Aspire-Lakewood Holdings, Inc 10-Q for FY2026 Q2
Aspire-Lakewood Holdings, Inc. (ASBP)
About this 10-Q
Aspire-Lakewood Holdings, Inc filed this 10-Q on August 13, 2026, covering the quarter ended June 30, 2026 (FY2026 Q2).
Headline figures
Quarter ended June 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $63.1K
- Net loss
- $1.27M
- compared with a net loss of $1.98M a year earlier
- Diluted EPS
- -$1.22
- compared with -$48.19 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the quarterly period ended
For the transition period from to
Commission
File No.
| (Exact name of registrant as specified in its charter) |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of Principal Executive Offices, including zip code)
Tel:
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☐ Large accelerated filer | ☐ Accelerated filer |
| ☒
|
|
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No
As of August 7, 2026, the registrant had shares of common stock outstanding, 8,199 private placement warrants each exercisable for one share of common stock issued and outstanding, and 14,374,969 public warrants, each 1,200 exercisable for one share of common stock, issued and outstanding.
ASPIRE BIOPHARMA HOLDINGS, INC.
TABLE OF CONTENTS
| 2 |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
ASPIRE BIOPHARMA HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
| June 30, 2026 | December 31, 2025 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepaid expenses and other current assets | ||||||||
| Inventories | ||||||||
| Total current assets | ||||||||
| Deferred financing costs | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and stockholders’ equity (deficit) | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Due to affiliate | ||||||||
| Notes payable – related party | ||||||||
| Promissory note fee – related party | ||||||||
| Derivative liability | ||||||||
| Loan and transfer notes payable – related party | ||||||||
| Subscription agreement loans | ||||||||
| Convertible notes | ||||||||
| Total current liabilities | ||||||||
| Forward purchase agreement liability | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 6) | ||||||||
| Stockholders’ equity (deficit) | ||||||||
| Preferred stock; $ par value, shares authorized, issued or outstanding, except for and shares designated, respectively, as Series A convertible preferred stock | ||||||||
| Series A convertible preferred stock, and shares as designated, respectively, $ par value; and shares issued or outstanding, respectively | ||||||||
| Common stock; $ par value; shares authorized; and issued and outstanding, respectively* | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity (deficit) | ( | ) | ||||||
| Total liabilities and stockholders’ equity (deficit) | $ | $ | ||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 3 |
ASPIRE BIOPHARMA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net revenue | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ||||||||||||||||
| Inventory write off | ||||||||||||||||
| Gross margin | ( | ) | ( | ) | ||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| General and administrative (including stock based compensation of $, $, $ and $, respectively) | ||||||||||||||||
| Research and development | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| Merger and acquisition expenses | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ||||||||||
| Change in fair value of derivative liabilities and convertible notes | ( | ) | ( | ) | ( | ) | ||||||||||
| Gain (loss) on extinguishment of debt | ( | ) | ( | ) | ||||||||||||
| Total other expense, net | ( | ) | ( | ) | ( | ) | ||||||||||
| Loss before provision for income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax expense | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average common shares outstanding – basic and diluted | ||||||||||||||||
| Net loss per common share – basic and diluted- | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| * | Retroactively restated for
a |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 4 |
ASPIRE BIOPHARMA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
(unaudited)
| Shares* | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Common Stock | Preferred Stock | Additional Paid-in | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
| Shares* | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance – December 31, 2025* | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Issuance of Series A Convertible Preferred Stock | ||||||||||||||||||||||||||||
| Conversion of convertible notes to Series A Convertible Preferred Stock | ||||||||||||||||||||||||||||
| Conversion of convertible notes to common stock | ||||||||||||||||||||||||||||
| Issuance of incentive shares pursuant to the January 2026 Share Purchase Agreement | ||||||||||||||||||||||||||||
| Issuance of commitment fee shares under ELOC agreement | ||||||||||||||||||||||||||||
| Issuance of shares pursuant to debt exchange agreements | ||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance – March 31, 2026 | ( | ) | ||||||||||||||||||||||||||
| Issuance of Series A Convertible Preferred Stock | ||||||||||||||||||||||||||||
| Conversion of Series A Convertible Preferred Stock to common stock | ( | ) | ( | ) | ||||||||||||||||||||||||
| Shares issued for consulting services | ||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance – June 30, 2026 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| * |
| Shares* | Amount | Capital | Deficit | Deficit | ||||||||||||||||
| Common Stock | Additional Paid-in | Accumulated | Total Stockholders’ | |||||||||||||||||
| Shares* | Amount | Capital | Deficit | Deficit | ||||||||||||||||
| Balance – December 31, 2024* | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Conversion of warrants | ( | ) | ||||||||||||||||||
| Issuance of shares in Reverse Recapitalization | ( | ) | ( | ) | ||||||||||||||||
| Issuance of shares under working capital loans and non redemption agreements | ( | ) | ||||||||||||||||||
| Issuance of commitment fee shares under ELOC agreement | ( | ) | ||||||||||||||||||
| Stock based compensation | ||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance – March 31, 2025 | ( | ) | ( | ) | ||||||||||||||||
| Balance | ( | ) | ( | ) | ||||||||||||||||
| Shares issued from debt extinguishment | ||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance – June 30, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Balance | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 5 |
ASPIRE BIOPHARMA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| 2026 | 2025 | |||||||
| For the Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash flows used in operating activities: | ||||||||
| Amortization of debt discount | ||||||||
| Interest expense | ||||||||
| (Gain) loss on extinguishment of debt | ( | ) | ||||||
| Change in fair value of derivative liabilities and convertible notes | ( | ) | ||||||
| Interest capitalized | ||||||||
| Inventory write-off | ||||||||
| Stock-based compensation expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Inventories | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses | ( | ) | ( | ) | ||||
| Due from related party | ( | ) | ||||||
| Other current liabilities | ( | ) | ||||||
| Net cash flows used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Issuance of Series A convertible preferred stock | ||||||||
| Proceeds from Reverse Recapitalization | ||||||||
| Proceeds from issuance of convertible notes | ||||||||
| Deferred financing costs | ( | ) | ||||||
| Proceeds from debenture | ||||||||
| Repayment of debenture | ( | ) | ||||||
| Proceeds from notes payable - related party | ||||||||
| Repayment of notes payable – related party | ( | ) | ( | ) | ||||
| Net cash flows provided by financing activities | ||||||||
| Net increase in cash and cash equivalents | ||||||||
| Cash and cash equivalents, beginning of the period | ||||||||
| Cash and cash equivalents, end of the period | $ | $ | ||||||
| Supplemental cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Conversion of convertible notes to common stock | $ | $ | ||||||
| Issuance of incentive shares pursuant to the January 2026 Share Purchase Agreement | $ | $ | ||||||
| Issuance of shares pursuant to debt exchange agreements | $ | $ | ||||||
| Conversion of convertible notes to Series A convertible preferred stock | $ | $ | ||||||
| Conversion of Series A convertible preferred stock to common stock | $ | $ | ||||||
| Issuance of commitment fee shares under ELOC agreement | $ | $ | ||||||
| Due to affiliate write-off | $ | |||||||
| Accounts payable and other liabilities combined, net | $ | $ | ||||||
| Promissory note fee - related party, write-off | ||||||||
| Promissory note fee - related party, combined | $ | $ | ||||||
| Subscription agreement loans combined | $ | $ | ||||||
| Loan and transfer notes payable combined | $ | $ | ||||||
| Forward purchase agreement liability combined | $ | $ | ||||||
| Issuance of common stock for services | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 6 |
ASPIRE BIOPHARMA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1. Description of Organization and Business
Organization and Business
Aspire Biopharma Holdings, Inc. (the “Company” or “Aspire”) was incorporated as PowerUp Acquisition Corp., a Cayman Islands exempted company, on February 9, 2021, then domesticated to Delaware as a corporation on February 17, 2025. On February 17, 2025, the Company completed the reverse recapitalization transaction (“Reverse Recapitalization”) (see Note 3. Reverse Recapitalization) and changed its name to Aspire Biopharma Holdings, Inc.
Aspire is an early-stage biopharmaceutical company which engages in the business of developing and marketing disruptive technology for novel sublingual delivery mechanisms initially for known drugs and supplements, such as aspirin and caffeine products.
The Company has two wholly-owned subsidiaries, Aspire Biopharma Inc., a Delaware corporation, formed on October 8, 2021, and Buzz Bomb Caffeine Co. LC, a Utah LLC, formed on May 5, 2025.
Reverse Recapitalization
On August 26, 2024, the Company (then known as PowerUp Acquisition Corp.) entered into an Agreement and Plan of Merger (as amended, the “Merger Agreement”) with PowerUp Merger Sub II, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”), Srirama Associates, LLC, a Delaware limited liability company (the “New Sponsor”), Stephen Quesenberry, in the capacity as the seller representative, and Aspire Biopharma, Inc., a Puerto Rico corporation.
On February 17, 2025 (the “Closing Date”), the Company consummated the reverse recapitalization transaction (the “Reverse Recapitalization”) in accordance with the terms of the Merger Agreement. In connection with the consummation of the Reverse Recapitalization, the Company changed its name from PowerUp Acquisition Corp. to “Aspire Biopharma Holdings, Inc.” (see Note 3. Reverse Recapitalization).
Reverse Stock Split
On January 16, 2026, the Company effected a 1-for-40 reverse stock split with respect to its common stock (the “Reverse Split”). All share and per share information in these unaudited condensed consolidated financial statements gives effect to this reverse stock split, including restating prior period amounts.
On May 11, 2026, the Company effected a 1-for-30 reverse stock split with respect to its common stock (the “Second Reverse Split”) (collectively with the Reverse Split, the “Reverse Splits”). All share and per share information in these unaudited condensed consolidated financial statements gives effect to the Reverse Splits, including restating prior-period amounts.
The Reverse Splits had no effect on the Company’s authorized number of shares of common stock, the par value of common stock, the public warrants outstanding, total assets, total liabilities, or stockholders’ equity (deficit). The Company restated the common stock outstanding (shares and amount) and additional paid-in capital to reflect the number of shares outstanding after the Reverse Splits.
Liquidity and Management’s Plan
The
Company’s primary sources of liquidity have been cash from financing activities. As of June 30, 2026, working capital was $
| 7 |
In
February 2025, the Company received proceeds of approximately $
Management has determined that the Company’s current liquidity position is sufficient to fund its operations for at least one year after the filing of these unaudited condensed consolidated financial statements.
Note 2. Summary of Significant Accounting Policies
Please see Note 2. Summary of Significant Accounting Policies to the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (“2025 Annual Report on Form 10-K”), filed with the SEC on March 30, 2026, as amended on Form 10-K/A filed with the SEC on April 8, 2026, for a description of all significant accounting policies.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company as of June 30, 2026, and December 31, 2025, and for the three and six months ended June 30, 2026, and 2025. The Company’s condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X and therefore do not include all information and footnotes necessary for a fair presentation of consolidated financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and should be read in conjunction with the audited financial statements of the Company for the year ended December 31, 2025, which are included in the 2025 Annual Report on Form 10-K, as amended on Form 10-K/A.
The interim condensed consolidated financial statements are unaudited, and in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation of results for the periods presented. The results of operations for the three and six months ended June 30, 2026, are not necessarily indicative of the results to be expected for the full year due primarily to the impact of the continued uncertainty of general economic conditions that may impact the Company’s markets for the remainder of fiscal year 2026. All intercompany accounts and transactions have been eliminated in consolidation.
Cash, Cash Equivalents and Concentrations
Cash
and cash equivalents consist of short-term, highly liquid investments with an original maturity of three months or less from the date
of acquisition. Certain of the Company’s cash and cash equivalents balances exceed Federal Deposit Insurance Corporation (“FDIC”)
insured limits or are invested in money market accounts with investment banks that are not FDIC-insured. The Company places its cash
and cash equivalents in what it believes to be credit-worthy financial institutions. At June 30, 2026, and December 31, 2025, cash equivalents
were $
Concentrations
The following table details total revenues by major geographic area for the periods presented:
Schedule of Total Revenues by Major Geographical Area
| For the Three Months Ended | For the Six Months Ended | |||||||
| June 30, 2026 | ||||||||
| United States | $ | $ | ||||||
| Canada | ||||||||
| International(1) | ||||||||
| Total revenues | $ | $ | ||||||
| (1) |
One customer accounted for approximately 15% of the Company’s total revenues during the six months ended June 30, 2026. Revenue from this customer primarily related to a one-time sale and is not expected to represent a recurring source of revenue. No other customer accounted for 10% or more of the Company’s total revenues during the period.
| 8 |
Inventories
Inventory
consisting of finished goods are stated at the lower of cost or net realizable value with cost determined on a first-in, first-out
basis. Inventories on hand are evaluated on an on-going basis to determine if any items are obsolete, spoiled, or in excess of
future demand. The Company records an impairment that is charged directly to cost of revenue when it determines the product is
obsolete, spoiled or in excess of future demand, and the Company will not be able to sell it at a normal profit above it carrying
value. During the three months ended June 30, 2026, the Company determined that $
Recently Issued Accounting Pronouncements
On November 4, 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updates (“ASU”) 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-04) — Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued ASU 2025-01 — Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the statement of operations as well as disclosures about specific types of expenses included in the expense captions presented in the statement of operations. ASU 2024-03, as clarified by ASU 2025-01, is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods within annual reporting periods beginning after December 15, 2027. Both early adoption and retrospective application are permitted. The Company is currently assessing the impact of this ASU; however expects to enhance expense disclosures based on the new requirements.
In December 2025, the FASB issued ASU 2025-11 – Interim Reporting (Topic 270): Narrow-Scope Improvements (“ASU 2025-11”). ASU 2025-11 clarifies the interim reporting guidance in the Accounting Standards Codification (“ASC”), adding a comprehensive list of required interim disclosures and a principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for interim periods within annual periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating these new disclosure requirements.
All other ASUs issued and not yet effective as of June 30, 2026, and through the date of this report, were assessed and determined to be either not applicable or are expected to have minimal impact on the Company’s current or future financial position or results of operations.
Note 3. Reverse Recapitalization
On August 26, 2024, PowerUp Acquisition Corp. (“PowerUp”) entered into Merger Agreement with PowerUp Merger Sub II, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”), the New Sponsor, Stephen Quesenberry, in the capacity as the seller representative, and Aspire Biopharma, Inc., a Puerto Rico corporation.
On February 17, 2025 prior to the time of the consummation of the Reverse Recapitalization (the “Closing Date”), Merger Sub merged with and into Aspire Biopharma, Inc., with Aspire Biopharma, Inc. being the surviving company. After giving effect to the Reverse Recapitalization, Aspire Biopharma, Inc. became a wholly-owned subsidiary of Aspire Biopharma Holdings, Inc., a Delaware corporation (f/k/a PowerUp Acquisition Corp.) (“New Aspire”).
In accordance with the Merger Agreement, PowerUp migrated out of the Cayman Islands and domesticated as a Delaware corporation. Also, prior to the Closing Date, Aspire Biopharma, Inc. deregistered as a Puerto Rican entity and domesticated as a Delaware corporation (the “Aspire Domestication”). In connection with the Aspire Domestication, all issued and outstanding shares of Aspire’s pre-domestication voting common stock, Series A preferred stock, and any unconverted warrants automatically converted, on a one-for-one basis, into shares of the post-domesticated entity’s common stock, Series A preferred stock, and warrants, respectively.
The Reverse Recapitalization was accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, PowerUp, who is the legal acquirer, was treated as the “acquired” company for financial reporting purposes and Aspire Biopharma, Inc. was treated as the accounting acquirer. Accordingly, for accounting purposes, the Reverse Recapitalization was treated as the equivalent of a capital transaction in which Aspire issued stock for the net assets of PowerUp. The net assets of PowerUp will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Reverse Recapitalization will be those of Aspire Biopharma, Inc.
Transaction Proceeds
Upon
the closing of the Reverse Recapitalization, the Company received gross proceeds of $
| 9 |
The following table reconciles the elements of the Reverse Recapitalization to the unaudited consolidated statement of cash flows and the unaudited consolidated statement of changes in stockholders’ deficit:
Schedule of Reconciles the Elements of the Business Combination
| Cash-trust and cash, net of redemptions | $ | |||
| Less: transaction costs, paid | ( | ) | ||
| Net proceeds from the Reverse Recapitalization | ||||
| Less: Accounts payable, Accrued liabilities and Other current liabilities combined | ( | ) | ||
| Less: Promissory note fee – related party combined | ( | ) | ||
| Less: Subscription agreement loans combined | ( | ) | ||
| Less: Loan and transfer notes payable combined | ( | ) | ||
| Less: Forward purchase agreement liability combined | ( | ) | ||
| Add: Other assets, net | ||||
| Reverse Recapitalization, net | $ | ( | ) |
The following table summarized the number of shares of common stock issued and outstanding immediately following the consummation of the Reverse Recapitalization:
Schedule of Consummation of the Business Combination
| PowerUp Class A common stock, outstanding prior to the Reverse Recapitalization | ||||
| Less: Redemption of PowerUp Class A common stock | ( | ) | ||
| Class A common stock of PowerUp | ||||
| PowerUp Class B common stock, outstanding prior to the Reverse Recapitalization | ||||
| Total Reverse Recapitalization Class A common stock, before giving effect to Reverse Splits (see Note 1. Description of Organization and Business) | ||||
| Reverse Recapitalization Class A common stock, after giving effect to the Reverse Splits (see Note 1. Description of Organization and Business) | ||||
| Issuance of shares related to working capital agreements | ||||
| Aspire Biopharma, Inc. shares | ||||
| Common Stock immediately after the Reverse Recapitalization, after giving effect to the Reverse Splits (see Note 1. Description of Organization and Business) |
Schedule of Number of Shares Conversion Ratio
| Aspire Biopharma, Inc. shares | Aspire’s shares after conversion ratio | |||||||
| Common stock issued to existing Aspire Biopharma, Inc. shareholders | ||||||||
| Common stock obligation shares issued | ||||||||
| Number of common shares | ||||||||
Public and private placement warrants
There
were
| 10 |
Note 4. Related Party Transaction
Loan and transfer agreements
In order to finance transaction costs in connection with the Reverse Recapitalization, the New Sponsor or an affiliate of the New Sponsor, or certain affiliates of PowerUp loaned monies for working capital purposes (“Working Capital Loans”) by entering into several Loan and Transfer Agreements.
On
February 17, 2025, the Company assumed $
On
February 17, 2025, the Company assumed $
On
February 17, 2025, the Company assumed $
On
February 17, 2025, the Company assumed $
On
April 14, 2026 and April 15, 2026, the Company entered into payment agreements with SSVK, Apogee and Sheth, to which the Company settled
in cash the total balance of $
Subscription Agreements
On
March 5, 2024, PowerUp entered into four separate Subscription Agreements (each, a “First Subscription Agreement”) with the
New Sponsor, Visiox, VKS Capital, LLC, an affiliate of, and an entity under common control with, the New Sponsor (the “Affiliate”),
and four separate investors (each, an “Investor”), whereby the Investors collectively contributed to New Sponsor a total
of $
On
May 9, 2024, PowerUp entered into four separate Subscription Agreements (each, a “Second Subscription Agreement”) with the
New Sponsor, the Affiliate, and four separate Investors, whereby, the Investors collectively contributed to the New Sponsor a total of
$
PowerUp accounted for the First and Second Subscription Agreements under ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”) and concluded that bifurcation of a single derivative that comprises all of the fair value of the conversion feature(s) (i.e., derivative instrument(s)) is not necessary under ASC 815-15-25-7 through 25-10. As a result, all debt proceeds received from Investor have been recorded using the relative fair value method of accounting under ASC 470, Debt (“ASC 470”). Pursuant to ASC 470, the Company recorded the fair value of the subscription liability on the unaudited condensed consolidated balance sheets using the relative fair value method. The initial fair value of the subscription liability at issuance was estimated using a Black Scholes and Probability Weighted Expected Return Model. At the close of the Reverse Recapitalization, 1,458 of commitment fee shares, after giving effect to the Reverse Splits (see Note 1. Description of Organization and Business), owing to the Investors under these agreements were transferred by affiliates to the Investors.
