).

 

“Company Related Party Transaction” has the meaning given to such term in Section 3.21(a).

 

“Company Transaction Expenses” means, to the extent not paid as of immediately prior to the Closing, without duplication, (i) the fees and disbursements payable to legal counsel, bankers and accountants of the Company, and/or Seller in connection with the negotiation, documentation and consummation of the Transactions, (ii) all other fees and expenses, in each case, incurred by the Company and/or Seller in connection with the Transactions as determined on the Closing Date, including Seller’s apportioned share of the R&W Insurance Policy as provided in Section 8.1, and (iii) all Company Bonuses except as set forth in the Estimated Closing Statement other than, for the avoidance of doubt, any severance payments as a result of any terminations effected by Buyer or the Company after the Closing.

 

“Confidentiality Agreement” means that certain Mutual Non-Disclosure Agreement by and between Parent and Buyer’s Affiliate dated as of January 4, 2022.

 

“Contract” means any written or oral legally binding contract, license, sublicense, mortgage, purchase order, indenture, loan agreement, lease, sublease, agreement or instrument or any legally binding commitment to enter into any of the foregoing to which the Company is a party or by which any of the Company’s assets are bound.

 

“COVID-19 Measures” means any quarantine, “shelter in place,” “stay at home,” workforce reduction, social distancing, “personal protective equipment,” shut down, closure, sequester, “return to work,” “reopening,” safety or similar law, regulation, policy, directive, guidance, rule or order promulgated by any Governmental Authority, including but not limited to the Centers for Disease Control and Prevention and the World Health Organization, in each case, related to the COVID-19 Pandemic.

 

“COVID-19 Pandemic” means the SARS-Cov2 or COVID-19 pandemic, including any future resurgence or evolutions or variants or mutations thereof and/or any related or associated disease outbreaks, epidemics and/or pandemics resulting therefrom.

 

 

“Disclosure Schedule” means the Disclosure Schedule attached hereto, dated as of the date hereof, delivered by the Company to Buyer in connection with this Agreement.

 

“Environmental Laws” means all Laws concerning protection of human health or the environment in connection with the presence, use, production, generation, handling, transport, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, Release, threatened Release, control or cleanup of any Hazardous Materials, as the foregoing are enacted and in effect prior to or on the Closing Date.

 

“Environmental Permits” has the meaning given to such term in Section 3.12.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

 

“ERISA Affiliate” means any entity that would have ever been considered a single employer with the Company under Section 4001(b) of ERISA or part of the same “controlled group” as the Company for purposes of Section 302(d)(3) of ERISA.

 

“Estimated Closing Statement” has the meaning given to such term in Section 2.6(a).

 

“Estimated Transaction Expenses” has the meaning given to such term in Section 2.6(a).

 

“Estimated Working Capital” has the meaning given to such term in Section 2.6(a).

 

“Excess” has the meaning given to such term in Section 2.6(d).

 

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

 

“Federal Consolidated Income Tax Return” has the meaning given to such term in Section 6.2(c)(i).

 

“Final Closing Cash Payment” has the meaning given to such term in Section 2.6(b).

 

“Financial Statements” has the meaning given to such term in Section 3.5.

 

“Florida Performance Bond” has the meaning given to such term in Section 6.4.

 

“Florida Surety” has the meaning given to such term in Section 6.4.

 

“Fraud” means common law fraud under the Laws of the State of Delaware with respect to the making of any representation or warranty in connection with this Agreement or the Transactions, including those representations and warranties set forth in Section 3 (Representations and Warranties of the Company) or Section 4 (Representations and Warranties of the Seller) of this Agreement (as applicable) or in any certificate delivered pursuant to this Agreement or in the representations and warranties in any other Transaction Document. For the avoidance of doubt, the term “Fraud” does not include any claim for equitable fraud, promissory fraud, unfair dealing and any other fraud-based claim.

 

“GAAP” means United States generally accepted accounting principles, consistently applied throughout the periods involved.

 

“Governmental Authority” means any federal, national, state, provincial or local, whether transnational, domestic, foreign or supranational, government or any court of competent jurisdiction, administrative agency, applicable self-regulatory organization, tribunal or commission or other governmental or regulatory authority, department, agency or instrumentality, including any political subdivision thereof, whether transnational, domestic, foreign or supranational.