On
February 17, 2025, the Company assumed $
| 11 |
Promissory Note Fee – related party
On
October 2, 2024, after Aspire and PowerUp had signed their BCA in August 2024, PowerUp entered into a Promissory Note Fee Agreement with
the Sponsor, Srirama Associates LLC (the “Promissory Note Fee Agreement”). Pursuant to the Promissory Note Fee Agreement, PowerUp and the Sponsor agreed that the
Sponsor took a significant risk on behalf of the Company by entering into the Visiox Promissory Note in exchange for payment of the Original
Promissory Note Fee, and that the Sponsor should be compensated for that risk despite the termination of the right to receive the Original
Promissory Note Fee as a result of the termination of the proposed merger with previous target, Visiox. As consideration for the foregoing,
PowerUp agreed to pay Sponsor a modified promissory note fee of $
In
April 2026, Srirama Associates, LLC filed a lawsuit in the Superior Court of the State of Delaware alleging breach of contract in
connection with the modified Promissory Note Fee Agreement. The complaint sought not less than $
Due to affiliate
On
February 17, 2025, in conjunction with the closing of the business combination, the Company had placed on its books $
Notes payable – related party
During
the years 2024 and 2023, Aspire Biopharma, Inc. incurred expenses and costs related to officer and director compensation, rental of office
space, reimbursable expenses paid by affiliates and non-interest bearing working capital loans. On September 27, 2024, to formalize the
related party working capital advances, Aspire Biopharma, Inc. issued three nonconvertible
On
December 31, 2024, the Company issued one non-convertible
The following table reflects the total balances of the Notes payable – related party for the periods presented.
Schedule of Note Issuance
| Issuance date | June 30, 2026 | December 31, 2025 | ||||||
| September 27, 2024 | $ | $ | ||||||
| December 31, 2024 | ||||||||
| Total | $ | $ | ||||||
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Note 5. Convertible Notes
February 2025 Securities Purchase Agreement
On
February 17, 2025, the Company entered into a Securities Purchase Agreement (“Securities Purchase Agreement”) with Cobra
Alternative Capital Strategies, LLC, an entity controlled by the Company’s former Director of Investor Relations, Lance Friedman,
whose services were provided through a consulting agreement with Blackstone Capital Advisors, Inc. that was terminated effective February
17, 2025, and Target Capital X LLC (collectively, the “Investors”). Under the Securities Purchase Agreement, the Company
issued
The
Company analyzed the Securities Purchase Agreement under ASC 480 and ASC 815 and concluded that bifurcation of a single derivative that
comprises all of the fair value of the conversion feature(s) (i.e., derivative instrument(s)) is not necessary. As a result, all debt
proceeds received have been recorded using the fair value method of accounting under ASC 825, Fair Value Measurement (“ASC 825”).
Pursuant to ASC 825, the Company recorded the fair value of the subscription liability on the unaudited condensed consolidated balance
sheet using the fair value method. The initial fair value of the subscription liability at issuance was estimated using a Monte Carlo
Model. In August and September 2025, the Company repaid a total of $
In
January 2026, the remaining balance of $
August 2025 Securities Purchase Agreement
On
August 19, 2025, the Company entered into a Securities Purchase Agreement (the “August Securities Purchase Agreement”) with
certain investors (the “Purchasers”), pursuant to which the Company sold to the Purchasers certain notes in an aggregate
principal amount of $
During
the year ended December 31, 2025, a total value of $
January 2026 Securities Purchase Agreement
On
January 26, 2026, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with certain
investors (the “Purchasers”), pursuant to which the Company sold to the Purchasers certain debentures in an aggregate principal
amount of $
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NOTE 6. Commitments and Contingencies
Registration Rights
The
holders of the Private Placement Warrants and Public Warrants that may be issued upon conversion of working capital loans, if any, are entitled
to registration rights pursuant to a registration rights agreement dated February 17, 2022. These holders are entitled to certain demand
and “piggyback” registration rights. The Company will bear the expenses incurred in connection with the filing of any such
registration statements. On May 13, 2025, the Company filed a Registration Statement on Form S-1 to register
Equity Line of Credit (“ELOC”) Agreement
On
November 11, 2025, the Company entered into a new Purchase Agreement (the “Second ELOC Agreement”) with Arena Business Solutions
AG/RA SA Ltd. (“Arena”). Under the Second ELOC Agreement, the Company has the right, but not the obligation, to direct Arena
to purchase up to $
The
term of the Second ELOC Agreement began on November 11, 2025, and ends on the earlier of (i) the first day of the month following the
36-month anniversary of the execution date, (ii) the date on which the Investor shall have purchased the maximum amount of Second ELOC
Shares, or (iii) the effective date of any written notice of termination delivered pursuant to the terms of the Second ELOC Agreement
(the “Commitment Period”).
The
Company issued shares of common stock after giving effects to the Reverse Splits (see Note 1. Description of Organization and
Business) to Arena in November and December 2025 and an additional true up shares in January 2026, after giving effects to the
Reverse Splits (see Note 1. Description of Organization and Business), representing payment of the commitment fee shares. For
the three and six months ended June 30, 2026, the change in fair value totaled $
Instaprin Acquisition
On March 28, 2022, the Company closed on an asset purchase agreement (“APA”) of Instaprin Pharmaceuticals, Inc.’s (“Instaprin”) intangible assets, inclusive of U.S. Patent No. 62/794141, International Publication No. 2020/15460 A1 and WO 2020/150685 A1, and the Instaprin U.S. Trademark No. 86274378, trade secrets and proprietary information, all applications for any of the foregoing, commercial and scientist relationships, and any license or agreements granting rights related to the foregoing.
The
purchase price for the Acquired Assets (as defined in the APA) was $
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Purchase Agreement
On June 10, 2026, the Company entered into a purchase agreement (the “Purchase Agreement”) with FireFish TopCo, LLC (the “Seller”, and, collectively with its Subsidiaries listed in the Purchase Agreement, “Sellers”), pursuant to which (i) the Seller agreed to sell, and cause the applicable Sellers to sell, and the Company agreed to purchase or cause certain of its Affiliates to purchase, all of the equity interests in certain of Seller’s subsidiaries of the Purchase Agreement (the aforementioned equity interests, collectively, the ‘Transferred Equity Interests”, and such subsidiaries, “Transferred Entities”), free and clear of all Liens, other than the Permitted Liens and in accordance with the applicable Local Transfer Documents and (ii) the Seller agreed to sell, and cause the applicable Sellers to sell, and the Company agreed to purchase, or cause certain of its affiliates to purchase, all of the assets of the other Business Entities as defined as Transferred Entities, DUS Operating Inc. with respect to the U.S. Enterprise and Automotive Czech with respect to the KOP Enterprise constituting the balance of the Business as defined as the business of designing, manufacturing, marketing and selling automotive systems that facilitate electronic driver control and the migration toward vehicle electrification, safety, light weighting and sustainability, as conducted by the Transferred Entities on June 10,2026, and in respect to (a) Automotive Czech, the business conducted by the KOP Enterprise and (b) DUS Operating Inc., the business conducted by the U.S. Enterprise.
Purchase
Price and Consideration: As consideration for such purchase,
On August 6, 2026, the Company entered into an Escrow and Closing Agreement pursuant to which the parties acknowledged and agreed that all conditions to the closing of the transactions per the Purchase Agreement had been satisfied. (see Note 11. Subsequent Events)
Commitment Letter for Credit Facility
In
May 2026, the Company entered into a commitment letter with a national financial institution providing for a senior secured credit
facility of Aspire in an aggregate principal amount of up to $
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The
Aspire Credit Facility is expected to consist of a senior secured five-year term loan, at an interest rate equal to 325 basis points
above the one-month term Secured Overnight Financing Rate. The final terms of the Aspire Credit Facility, including the senior secured
term loan, will be subject to execution of definitive credit documentation and the satisfaction of customary closing conditions. During
the three and six months ended June 30, 2026, $
Legal Proceedings
The Company is and may be subject to various claims, lawsuits and proceedings in the ordinary course of the Company’s business. Such matters are subject to many uncertainties and outcomes are not predictable with assurance. While there can be no assurances as to the ultimate outcome of any legal proceeding or other loss contingency involving the Company, in the opinion of management, such claims are either adequately covered by insurance or otherwise indemnified, or are not expected individually or in the aggregate, to result in a material, adverse effect on the Company’s financial condition, results of operations or cash flows. However, it is possible that the Company’s results of operations, financial position and cash flows in a particular period could be materially affected by these contingencies.
Legal Claim
Note 7. Securities Purchase Agreement
February 2026 Securities Purchase Agreement
On February 6, 2026, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain accredited investors (the “Investors”), pursuant to which the Company agreed to issue and sell, in a private placement (the “Offering”), up to shares (the “Shares”) of the Company’s newly-designated Series A Convertible Preferred Stock, par value $ per share (the “Preferred Stock”), which Preferred Stock is convertible into shares of the Company’s common stock, par value $ per share (the “Common Stock”) as more fully described in the Certificate of Designation, Preferences and Rights of the Series A Convertible Preferred Stock (the “Certificate of Designation”).
Pursuant to the Certificate of Designation on February 6, 2026, subject to Stockholder Approval (as defined below), each share of Preferred Stock is convertible at the option of the holder into shares of Common Stock at a conversion price equal to 80% of the lowest closing price of our Common Stock as of the closing of the Principal Market (as such term is defined in the Certificate of Designation) for each of the five (5) Trading Days (as such term is defined in the Certificate of Designation) immediately prior to the date of conversion, or other date of determination (but in no event less than the floor price), subject to certain adjustments as set forth in the Certificate of Designation (the “Conversion Price”). The floor price is equal to 20% of the Minimum Price (as such term is defined by the rules and regulations of The Nasdaq Stock Market LLC under Nasdaq Listing Rule 5635(d)(1)(A)) or such lower amount as permitted, from time to time, by the Principal Market (the “Floor Price”). The number of shares of Common Stock issuable upon conversion of a share of Preferred Stock shall be determined by dividing (x) the stated value of the Preferred Stock to be converted by (y) the Conversion Price.
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In
connection with the Offering,
In addition, the Company and each Investor entered into a registration rights agreement (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, within fifteen (15) days following the Initial Closing, the Company shall file a resale registration statement on Form S-1 (or Form S-3 if the Company is S-3 eligible) providing for the resale by the Investors of the Registrable Securities (as defined in the Registration Rights Agreement) and to use its best efforts to cause such resale registration statement to be declared effective by the staff of the Commission within forty five (45) days following the Initial Closing, or within sixty five (65) days in the event of a review by the Commission.
Pursuant to the Securities Purchase Agreement, the Investors have the right to appoint one (1) director to our Board of Directors. The Securities Purchase Agreement and Registration Rights Agreement contain certain representations and warranties, covenants and indemnities customary for similar transactions. The representations, warranties and covenants contained in the Securities Purchase Agreement and Registration Rights Agreement were made solely for the benefit of the parties to the Securities Purchase Agreement and Registration Rights Agreement and may be subject to limitations agreed upon by the contracting parties.
Series A Convertible Preferred Stock Issuance
Pursuant
to the terms of the February 2026 Securities Purchase Agreement, on February 2, 2026, the Company filed the certificate of
designation (the “Certificate of designation”) with The Delaware Secretary of State designating,
shares of authorized and unissued preferred stock as Series A Convertible Preferred Stock. At the close of the first tranche, the
company recorded $
On
April 13, 2026, the Company filed the further amendment to the Certificate of designation with the Delaware Secretary of State designating,
shares of the authorized and unissued preferred stock as Series A Convertible Preferred Stock. On April 13, 2026, additional
shares were issued at the close of tranche 2 of the February 2026 Securities Purchase Agreement and the Company recorded $
During the three months ended June 30, 2026, holders of the preferred stock converted shares of Series A Convertible Preferred Stock into , shares of common stock. The Company had shares of Series A Convertible Preferred Stock outstanding at June 30, 2026.
The following is a summary of the terms of the Preferred Stock:
Conversion
Pursuant to the Certificate of Designation, each share of Preferred Stock, subject to the Stockholder Approval (as defined in the Certificate of Designation), is convertible at the option of the holder into shares of common stock at a conversion price equal to 80% of the lowest closing price of our Common Stock as of the closing of the Principal Market (as such term is defined in the Certificate of Designation) for each of the five (5) Trading Days (as such term is defined in the Certificate of Designation) immediately prior to the date of conversion, or other date of determination (but in no event less than the floor price), subject to certain adjustments as set forth in the Certificate of Designation (the “Conversion Price”). The floor price is equal to 20% of the Minimum Price (as such term is defined by the rules and regulations of the Nasdaq Stock Market LLC, Rule 5635(d)(1)(A)) (or such lower amount as permitted, from time to time, by the Principal Market (the “Floor Price”). The number of shares of common stock issuable upon conversion of a share of Preferred Stock shall be determined by dividing (x) the stated value of the Preferred Stock to be converted by (y) the Conversion Price.
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Ranking
The Series A shall rank (i) senior to all of the common stock; (ii) senior to any class or series of capital stock of the Corporation hereafter created specifically ranking by its terms junior to any Series A (“Junior Securities”); (iii) on parity with any class or series of capital stock of the Corporation created specifically ranking by its terms on parity with the Preferred Stock (“Parity Securities”); and (iv) junior to any class or series of capital stock of the Corporation hereafter created specifically ranking by its terms senior to any Series A (“Senior Securities”), in each case, as to dividends or distributions of assets upon liquidation, dissolution, winding up of the Corporation, whether voluntarily or involuntarily. Subject to any superior liquidation rights of the holders of any Senior Securities of the Corporation and the rights of the Corporation’s existing and future creditors, upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary (a “Liquidation”), each Holder shall be entitled to be paid out of the assets of the Corporation legally available for distribution to stockholders, prior and in preference to any distribution of any of the assets or surplus funds of the Corporation to the holders of the Common Stock and Junior Securities and pari passu with any distribution to the holders of Parity Securities, an amount equal to the Stated Value for each share of Series A held by such Holder plus an amount equal to any accrued and unpaid dividends thereon, and thereafter the Holders shall be entitled to receive out of the assets, whether capital or surplus, of the Corporation the same amount that a holder of Common Stock would receive if the Series A were fully converted (disregarding for such purposes any conversion limitations hereunder) to common stock which amounts shall be paid pari passu with all holders of common stock. The Corporation shall mail written notice of any such Liquidation, not less than sixty (60) days prior to the payment date stated therein, to each Holder.
Price Protection
Except for any Exempt Issuance, in the event the Corporation issues or sells any securities including options or convertible securities (or amends any outstanding securities of the Company), at an effective price of, or with an exercise or conversion price of less than the conversion price, then upon such issuance or sale, the conversion price shall be reduced to the lesser of (i) the Floor Price; or (ii) the sale price or the exercise or conversion price of the securities issued or sold. In case any shares of common stock, convertible securities or options are issued in connection with the issue or sale of other securities of the Company, together comprising one integrated transaction, each share of common stock underlying any such convertible securities or options shall be deemed to be one additional share of common stock for the purposes of determining the effective price of the non-Exempt Issuance.
Participation Rights
Subject to certain terms and conditions in the Certificate of Designation, until the six (6) month anniversary of the issuance of the Series A to the Holder, upon any subsequent financing, the Holders of the outstanding Series A shall have the right to participate in an amount equal to an aggregate of 30% of the Subsequent Financing on the same terms, conditions and price provided for in the Subsequent Financing.
Note 8. Stockholders’ equity (deficit)
Preferred Stock—The Company is authorized to issue shares of Preferred Stock with a par value of $ per share and with such designations, voting and other rights and preferences as may be determined from time to time by the Board. At June 30, 2026 and December 31, 2025, and , respectively, were designated as Series A Convertible Preferred Stock.
Series A Convertible Preferred Stock—The Company is authorized to issue shares of Series A Convertible Preferred Stock with a par value of $ per share and with such designations, voting and other rights and preferences as may be determined from time to time by the Board. At June 30, 2026 and December 31, 2025, there were and shares of Series A Convertible Preferred Stock issued or outstanding, respectively.
Common Stock— The Company is authorized to issue shares of Common Stock with a par value of $ per share. As of June 30, 2026, and December 31, 2025, there were and shares of common stock issued and outstanding, respectively, after giving effects to the Reverse Splits (see Note 1. Description of Business and Organization).
PowerUp Warrants
As
part of the PowerUp IPO, PowerUp issued warrants to third-party investors where
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At
December 31, 2025, there are
The
Public Warrants became exercisable
Upon the warrants becoming exercisable, the Company may redeem the warrants:
● in whole and not in part;
●
at a redemption price of $
●
upon not less than
if,
and only if, the reported last sale price of the Company’s Common Stock equals or exceeds $ per share (as adjusted for share
subdivisions, share consolidations, share capitalizations, rights issuances, reorganizations, recapitalizations and the like) for any
The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the IPO, except that the Private Placement Warrants and the common stock issuable upon the exercise of the Private Placement Warrants are not transferable, assignable, or saleable until 30 days after the completion of a Reverse Recapitalization, subject to certain limited exceptions.
The Company has determined that Public Warrants and the Private Placement Warrants issued in connection with its IPO in February 2022 are subject to treatment as equity. Upon the closing of the Reverse Recapitalization, in accordance with the guidance contained in ASC 815, the warrants continue to be classified as equity.
Stock based compensation
On February 29, 2024, Aspire Biopharma, Inc. entered into a Corporate Advisory Agreement with an advisory firm, pursuant to which the advisory firm will receive % of the amount of shares outstanding after the close of the Reverse Recapitalization as compensation for advisory services to support the Company’s efforts related to the Reverse Recapitalization. On January 3, 2025, the agreed upon compensation was reduced to % of the amount of shares outstanding after the close of the Reverse Recapitalization (see Note 3. Reverse Recapitalization). In February 2025, shares of the Reverse Recapitalization shares after giving effects to the Reverse Splits (see Note 1. Description of Business and Organization) were issued to the affiliated company under this agreement. The issuance of these shares to the service advisors is subject to ASC 718. Under ASC 718, compensation associated with equity-classified awards is measured at fair value upon the grant date. The shares were granted subject to a performance condition (i.e., the occurrence of a Reverse Recapitalization).
Stock-based
compensation expense which is included in general and administrative expenses on the unaudited condensed consolidated statement of operations
was $
Aspire Biopharma Inc. warrants
During
the year ended December 31, 2024, Aspire Biopharma, Inc. issued
Other Share issuances
On April 28, 2025, in connection with the Settlement Agreement, the Company issued shares of common stock after giving effect to the Reverse Splits (see Note 1. Description of Business and Organization to Blackstone Capital Advisors, Inc. or its designees. (See Note 5. Convertible Notes)
During
the year ended December 31, 2025, a total value of $
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As stated in Note 6. Commitments and Contingencies, In January 2026, the Company issued true up shares to Arena after giving effect to the Second Reverse Split (see Note 1. Description of Business and Organization).
As stated in Note 5. Convertible Notes, The Company issued shares of common stock as incentive to the Investors for entering into the January 2026 Share Purchase Agreement after giving effect to the Second Reverse Split (see Note 1. Business Description and Organization).
On April 7, 2026, the Company issued shares of common stock, after giving effect to the Second Reverse Split (see Note 1. Business Description and Organization), to a consultant pursuant to a consulting agreement.
Exchange Agreements
On
January 1, 2026, the Company entered into Exchange Agreements (the “Exchange Agreements”) with certain holders of the Company’s
subscription agreement loans (the “Holders”) to exchange approximately $
Pursuant to the Exchange Agreements, the Holders may, in their discretion, submit a notice of exchange setting forth the Exchange Amount, the Exchange Shares, and the applicable Exchange Price. Within one business day of receipt of an Exchange Notice, the Company will issue to such Holder the number of Exchange Shares equal to the Exchange Amount divided by the Exchange Price, and such Exchange Amount shall be deducted from the Outstanding Balance. Each Holder may submit up to four (4) Exchange Notices, but each Exchange Notice may not exchange more than thirty percent (30%) of the applicable Holder’s Outstanding Balance.
In
addition,
In January 2026, pursuant to the Exchange Agreements, the Subscription Agreement Loan balances along with applicable interest were converted into shares of common stock of the Company after giving effect to the Reverse Splits (see Note 1. Description of Business and Organization).
Note 9. Fair Value Measurements
The following table presents the Company’s fair value hierarchy assets and liabilities that are measured at fair value on a recurring basis at June 30, 2026 and December 31, 2025 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value.
Schedule of Assets and Liabilities That are Measured at Fair Value On a Recurring Basis
| June 30, 2026 | Balance Sheet Classification | Quoted Prices in Active Markets | Significant Other Observable Inputs | Significant Other Unobservable Inputs | ||||||||||
| (Level 1) | (Level 2) | (Level 3) | ||||||||||||
| Assets: | ||||||||||||||
| Money market funds | Cash and cash equivalents | $ | $ | $ | ||||||||||
| Liabilities: | ||||||||||||||
| Forward purchase agreement liability | $ | $ | $ | |||||||||||
| December 31, 2025 | Balance Sheet Classification | Quoted Prices in Active Markets | Significant Other Observable Inputs | Significant Other Unobservable Inputs | ||||||||||||
| (Level 1) | (Level 2) | (Level 3) | ||||||||||||||
| Liabilities: | ||||||||||||||||
| Convertible notes | $ | $ | $ | |||||||||||||
| Forward purchase agreement liabilities | $ | $ | $ | |||||||||||||
| Derivative liability | $ | $ | $ | |||||||||||||
| Total liabilities | $ | $ | $ | |||||||||||||
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Convertible notes
As discussed in Note 5. Convertible Notes, the February 2025 Convertible Debentures are classified and accounted for as a financial liability which is measured at fair value on a recurring basis (one of the instruments is accounted for at fair value on a recurring basis under ASC 480-10, as a derivative instrument under ASC 815).
The financial liabilities are valued under a Monte Carlo Model. The estimated fair value of the financial liabilities component is determined using Level 3 inputs. Inherent in the pricing models are assumptions related to expected share-price volatility, expected life and risk-free interest rate.
The significant inputs of the models used to value the Company’s February 2025 Convertible Debentures as of December 31, 2025 were:
Schedule of Convertible Notes
| Inputs | December 31, 2025 | |||
| Term Remaining - Years | ||||
| Share Price | $ | |||
| Debt Rate | % | |||
The change in the fair value of the February 2025 Convertible Notes measured using Level 3 inputs is summarized as follow:
Schedule of Fair Value of the Convertible Notes
| Balance at, December 31, 2025 | $ | |||
| Convertible notes, beginning balance | $ | |||
| Paid in kind interest | ||||
| Change in fair value | ( | ) | ||
| Repayment of Convertible notes | ( | ) | ||
| Balance at June 30, 2026 | $ | |||
| Convertible notes, ending balance | $ |
Forward purchase agreement liabilities
As discussed in Note 6. Commitment and Contingencies, the forward purchase agreement liabilities are classified and accounted for as financial liabilities which are measured at fair value on a recurring basis.
The forward purchase agreements liabilities are valued under a Probability Weighted Expected Return Model (“PWERM”) which fair values reportable capital investment and uses a Black Scholes Model that fair values the conversion features within the convertible debt. The PWERM is a multistep process in which value is estimated based on the probability-weighted present value of various future outcomes. The estimated fair value of the forward purchase agreements liabilities are determined using Level 3 inputs. Inherent in the pricing models are assumptions related to expected share-price volatility, expected life and risk-free interest rate.
The significant inputs of the models used to value the forward purchase agreement liabilities as of June 30, 2026 and December 31, 2025 were:
Schedule of Models Used in Forward Purchase Agreements Liabilities
| Inputs | June 30, 2026 | December 31, 2025 | ||||||
| Share Price | $ | $ | ||||||
| Risk Free Rate | ||||||||
| Likelihood of a call | ||||||||
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The change in the fair value of the forward purchase agreement liabilities measured using Level 3 inputs is summarized as follows:
Schedule of Fair Value Forward Purchase Agreement Liabilities
| Balance at December 31, 2025 | $ | |||
| Change in fair value | ||||
| Balance at March 31, 2026 | ||||
| Balance | ||||
| Change in fair value | ||||
| Balance at June 30, 2026 | $ | |||
| Balance | $ |
Derivative liability
As
discussed in Note 5. Convertible Notes, the Company accounted for the August 2025 Notes under ASC 470 and ASC 815 and concluded
that bifurcation of multiple embedded features was necessary under ASC 815-15-25-1. As a result, the Company separately accounted for
it as a single compound derivative. The initial fair value of the derivative liability at issuance was $
The change in the fair value of the derivative liability measured using Level 3 inputs is summarized as follows:
Summary of Change in Fair Value of Derivative Liability
| Balance at December 31, 2025 | $ | |||
| Change in fair value | ( | ) | ||
| Balance at March 31, 2026 | ||||
| Derivative liability, beginning balance | ||||
| Change in fair value | ||||
| Balance at June 30, 2026 | $ | |||
| Derivative liability, ending balance | $ |
The significant inputs of the models used to value the Company’s derivative liability as of December 31, 2025, were:
Schedule of Key Inputs of Models Used to Value Derivative Liability
| Inputs | December 31, 2025 | |
| Term Remaining - Years | ||
| Share Price | $- $ | |
| Risk Free Rate |
Note 10. Segments
The Company determines its operating segments in accordance with FASB ASC 280, Segment Reporting (“ASC 280”). ASC 280 defines operating segments as components where discrete financial information is regularly reviewed by the chief operating decision maker (“CODM”), which for the Company is the Chief Executive Officer, to determine resource allocation and assess performance. As such, based on the way the CODM monitors and makes decisions affecting operations, the Company has concluded that it has one operating and reportable segment. The CODM is regularly provided with only the consolidated expenses as noted on the face of the condensed consolidated statements of operations. As the Company has only one operating segment and is managed on a consolidated basis, the measure of profit or loss is consolidated net income or loss. The metrics are used to review operating trends, to perform analytical comparisons between periods and to monitor budget to actual variances. When evaluating the Company’s performance and making key decisions regarding resource allocation, the CODM reviews several key metrics included in net loss, which include the following:
All other segment items included in net loss are reported on the unaudited condensed consolidated statements of operations and described within their respective disclosures.
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Note 11. Subsequent Events
The Company evaluated subsequent events and transactions that occurred after the balance sheet date through the date that the unaudited condensed consolidated financial statements were issued. Based upon this review, other than disclosed below or within these unaudited condensed consolidated financial statements, the Company did not identify any other subsequent events that would have required adjustment or disclosure in the unaudited condensed consolidated financial statements.
Conversion of Preferred Stock and Effects on Stockholders’ Equity
In July 2026, certain holders of the Series A
Convertible Preferred Stock converted
shares at a conversion price of $
Purchase Agreement
On June 10, 2026, the Company entered into a purchase
agreement (“Purchase Agreement”) with FireFish Topco LLC (the “Seller and collectively with its Subsidiaries as identified
in the Purchase Agreement, “Sellers”) pursuant to which the Company purchased all of the equity interests in certain of the
Seller’s subsidiaries and all of the assets and liabilities of other Business Entities (see Note 6. Commitments and Contingencies)
for an amount equal to (i) $
On August 6, 2026, the Company entered into an Escrow and Closing Agreement (see below) pursuant to which the parties acknowledged and agreed that all conditions to the closing of the transactions per the Purchase Agreement had been satisfied.
As a result of the limited time since the acquisition date and the effort required to conform the financial statements to the Company’s practices and policies, the initial accounting for the business combination is incomplete at the time of this filing. As a result, the Company is unable to provide the amounts recognized as of the acquisition date for the major classes of assets acquired and liabilities assumed.
Escrow and Closing Agreement
On August 6, 2026, the Company and FireFish TopCo, LLC (the “Seller”) entered into an Escrow and Closing Agreement (the “Closing Agreement”), pursuant to which the parties acknowledged and agreed that all conditions to the closing of the transactions contemplated by the Purchase Agreement (see Note 6. Commitments and Contingencies) (the “Closing”) had been irrevocably satisfied or irrevocably waived by the party entitled to the benefit thereof, and that all Transaction Documents, certificates and other deliverables required to effect the Closing (collectively, the “Closing Documents”) had been duly executed and irrevocably delivered by the parties and were being held in escrow by the parties (or their respective counsel) pending automatic release as described below.
According to the Closing Agreement, the Closing Documents will be automatically released from escrow without any further action, and the Closing will be deemed to occur automatically and without any further action, immediately upon payment by the Company to the Seller of the Closing Purchase Price in accordance with the closing statement delivered by the Seller to the Company on July 28, 2026 under the Purchase Agreement.
The Company has agreed to immediately pay the Closing Purchase Price to the Seller upon receipt of funds from its debt financing source (the “Financing”). The Closing Agreement provides that the Financing is not, and was not, a condition to the Closing, that the Seller entered into the Closing Agreement as an accommodation to the Company and without prejudice to the Seller’s rights (including its right to terminate the Purchase Agreement pursuant to Section 9.01(c) or Section 9.01(e) thereof to the extent the Closing does not promptly occur after July 31, 2026), and that the Company will use reasonable best efforts to obtain the Financing so as to enable it to pay the Closing Purchase Price as promptly as possible.
Working Capital Financing; Note Purchase Agreement
On
July 31, 2026, the board of directors of the Company (the “Board”) adopted resolutions by written consent authorizing the
Company to issue convertible promissory notes (the “Notes”) pursuant to a Convertible Promissory Note Purchase Agreement,
dated as of August 6, 2026 (the “Note Purchase Agreement”), by and among the Company and the investors named therein (the
“Investors”). Pursuant to the Note Purchase Agreement, the Company will issue and sell to the Investors Notes in an aggregate
principal amount of $
The Board ratified, confirmed, consented to and approved the Company’s entry into the Note Purchase Agreement and authorized the Company’s officers to negotiate, execute, deliver and perform the Note Purchase Agreement and related ancillary documents, and to issue the Conversion Shares (as defined below) upon conversion of the Notes.
The
Notes are convertible into shares of the Company’s common stock, par value $ per share (the “Conversion Shares”),
in accordance with the terms of the Notes. The conversion price applicable to the Notes is $
RBW Capital Partners LLC acted as exclusive financial
advisor to the Company in connection with the foregoing transactions. Any securities or brokerage services were offered through Dawson
James Securities, Inc. RBW received a placement agency fee equal to
Management Services Agreement
A Management Services Agreement (the “Agreement”) was entered into on May 10, 2026, between the Company and Lakewood Capital, LLC (“Lakewood”) becoming effective on the closing date of the acquisition of the Drivers Control Systems (“DCS”) business of Dura Automotive (the “Dura Transaction”), August 6, 2026, (the “Effective Date”) (see Escrow and Closing Agreements above). The term of the Agreement is for a period of five years from the Effective Date.
The Management
Services to be provided during the term of the Agreement include consultation in connection to the DCS operations with respect to
the development and implementation of strategies for improving operating, engineering, manufacturing, marketing, and/or financial
performance of the Company, its subsidiaries or affiliates. In consideration of the Management Services,
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following “Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)” should be read in conjunction with our unaudited condensed consolidated financial statements for the three and six months ended June 30, 2026 and 2025 and our audited financial statements as of the year ended December 31, 2025, included in Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 30, 2026.
This discussion includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Such statements include, but are not limited to, possible business combinations and the financing thereof, and related matters, as well as all other statements other than statements of historical fact included herein. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings.
Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “Aspire,” “we”, “us”, “our”, and the “Company” are intended to refer to (i) following the Reverse Recapitalization (as defined below), the business and operations of Aspire Biopharma Holdings, Inc. (formerly PowerUp Acquisition Corp.) and its consolidated subsidiaries, and (ii) prior to the Reverse Recapitalization, Aspire Biopharma, Inc. (the predecessor entity in existence prior to the consummation of the Reverse Recapitalization) and its consolidated subsidiaries.
Overview
We are an early-stage biopharmaceutical and supplements company. Aspire Biopharma Holdings, Inc. (the “Company” or “Aspire”) is a Delaware Company that was incorporated as PowerUp Acquisition Corp., a Cayman Islands exempted company, on February 9, 2021. On February 17, 2025, the Company completed the Reverse Recapitalization described below and changed its name to Aspire Biopharma Holdings, Inc. The Company engages in the business of developing and marketing the disruptive technology for novel sublingual delivery mechanisms initially for known drugs and supplements. Prior to our Reverse Recapitalization, we were a privately held Puerto Rico corporation incorporated in September 2021.
Growth Strategy and Outlook
Business Plan
We expect to generate revenue through developing and marketing drugs and nutraceuticals using the technology for the novel sublingual delivery. Further, from time to time, we may enter into license or collaboration agreements with other companies that include development funding and significant upfront and milestone payments and/or royalties, which may become an important source of our revenue. Accordingly, our revenue may depend on development funding and the achievement of development and clinical milestones under current and any potential future license and collaboration agreements and sales of our products, if approved. We do not currently have any licensing or collaboration agreements.
On August 10, 2026, we completed the acquisition of Dura Drive Control Systems (“DCS”), a tier-one supplier specializing in automotive systems that facilitate electronic driver control and the migration toward vehicle electrification, safety, lightweighting, and sustainability. The acquisition is expected to enhance our ability to deliver increased revenues, durable earnings and cash flow, driven by a new portfolio of product offerings in the large and growing markets for vehicle and mobility control systems.
Critical Accounting Policies
Revenue
We currently contract with third parties for the manufacture of our product candidates for preclinical studies, clinical trials, and sale, and intend to do so in the future. We do not own or operate manufacturing facilities for the production of clinical or commercial quantities of our product candidates. We currently have no plans to build our own clinical or commercial scale manufacturing capabilities. To meet our projected needs for commercial manufacturing, third parties with whom we currently work will need to increase their scale of production or we will need to secure alternate suppliers. Although we rely on contract manufacturers, we have personnel with manufacturing experience to oversee our relationships with contract manufacturers.
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We entered into a development and manufacturing agreement with a contract manufacturer, Glatt, in the fourth quarter of 2024, under which Glatt produced sufficient quantities of our high-dose sublingual aspirin product (sometimes referred to informally herein as “Instaprin” for ease of reference) for our clinical trials required to obtain FDA approval to market the product and complete clinical trials. Glatt currently has the capabilities to manufacture our aspirin drug product for potential commercial use, however, their current capacity may be insufficient to meet our planned needs and may require us to engage additional or alternative third-party manufacturers in the future. In addition, we have entered into a fill-and-finish agreement with a contract manufacturer to convert the aspirin product manufactured by Glatt into packaged drug product that can be utilized in clinical trials. We believe that both Glatt and the fill-and-finish contract manufacturer are compliant under current good manufacturing practice, or cGMP, requirements and have experience with cGMP inspections of their respective facilities. We have also entered into a manufacturing agreement with Microsize, a CDMO in Quakertown, PA in January 2026 to manufacture aspirin products for the next round of clinical trials of the high-dose aspirin for myocardial infarction.
We used drug product manufactured by Glatt to conduct clinical trials to support approval of a section 505(b)(2) New Drug Application (“NDA”) for the aspirin product. A successful clinical trial was completed in the third quarter of 2025 in Florida studying the pharmacokinetics of aspirin and its metabolites in blood following sublingual administration of a single dose of each of two different formulations of our aspirin drug product and a single dose of standard oral aspirin. This trial enrolled 6 healthy adult volunteers with each dose separated by a washout period of fourteen days and provided information required to (i) select the optimal drug product formulation and (ii) support FDA approval. This trial also studied sublingual administration of our aspirin products and how it delivers therapeutic concentrations of drug into the bloodstream, comparable to those of standard oral aspirin, but faster and without gastro-intestinal toxicity associated with oral aspirin. This clinical trial concluded in the third quarter of 2025. We received the final report in September 2025. The result of the clinical trials was positive, demonstrating that Aspire’s sublingual delivery technology results in much faster aspirin bioavailability in the blood (compared to aspirin tablets) and that the anti-coagulant effect of aspirin occurs much quicker with Aspire’s product. These results will be the backbone of a 505(b)(2) submission to the FDA planned for the first six months of 2027, once the next clinical trial is concluded.
Commercialization of Aspirin Products
We have not yet established a sales, marketing, or product distribution infrastructure for our aspirin products because our lead product candidates are still in early-stage clinical development. We generally plan to retain commercial rights in the United States for our product candidates for which we hope to receive marketing approvals. We believe that it will be possible for us to access the heart attack and stroke prevention market through a targeted hospital and/or specialty care sales force. We are also strongly considering the licensing of the aspirin products and have received inquiries about the availability of that product for license.
Our Products
The Company has developed and acquired disruptive sublingual delivery technologies that are patent-pending and which address emergencies and drug efficacy, dosage management, and response time. In March 2023, the Company filed application number 63/456,290 with the United States Patent and Trademark Office (“USPTO”) with the goal of securing patent protection for its new technology and aspirin formulation. The Company’s new patent pending formulation is a significant improvement on the previous formulation which was acquired by the Company through the Instaprin Pharmaceuticals, Inc. acquisition. This technology will facilitate development of any number of products in a soluble, fast acting powder or granule form which has been developed by using our patent pending formulation, and “trade secret” process. Aspire’s drug delivery which allows for rapid sublingual absorption. The benefits of “rapid absorption” are to provide rapid treatment impact and also allows high dose absorption. The Company’s patent pending delivery system includes components specifically formulated to allow rapid sublingual absorption of drugs into the blood stream, thus by-passing the gastrointestinal tract. A second patent application was filed in October 2024 for a high-dose version of our sublingually administered aspirin product (application number 63/702,381) using a micelle variation on our technology which can be used with a variety of substances.
In the initial development launch of its aspirin product, Aspire has focused on the delivery of aspirin, which may be the most studied and accepted analgesic and anti-inflammatory drug on the market. Aspirin is over a century old and is traditionally available in several forms, including effervescence, powder, capsule, and tablet. Over 100 years of documented safety and efficacy data is readily available. Aspirin is the only drug in history to receive a certified recommendation by the FDA for heart attack, stroke, and colon cancer. However, current aspirin applications are often limited due to side effects from gastric irritation. Aspire plans to submit its FDA 505(b)(2) approval request in late 2026 or early 2027 for the prescription strength high dose aspirin product given the history of aspirin (and over 100 years of history).
Current Development Status of Aspire’s Aspirin Product
Aspire’s cGMP batch of high-dose aspirin was manufactured by Glatt in its New Jersey facility in March 2025. Glatt used this batch to finalize the packaging and manufacturing process, and to provide the products which were used in the clinical trials which took place in Florida and ended in the third quarter of 2025, with the final clinical trial study results provided to Aspire on September 5, 2025. Glatt’s scientific team conducted the stability testing required by the FDA on this batch to help determine product shelf life. This is in addition to prior similar initial testing done in 2022 by Glatt which provided important background data on the stability and manufacturing process for Aspire’s low dose sublingual aspirin product. Aspire’s new manufacturer, Microsize, is currently conducting tests and preparing the high-dose product for the next clinical tests, and improving the formulation. Pace Analytical is assisting with the testing process.