 

“Guaranty Agreements” means those certain guaranty agreements by and among the Seller and (i) the guarantor Affiliates of Buyer party thereto, in the form attached hereto as Exhibit D-1 and (ii) the Company, in the form of Exhibit D-2.

 

“Hazardous Materials” means any hazardous or toxic materials, substances or wastes regulated under Environmental Laws, including toxic chemicals, petroleum products or byproducts, friable asbestos and polychlorinated biphenyls.

 

“Indebtedness” means, without duplication, (i) any indebtedness for borrowed money, (ii) any indebtedness evidenced by any note, bond, debenture or other debt securities, (iii) any indebtedness for the deferred purchase price of property or services with respect to which a Person is liable, contingently or otherwise, as obligor or otherwise, (iv) any commitment by which a Person assures a creditor against loss (including contingent reimbursement liability with respect to letters of credit), (v) any liabilities under leases that would be considered capitalized leases under GAAP, (vi) any indebtedness secured by a Lien on a Person’s assets (other than a Permitted Lien), (vi) unpaid income Taxes of the Company for Pre-Closing Tax Periods beginning on or after January 1, 2022 (and, in the case of a Straddle Period, determined in accordance with Section 6.2(c)(iii)) that are first due to be paid after the Closing Date (taking into account any applicable extensions) solely in jurisdictions where the Company filed a Tax Return for the immediately preceding taxable period (provided that, such unpaid income Taxes shall be calculated (A) in accordance with past practices of the Company and (B) as of the end of the day on the Closing Date taking into account any Transaction Tax Deductions, net operating losses and other Tax attributes of the Company to the extent permitted by applicable Law at a “more likely than not” (or higher) level of comfort and any applicable prepayments of Tax or payments of estimated Taxes), but excluding any Taxes imposed on the Company due to Buyer’s action after Closing outside the Ordinary Course of Business, and (vii) any accrued and unpaid interest on, and any prepayment premiums, penalties or similar contractual charges in respect of, any of the foregoing obligations computed as though payment is being made in respect thereof on the Closing Date. Notwithstanding the foregoing, “Indebtedness” shall not include any deferred revenue, trade payables and accrued expenses arising in the Ordinary Course of Business or obligations under the Florida Performance Bond.

 

“Independent Accountant” shall mean a certified public accountant satisfactory to Buyer and Seller; provided, that if Buyer and Seller do not appoint an Independent Accountant within ten (10) days after either Buyer or Seller gives notice to the other of a request therefor, either of them may request the American Arbitration Association to appoint as the Independent Accountant a partner in the New York office of a nationally recognized independent registered public accounting firm based on its determination that the partner has had no material relationships with the parties or their respective Affiliates within the preceding two years and taking into account such firm’s material relationships during the preceding two years with the parties and their respective Affiliates, and such appointment shall be final, binding and conclusive on Buyer and Seller.

 

“Intellectual Property Rights” means any and all of the following, as they exist in any jurisdiction throughout the world: (i) patents, patent applications of any kind, patent rights, inventions, discoveries and invention disclosures (whether or not patented) (collectively, “Patents”); (ii) rights in registered and unregistered trademarks, service marks, trade names, trade dress, corporate names, logos, packaging designs, slogans and Internet domain names, rights to social media accounts, and other indicia of source, origin or quality, together with all goodwill associated with any of the foregoing, and registrations and applications for registration of any of the foregoing (collectively, “Marks”); (iii) copyrights in both published and unpublished works (including all compilations, databases and computer programs, manuals and other documentation and all derivatives, translations, adaptations and combinations of the above) and registrations and applications for registration of any of the foregoing (collectively, “Copyrights”); (iv) know-how, trade secrets, confidential or proprietary information (including customer and supplier lists, customer and supplier records, pricing and cost information, reports, software development methodologies, technical information, proprietary business information, process technology, plans, drawings, blue prints, know-how, inventions and invention disclosures (whether or not patented or patentable and whether or not reduced to practice), ideas, research in progress, algorithms, data, databases, data collections, designs, processes, drawings, schematics, blueprints, flow charts, models, strategies, prototypes, techniques, source code, source code documentation, testing procedures and testing results and business, financial, sales and marketing plans) and rights under applicable trade secret Law in the foregoing (collectively, “Trade Secrets”); (v) rights of publicity and privacy and data protection rights; and (vi) any and all other intellectual property rights and/or proprietary rights relating to any of the foregoing.

 

“Interim Financial Statements” has the meaning given to such term in Section 3.5.

 

“Interim Services Agreement” means that certain Interim Services Agreement by and among Buyer, the Company, Seller and Parent, substantially in the form attached hereto as Exhibit A.

 

 “Key Employee,” means, with respect to the Company, any Company employee set forth in Section 1.1(a) of the Disclosure Schedule.

 

“Knowledge,” means, with respect to the Company, the actual knowledge of the individuals set forth in Section 1.1(b) of the Disclosure Schedule, in each case after reasonable inquiry of the employees, consultants or independent contractors of the applicable Person with the administrative or operational responsibility for such matter in question.

 

“Law” Means any transnational, domestic or foreign federal, provincial, state or local law, statute, treaty, convention, code, ordinance, rule, regulation (including of self-regulatory organizations), interpretations, resolutions, Order or other similar requirement enacted, adopted, promulgated or applied by a Governmental Authority.

 

“Liability” means any material liability, debt, obligation, deficiency, penalty, assessment, fine or other loss, fee, cost or expense of any kind or nature whatsoever, whether asserted or unasserted, absolute or contingent, known or unknown, accrued or unaccrued, liquidated or unliquidated, and whether due or to become due and regardless of when asserted.

 

“License Agreement” means that certain license agreement by and between Buyer, the Company and their respective Affiliates, on the one hand, and Seller and Parent and their respective Affiliates, on the other hand, in the form attached hereto as Exhibit C.

 

“Licensed Company IP” has the meaning given to such term in Section 3.15(b).

 

“Licensed Software” has the meaning given to such term in Section 3.15(k).

 

“Lien” means any lien, pledge, charge, mortgage, security interest, deed of trust, judgment, adverse right or other encumbrance of any sort.

 

“Malicious Code” has the meaning given to such term in Section 3.15(m).

 

“Misconduct Claim” means, without limitation, unlawful harassment and or discrimination, or any other unlawful act of a similar nature, if made to an employee, independent contractor or customer who has not invited such conduct, and any unlawful retaliatory act for refusing or opposing any of the foregoing.

 

“Multiemployer Plan” means a plan defined in Section 3(37) of ERISA.

 

“Non-Party Affiliates” has the meaning given to such term in Section 8.2.

 

“Non-Released Claims” has the meaning given to such term in Section 8.2.

 

“Off-the-Shelf Software” means any commercially available Software that the Company licenses (including under shrink-wrap, click-through, or other standard licensing terms) for use in the business of the Company, in any individual case, under a license with a maximum annual payment obligation on the part of the Company of less than twenty-five thousand dollars ($25,000).

 

 

“Order” means any order, judgment, injunction, award, decree, ruling or writ of any Governmental Authority.

 

“Ordinary Course of Business” means with respect to a Person, any action taken, or omitted to be taken, by such a Person in the ordinary course of such Person’s business that is materially consistent with the past practices of such Person; provided, however, that actions taken or omitted to be taken in response to a condition or conditions arising from the COVID-19 Pandemic, including COVID-19 Measures, in accordance with the Law shall be deemed Ordinary Course of Business of such Person.

 

“Owned Company IP” has the meaning given to such term in Section 3.15(b).

 

“Parent” means Forian Inc., a Delaware corporation and the parent of Seller.

 

“Parent Insurance Policies” has the meaning given to such term in Section 3.20.

 

“Parties” (collectively) or “Party” (individually) shall refer to the Company, Seller and Buyer.

 

“Permitted Liens” means (i) any Lien for Taxes or other governmental charges, assessments or levies that are not yet delinquent or that are being contested in good faith by appropriate proceedings, (ii) any statutory landlord’s, mechanic’s, carrier’s, workmen’s, repairmen’s or other similar Lien arising or incurred in the Ordinary Course of Business, (iii) any covenants, conditions, restrictions, declarations, easements, rights-of-way, roads, highways or reservation of rights, including easements and/or rights of way, for sanitary and storm sewers, storm water discharge pipes, conduits and swales, water mains and pipes, electric lines, cable lines, telephone lines and lines for other similar purposes (whether overhead or underground), and affecting the leasehold estate in any Company Leased Real Property and being transferred to Buyer at the Closing that are in existence and recorded as of the Closing Date, (iv) with respect to Company Leased Real Property only, any Lien (including Indebtedness) encumbering the fee interest title in any Company Leased Real Property and not attributable to the Company and any statutory liens to secure obligations to landlords, lessors or renters under leases or rental agreements, and (v) nonexclusive licenses to Intellectual Property Rights granted in the Ordinary Course of Business.