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Aspire’s consultants have completed (1) a comprehensive review of relevant regulatory issues and regulatory strategy (including regulations, guidance documents, FDA reviews of approved NDAs for other relevant products, Pediatric Research Equity Act requirements, FDA’s trade name approval requirements, opportunities for accelerated regulatory processes, etc.), (2) a comprehensive summary of relevant safety, efficacy and pharmacokinetic data to support IRB approvals, IND, and 505(b)(2) NDA approval, (3) a target product profile (including product description, composition, strength, route of administration, prescription v. OTC, indications, dosing and claims to differentiate from other aspirin products), and (4) an integrated product development plan (including plans to support each module of an NDA submission: CMC, preclinical safety, human PK, clinical safety, clinical efficacy, timelines, critical path, Gantt chart, etc.). These reviews were done in preparation for Aspire’s communication with the FDA, its clinical testing, and its NDA.
Aspire recently conducted an in vivo single-dose bioavailability study in healthy human volunteers which ended in the third quarter of 2025. The final clinical trial report was received on September 5, 2025. This clinical trial evaluated pharmacokinetic endpoints including but not limited to maximum concentrations of aspirin and/or its metabolites in plasma (“Cmax”), time of maximum concentrations (“Tmax”), and area under the time curve concentrations (“AUC”) following sublingual dosing of two different pharmaceutical formulations of Aspire’s sublingual aspirin compared to standard oral aspirin. Pharmacodynamic effect on serum thromboxane B2 (TXB2, a market relating to platelet inhibition) was evaluated as a secondary endpoint. Data from this bioavailability study will be used to select the optimal pharmaceutical formulation of aspirin and to support filing of an NDA. This trial was exempt from Investigational New Drug (“IND”) filing requirements under 21 C.F.R. 320.31(d) because it is a human bioavailability trial of an FDA-approved active ingredient that is not a new chemical entity, a radioactively labeled drug product, or cytotoxic drug product, using a dose not exceeding the dose specified in the labeling of the approved drug product, conducted in compliance with the requirements for review by an Institutional Review Board (IRB), with reserve test article samples retained by the study sponsor. The results showed that Aspire’s product entered the bloodstream faster than conventional aspirin and had a more significant impact on TxB2 than conventional aspirin. Management believes that both results are very positive.
Following receipt and analysis of the clinical trial results, Aspire submitted a pre-IND written request to the FDA on October 31, 2025, to which the FDA responded positively on November 13, 2025, providing essential guidance for the proposed next clinical trial of approximately 32 healthy human volunteers to evaluate the pharmacodynamic effect of a single dose of Aspire’s high dose aspirin on platelet inhibition compared to that of standard oral aspirin. The proposed primary endpoint for additional trial would be time to TXB2 inhibition. Variability of TXB2 inhibition and pharmacokinetic parameters (Cmax, Tmax, AUC, etc.) for aspirin and/or its metabolites in plasma will be analyzed as secondary endpoints. If needed, the additional trial will be designed to demonstrate a shorter time to clinically meaningful pharmacodynamic effect (TXB2 inhibition) following administration of Aspire’s aspirin compared to standard oral aspirin (standard of care for treatment of suspected acute myocardial infarction). Aspire is hoping to conduct this next trial during the first six months of 2027. Following completion of this additional trial, Aspire would submit a section 505(b)(2) NDA for Aspire’s aspirin product to the FDA seeking approval to market the product for treatment of suspected acute myocardial infarction. Additional clinical trials focused on differentiating Aspire’s aspirin from standard oral aspirin based on TxB2 inhibition and gastrointestinal irritation, ulceration and bleeding during longer term use may be conducted to support subsequent 505(b)(2) NDAs and/or supplemental NDAs for our aspirin in other therapeutic indications focused on the antithrombotic and analgesic effects of aspirin.
Current Development Status of Other Products
Melatonin: Aspire’s scientists have developed a working formulation for a sublingually administered melatonin sleep-aid product, in 3mg, 5mg, and 10mg doses and has created a batch of product and completed limited testing. Aspire may, although is not required to, conduct a limited pharmacokinetic study using at least eight volunteers, comparing to orally administered melatonin products on the market, in order to support its claims and labeling. No FDA approval is required for melatonin, which is sold as a supplement. Melatonin is a popular sleep aid and Aspire has begun exploring licensing possibilities. The Company has filed for patent protection of its melatonin formulation in patent application 63/890,248 filed on 9/25/25 (part of the “Omnibus Patent”).
Vitamins: Aspire’s scientists have developed a working formulation for sublingually administered vitamins D, E and K. The Company has filed for patent protection of its vitamin products in the Omnibus Patent.
ED Medication: Aspire’s scientists are also developing a working formulation for a sublingual ED (erectile dysfunction) product. The timeline to market will be similar depending on the speed of formulation, availability of resources, market conditions and other factors. FDA approval would likely take at least 2-3 years as ED medication is not likely a candidate for fast-track/breakthrough therapy approval. The Company has filed for patent protection of its ED formulation in the Omnibus Patent.
Caffeine Products: Aspire has developed a working formula for a single-serving sublingual caffeine supplement using its patent-pending sublingual absorption technology. Aspire first manufactured initial runs of this supplement and conducted consumer and safety testing in the second quarter of 2025. Aspire entered into a manufacturing agreement with Desert Stream, Inc. (Nephi, UT), a nutrition and supplement manufacture with experience in caffeine products, through its wholly owned subsidiary Buzz Bomb Caffeine Company LC. Aspire and Desert Stream developed a half dozen flavors of the product. Aspire has registered several trademarks that it intends to use with these products and obtained domain names as well. The trademark for the wordmark “Buzz Bomb” was issued to Aspire by the USPTO in July 2026. Aspire unveiled its caffeine product at two large fitness conventions in the first week of August 2025 and began selling initial versions of its caffeine products on a limited basis in the third quarter of 2025. After that product was well-received, Aspire entered into a manufacturing contract with SupraNaturals (Springville, UT) to manufacture 2,000,000 units of its caffeine supplement which is marketed under the trademark “Buzz Bomb.” The new marketing and labeling of these 2,000,000 units began on January 15, 2026. The Company has subsequently placed more product orders and is selling Buzz Bomb products online (see buzzbombcaffeine.com), on Amazon, and at events all over the country.
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Other Products: Aspire’s scientists have created formulations for anti-nausea products (meclizine and ondansetron), alprazolam (generic Xanax), clopidogrel, and microdose nicotine, and are considering formulations for anti-psychotic products, seizure medication, and several other classes of drugs, all using our sublingual mode of administration. We anticipate taking several of these products to market as the research and development dictates, as well as market conditions and company funding. Aspire has filed patents protecting several of these products: nicotine (Omnibus Patent), alprazolam (patent application 63/957,370 filed 1/9/26), meclizine (patent application 63/971,320 filed 1/29/26), clopidogrel (patent application 63/957,361 filed 1/9/26), and ondansetron (patent application 63/970,377 filed on 1/28/26).
Competition
The biopharmaceutical industry is characterized by rapidly advancing technologies, intense competition and strong emphasis on proprietary products. While we believe that our sublingual absorption technology, knowledge, experience and scientific resources provide us with competitive advantages, we face potential competition from many sources, including major pharmaceutical, specialty pharmaceutical and biotechnology companies, academic institutions and government agencies and public and private research institutions. Any product candidates that we successfully develop and commercialize will compete with existing therapies and new therapies that may become available in the future.
Many of our competitors, either alone or with their strategic partners, have substantially greater financial, technical and human resources than we do and significantly greater experience in the discovery and development of product candidates, obtaining FDA and other regulatory approvals of treatments and commercializing those treatments. These same competitors may invent technology that competes with our product candidates. Mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated among a smaller number of our competitors. These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical study sites and subject registration for clinical studies, as well as in acquiring technologies complementary to, or necessary for, our programs. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.
We expect any products that we develop and commercialize to compete on the basis of, among other things, efficacy, safety, convenience of administration and delivery, price, the level of generic or biosimilar competition and the availability of adequate reimbursement from government and other third-party payors.
Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any products that we may develop. Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market. In addition, we expect that our products, if approved, will be priced at a premium over competitive generic products and our ability to compete may be affected in many cases by insurers or other third-party payors seeking to encourage the use of generic products.
We expect that Aspire’s aspirin products will compete with currently approved products, such as Bayer aspirin, Advil and Tylenol, and, if approved, other product candidates currently under development. To our knowledge, there are currently no sublingual aspirin products on the market and none listed inside of the Food and Drug Administration’s (the “FDA”) Approved Drug Products with Therapeutic Equivalence Evaluations book, also known as the “Orange Book.”
Intellectual Property
Our commercial success depends in part on our ability to obtain and maintain proprietary or intellectual property protection for our drug candidates, including our drugs and supplements using our patent-pending sublingual absorption technology, and other knowhow; to operate without infringing on the proprietary rights of others; and to prevent others from infringing our proprietary or intellectual property rights. Our practice is to seek to protect our proprietary and intellectual property position by, among other methods, filing U.S. and international patent applications related to our proprietary drug candidates, inventions and improvements that are important to the development and implementation of our business. We also rely on trade secrets, know-how and continuing technological innovation to develop and maintain our proprietary and intellectual property position.
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Any patents granted from national/regional phase applications of International Application No. PCT/US2024/022318 (which claims priority to U.S. Application No. 63/456,290) or applications claiming priority to International Application No. PCT/US2024/022318 will have a nominal expiration of March 29, 2044. The Company further intends to file a PCT application on October 1, 2025, claiming priority to U.S. Application No. 63/702,381. Any patents granted from national/regional phase applications of this PCT application or applications claiming priority to this PCT application will have a nominal expiration of October 1, 2045. The patent applications cover composition of matter (formulations), including product-by-process coverage, as well as uses of the formulations.
Provisional patent application Serial No. 62/794,141 expired on January 19, 2020. Prior to expiration of 62/794,141, two nonprovisional patent applications were filed under the Patent Cooperation Treaty (PCT), each claiming priority to 62/794,141. These PCT applications have PCT Application Nos. PCT/US2020/013863 and PCT/US2020/014218, respectively. National/regional phase entries of these PCT applications were due on July 18, 2021, or August 18, 2021, depending on the specific country/region. No national/regional phase entries were completed by the deadlines.
The expired patent properties do not describe Aspire’s aspirin formulation technology. Aspire’s aspirin formulation technology is covered by pending patent application nos. PCT/US2024/022318 and 63/702,381, which are Aspire’s primary patent properties. The expired patent properties were intended to supplement the later-filed primary patent properties covering Aspire’s aspirin formulation technology. At the time of its acquisition of assets, Aspire was not aware that the patent properties had expired. Aspire’s Omnibus Patent to extend its novel intellectual property rights to cover many other classes of drugs and supplements was filed in October 2025, as set forth above. In addition, Aspire has file the patents referred to above which it intends to file further patents as warranted.
Trademark Registration No. 4823125 (granted from Trademark Serial No. 86274378) was cancelled on April 8, 2022, for failure to file maintenance documents due on March 29, 2022. Aspire was not aware of the March 29, 2022, filing deadline at the time of the Asset Purchase Agreement, which was executed one day prior to the filing deadline. Aspire has filed new trademark application Serial No. 98793226, which covers the “Instaprin” mark.
The Company believes that it is important to note that while the previously acquired intellectual property is dead or expired, Aspire has used these technologies and relationships as the foundation of their new patent applications and formulations. Aspire’s management had always intended to build upon the acquired intellectual property assets and enhance the patent protections and apply the technology to new patented products and classes of products. Aspire has maintained the relationships with the individuals who cultivated the original science and research. Aspire has built upon these technologies, research, and relationships to improve and expand upon the previous intellectual property as reflected in their most recent patent applications.
The following table sets forth details of our intellectual property registrations and applications:
IP Schedule for Aspire Biopharma, Inc. as of June 30, 2026
| PATENT FILINGS | ||||||||
| Country | Substance | Application No. | Filing Date | Status | ||||
| United States | ORAL MUCOSAL FORMULATIONS OF ALPRAZOLAM | 63/957,370 | 9-Jan-26 | Pending | ||||
| World Intellectual Property Organization | LOWER DOSE ASPIRIN | 63/456,290 | 3-Mar-23 | Pending | ||||
| United States | HIGHER DOSE ASPIRIN | 63/702,381 | 2-Oct-24 | Pending | ||||
| United States | ORAL MUCOSAL FORMULATIONS OF CLOPIDOGREL | 63/957,361 | 9-Jan-26 | Pending | ||||
| United States | ORAL MUCOSAL FORMULATIONS OF MECLIZINE | 63,971,320 | 29-Jan-26 | Pending | ||||
| United States | ORAL MUCOSAL FORMULATIONS OF ONDANSETRON | 63/970,377 | 28-Jan-26 | Pending | ||||
| United States | VARDENAFIL (OMNIBUS) | 63/890,248 | 29-Sep-25 | Pending | ||||
| United States | CAFFEINE (OMNIBUS) | 63/890,248 | 29-Sep-25 | Pending | ||||
| United States | MELATONIN (OMNIBUS) | 63/890,248 | 29-Sep-25 | Pending | ||||
| United States | NICOTINE (OMNIBUS) | 63/890,248 | 29-Sep-25 | Pending | ||||
| United States | VITAMIN A (OMNIBUS) | 63/890,248 | 29-Sep-25 | Pending | ||||
| TRADEMARK FILINGS | ||||||||
| Country | Wordmark | Serial No. / Registration No. |
Filing or Registration Date | Status | ||||
| United States | BUZZ BOMB | 88447682 | 16-Oct-25 | Pending | ||||
| United States | BUZZ BOMB | 99146781 | 20-Apr-25 | Approved | ||||
| United States | BUZZ BOMB | 99287743 | 16-Jul-25 | Pending | ||||
| United States | CAFFEINE…ACCELERATED | 99287826 | 16-Jul-25 | Pending | ||||
| United States | WITHOUT THE CUP | 99287858 | 14-Oct-25 | Pending | ||||
We also hold numerous domains, including, but not limited to, aspire-biopharma.com, aspirebiolabs.com, and buzzbombcaffeine.com. Additionally, Aspire plans to enter into customer and license agreements to protect its intellectual property. All other intellectual property is in the form of trade secrets, business methods and know-how and is protected through intellectual assignment and confidentiality agreements with Aspire employees, advisors and consultants.
Recent Development
Recapitalization
On August 26, 2024, PowerUp Acquisition Corp. (‘PowerUp”) entered into an Agreement and Plan of Merger (as amended from time to time, the “Merger Agreement”) with PowerUp Merger Sub II, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”), the New Sponsor, Stephen Quesenberry, in the capacity as the seller representative, and Aspire Biopharma, Inc., a Puerto Rico corporation.
On the Closing Date, Merger Sub merged with and into Aspire Biopharma, Inc., with Aspire Biopharma, Inc. being the surviving company. After giving effect to the Reverse Recapitalization, Aspire Biopharma, Inc. became a wholly-owned subsidiary of New Aspire. In accordance with the terms and subject to the conditions of the Merger Agreement and the Proposed Charter, at Closing Date, the Aspire Biopharma, Inc. Stockholders collectively received, in the aggregate, a number of shares of duly authorized, validly issued, fully paid and nonassessable shares of New Aspire Common Stock with an aggregate value equal to (a) $350 million less (b) the amount by which Aspire Biopharma, Inc.’s cash at Closing is less than the Minimum Cash Condition (but only in the event the Minimum Cash Condition is waived by PowerUp), if any, less (c) Aspire’s Indebtedness at Closing.
To the satisfaction or waiver of the conditions of the Merger Agreement, PowerUp migrated out of the Cayman Islands and domesticated as a Delaware corporation. Also prior to the Closing Date, Aspire Biopharma, Inc. deregistered as a Puerto Rican entity and domesticated as a Delaware corporation (the “Aspire Domestication”) in accordance with Section 3746 of the Puerto Rico General Corporations Act (as amended) and Section 388 of the Delaware General Corporation Law. Pursuant to the Aspire Domestication, Aspire’s jurisdiction of incorporation was changed from Puerto Rico to the State of Delaware. In connection with the Aspire Domestication, all issued and outstanding shares of Aspire’s pre-domestication voting common stock, Series A preferred stock, and any unconverted warrants automatically converted, on a one-for-one basis, into shares of the post-domesticated entity’s common stock, Series A preferred stock, and warrants, respectively.
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In connection with the change of PowerUp’s jurisdiction of incorporation from the Cayman Islands to the State of Delaware ( the “PowerUp Domestication”), prior to the consummation of the Reverse Recapitalization (the” Closing Date”): (i) each issued and outstanding Class A ordinary share, par value $0.0001 per share (the “Class A common stock”), of PowerUp converted, on a one-forone basis, into a duly authorized, validly issued, fully paid and nonassessable share of common stock, par value $0.0001 per share, of New Aspire (the “New Aspire Common Stock”); and (ii) each issued and outstanding whole warrant to purchase Class A common stock of PowerUp automatically represented the right to purchase one share of New Aspire Common Stock, at an exercise price of $460 per share, after giving effect to the Reverse Split as described in Note 1. Description of Organization and Business, on the terms and conditions set forth in the Warrant Agreement, dated as of February 17, 2022, by and between PowerUp and Equiniti Trust Company, LLC (f/k/a American Stock Transfer & Trust Company), a New York limited purpose trust company, as warrant agent (in such capacity, the “Warrant Agent”, also referred to herein as the “Transfer Agent”) (the “Warrant Agreement”).
Immediately following the PowerUp Domestication, (i) the New Aspire Common Stock reclassified as common stock, par value $0.0001 per share (the “New Aspire Common Stock”); (ii) each issued and outstanding unit of PowerUp that has not been previously separated into the underlying Class A ordinary share and underlying one-half of one warrant upon the request of the holder thereof were cancelled and entitled the holder thereof to one share of New Aspire Common Stock and one-half of one public warrant, with a whole public warrant representing the right to acquire one share of New Aspire Common Stock at an exercise price of $460 per share, after giving effect to the Reverse Splits as described in Note 1. Description of Organization and Business, on the terms and conditions set forth in the Warrant Agreement; (iii) the governing documents of PowerUp were amended and restated and become the certificate of incorporation and the bylaws of New Aspire and (iv) the form of the certificate of incorporation and the bylaws were appropriately adjusted to give effect to any amendments contemplated by the form of certificate of incorporation or the bylaws that are not adopted and approved by the PowerUp shareholders, other than the amendments to the PowerUp governing documents that are contemplated by the Organizational Documents Proposal, which is a condition to the Closing of the Reverse Recapitalization. No fractional warrants were issued upon the separation of units and only whole warrants are traded.
Immediately prior to the effective time of the consummation of the Reverse Recapitalization, Aspire Biopharma, Inc. caused (i) each share of Aspire Biopharma, Inc. Preferred Stock that is issued and outstanding immediately prior to the effective time of the Reverse Recapitalization to be automatically converted into a number of shares of Aspire Common Stock at the then-effective conversion rate (the “Preferred Conversion”); All the shares of Aspire Preferred Stock converted into shares of Aspire Common Stock were no longer outstanding and ceased to exist, and each holder of Aspire Biopharma, Inc. Preferred Stock thereafter ceased to have any rights with respect to such Aspire Biopharma, Inc. Preferred Stock. Aspire Biopharma, Inc. caused each Aspire Biopharma, Inc. warrant to be terminated in exchange for shares of Aspire Common Stock in accordance with the respective warrant agreements associated with each such warrant.
On February 17, 2025 (the “Closing Date), the Reverse Recapitalization was consummated. In connection with the consummation of the Reverse Recapitalization PowerUp Acquisition Corp. changed its name to Aspire Biopharma Holdings, Inc.