 

“Person” means any individual, partnership, limited liability company, corporation, cooperative, association, joint stock company, trust, joint venture, unincorporated organization or Governmental Authority, body or entity or any department, agency or political subdivision thereof.

 

“Personal Data” means any data or information in any medium relating to an identified or identifiable individual, browser or device and any other data or information that constitutes personal information or personally identifiable information under any applicable Law, and includes, but is not limited to, a natural person’s first and last name, home or other physical address, telephone number, e-mail address, photograph, social security number, driver’s license number, passport number or other government-issued identification number, biometric information, credit card or other financial information, or customer or account number, IP address, cookie information, or other unique identifiers. An identifiable individual is one who can be identified, directly or indirectly, in particular by reference to an identification number or to one or more factors specific to his/her physical, physiological, mental, economic, cultural or social identity.

 

“Pledge Agreement” means that certain pledge agreement by and between Buyer and Seller in the form attached hereto as Exhibit E-1.

 

“Post-Closing Statement” has the meaning given to such term in Section 2.6(b).

 

“Pre-Closing Tax Period” means any taxable period ending on or before the Closing Date and the portion through the end of the Closing Date for any Straddle Period.

 

“Pre-Closing Tax Returns” has the meaning given to such term in Section 6.2(c)(ii).

 

“Purchase Price” means Thirty Million Dollars ($30,000,000).

 

“R&W Insurance Policy” means the buyer side representations and warranties indemnity policy with policy number US00126040BL23A to be issued by AXA XL to Buyer (as may be amended, restated, amended and restated, supplemented or otherwise modified from time to time) pursuant to the binder agreement, dated as of the date hereof, between AXA XL and Buyer.

 

“Release” shall have the meaning set forth in CERCLA.

 

“Released Claims” has the meaning given to such term in Section 8.2.

 

“Restricted Cash” means all cash and cash equivalents not freely usable by and available to Seller or the Company because it is subject to restrictions, limitations or Taxes on use or distribution by applicable Law, contract or otherwise, including third-party deposits.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Security Agreement” means that certain security agreement by and between Buyer and Seller in the form attached hereto as Exhibit E-2.

 

“Section 338(h)(10) Election” has the meaning given to such term in Section 6.2(d)(i).

 

“Section 338(h)(10) Forms” has the meaning given to such term in Section 6.2(d)(iii).

 

“Seller” has the meaning given to such term in the Preamble.

 

“Shortfall” has the meaning given to such term in Section 2.6(d).

 

“Software” means any and all computer programs, software and code, including all versions, translations, updates, revisions, improvements and modifications thereof, whether in source code, object code, or executable code format, including systems software, application software (including mobile apps), firmware, middleware, programming tools, scripts, routines, interfaces, input and output formats, libraries, data, data models and databases, and all related specifications and documentation, including developer notes, comments and annotations, flow charts, outlines, narrative descriptions, operating instructions, user manuals, training materials and tangible media relating to any of the foregoing.

 

“Straddle Period” means any taxable period beginning on or prior to and ending after the Closing Date.

 

“Subsequent Cash Payments” shall mean such payments in the aggregate amount of Ten Million Dollars ($10,000,000) to be paid by Buyer in accordance with Section 2.4.

 

“Subsidiary” means, with respect to any person, any corporation or other organization or Person, whether incorporated or unincorporated, of which (i) such party or any other subsidiary of such party is a general partner (excluding such partnerships where such party or any subsidiary of such party does not have a majority of the voting interest in such partnership), or (ii) at least fifty percent (50%) of the securities or other interests having by their terms ordinary voting power to elect at least fifty percent (50%) of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such party or by any one or more of its subsidiaries or Affiliates.

 

“Target Working Capital” means Zero Dollars ($0).

 

“Tax” or “Taxes” means any federal, state, local or foreign income, gross receipts, capital gains, profits, franchise, alternative or add-on minimum, sales, use, transfer, excise, severance, stamp, premium, customs, duties, withholding, real property, ad valorem, personal property, capital stock, social security, unemployment, employment, disability or any other assessment or charge in the nature of a tax imposed by any Governmental Authority, including any interest, penalties or additions to tax or additional amounts in respect of the foregoing.

 

“Tax Returns” means returns, declarations, reports, claims for refund, information returns or other documents filed or required to be filed in connection with the determination, assessment or collection of any Taxes.

 

“Taxing Authority” means any Governmental Authority responsible for the imposition, assessment, reassessment or collection of any Taxes.

 

“Transactions” has the meaning given to such term in the Recitals.

 

“Transaction Agreements” means this Agreement, the Interim Services Agreement, the Stock Power, the License Agreement, the Guaranty Agreements, the Indemnification Side Letter and the Security and Pledge Agreement.

 

“Transaction Tax Deductions” means (i) all fees, costs and expenses incurred by the Company in connection with or incident to the Transaction Agreements and the Transactions, including Company Transaction Expenses and any other legal, accounting and investment banking fees, costs and expenses, and (ii) any applicable expenses or other amounts not otherwise described in clause (ii) of this definition that are paid by or on behalf of the Company in connection with the Transactions to the extent that such expenses or amounts are paid prior to the Closing or reduce the Consideration. The amount of the Transaction Tax Deductions shall be computed assuming that an election was made under Revenue Procedure 2011-29 to deduct seventy percent (70%) of any Transaction Tax Deductions that are success-based fees (as described in Revenue Procedure 2011-29).

 

“Transfer” means, with respect to any security, to sell, offer, pledge, contract to sell, grant any option or contract to purchase, purchase any option or contract to sell, grant any right or warrant to purchase, lend or otherwise transfer (including by gift or operation of law), dispose of, hypothecate or encumber, directly or indirectly, such security, or to enter into any swap, hedging or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such security.

 

“Transfer Taxes” has the meaning given to such term in Section 6.2(a).

 

“UCC-1 Financing Statements” means the Uniform Commercial Code Financing Statements (Form UCC 1), naming Buyer as the debtor and Seller as the secured party, or other similar instruments or documents, filed or to be filed under the Uniform Commercial Code of all jurisdictions as may be necessary or, in the opinion of Seller, desirable to perfect the security interest of the Seller pursuant to the Security and Pledge Agreement.

 

“Unaudited Financial Statements” has the meaning given to such term in Section 3.5.

 

“WARN Act” means the Worker Adjustment and Retraining Notification Act, 29 U.S.C. §§ 2101 et seq., and the regulations promulgated thereunder.

 

“Working Capital” means the difference, whether positive or negative, between (i) the current assets of the Company and (ii) the current liabilities of the Company, in each case (i) for only those line items as set forth on the Estimated Closing Statement, (ii) calculated as of the Closing and (iii) determined in accordance with the Accounting Principles.

 

“Working Capital Overage” means the amount, if any, by which the Closing Working Capital is greater than the Target Working Capital; provided that such amount is at least Fifty Thousand Dollars ($50,000).

 

“Working Capital Underage” means the amount, if any, by which the Closing Working Capital is less than the Target Working Capital; provided that such amount is at least negative Fifty Thousand Dollars ($(50,000)).

 

SECTION 2

 

THE TRANSACTIONS

 

2.1          Purchase and Sale of Company Common Stock. Upon the terms of and subject to the conditions set forth in this Agreement, and in reliance upon the representations, warranties and covenants set forth herein, at the Closing, Seller shall sell, transfer and deliver to Buyer, free and clear of any and all Liens, all of the issued and outstanding capital stock of the Company for the Purchase Price.

 

2.2         Time and Place of Closing. The closing of the Transactions (the “Closing”) shall be held remotely by exchange of documents and signatures (or their electronic counterparts) simultaneously with the execution of the Transaction Agreements effective at 11:59 p.m. Eastern Time on the date hereof (the “Closing Date”). Except as otherwise set forth herein, all actions to be taken and all documents to be executed and delivered at the Closing will be deemed to have been taken, executed and delivered simultaneously, and no proceedings will be deemed taken nor any documents deemed executed or delivered until all such proceedings have been taken, and all such documents executed and delivered.

 

 

2.4       Subsequent Cash Payments. On or before the tenth (10^th) day of each month (or the next immediately succeeding Business Day if not a Business Day) commencing on March 10, 2023 and ending on February 8, 2024, Buyer shall remit to Seller by wire transfer of immediately available funds the sum of Eight Hundred Thirty-Three Thousand Three Hundred Thirty-Three Dollars and Thirty-Three Cents ($833,333.33); provided that the payment made on or before February 8, 2024, shall be made in the amount of Eight Hundred Thirty-Three Thousand Three Hundred Thirty-Three Dollars and Thirty-Seven Cents ($833,333.37).