On February 17, 2025, the Company entered into a Securities Purchase Agreement (“Securities Purchase Agreement”) with Cobra Alternative Capital Strategies, LLC, a sole member entity controlled by Aspire’s former Director of Investor Relations, Lance Friedman, which services were provided through a consulting agreement with Blackstone Capital Advisors, Inc. that was terminated effective February 17, 2025, and Target Capital X LLC (collectively, the “Investors”). Under the Securities Purchase Agreement, the Company issued two 20% original issue discount senior secured convertible debentures (“Debentures”) in an aggregate principal amount of $3,750,000, and may issue additional Debentures upon the mutual agreement of the Company and the holders of Debentures representing at least a majority of the aggregate principal and interest owed under the outstanding Debentures (“Requisite Holders”), under the Securities Purchase Agreement (the “Offering”). The conversion price per share of each Debenture is equal to 92.5% of the lowest daily VWAP (as defined in the Debentures) of the Company’s shares of common stock during the five trading day period ending on the trading day immediately prior to delivery or deemed delivery of the applicable Conversion Notice (as defined in the Debentures), subject to adjustments related to the trading price of the Company’s common stock provided that no conversion may be at a price per share less than the floor price of $4.00 per share (see Note 5. Convertible Notes).
In connection with the Reverse Recapitalization, on the Closing Date, certain officers, directors, and stockholders of Aspire Biopharma, Inc. each entered into a non-competition agreement and lock-up agreements with the Company.
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The Reverse Recapitalization was accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, PowerUp, who is the legal acquirer, was treated as the “acquired” company for financial reporting purposes and Aspire Biopharma, Inc. was treated as the accounting acquirer. Aspire Biopharma, Inc. has been determined to be the accounting acquirer based on evaluation of the following facts and circumstances under the redemption scenarios:
| ● | Aspire Biopharma Inc.’s existing stockholders will have more than 64.4% of the voting interest of New Aspire under both the no redemption and maximum redemption scenarios; | |
| ● | Aspire Biopharma Inc.’s senior management will comprise the senior management of New Aspire; | |
| ● | the directors nominated by Aspire will represent the majority of the board of directors of New Aspire; | |
| ● | Aspire Biopharma Inc.’s operations will comprise the ongoing operations of New Aspire; and | |
| ● | New Aspire will assume Aspire’s name. |
Accordingly, for accounting purposes, the Reverse Recapitalization was treated as the equivalent of a capital transaction in which Aspire is issuing stock for the net assets of PowerUp. The net assets of PowerUp will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Reverse Recapitalization will be those of Aspire Biopharma, Inc.
Equity line of credit Agreement
On November 11, 2025, the Company entered into a new Purchase Agreement (the “Second ELOC Agreement”) with Arena Business Solutions Global SPC II, Ltd. (“Arena”). Under the Second ELOC Agreement, the Company has the right, but not the obligation, to direct Arena to purchase up to $100,000,000 in shares of the Company’s common stock (the “ELOC Shares”) upon satisfaction of certain terms and conditions contained in the Second ELOC Agreement, including, without limitation, an effective registration statement filed with the SEC registering the resale of the ELOC Commitment Fee Shares (as defined below) and additional shares to be sold to Arena from time to time under the ELOC Agreement.
The term of the ELOC Agreement began on November 11, 2025 and ends on the earlier of (i) the first day of the month following the 36-month anniversary of the execution date, (ii) the date on which the Investor shall have purchased the maximum amount of ELOC Shares, or (iii) the effective date of any written notice of termination delivered pursuant to the terms of the ELOC Agreement (the “Commitment Period”). In consideration for the Arena’s execution and delivery of the ELOC Agreement, the Company is required to issue Common Shares to Arena equal to $250,000 divided by the lowest 1-Trading Day VWAP of the Common Shares of the five (5) Trading Days immediately preceding the effectiveness of the initial registration statement (the “Commitment Fee Shares”), plus $25,000 in Common shares for fees associated with the prior ELOC Agreement with the Company, based on a price equal to the lowest 1-Trading Day VWAP of the Common Shares of the five (5) Trading Days immediately preceding the date of execution and delivery of this Agreement.
No Common Shares have been issued to Arena under the Second ELOC Agreement after the balance sheet date through the date that the financial statements were issued. Second ELOC Agreement replaces the ELOC Agreement (see Note 6. Commitment and Contingencies).
Securities Purchase Agreement
On February 17, 2025, the Company entered into a Securities Purchase Agreement (“Securities Purchase Agreement”) with Cobra Alternative Capital Strategies, LLC (“Cobra”), a sole member entity controlled by Aspire’s former Director of Investor Relations, Lance Friedman, which services were provided through a consulting agreement with Blackstone Capital Advisors, Inc. (a firm that Mr. Friedman controls) that was terminated effective February 17, 2025, and Target Capital X LLC (collectively, the “Investors”). Under the Securities Purchase Agreement, the Company issued two 20% original issue discount senior secured convertible debentures (“Debentures”) in an aggregate principal amount of $3,750,000 and may issue additional Debentures upon the mutual agreement of the Company and the holders of Debentures representing at least a majority of the aggregate principal and interest owed under the outstanding Debentures (“Requisite Holders”), under the Securities Purchase Agreement (the “Offering”). The conversion price per share of each Debenture is equal to 92.5% of the lowest daily VWAP (as defined in the Debentures) of the Company’s shares of common stock during the five trading day period ending on the trading day immediately prior to delivery or deemed delivery of the applicable Conversion Notice (as defined in the Debentures), subject to adjustments related to the trading price of the Company’s common stock provided that no conversion may be at a price per share less than the floor price of $4.00 per share.
The closing was consummated on February 20, 2025 (the “SPA Closing”) and the Company issued to the Investors Debentures in an aggregate principal amount of $3,750,000 (the “Closing Debentures”). The Closing Debentures were sold to the Investors for a purchase price of $3,000,000, representing an original issue discount of twenty percent (20%). The Company may issue additional Debentures under the terms of the Securities Purchase Agreement if the Requisite Holders agree. Any such additional closings would be in such amounts as the Company and the Requisite Holders mutually agree upon and would be subject to substantially the same closing conditions as the Closing Debentures.
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As consideration for the Investors’ consummation of the SPA Closing, concurrently with the SPA Closing, each Investor received a pro rata portion of 1,755 shares of common stock after giving effects to the Reverse Splits (see Note 1. Description of Organization and Business), of which 25,000 were freely tradable, subject to a leak out agreement (the “Leak Out Agreement”) whereby each Investor’s sales may not exceed 15% of the daily trading volume of the common stock on the date of sale.
Convertible Notes
On August 19, 2025, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with certain investors (the “Purchasers”), pursuant to which the Company sold to the Purchasers certain notes in an aggregate principal amount of $9,687,500 for a subscription price of $7,750,000 (the “August 2025 Notes”) with a maturity date of February 19, 2026. The Notes have a 20% original issue discount which is included in the aggregate principal amount of $9,687,500 and do not bear an interest rate. Of the $7,750,000 total funding under the Securities Purchase Agreement, $4,500,000 was funded on August 19, 2025 (the “first Tranche”), $1,000,000 was funded on September 22, 2025 (the “Second Tranche”), and the balance of $2,250,000 (the “Third Tranche”) was funded on September 30, 2025. The Notes are convertible into up to an aggregate of 122,647 Common Stock (the “Conversion Shares”) after giving effects to the Reverse Splits (see Note 1. Description of Organization and Business), subject to certain conditions. The Company incurred debt issuance costs of $907,500 which is capitalized and amortized over the term on the Notes.
The Notes are convertible (in whole or in part) at any time on or after the thirty-first (31st) day following the Issuance Date into such number of shares of Common Stock as shall be determined by dividing (x) that portion identified by the Purchaser of (A) the outstanding principal amount, plus (B) accrued and unpaid interest with respect to such outstanding principal amount of such Purchaser’s Note and any other amounts owing under such Note or other Transaction Documents (the as that term is defined in the Notes) by (y) the conversion price then in effect on the date on which the Purchaser delivers a notice of conversion. The conversion price means the greater of (i) eighty (80%) percent of the lowest Closing Price on any Trading Day during the five (5) Trading Days prior to the applicable conversion date or (ii) the floor price (the “Floor Price”). The Floor Price means 20% of the average closing price of our Common Stock for the five days prior to the Closing Date.
The Notes may not be converted and shares of Common Stock may not be issued under Notes if, after giving effect to the conversion or issuance, such Purchaser (together with its affiliates, if any) would beneficially own in excess of 4.99% of our outstanding shares of our Common Stock, which we refer to herein as the “Note Blocker”. The Note Blocker may be raised or lowered to any other percentage not in excess of 9.99% at the option of the applicable Purchaser of Notes, except that any raise will only be effective upon 61-days’ prior notice to us.
In connection with the Purchase Agreement, the Company entered into a registration rights agreement, dated as of August 19, 2025 (the “Registration Rights Agreement”), pursuant to which the Company agreed to file the initial resale registration statement by no later than September 18, 2025, to register the resale of the Common Stock underlying the Notes. The resale registration statement became effective on September 30, 2025.
Conversion of Notes
In October 2025 and November 2025, a total value of $9,523,683 of convertible notes were converted into 73,998 shares of common stock of the Company after giving effects to the Reverse Splits (see Note 1. Description of Organization and Business).
In January 2026, a total value of $163,817 of convertible notes were converted into 1,630 shares of common stock of the Company after giving effects to the Second Reverse Split (see Note 1. Description of Organization and Business).
Nasdaq Notices
On April 16, 2025, the Company received two letters from The Nasdaq Stock Market LLC (“Nasdaq”), each addressing a separate compliance deficiency under the Nasdaq Listing Rules. The first letter notified of the deficiency with regard to Rule 5450(b)(2)(A) (the “MVLS Notice”), which requires a company, whose securities are listed on The Nasdaq Global Market under the “Market Value Standard,” to maintain a minimum Market Value of Listed Securities of “MVLS”) of $50,000,000. The deficiency was caused by the Company’s MVLS having been below the minimum level for the prior 30 consecutive business days. Under Nasdaq Listing Rule 5810(c)(3)(C), the Company was entitled to a 180-day grace period, which ended on October 13, 2025, to rectify the deficiency. In order to do so, the Company was required to achieve and maintain an MVLS of at least $50,000,000 for a minimum of 10 consecutive business days (Nasdaq may monitor the MVLS compliance for up to 10 consecutive business days).
The second letter notified of the deficiency with regard to Rule 5450(a)(1) (the “Bid Price Notice” together with the MVLS Notice, the “Notices”), which requires the Company to maintain a minimum bid price of $1.00 per share (the “Bid Price Rule”) for continued listing on The Nasdaq Global Market.
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The Company did not regain compliance with the MVLS Rule or the Bid Price Rule within the relevant compliance periods. Accordingly, on October 15, 2025, (the “October Letter”) the Staff notified the Company that its securities were subject to delisting from Nasdaq unless the Company timely requested a hearing before the Nasdaq Hearings Panel (the “Panel”). Both items of noncompliance serve as an independent basis for delisting the Company’s securities from Nasdaq.
The Company retained an advisor and requested a hearing before the Panel and held the hearing. At the hearing, the Company was granted until February 17, 2026, to regain compliance with the two deficiencies. On February 3, 2026, the Company was notified that it had regained compliance with the Bid Price Rule. As a result of the Preferred Stock Offering, the Company believes that it exceeds the $2,500,000 stockholders’ equity rule and is waiting for confirmation that it meets the stockholders’ equity rule.
On February 18, 2026, the Company was notified that it has regained compliance with Listing Rule 5450(b)(2)(A), the “MVLS Rule,” and is in full compliance with the terms set forth in the Panel’s (“Panel”) decision dated December 11, 2025.
Default Notices and Settlement Agreement
On April 1, 2025, the Company received two default notices, first citing failure to timely file the Company’s Form 10-K by March 31, 2025 and for late filing of the Form S-1, as required by Blackstone Subscription Agreement discussed in Note 5. Convertible Notes, and second citing a cross default to the Securities Purchase Agreement (“Securities Purchase Agreement”) with Cobra Alternative Capital Strategies, LLC as described in Note 7. Securities Purchase Agreements, both entities controlled by the Company’s former Director of Investor Relations, Lance Friedman, which services were provided through a consulting agreement with Blackstone Capital Advisors, Inc. that was terminated effective February 17, 2025. The Company maintains that it was not in default at any time since the Company filed Form NT 10-K and the required filings were made within the automatic extension period.
On April 24, 2025, the Company entered into a settlement agreement (the “Settlement Agreement”) with Cobra Alternative Capital Strategies LLC, Blackstone Capital Advisors, Inc., and their affiliates (collectively, the “Lenders”) to resolve all matters related to previously issued notices of default and to amend certain outstanding loan agreements. Pursuant to the Agreement, the Lenders withdrew and cancelled all prior notices of default and acceleration previously delivered to the Company on April 1, 2025. Any alleged previous defaults under the Company’s loan agreements were deemed cured, and all previous accelerations of payment were rendered null and void. The Company maintains that it was not in default at any time. Additionally, the Agreement provides for an extension of the maturity dates of key promissory notes to seventy-five (75) days, extending the earliest maturity date to August 15, 2025, and amending additional notes to extend their maturity dates to September 10, 2025.
In connection with the Agreement, the Company agreed to issue $21 shares of common stock after giving effect to the Reverse Splits as described in Note 1. Description of Organization and Business to Blackstone Capital Advisors, Inc. and to register those shares, along with certain other restricted securities, through the filing of a registration statement on Form S-1 no later than May 13, 2025. The Company also agreed to remove lock-up restrictions on certain shares held by Cobra Alternative Capital Strategies LLC, Blackstone Capital Advisors, Inc., and Thor Special Situations LLC, enabling such shares to be made eligible for transfer to the Direct Registration System. The Lenders also agreed to enter into lock-up/leak-out agreements governing the sale of Company shares through August 20, 2025, with sale limitations tied to the Company’s daily trading volume, as detailed in the Agreement.
Board Changes
On January 7, 2026, Surendra Ajjarapu, a Director of the Company, notified the board of directors of his intention to step down from the role of Director, effective immediately. Mr. Ajjarapu’s decision to resign is not due to any disagreement with the Company, the Board of Directors, or any member of the Company’s management.
On February 6, 2026, Donald G. Fell resigned from the Company’s board of directors. Mr. Fell’s decision to resign is not due to any disagreement with the Company, the Board of Directors, or any member of the Company’s management.
In connection with this transition, Philip Balatsos has been appointed to fill one of the vacancies on the Board of Directors left by the aforementioned resignations. Philip Balatsos is a Senior financial markets executive with experience in foreign exchange and emerging market sales and trading. He has a proven track record of driving revenue growth, expanding institutional client relationships, and building businesses across global markets. His experience spans bulge-bracket banks, international financial institutions, entrepreneurial ventures, and public company boards. He presently holds a senior position at Oscar Gruss & Son Inc. in foreign exchange sales and trading. He previously served as vice president of foreign exchange and emerging markets rates sales and trading at XP Investments US LLC and was the director of foreign exchange hedge fund sales at Barclays Capital. He currently serves on the Board of Directors of Ciso Global, Inc. and Inspire Veterinary Partners, Inc. (OTCMKTS: IVPR) and served on the Board of Directors of Sadot Group Inc. from October 2019 through December 2023. He earned his Bachelor of Science in business administration from Skidmore College.
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Exchange Agreements
On January 1, 2026, the Company entered into Exchange Agreements (the “Exchange Agreements”) with certain holders of the Company’s debt (the “Holders”) to exchange approximately $1.75 million in debt for shares (the “Exchange Shares”) of the Company’s common stock (the “Exchanges”) (see Note 5. Convertible Notes). The debt was incurred by the Company’s predecessor, PowerUp Acquisition Corp. (“PowerUp”) pursuant to subscription agreements dated March 4, 2024, and May 9, 2024. The Holders were Sponsors of PowerUp’s initial public offering.
Pursuant to the Exchange Agreements, the Holders may, in their discretion, submit a notice of exchange setting forth the Exchange Amount, the Exchange Shares, and the applicable Exchange Price (as those terms are defined in the Exchange Agreements). Within one business day of receipt of an Exchange Notice, the Company will issue to such holder the number of Exchange Shares equal to the Exchange Amount divided by the Exchange Price, and such Exchange Amount shall be deducted from the Outstanding Balance (as that term is defined in the Exchange Agreements) owed to such Holder. The Exchange Price is equal to the closing price of the Company’s Common Stock on the Trading Day immediately prior to any Exchange Notice less one cent ($0.01) which shall be deemed an administrative fee to cover the costs of depositing the Exchange Shares. Each Holder may submit up to four (4) Exchange Notices, but each Exchange Notice may not exchange more than thirty percent (30%) of the applicable Holder’s Outstanding Balance. Each Holder must submit all Exchange Notices it determines to submit pursuant to the terms of the Exchange Agreements by no later than January 31, 2026, subject to certain reasonable exceptions. The Exchange Shares shall be delivered to the Holders as freely tradeable, free and clear of any transfer restrictions, and without any restrictive legends.
In addition, upon a financing in excess of $3,000,000 (a “Financing”), the Company may repay part or all of any Holder’s Outstanding Balance. Upon a Financing, a Holder may elect to receive cash proceeds from any Financing in an amount equal to twenty five percent (25%) of such Holder’s Outstanding Balance, to be applied to such Holder’s Outstanding Balance. If a Holder elects to require any part of its Outstanding Balance to be repaid from the proceeds of a Financing, it can elect to receive up to 33.33% of the aggregate proceeds of such Financing.
In January 2026, pursuant to the Exchange Agreements, the Subscription Agreement Loan balances along with applicable interest were converted into 13,121 shares of common stock of the Company after giving effects to the Reverse Splits (see Note 1. Description of Organization and Business).
Reverse Stock Splits
On January 16, 2026, the Company effected a 1-for-40 reverse stock split. The authorized shares and par value per share of common stock were unchanged by the reverse stock split.
On May 11, 2026, the Company effected a 1-for-30 reverse stock split. The authorized shares and par value per share of common stock were unchanged by the reverse stock split.
January 2026 Securities Purchase Agreement
On January 26, 2026, Aspire Biopharma Holdings, Inc. (the “Company”), entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with certain investors (the “Purchasers”), pursuant to which the Company sold to the Purchasers certain debentures in an aggregate principal amount of $2,173,913 for a subscription price of $2,000,000 (the “Debentures”) with a maturity date of April 23, 2026. The Notes have an 8% original issue discount and do not bear any annual interest. The Debentures are due the sooner of (i) 90 days, or (ii) upon the Company’s receipt of gross proceeds of at least $8,000,000 in any equity or debt financing. The Company shall have the option to prepay this Debenture(s) at any time after the Original Issue Date at an amount equal to the Principal Amount. The Company shall provide Holder(s) with ten (10) Business Days’ prior written notice of intention to satisfy the Debentures, whether at maturity, by prepayment, or in default. The Debentures are not convertible into common stock. In connection with the financing the Purchasers received an aggregate of 790,000 Shares of the Company’s common stock as incentive shares.
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Series A Convertible Preferred Stock
Pursuant to the terms of the Securities Purchase Agreement, on February 2, 2026, the Company filed the Certificate of Designation with the Delaware Secretary of State designating 30,000 shares of its authorized and unissued preferred stock as Series A Convertible Preferred Stock. The Certificate of Designation sets forth the rights, preferences and limitations of the shares of Preferred Stock. Terms not otherwise defined in this item shall have the meanings given in the Certificate of Designation.
The following is a summary of the terms of the Preferred Stock:
Conversion. Pursuant to the Certificate of Designation, which is filed as Exhibit 3.1 to this Current Report on Form 8-K (the “Certificate of Designation”), each share of Preferred Stock, subject to the Stockholder Approval (as defined in the Certificate of Designation), is convertible at the option of the holder into shares of Common Stock at a conversion price equal to 80% of the lowest closing price of our Common Stock as of the closing of the Principal Market (as such term is defined in the Certificate of Designation)for each of the five (5) Trading Days (as such term is defined in the Certificate of Designation)immediately prior to the date of conversion, or other date of determination (but in no event less than the floor price), subject to certain adjustments as set forth in the Certificate of Designation (the “Conversion Price”). The floor price is equal to 20% of the Minimum Price (as such term is defined by the rules and regulations of The Nasdaq Stock Market LLC, Rule 5635(d)(1)(A)) (or such lower amount as permitted, from time to time, by the Principal Market (the “Floor Price”). The number of shares of Common Stock issuable upon conversion of a share of Preferred Stock shall be determined by dividing (x) the stated value of the Preferred Stock to be converted by (y) the Conversion Price.
The shares of Preferred Stock will be convertible immediately upon issuance, at the option of the holder, at the Conversion Price, subject to a conversion cap that limits the conversion of the Preferred Stock such that an Investor may not beneficially own more than 4.99% (the “Maximum Percentage”) of the shares of Common Stock that would be issued and outstanding following such conversion (the “Maximum Percentage”). An Investor may decrease or increase the Maximum Percentage by written notice to the Company from time to time to any other percentage not in excess of 9.99%, provided that any increase in the Maximum Percentage will not be effective until the sixty-first (61st) day after such notice is delivered to the Company, provided further that a holder shall not convert any Preferred Stock to the extent that, after giving effect to such conversion, the aggregate number of shares of Common Stock issued or issuable upon conversion of the Preferred Stock would exceed 19.99% of the issued and outstanding shares of the Company’s Common Stock unless and until the Company has obtained the shareholder approval required by Nasdaq Listing Rule 5635(d).
Ranking. The Series A shall rank (i) senior to all of the Common Stock; (ii) senior to any class or series of capital stock of the Corporation hereafter created specifically ranking by its terms junior to any Series A (“Junior Securities”); (iii) on parity with any class or series of capital stock of the Corporation created specifically ranking by its terms on parity with the Preferred Stock (“Parity Securities”); and (iv) junior to any class or series of capital stock of the Corporation hereafter created specifically ranking by its terms senior to any Series A (“Senior Securities”), in each case, as to dividends or distributions of assets upon liquidation, dissolution, winding up of the Corporation, whether voluntarily or involuntarily. Subject to any superior liquidation rights of the holders of any Senior Securities of the Corporation and the rights of the Corporation’s existing and future creditors, upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary (a “Liquidation”), each Holder shall be entitled to be paid out of the assets of the Corporation legally available for distribution to stockholders, prior and in preference to any distribution of any of the assets or surplus funds of the Corporation to the holders of the Common Stock and Junior Securities and pari passu with any distribution to the holders of Parity Securities, an amount equal to the Stated Value for each share of Series A held by such Holder and an amount equal to any accrued and unpaid dividends thereon, and thereafter the Holders shall be entitled to receive out of the assets, whether capital or surplus, of the Corporation the same amount that a holder of Common Stock would receive if the Series A were fully converted (disregarding for such purposes any conversion limitations hereunder) to Common Stock which amounts shall be paid pari passu with all holders of Common Stock. The Corporation shall mail written notice of any such Liquidation, not less than sixty (60) days prior to the payment date stated therein, to each Holder.
Price Protection. Except for any Exempt Issuance, in the event the Corporation issues or sells any securities including Options or Convertible Securities (or amends any outstanding securities of the Company), at an effective price of, or with an exercise or conversion price of less than the Conversion Price, then upon such issuance or sale, the Conversion Price shall be reduced to the lesser of (i) the Floor Price; or (ii) the sale price or the exercise or conversion price of the securities issued or sold. In case any shares of Common Stock, Convertible Securities or Options are issued in connection with the issue or sale of other securities of the Company, together comprising one integrated transaction, each share of Common Stock underlying any such Convertible Securities or Options shall be deemed to be one additional share of Common Stock for the purposes of determining the effective price of the non-Exempt Issuance.
Participation Rights. Subject to certain terms and conditions in the Certificate of Designation, until the six (6) month anniversary of the issuance of the Series A to the Holder, upon any Subsequent Financing, the Holders of the outstanding Series A shall have the right to participate in an amount equal to an aggregate of 30% of the Subsequent Financing on the same terms, conditions and price provided for in the Subsequent Financing.
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February 2026 Securities Purchase Agreement
On February 6, 2026, Aspire Biopharma Holdings, Inc. (the “Company”) entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain accredited investors (the “Investors”), pursuant to which the Company agreed to issue and sell, in a private placement (the “Offering”), up to 25,000 shares (the “Shares”) of the Company’s newly-designated Series A Convertible Preferred Stock, par value $0.0001 per share (the “Preferred Stock”), which Preferred Stock is convertible into shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) as more fully described in the Certificate of Designations, Preferences and Rights of the Series A Convertible Preferred Stock (the “Certificate of Designation”).
Pursuant to the Certificate of Designation on February 6, 2026, subject to Stockholder Approval (as defined below), each share of Preferred Stock is convertible at the option of the holder into shares of Common Stock at a conversion price equal to 80% of the lowest closing price of our Common Stock as of the closing of the Principal Market (as such term is defined in the Certificate of Designation) for each of the five (5) Trading Days (as such term is defined in the Certificate of Designation) immediately prior to the date of conversion, or other date of determination (but in no event less than the floor price), subject to certain adjustments as set forth in the Certificate of Designation (the “Conversion Price”).The floor price is equal to 20% of the Minimum Price (as such term is defined by the rules and regulations of The Nasdaq Stock Market LLC under Nasdaq Listing Rule 5635(d)(1)(A)) or such lower amount as permitted, from time to time, by the Principal Market (the “Floor Price”). The number of shares of Common Stock issuable upon conversion of a share of Preferred Stock shall be determined by dividing (x) the stated value of the Preferred Stock to be converted by (y) the Conversion Price.
The shares of Preferred Stock will be convertible immediately upon issuance, at the option of the holder, at the Conversion Price, subject to a conversion cap that limits the conversion of the Preferred Stock such that an Investor may not beneficially own more than 4.99% of the shares of Common Stock that would be issued and outstanding following such conversion (the “Maximum Percentage”). An Investor may decrease or increase the Maximum Percentage by written notice to the Company from time to time to any other percentage not in excess of 9.99%, provided that any increase in the Maximum Percentage will not be effective until the sixty-first (61st) day after such notice is delivered to the Company, provided further that a holder shall not convert any Preferred Stock to the extent that, after giving effect to such conversion, the aggregate number of shares of Common Stock issued or issuable upon conversion of the Preferred Stock would exceed 19.99% of the issued and outstanding shares of the Company’s Common Stock unless and until the Company has obtained the shareholder approval required by Nasdaq Listing Rule 5635(d) (“Shareholder Approval”).
Pursuant to the Securities Purchase Agreement, the Company closed on an aggregate of 13,750 Shares resulting in gross proceeds of $11,000,000 including the conversion of $943,801 in existing debt into Shares on the same terms, before deducting fees to be paid to the placement agents and financial advisors of the Company and other estimated offering expenses payable by the Company.
RBW Capital Partners, LLC acted as placement agent for the Offering. As compensation in connection with the Offering, the Company paid the placement agent a placement agent fee equal to $900,000.
The initial closing of the issuance of Preferred Stock occurred on February 6, 2026 (the “Initial Closing”). At the Initial Closing, the Company issued 13,750 Shares of Preferred Stock for aggregate gross proceeds of $11,000,000, which included $943,801 of debt that converted into Preferred Shares on the same terms. Subject to the satisfaction or waiver of certain conditions set forth in the Purchase Agreement, a second closing may take place, pursuant to which the Company may issue up to 12,500 additional Shares of Preferred Stock for aggregate proceeds not to exceed $10,000,000 (the “Second Closing”). The Second Closing is contingent on the effectiveness of the registration statement to register the shares of Common Stock issuable upon conversion of the Shares and receipt of Shareholder Approval.
In connection with the Offering, the Company filed a proxy statement with the United States Securities and Exchange Commission (the “Commission”) seeking the approval of its stockholders for (i) the transactions contemplated by the Securities Purchase Agreement, (ii) the issuance of the Preferred Stock and the Common Stock issuable upon the conversion of the Preferred Stock, (iii) a reverse stock split of the Company’s Common Stock at a range of one for five (1-for-5) to a maximum of one for five hundred (1-for-500) shares, whether effected in a single transaction or in multiple transactions, and all related amendments to the Company’s certificate of incorporation, and (iv) an amendment to the Company’s certificate of incorporation to effect an increase in the Company’s authorized shares to the extent required to issue the securities. Pursuant to the Securities Purchase Agreement, the Company was required to file a proxy statement within ten (10) business days after the initial closing.
In addition, the Company and each Investor entered into a registration rights agreement (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, within fifteen (15) days following the Initial Closing, the Company shall file a resale registration statement on Form S-1 (or Form S-3 if the Company is S-3 eligible) providing for the resale by the Investors of the Registrable Securities (as defined in the Registration Rights Agreement) and to use its best efforts to cause such resale registration statement to be declared effective by the staff of the Commission within forty five (45) days following the Initial Closing, or within sixty five (65) days in the event of a review by the Commission.
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Pursuant to the Securities Purchase Agreement, the Investors have the right to appoint one (1) director to our Board of Directors. The Securities Purchase Agreement and Registration Rights Agreement contain certain representations and warranties, covenants and indemnities customary for similar transactions. The representations, warranties and covenants contained in the Securities Purchase Agreement and Registration Rights Agreement were made solely for the benefit of the parties to the Securities Purchase Agreement and Registration Rights Agreement and may be subject to limitations agreed upon by the contracting parties.
Amendments to Articles of Incorporation or Bylaws: Change in Fiscal Year
On April 13, 2026, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment to the Certificate of Designation of Series A Convertible Preferred Stock to amend the Company’s previously filed Certificate of Designation of Series A Convertible Preferred Stock, which was originally filed on February 2, 2026. Pursuant to the Certificate of Amendment, the Company amended certain provisions of the Certificate of Designation, including clarifying and restating provisions relating to the designation and number of shares of Series A Convertible Preferred Stock. As amended, the Company has designated 30,000 shares of Series A Convertible Preferred Stock, each with a par value of $0.0001 and a stated value of $1,000 per share.
On April 13, 2026, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment to the Certificate of Designation of Series A Convertible Preferred Stock to amend the Company’s previously filed Certificate of Designation of Series A Convertible Preferred Stock, which was originally filed on February 2, 2026 in order to clarify and restate provisions relating to the designation and number of shares of Series A Convertible Preferred Stock. As amended, the Company has designated 30,000 shares of Series A Convertible Preferred Stock, each with a par value of $0.0001 and a stated value of $1,000 per share.
On May 11, 2026, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment to the Company’s Certificate of Incorporation to effect a 1-for-30 reverse stock split of the Company’s issued and outstanding common stock.
Purchase Agreement
On June 10, 2026, the Company entered into a purchase agreement (the “Purchase Agreement”) with FireFish TopCo, LLC (the “Seller”, and, collectively with its Subsidiaries listed in the Purchase Agreement, “Sellers”), pursuant to which (i) the Seller agreed to sell, and cause the applicable Sellers to sell, and the Company agreed to purchase or cause certain of its Affiliates to purchase, all of the equity interests in certain of Seller’s subsidiaries listed in the Purchase Agreement (the aforementioned equity interests, collectively, the ‘Transferred Equity Interests”, and such subsidiaries, “Transferred Entities”), free and clear of all Liens, other than the Permitted Liens and in accordance with the applicable Local Transfer Documents and (ii) the Seller agreed to sell, and cause the applicable Sellers to sell, and the Company agreed to purchase, or cause certain of its affiliates to purchase, all of the assets of the other Business Entities as defined as Transferred Entities, DUS Operating Inc. with respect to the U.S. Enterprise and Automotive Czech with respect to the KOP Enterprise constituting the balance of the Business defined as the business of designing, manufacturing, marketing and selling automotive systems that facilitate electronic driver control and the migration toward vehicle electrification, safety, light weighting and sustainability, as conducted by the Transferred Entities on June 10,2026, and in respect to (a) Automotive Czech, the business conducted by the KOP Enterprise and (b) DUS Operating Inc., the business conducted by the U.S. Enterprise.
Purchase Price and Consideration: As consideration for such purchase, the Company agreed to pay the Seller (or one or more of its designated other Sellers or Affiliates) at least two (2) Business Days prior to the date of Closing (“Closing Date”) an amount equal to: (i) $30,000,000 (the “Purchase Price”) plus (ii) $800,000 in respect of deferred revenue of the Business Entities (such $800,000 representing an agreed upon fixed credit for the deferred revenue, regardless of the actual amount of the deferred revenue), minus (iii) any Income Tax obligations of the Transferred Entities net of any Income Tax receivables, minus (iv) Indebtedness of the Transferred Entities as of the closing (such final amount, the “Closing Purchase Price”). The Purchase Price will be allocated among the Transferred Entities and/or business units listed in the Purchase Agreement. To the extent relevant under applicable Tax Law, the Purchase Price associated with each Transferred Entity and/or business unit will be further allocated among the assets of such Transferred Entities in a manner consistent with Section 1060 of the Internal Revenue Code.
On August 6, 2026, the Company entered into an Escrow and Closing Agreement pursuant to which the parties acknowledged and agreed that all conditions to the closing of the transactions per the Purchase Agreement had been satisfied. (see Note 11. Subsequent Events)
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Commitment Letter for Credit Facility
The Company entered into a commitment letter with a national financial institution providing for a senior secured credit facility of Aspire in an aggregate principal amount of up $22,500,000 (the “Aspire Credit Facility”). Aspire intends to use the proceeds of the Aspire Credit Facility, if consummated, to finance the acquisition of 100% of DCS. The Company does not anticipate procuring any new equity raise to consummate the purchase.
The Aspire Credit Facility is expected to consist of a senior secured five-year term loan, at an interest rate equal to 325 basis points above the one-month term Secured Overnight Financing Rate. The final terms of the Aspire Credit Facility, including the senior secured term loan, will be subject to execution of definitive credit documentation and the satisfaction of customary closing conditions.
Key Financial Definitions/Components of Results
Revenue
The Company began earning revenue in the fourth quarter of 2025 from the sale of its nutraceutical products.
Operating Expenses
We classify our operating expenses into the following categories:
| ● | General and administrative expenses. General and administrative expenses consist primarily of personnel-related expenses for our executives, consultants and advisors. These expenses also include non-personnel costs, such as rent, office supplies, legal, audit and accounting services and other professional fees. | |
| ● | Research and development expenses. Research and development expenses include internal personnel and third-party consulting costs related to preliminary research and development of the Company’s products. | |
| ● | Merger and acquisition expenses. Merger and acquisition expenses include costs directly related to business acquisitions. | |
| ● | Sales and marketing expenses. Sales and marketing expenses consist primarily of business development professional fees, advertising and marketing costs. |
Critical Accounting Estimates
Management’s discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which are prepared in conformity with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make certain estimates, judgments, and assumptions that we believe are reasonable based upon the information available. These estimates and assumptions can be subjective and complex and may affect the reported amounts of assets and liabilities, revenues, and expenses reported in those financial statements. As a result, actual results could differ from such estimates and assumptions. Such changes to estimates could potentially result in impacts that would be material to the consolidated financial statements.
While our significant accounting policies are described in (Note 2. Significant Accounting Policies) to our unaudited condensed consolidated financial statements appearing in Item 1 to this Quarterly Report on Form 10-Q, we believe that the following accounting policies were most critical to the judgments and estimates used in the preparation of our unaudited condensed consolidated financial statements.
Use of Estimates
The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements. Making estimates requires management to exercise significant judgment. Such estimates may be subject to change as more current information becomes available and accordingly the actual results could differ significantly from those significant estimates. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited condensed consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Significant accounting estimates included in these financial statements are the determination of the fair value of the subscription agreements, convertible notes and the securities purchase agreement liability. Such estimates may be subject to change as more current information becomes available and accordingly, the actual results could differ significantly from those estimates.
Segment Information
ASC 280, Segment Reporting (“ASC 280”), defines operating segments as components of an enterprise where discrete financial information is available that is evaluated regularly by the chief operating decision-maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company’s CODM is the Chief Executive Officer, who has ultimate responsibility for the operating performance of the Company and the allocation of resources. The CODM reviews the assets, operating results, and financial metrics for the Company as a whole to make decisions about allocating resources and assessing financial performance. Accordingly, management has determined that there is only one reportable segment. The CODM assesses performance for the single reportable segment and decides how to allocate resources based on operating expenses that also is reported on the statements of operations as net income. The measure of segment assets is reported on the consolidated balance sheet as total assets. When evaluating the Company’s performance and making key decisions regarding resource allocation, the CODM reviews several key metrics included in operating expenses and cash and cash equivalents.
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Gross margin, operating expenses, inclusive of general and administrative costs, research and development costs and sales and marketing costs, other expenses, net and income tax expense, are reviewed and monitored by the CODM to manage and forecast cash to ensure enough capital is available to fund operations. The CODM also reviews operating expenses to manage, maintain and enforce all contractual agreements to ensure costs are aligned with all agreements. The categories of operating expenses, as reported on the unaudited condensed consolidated statements of operations, are the significant segment expenses provided to the CODM on a regular basis.
Share-Based Compensation
The Company accounts for share-based compensation arrangements granted to employees and vendors in accordance with ASC 718 by measuring the grant date fair value of the award and recognizing the resulting expense over the period during which the employee is required to perform service in exchange for the award. Equity-based compensation expense is only recognized for awards subject to performance conditions if it is probable that the performance condition will be achieved. The Company accounts for forfeitures when they occur.
Warrants
The Company reviews the terms of warrants to purchase its common stock to determine whether warrants should be classified as liabilities or stockholders’ equity (deficit) in its unaudited condensed consolidated balance sheets. In order for a warrant to be classified in stockholders’ equity (deficit), the warrant must be (i) indexed to the Company’s equity and (ii) meet the conditions for equity classification.
If a warrant does not meet the conditions for stockholders’ equity (deficit) classification, it is carried on the unaudited condensed consolidated balance sheets as a warrant liability measured at fair value, with subsequent changes in the fair value of the warrant recorded in other nonoperating losses (gains) in the unaudited condensed consolidated statements of operations. If a warrant meets both conditions for equity classification, the warrant is initially recorded, at its relative fair value on the date of issuance, in stockholders’ equity (deficit) in the unaudited condensed consolidated balance sheets, and the amount initially recorded is not subsequently remeasured at fair value.
Revenue recognition
The Company recognizes revenue in accordance with ASC 606. The core principle of the guidance in ASC 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve the core principle, the Company applied the following five-step model that requires entities to exercise judgment:
(1) Identify the contracts or agreements with a customer: The Company sells pharmaceutical products directly to customers from its website. The Company’s revenue is derived from the customer orders evidenced by invoices issued. Orders placed by customers constitute the Company’s contracts with customers.
(2) Identifying the performance obligations in the contract or agreement: The contract with the customer contains a single performance obligation: the sale of the product.
(3) Determine the transaction price: The Company’s sales arrangements for pharmaceutical products require a full prepayment from the customer at a fixed price per unit based on the terms of the invoice with the customer and before the shipment of products. The transaction price is the amount that reflects the consideration which the Company expects to receive.
(4) Allocate the transaction price to the separate performance obligations: All transaction prices are allocated to the single performance obligation.
(5) Recognize revenue as each performance obligation is satisfied: This performance obligation is satisfied when control of the product is transferred to the customer, which generally occurs upon shipment. The Company receives orders for products to be delivered over multiple dates that may extend across reporting periods. The Company’s accounting policy treats shipping and handling activities as a fulfillment cost. The Company invoices for each order upon payment and recognizes revenue at the fixed price for each distinct product delivered when transfer of control has occurred, which is generally upon shipment.