 

 

2.6          Adjustment to Purchase Price.

 

 

 

 

 

SECTION 3

REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY

 

Subject to such exceptions as are set forth in the Disclosure Schedule and delivered herewith by the Company to Buyer, the Company hereby represents and warrants to Buyer that:

 

3.1        Organization, Standing and Power. The Company is a duly organized, validly existing corporation and in good standing under the laws of the State of Florida. The Company has all requisite power and authority to own, lease and operate its properties and conduct its businesses as and where presently conducted. The Company is duly qualified or licensed to do business and in good standing in each jurisdiction (in the case of good standing, to the extent such jurisdiction recognizes such concept) where the nature of its business or the ownership or leasing of its properties make such qualification necessary, other than in such jurisdictions where the failure to be so qualified or licensed, individually or in the aggregate, has not had and would not reasonably be expected to have, a Company Material Adverse Effect. The Company has made available to Buyer true, correct and complete copies of the Company’s Certificate of Incorporation and Bylaws (and all amendments thereto) as currently in full force and effect. The Company is not in violation of any of the provisions of its Certificate of Incorporation or Bylaws or similar organizational documents (and all amendments thereto).

 

3.2          Capital Structure.

 

 

 

 

 

 

 

 

 

3.5         Financial Statements. Section 3.5 of the Disclosure Schedule sets forth true and correct copies of the Company’s unaudited financial statements consisting of the balance sheet of the Company as at December 31, 2021 and the related statements of income and retained earnings for the period commencing March 2, 2021 and ended December 31, 2021 (the “Unaudited Financial Statements”), and unaudited financial statements consisting of the balance sheet of the Company as at November 30, 2022, and the related statements of income and retained earnings for the eleven-month period then ended (the “Interim Financial Statements” and together with the Unaudited Financial Statements, the “Financial Statements”) have been delivered to Buyer. The Financial Statements comply as to form in all material respects with applicable accounting requirements with respect thereto as of their respective dates, have been prepared in accordance with GAAP applied on a consistent basis throughout the period involved, subject, in the case of the Interim Financial Statements, to normal and recurring year-end adjustments and the absence of notes, none of which individually or in the aggregate would reasonably be expected to be material to the Company, taken as a whole. The Financial Statements fairly present in all material respects the financial condition of the Company as of the respective dates they were prepared and the results of the operations of the Company for the periods indicated.

 

3.6       Absence of Certain Changes or Events. Since January 1, 2022, there has not occurred any fact, circumstance, occurrence, effect, event or development or change that, individually or in the aggregate, has had or would reasonably be expected to have a Company Material Adverse Effect. Since January 1, 2022, the Company has conducted and operated its businesses in the Ordinary Course of Business, except for the execution and delivery of this Agreement, and has not taken any of the following actions:

 

 

 

 

 

 

 

 

3.7          Taxes.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.8          Employee Benefits.

 

 

 

 

 

 

 

 

3.9          Employment and Labor Matters.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.10       Legal Proceedings. There is no, and since March 2, 2021, there has been no, suit, action, litigation, arbitration, proceeding (including any civil, criminal, administrative, investigative or appellate proceeding), hearing, audit, examination, inquiry, investigation or similar proceeding pending or, to the Knowledge of the Company, threatened against the Company or any of their respective former or current officers, directors or employees or properties (including any properties owned, operated, leased or licensed by the Company) or assets. There is no suit, action, litigation, arbitration or proceeding (including any civil, criminal, administrative or appellate proceeding) pending or threatened by the Company against any other Person. There is no, and since March 2, 2021, there has been no, Order against or, to the Knowledge of the Company, threatened or pending by any Governmental Authority involving the Company or any of their respective former or current officers, directors or employees or properties (including any properties owned, operated, leased or licensed by the Company) or assets. The Company has no current obligation under any settlement agreement, consent decree, waiver of rights or similar agreement or arrangement with respect to any suit, action, litigation, arbitration, proceeding, hearing, audit, examination, inquiry, investigation or similar proceeding.

 

 

 

3.13        Contracts.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Each Contract described in this Section 3.13(a) and is referred to herein as a “Company Material Contract.” There are no active or outstanding offers, bids, quotations or proposals to sell products made or services provided by the Company that, if accepted or awarded, would lead to any Contract or subcontract of the type described by any of the foregoing items in this Section 3.13(a).