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The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients.
Recent Accounting Pronouncements
A discussion of recently issued accounting standards applicable to us is described in Note 2, Significant Accounting Policies, in the notes to the unaudited condensed consolidated financial statements contained elsewhere in this Quarterly Report on Form 10-Q.
Results of Operations
The following tables set forth the results of our operations for the periods presented, as well as the changes between periods. The period-to-period comparison of financial results is not necessarily indicative of future results.
Comparison of Three Months Ended June 30, 2026 and 2025
The following table sets forth our unaudited condensed consolidated statements of operations data for the three months ended June 30, 2026, and 2025:
| Three Months Ended June 30, | ||||||||||||
| 2026 | 2025 | Change | ||||||||||
| Net revenue | $ | 63,104 | $ | - | $ | 63,104 | ||||||
| Cost of revenue | 50,818 | - | 50,818 | |||||||||
| Inventory write off | 42,372 | - | 42,372 | |||||||||
| Gross margin | (30,086 | ) | - | (30,086 | ) | |||||||
| Operating expenses | ||||||||||||
| General and administrative | 970,211 | 395,692 | 574,519 | |||||||||
| Research and development | 233,482 | 352,887 | (119,405 | ) | ||||||||
| Sales and marketing | 1,215,025 | 51,311 | 1,163,714 | |||||||||
| Merger and acquisition | 229,418 | - | 229,418 | |||||||||
| Total operating expenses | 2,648,136 | 799,890 | 1,848,246 | |||||||||
| Loss from operations | (2,678,222 | ) | (799,890 | ) | (1,878,332 | ) | ||||||
| Other income (expenses): | ||||||||||||
| Interest income | 56,676 | - | 56,676 | |||||||||
| Interest expense | - | (527,893 | ) | 527,893 | ||||||||
| Change in fair value of derivative liabilities and convertible notes | (275 | ) | (289,401 | ) | 289,126 | |||||||
| Gain (loss) on extinguishment of debt | 1,353,679 | (364,109 | ) | 1,717,788 | ||||||||
| Total other expense, net | 1,410,080 | (1,181,403 | ) | 2,591,483 | ||||||||
| Net loss | $ | (1,268,142 | ) | $ | (1,981,293 | ) | $ | 713,151 | ||||
Gross Margin
For the three months ended June 30, 2026, total revenue was $63,104 and total cost of revenue was $50,818 and a write-off of obsolete inventory to it carrying value totaling $42,372. We began selling our products during the quarter ended September 30, 2025; therefore no sales were recorded during the three months ended June 30, 2025.
General and Administrative
General and administrative expenses for the three months ended June 30, 2026, was $970,211 as compared to $395,692 for the three months ended June 30, 2025. The $574,519 increase in general and administrative primarily consists of increases in professional fees such as legal and accounting.
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Research and Development
Research and development expenses for the three months ended June 30, 2026, was $233,482 as compared to $352,887 for the three months ended June 30, 2025. The $119,405 decrease in research and development reflects the reduction in product development costs as our products are now marketable.
Sales and Marketing
Sales and marketing for the three months ended June 30, 2026, was $1,215,025 as compared to $51,311 for the three months ended June 30, 2025. The $1,163,714 increase in sales and marketing reflects increases in marketing such as investor awareness costs and product sampling as we continue to develop our products.
Merger and acquisition
Merger and acquisition expenses for the three months ended June 30, 2026, was $229,418 as compared to $0 for the three months ended June 30, 2025. The $229,418 increase in merger and acquisition expenses is a result of costs incurred related to the anticipated DCS transaction.
Interest Income
Interest income was $56,676 for the three months ended June 30, 2026, and is due to an increase in cash deposits during the second quarter of 2026.
Interest expense
Interest expense for the three months ended June 30, 2026 was $0 as compared to $527,893 for the three months ended June 30, 2025. The decrease in interest expense of $527,893 is a result of the full payment or conversion to equity of the outstanding balances of the convertible notes, subscription agreement loans, and the amortization of debt discount associated with the notes payable – related party in 2025.
Change in fair value of derivative liabilities and convertible notes
Change in fair value of derivative liabilities and convertible notes for the three months ended June 30, 2026, was $0 as compared to $289,126 for the three months ended June 30, 2025. The $289,126 reduction in change in fair value of derivative liabilities and convertible notes is the result of the full payment or conversion to equity of the outstanding balance of the subscription agreement loans, convertible notes and the related derivative liability.
Gain (loss) on extinguishment of debt
The gain (loss) on extinguishment of debt for the three months ended June 30, 2026 of $1,353,679 was primarily due to the write off of balances related to the Srirama Associates LLC legal claim following the dismissal of the claim with prejudice on June 29, 2026.
Comparison of Six Months Ended June 30, 2026 and 2025
The following table sets forth our unaudited condensed consolidated statements of operations data for the six months ended June 30, 2026 and 2025:
| For the Six Months Ended June 30, | ||||||||||||
| 2026 | 2025 | Change | ||||||||||
| Net revenue | $ | 91,457 | $ | - | $ | 91,457 | ||||||
| Cost of revenue | 73,421 | - | 73,421 | |||||||||
| Inventory write off | 42,372 | - | 42,372 | |||||||||
| Gross margin | (24,336 | ) | - | (24,336 | ) | |||||||
| Operating expenses | ||||||||||||
| General and administrative | 1,990,668 | 15,469,240 | (13,478,572 | ) | ||||||||
| Research and development | 530,205 | 615,980 | (85,775 | ) | ||||||||
| Sales and marketing | 1,549,764 | 271,150 | 1,278,614 | |||||||||
| Merger and acquisition | 229,418 | - | 229,418 | |||||||||
| Total operating expenses | 4,300,055 | 16,356,370 | (12,056,315 | ) | ||||||||
| Loss from operations | (4,324,391 | ) | (16,356,370 | ) | 12,031,979 | |||||||
| Other income (expenses): | ||||||||||||
| Interest income | 61,685 | - | 61,685 | |||||||||
| Interest expense | (1,595,315 | ) | (817,824 | ) | (777,491 | ) | ||||||
| Change in fair value of derivative liabilities and convertible notes | 251,532 | (384,318 | ) | 635,850 | ||||||||
| Gain (loss) on extinguishment of debt | 1,115,455 | (364,109 | ) | 1,479,564 | ||||||||
| Total other expense, net | (166,643 | ) | (1,566,251 | ) | 1,399,608 | |||||||
| Net loss | $ | (4,491,034 | ) | $ | (17,922,621 | ) | $ | 13,431,587 | ||||
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Gross Margin
For the six months ended June 30, 2026, total revenue was $91,457 and total cost of revenue was $73,421 and a write-off of obsolete inventory to it carrying value totaling $42,372. We began selling our products during the quarter ended September 30, 2025; therefore no sales were recorded during the six months ended June 30, 2025.
General and Administrative
General and administrative expenses for the six months ended June 30, 2026 was $1,990,668 as compared to $15,469,240 for the six months ended June 30, 2025. The $13,478,572 decrease in general and administrative expenses is primarily due to a reduction in stock-based compensation.
Research and Development
Research and development expenses for the six months ended June 30, 2026 was $530,205 as compared to $615,980 for the six months ended June 30, 2025. The $85,775 decrease in research and development is due to a reduction in product development costs as our products are now marketable.
Sales and Marketing
Sales and marketing for the six months ended June 30, 2026 was $1,549,764 as compared to $271,150 for the six months ended June 30, 2025. The $1,278,614 increase in sales and marketing reflects increases in marketing costs related to investor awareness and product sampling as we continue to develop our products.
Merger and acquisition
Merger and acquisition expenses for the six months ended June 30, 2026 was $229,418 as compared to $0 for the six months ended June 30, 2025. The $229,418 increase in merger and acquisition expenses is a result of costs incurred related to the anticipated DCS transaction.
Inventory write off
During the six months ended June 30, 2026, we wrote off $42,372 of obsolete inventory to its carrying value.
Interest Income
Interest income of $61,685 for the six months ended June 30, 2026, and is due to an increase in cash deposits during the second quarter of 2026.
Interest expense
Interest expense for the six months ended June 30, 2026 was $1,595,315 as compared to $817,824 for the six months ended June 30, 2025. The decrease in interest expense of $777,491 is a result of the full payment or conversion to equity of the outstanding balances of the convertible notes, subscription agreement loans, and the amortization of debt discount associated with the notes payable – related party in 2025
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Change in fair value of derivative liabilities and convertible notes
Change in fair value of derivative liabilities and convertible notes for the six months ended June 30, 2026 was $251,532 as compared to $384,318 for the six months ended June 30, 2025. The $635,850 decrease in change in fair value of derivative liabilities and convertible notes is a result of the full payment or conversion to equity of the outstanding balance of the subscription agreement loans, convertible notes and the related derivative liability.
Gain (loss) on extinguishment of debt
The gain (loss) on extinguishment of debt for the six months ended June 30, 2026 of $1,353,679 is primarily the result of the write off of the Srirama Associates LLC legal claim following the dismissal of the claim with prejudice on June 29, 2026 partially offset by the loss on costs related to certain debt conversions.
Liquidity and Capital Resources
Our primary source of liquidity has been cash from financing activities. As of June 30, 2026, working capital was $11,779,348 and cash was $12,167,136. For the six months ended June 30, 2026, our net loss was $4,491,034 and we had an accumulated deficit of $31,749,115.
In February 2025, we received proceeds of approximately $265,827 as a result of the Reverse Recapitalization. Immediately after the consummation of the Reverse Recapitalization, we received $3,000,000 from the issuance of convertible notes and an additional net cash proceeds of $2,661,459 after partial repayment of the convertible notes and deal costs pursuant to the August 19, 2025 Securities Purchase Agreement (see Note 5. Convertible Notes). In February 2026, we entered into a Securities Purchase Agreement (see Note 7. Securities Purchase Agreement) pursuant to which we received net payout of approximately $6,777,206 after repayment of the remaining convertible notes and deal costs under the first tranche for purchases of convertible preferred stock. We also entered into an ELOC agreement in November 2025, to which we can sell up to $100 million in common stock over 24 months. In April 2026, we closed the final tranche of the Securities Purchase Agreement and received an additional $9,000,000 after payment of applicable fees.
We assess our liquidity in terms of our ability to generate adequate amounts of cash to meet current and future needs. Our expected primary uses of cash on a short- and long-term basis are for working capital requirements and other liquidity needs. Management has determined that our current liquidity position is sufficient to fund our operations for at least one year after the filing of these unaudited condensed consolidated financial statements.
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Cash Flows for the Six Months Ended June 30, 2026 and 2025
The following table summarizes our cash flows from operating and financing activities for the six months ended June 30, 2026 and 2025:
| Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Net cash used in operating activities | $ | (5,154,196 | ) | $ | (2,891,838 | ) | ||
| Net cash provided by financing activities | $ | 16,317,428 | $ | 3,094,438 | ||||
Net Cash Flows Used in Operating Activities
Net cash flows used in operating activities was $5,154,196 during the six months ended June 30, 2026, compared to net cash flows used in operating activities of $2,891,838 during the six months ended June 30, 2025. The period-to-period change was a result of the change in noncash stock compensation of $14,102,094 and the decrease in net loss for the periods, increase in prepaid expenses and other assets and decrease in accounts payable and due from related party.
Net Cash Flows Provided by Financing Activities
For the six months ended June 30, 2026, net cash flows provided by financing activities was $16,317,428, compared to net cash flows provided by financing activities of $3,094,438 during the six months ended June 30, 2025. The period-to-period change was primarily due to proceeds from the issuance of Series A Convertible Preferred Stock of $17,951,119, partially offset by repayments of convertible notes and debentures.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of June 30, 2026. We do not participate in transactions that create relationships with entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act), we are not required to provide disclosure under this Item 3.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2026. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective including those controls surrounding complex accounting areas such as the accounting for the Company’s recapitalization.
Limitations on the Effectiveness of Controls
Management of the Company, including its Chief Executive Officer and its Chief Financial Officer, does not expect that the Company’s disclosure controls and procedures or its internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Furthermore, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons or by the collusion of two or more persons. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
Changes in Internal Control over Financial Reporting
During the fiscal quarter ended June 30, 2026, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Our process for evaluating controls and procedures is continuous and encompasses constant improvement of the design and effectiveness of established controls and procedures.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As discussed in Note 6. Commitments and Contingencies to the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q, we are engaged in certain legal proceedings and the disclosure set forth in Note 6. Commitments and Contingencies relating to legal proceedings is incorporated herein by reference.
ITEM 1A. RISK FACTORS
There have been no material changes to the risk factors disclosed under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 30, 2026, as amended on Form 10-K/A filed with the SEC on April 8, 2026.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES
During the six months ended June 30, 2026, we issued an aggregate of 26,250 shares of our Series A Convertible Preferred Stock in a private placement to institutional investors for gross proceeds of $20,000,000, pursuant to a Securities Purchase Agreement entered into in February 2026. The shares were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D. The investors are accredited and represented their investment intent; no general solicitation or advertising was used.
In January 2026, we issued 26,333 shares of common stock as incentive shares to investors in connection with a short-term debenture financing, and 21,525 shares of common stock to certain lenders pursuant to exchange agreements that converted outstanding subscription agreement loans and accrued interest into equity. We also issued 207 “true-up” shares of common stock to Arena under our equity line of credit commitment fee. These issuances were made in private transactions exempt from registration under Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D.
We did not repurchase any of our equity securities during the three and six months ended June 30, 2026. There were no proceeds used from a registered offering during the periods.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. MINE SAFETY DISCLOSURES
None
ITEM 5. OTHER INFORMATION
During
the three and six months ended June 30, 2026, none of our directors or officers
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ITEM 6. EXHIBITS
* Filed herewith.
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ASPIRE BIOPHARMA HOLDINGS, INC.
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2026
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ASPIRE BIOPHARMA HOLDINGS, INC. | ||
| Date: August 13, 2026 | By: | /s/ Kraig T. Higginson |
| Name: | Kraig T. Higginson | |
| Title: | Chief Executive Officer and Chairman | |
| (Principal Executive Officer) | ||
| Date: August 13, 2026 | By: | /s/ Ernest J. Scheidemann |
| Name: | Ernest J. Scheidemann | |
| Title: | Chief Financial Officer | |
| (Principal Financial and Accounting Officer) | ||
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Exhibit 3.1
Exhibit 3.2
Exhibit 10.4
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES
Original Issue Date: __________________
Original Principal Amount: $___________________
20% ORIGINAL ISSUE DISCOUNT
SENIOR SECURED CONVERTIBLE
DEBENTURE
DUE 20261
THIS 20% ORIGINAL ISSUE DISCOUNT SENIOR SECURED CONVERTIBLE DEBENTURE is one of a series of duly authorized and validly issued 20% Original Issue Discount Secured Convertible Debentures of ASPIRE BIOPHARMA HOLDINGS INC. (formerly known as Powerup Acquisition Corp.), a Delaware corporation (together with its successors and assigns, the “Company”), whose registered office is at 188 Grand Street, Unit #195, New York, NY 10013, designated as its 20% Original Issue Discount Senior Secured Convertible Debenture due _____2026 (this debenture, the “Debenture” and, collectively with the other debentures of such series, the “Debentures”).
FOR VALUE RECEIVED, the Company promises to pay to or its registered assigns (the “Holder”), or shall have paid pursuant to the terms hereunder, the principal sum of $_____ on __ 2026 (the “Maturity Date”) or such earlier date as this Debenture is required or permitted to be repaid as provided hereunder, and to pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Debenture in accordance with the provisions hereof. All payments due hereunder (to the extent not converted into shares of Common Stock in accordance with the terms hereof) shall be made in lawful money of the United States of America at the address or otherwise pursuant to such instructions as the Holder shall provide to the Company by written notice made in accordance with the provisions of this Debenture. This Debenture is subject to the following additional provisions:
Section 1. Definitions. For the purposes hereof, in addition to the terms defined elsewhere in this Debenture, (a) capitalized terms not otherwise defined herein shall have the meanings set forth in the Purchase Agreement and (b) the following terms shall have the following meanings:
“Alternate Consideration” shall have the meaning set forth in Section 5(e).
112 months from the First Closing Date.
“Bankruptcy Event” means any of the following events: (a) the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company or any Significant Subsidiary thereof, (b) there is commenced against the Company or any Significant Subsidiary thereof any such case or proceeding that is not dismissed within 60 days after commencement, (c) the Company or any Significant Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) the Company or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) the Company or any Significant Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the Company or any Significant Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts, (g) the Company or any Significant Subsidiary thereof admits in writing that it is generally unable to pay its debts as they become due, (h) the Company or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.
“Base Conversion Price” shall have the meaning set forth in Section 5(b).
“Beneficial Ownership Limitation” shall have the meaning set forth in Section 4(d).
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York are generally are open for use by customers on such day.
“Buy-In” shall have the meaning set forth in Section 4(c)(v).
“Change of Control Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital shares of the Company, by contract or otherwise) of in excess of 33% of the voting securities of the Company (other than by means of conversion of the Debentures), (b) the Company merges into or consolidates with any other Person, or any Person merges into or consolidates with the Company and, after giving effect to such transaction, the shareholders of the Company immediately prior to such transaction own less than 66% of the aggregate voting power of the Company or the successor entity of such transaction, (c) the Company (and all of its Subsidiaries, taken as a whole) sells or transfers all or substantially all of its assets to another Person and the shareholders of the Company immediately prior to such transaction own less than 66% of the aggregate voting power of the acquiring entity immediately after the transaction, (d) a replacement at one time or within a three year period of more than one-half of the members of the Board of Directors which is not approved by a majority of those individuals who are members of the Board of Directors on the Execution Date (or by those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board of Directors was approved by a majority of the members of the Board of Directors who are members on the date hereof), or (e) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth in clauses (a) through (d) above.
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“Common Stock” means the shares of common stock of the Company, par value $0.0001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.
“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time shares of Common Stock, including, without limitation, any debt, preference shares, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, shares of Common Stock.
“Conversion Date” means the date of any conversion under this Debenture.
“Conversion Price” shall have the meaning set forth in Section 4(b).
“Conversion Shares” means, collectively, the shares of Common Stock issuable upon conversion of this Debenture in accordance with the terms hereof.
“Debenture Register” shall have the meaning set forth in Section 2.
“Dilutive Issuance” shall have the meaning set forth in Section 5(b).
“Dilutive Issuance Notice” shall have the meaning set forth in Section 5(b).
“Dollars” and “$” mean dollars in lawful currency of the United States of America.
“Effectiveness Period” shall have the meaning set forth in the Registration Rights Agreement.
“Event of Default” shall have the meaning set forth in Section 8(a).
“Execution Date” means February [_], 2025.
“Floor Price” shall have the meaning set forth in the Purchase Agreement.
“Floor Price Spread Amount” shall have the meaning set forth in Section 4(c)(i).
“Fundamental Transaction” shall have the meaning set forth in Section 5(e).
“Indebtedness” or “indebtedness” of any person shall mean, if and to the extent (other than with respect to clause (i)) the same would constitute indebtedness or a liability on a balance sheet prepared in accordance with GAAP, without duplication, (a) all obligations of such person for borrowed money, (b) all obligations of such person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such person under conditional sale or other title retention agreements relating to property or assets purchased by such person, (d) all obligations of such person issued or assumed as the deferred purchase price of property or services (other than such obligations accrued in the ordinary course of business or consistent with past practice or industry norm), to the extent that the same would be required to be shown as a long term liability on a balance sheet prepared in accordance with GAAP, (e) all capitalized lease obligations of such person, (f) the principal component of all obligations, contingent or otherwise, of such person as an account party in respect of letters of credit, (g) the principal component of all obligations of such person in respect of bankers’ acceptances, and (h) all guarantees by such person of indebtedness described in clauses (a) to (g) above; provided, that Indebtedness shall not include (A) (i) trade and other ordinary-course payables and intercompany liabilities arising in the ordinary course of business or consistent with past practice or industry norm or (ii) accrued expenses, in excess of $25,000 as a single obligation or $125,000.00 in the aggregate if such indebtedness is subordinated to the Company’s and, as applicable, any Subsidiary’s obligations in respect of the Debentures and the other Transaction Documents pursuant to the terms of a subordination agreement, acceptable to the Holder in its sole discretion, to which the creditor in respect of such indebtedness is a party, (B) prepaid or deferred revenue, (C) purchase price holdbacks arising in the ordinary course of business or consistent with past practice or industry norm in respect of a portion of the purchase prices of an asset to satisfy unperformed obligations of the seller of such asset, or (D) earn-out obligations until such obligations become a liability on the balance sheet of such person in accordance with GAAP.
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“Mandatory Default Amount” means the sum of (a) 125% of the outstanding principal amount of this Debenture, plus 125% of accrued and unpaid interest hereon, and (b) all other amounts, costs, expenses and liquidated damages due in respect of this Debenture.
“New York Courts” shall have the meaning set forth in Section 9(f).
“Notice of Conversion” shall have the meaning set forth in Section 4(a).
“Optional Redemption” shall have the meaning set forth in Section 6(b).
“Optional Redemption Amount” shall have the meaning set forth in Section 6(b).
“Optional Redemption Date” shall have the meaning set forth in Section 6(b).
“Optional Redemption Notice” shall have the meaning set forth in Section 6(b).
“Optional Redemption Notice Date” shall have the meaning set forth in Section 6(b).
“Original Issue Date” means the date of the first issuance of the Debenture (i.e., the date first written above), regardless of any transfers of the Debenture and regardless of the number of instruments which may be issued to evidence such Debenture.
“Permitted Indebtedness” means (a) the Indebtedness evidenced by the Debentures; (b) Indebtedness that has been subordinated to the Company’s and, as applicable, any Subsidiary’s obligations in respect of the Debentures and the other Transaction Documents pursuant to the terms of a subordination agreement, acceptable to the Holder in its sole discretion, to which the creditor in respect of such Indebtedness is a party, and (c) indebtedness owed to service providers as set forth in the Use of Proceeds Certificate provided that any indebtedness that is in excess of $25,000 and not specifically provided for in the Use of Proceeds Certificate, shall be subordinated to the Company’s and, as applicable, any Subsidiary’s obligations in respect of the Debentures and the other Transaction Documents pursuant to the terms of a subordination agreement, acceptable to the Holder in its sole discretion, to which the creditor in respect of such indebtedness is a party.
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“Permitted Lien” means the individual and collective reference to the following: (a) Liens for taxes, assessments and other governmental charges or levies not yet delinquent by more than 30 days or Liens for taxes, assessments and other governmental charges or levies being contested in good faith and by appropriate proceedings for which adequate reserves (in the good faith judgment of the management of the Company) have been established in accordance with GAAP, and (b) Liens imposed by law which were incurred in the ordinary course of the Company’s business, such as carriers’, warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other similar Liens arising in the ordinary course of the Company’s business which secure obligations which are not more than 30 days overdue, and which (x) do not individually or in the aggregate materially detract from the value of such property or assets or materially impair the use thereof in the operation of the business of the Company and its consolidated Subsidiaries or (y) are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing for the foreseeable future the forfeiture or sale of the property or asset subject to such Lien.
“Purchase Agreement” means the Securities Purchase Agreement, dated as of February __, 2025, by and among the Company, and the Purchasers party thereto (as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with its terms).
“Registration Rights Agreement” means the Registration Rights Agreement, dated as of the date hereof, among the Company and the Purchasers of the Securities issued by the Company pursuant to the Purchase Agreement.
“Registration Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and covering the resale of the Underlying Shares and Commitment Shares by the Holder as provided for in the Registration Rights Agreement.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Share Delivery Date” shall have the meaning set forth in Section 4(c)(ii).
“Standard Settlement Period” shall have the meaning set forth in Section 4(c)(ii).
“Successor Entity” shall have the meaning set forth in Section 5(e).
“Surviving Entity” shall have the meaning set forth in Section 10.
“Trading Day” means a day on which the principal Trading Market is open for trading.
“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange (or any successors to any of the foregoing).
“VWAP” means, as of any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock are then listed or quoted on a Trading Market, the per share daily volume weighted average price of the Common Stock for such date (or if such date is not a Trading Day, for the nearest preceding Trading Day) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Common Stock is listed on the OTCQB or OTCQX, the per share volume weighted average price of the Common Stock for such date (or if such date is not a Trading Day, for the nearest preceding Trading Day) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on any Trading Market or OTCQB or OTCQX and if prices for the Common Stock are then reported on The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
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Section 2. Interest. Interest shall accrue on the outstanding principal amount of this Debenture at a rate equal to 10.00% per annum paid in kind (the “PIK Interest”) unless there is an Event of Default, in which case Default Interest shall accrue and be paid instead of PIK Interest. The PIK Interest shall be added to the outstanding principal amount of this Debenture on a monthly basis as additional principal obligations hereunder and shall automatically and thereafter constitute a part of the outstanding principal amount for all purposes hereof (including the accrual of interest thereon at the rates applicable to the principal amount generally). The Borrower will not issue additional debentures to represent the PIK Interest. Interest shall be calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods, and shall accrue daily commencing on the Original Issue Date until payment in full of the outstanding principal, together with all accrued and unpaid interest, liquidated damages and other amounts which may become due hereunder, has been made. Interest shall cease to accrue with respect to any portion of the principal amount of this Debenture that is converted to Conversion Shares, provided that the Company delivers the Conversion Shares and pays the applicable Floor Price Spread Amount with respect to such conversion, if any, within the time period required by Section 4 hereof. Accrued and unpaid interest hereunder will be paid to the Person in whose name this Debenture is registered on the records of the Company regarding registration and transfers of this Debenture (the “Debenture Register”); provided, notwithstanding anything to the contrary set forth herein, the Company represents and warrants that as of the Original Issue Date, the Person in whose name this Debenture is duly registered on the Debenture Register as the owner of this Debenture for the purpose of receiving payment as herein provided and for all other purposes is ___. Upon the occurrence and during the continuance of an Event of Default, interest shall accrue on the outstanding principal amount of this Debenture at the rate of two percent (2.00%) per month (“Default Interest”). Accrued and unpaid Default Interest shall be due and payable monthly in arrears in cash on the first of each month following the occurrence of any Event of Default for Default Interest accrued through the last day of the prior month.
Section 3. Registration of Transfers and Exchanges.
(a) Different Denominations. This Debenture is exchangeable for an equal aggregate principal amount of Debentures of different authorized denominations, as requested by the Holder surrendering the same. No service charge will be payable for such registration of transfer or exchange.
(b) Investment Representations. This Debenture has been issued subject to certain investment representations of the original Holder set forth in the Purchase Agreement and may be transferred or exchanged only in compliance with the Purchase Agreement and applicable federal and state securities laws and regulations.
(c) Reliance on Debenture Register. Prior to due presentment for transfer to the Company of this Debenture, the Company and any agent of the Company may treat the Person in whose name this Debenture is duly registered on the Debenture Register as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture is overdue, and neither the Company nor any such agent shall be affected by notice to the contrary.
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Section 4. Conversion.
(a) Conversion Upon Event of Default. This Debenture shall convert into shares of Common Stock upon an Event of Default (subject to the conversion limitations set forth in Section 4(d) hereof), at the option of the Holder. The Holder shall effect conversions by delivering to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “Notice of Conversion”), specifying therein the amount to be converted and the date on which such conversion shall be effected. If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder. No ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Conversion form be required. To effect conversions hereunder, the Holder shall not be required to physically surrender this Debenture to the Company unless the entire principal amount of this Debenture, plus all accrued and unpaid interest thereon and any other amounts owing, has been so converted in which case the Holder shall surrender this Debenture as promptly as is reasonably practicable after such conversion without delaying the Company’s obligation to deliver the shares on the Share Delivery Date. Any conversion hereunder shall have the effect of lowering the outstanding principal amount of this Debenture in an amount equal to the applicable principal amount being converted provided that the Company delivers the Conversion Shares and pays the applicable Floor Price Spread Amount with respect to such conversion, if any, in accordance with this Section 4. The Holder and the Company shall maintain records showing the principal amount(s) converted and the date of such conversion(s). The Company may deliver an objection to any Notice of Conversion within one (1) Business Day of delivery of such Notice of Conversion. In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest error. The Holder, and any assignee by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Debenture, the unpaid and unconverted principal amount of this Debenture may be less than the amount stated on the face hereof.
(b) Conversion Price. The conversion price of this Debenture in effect as of any Conversion Date shall be a price per share of Common Stock equal to 92.5% of the lowest daily VWAP of the shares of Common Stock during the five Trading Day period ending on the Trading Day immediately prior to delivery or deemed delivery of the applicable Conversion Notice (the “Conversion Price”) and subject to adjustment as provided herein; provided that, no conversion may be at a price per share less than the Floor Price.
(c) Mechanics of Conversion; Floor Price Spread Payments.
(i) Conversion Shares Issuable Upon Conversion of Principal Amount; Floor Price Spread Payments. The number of Conversion Shares issuable upon a conversion as of any Conversion Date hereunder shall be equal to the quotient obtained by dividing the amount to be converted by the Conversion Price, as of such Conversion Date; provided, notwithstanding anything to the contrary set forth herein, that if the Floor Price exceeds the Conversion Price, on any Conversion Date, then (1) the number of Conversion Shares issuable upon the applicable conversion hereunder shall be equal to the quotient obtained by dividing the amount to be converted by the Floor Price as of such Conversion Date, and (2) the Company shall pay the Holder an amount in cash on the applicable Share Delivery Date with respect to such conversion (a “Floor Price Spread Amount”) equal to the product obtained by multiplying (A) the amount obtained by subtracting the Conversion Price, as of such Conversion Date from the Floor Price as of such Conversion Date by (B) the amount obtained by subtracting (x) the quotient obtained by dividing the amount to be converted by the Conversion Price as of such Conversion Date from (y) the quotient obtained by dividing the amount to be converted by the Floor Price as of such Conversion Date.
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(ii) Delivery of Conversion Shares Upon Conversion; Floor Price Spread Payments. Not later than the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined below) after each Conversion Date (the “Share Delivery Date”), the Company shall deliver, or cause to be delivered, to the Holder (A) the Conversion Shares which, on or after the earlier of (i) the six month anniversary of the Original Issue Date or (ii) the Applicable Effective Date, shall be free of restrictive legends and trading restrictions (other than those which may then be required by the Purchase Agreement) representing the number of Conversion Shares being acquired upon the applicable conversion of this Debenture). On or after the earlier of (i) the six-month anniversary of the Original Issue Date or (ii) the Applicable Effective Date, the Company shall deliver any Conversion Shares required to be delivered by the Company under this Section 4(c) electronically through the Depository Trust Company or another established clearing corporation performing similar functions. Any Floor Price Spread Amount payable with respect to a conversion of the Debenture as determined in accordance with Section 4(c)(i) above shall be due and payable by the Company in full on the Share Delivery Date for such conversion. As used herein, the term “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of any Notice of Conversion.
(iii) Failure to Deliver Conversion Shares. If, in the case of any Notice of Conversion, such Conversion Shares are not delivered to or as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to the Company at any time on or before its receipt of such Conversion Shares, to rescind such Conversion, in which event the Company shall promptly return to the Holder any original Debenture delivered to the Company and the Holder shall promptly return to the Company the Conversion Shares issued to such Holder pursuant to the rescinded Conversion Notice.
(iv) Obligation Absolute; Partial Liquidated Damages. The Company’s obligations to issue and deliver the Conversion Shares upon conversion of this Debenture in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of such Conversion Shares; provided, however, that such delivery shall not operate as a waiver by the Company of any such action the Company may have against the Holder. In the event the Holder of this Debenture shall elect to convert any or all of the outstanding principal amount hereof, the Company may not refuse conversion based on any claim that the Holder or anyone associated or affiliated with the Holder has been engaged in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and or enjoining conversion of all or part of this Debenture shall have been sought and obtained, and the Company posts a surety bond for the benefit of the Holder in the amount of 150% of the outstanding principal amount of this Debenture, which is subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which shall be payable to the Holder to the extent it obtains judgment. In the absence of such injunction, the Company shall issue Conversion Shares or, if applicable, cash, upon a properly noticed conversion. If the Company fails for any reason to deliver to the Holder such Conversion Shares pursuant to Section 4(c)(ii) by the Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of principal amount being converted, $10 per Trading Day (increasing to $20 per Trading Day on the fifth (5th) Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Share Delivery Date until such Conversion Shares are delivered or Holder rescinds such conversion. Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section 8 hereof for the Company’s failure to deliver Conversion Shares within the period specified herein and the Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.
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(v) Compensation for Buy-In on Failure to Timely Deliver Conversion Shares Upon Conversion. In addition to any other rights available to the Holder, if the Company fails for any reason to deliver to the Holder such Conversion Shares by the Share Delivery Date pursuant to Section 4(c)(ii), and if after such Share Delivery Date the Holder is required by its brokerage firm to purchase (in an open market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Conversion Shares which the Holder was entitled to receive upon the conversion relating to such Share Delivery Date (a “Buy-In”), then the Company shall (A) pay in cash to the Holder (in addition to any other remedies available to or elected by the Holder) the amount, if any, by which (x) the Holder’s total purchase price (including any brokerage commissions) for the shares of Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common Stock that the Holder was entitled to receive from the conversion at issue multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and (B) at the option of the Holder, either reissue (if surrendered) this Debenture in a principal amount equal to the amount of the attempted conversion (in which case such conversion shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued if the Company had timely complied with its delivery requirements under Section 4(c)(ii). For example, if the Holder purchases a number of shares of Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of this Debenture with respect to which the actual sale price of the Conversion Shares (including any brokerage commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver Conversion Shares upon conversion of this Debenture as required pursuant to the terms hereof.
(vi) Reservation of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of this Debenture and payment of interest on this Debenture, each as herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder (and any other holders of the Debentures), not less than the Required Minimum. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable and, if the Registration Statement is then effective under the Securities Act, shall be registered for public resale in accordance with such Registration Statement (subject to such Holder’s compliance with its obligations under the Registration Rights Agreement).
(vii) Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this Debenture. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the Company shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion Price or round up to the next whole share.
(viii) Transfer Taxes and Expenses. The issuance of Conversion Shares on conversion of this Debenture shall be made without charge to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such Conversion Shares, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such Conversion Shares upon conversion in a name other than that of the Holder of this Debenture so converted and the Company shall not be required to issue or deliver such Conversion Shares unless or until the Person or Persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Conversion and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Conversion Shares.
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(d) Holder’s Conversion Limitations. The Company shall not effect any conversion of this Debenture, and a Holder shall not have the right to convert any portion of this Debenture, to the extent that after giving effect to the conversion set forth on the applicable Notice of Conversion, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable upon conversion of this Debenture with respect to which such determination is being made and any Commitment Shares issued pursuant to the Purchase Agreement, but shall exclude the number of shares of Common Stock which would be issuable upon (i) conversion of the remaining, unconverted principal amount of this Debenture beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company subject to a limitation on conversion analogous to the limitation contained herein (including, without limitation, any other Debentures) beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 4(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section 4(d) applies, the determination of whether this Debenture is convertible (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which principal amount of this Debenture is convertible shall be in the sole discretion of the Holder, and the submission of a Notice of Conversion shall be deemed to be the Holder’s determination of whether this Debenture may be converted (in relation to other securities owned by the Holder together with any Affiliates or Attribution Parties) and which principal amount of this Debenture is convertible, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 4(d), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company, or (C) a more recent written notice by the Company or the Company’s Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within one Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Debenture, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock are issuable upon conversion of this Debenture. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 4(d), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of this Debenture held by the Holder and the Beneficial Ownership Limitation provisions of this Section 4(d) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company. The Beneficial Ownership Limitation provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 4(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Debenture.
Section 5. Certain Adjustments.
(a) Share Dividends and Share Splits. If the Company, at any time while this Debenture is outstanding: (i) pays a share dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock are issued by the Company upon conversion of, or payment of interest on, the Debentures), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse share split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues, in the event of a reclassification of shares of Common Stock or any capital shares of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Company) outstanding immediately before such event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
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(b) Subsequent Equity Sales. If, at any time while this Debenture is outstanding, the Company or any Subsidiary, as applicable, sells or grants any option to purchase, or otherwise issues, any shares of Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock at an effective price per share that is lower than the then Conversion Price and/or the then Floor Price (such lower price, the “Base Conversion Price” and such issuances, collectively, a “Dilutive Issuance”), then simultaneously with the consummation of each Dilutive Issuance, the Conversion Price and/or the Floor Price, as applicable, shall be reduced to equal the Base Conversion Price (subject to adjustment for reverse and forward share splits, recapitalizations and similar transactions following the date of the Purchase Agreement); provided, for the avoidance of doubt, the effect of any adjustment to the Conversion Price and/or Floor Price pursuant to this Section 5(b) shall be to reduce and not increase the Conversion Price and/or Floor Price, as applicable. Notwithstanding the foregoing, no adjustment will be made under this Section 5(b) in respect of an Exempt Issuance. If the Company enters into a Variable Rate Transaction, despite the prohibition set forth in the Purchase Agreement, the Company shall be deemed to have issued shares of Common Stock or Common Stock Equivalents at the lowest possible conversion price at which such securities may be converted or exercised. The Company shall notify the Holder in writing, no later than the Trading Day following the issuance of shares of Common Stock or Common Stock Equivalents subject to this Section 5(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 5(b), upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Conversion Shares based upon the Base Conversion Price on or after the date of such Dilutive Issuance, regardless of whether the Holder accurately refers to the Base Conversion Price in the Notice of Conversion.
(c) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 5(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase shares, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Debenture (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, that, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such s Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
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(d) Pro Rata Distributions. During such time as this Debenture is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, shares or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Debenture, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Debenture (without regard to any limitations on conversion hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, that, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
(e) Fundamental Transaction. If, at any time while this Debenture is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company (and all of its Subsidiaries, taken as a whole), directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of shares of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding shares of Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the shares of Common Stock or any compulsory share exchange pursuant to which the shares of Common Stock are effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent conversion of this Debenture, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in Section 4(d) on the conversion of this Debenture), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Debenture is convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 4(d) on the conversion of this Debenture). For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one (1) share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of shares of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Debenture following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under the Debentures and the other Transaction Documents (as defined in the Purchase Agreement) in accordance with the provisions of this Section 5(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the holder of this Debenture, deliver to the Holder in exchange for this Debenture a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Debenture which is convertible for a corresponding number of capital shares of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Debenture (without regard to any limitations on the conversion of this Debenture) prior to such Fundamental Transaction, and with a conversion price which applies the conversion price hereunder to such capital shares (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such capital shares, such number of capital shares and such conversion price being for the purpose of protecting the economic value of this Debenture immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Debenture and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under the Debentures and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.
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(f) Calculations. All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Company) issued and outstanding.
(g) Notice to the Holder.
(i) Adjustment to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5, the Company shall promptly deliver to the Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.
(ii) Notice to Allow Conversion by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the shares of Common Stock of rights or warrants to subscribe for or purchase any capital shares of any class or of any rights, (D) the approval of any shareholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company (and all of its Subsidiaries, taken as a whole) is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of this Debenture, and shall cause to be delivered to the Holder at its last address as it shall appear upon the Debenture Register, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the shares of Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the shares of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to convert this Debenture during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
Section 6. Mandatory Prepayment; Redemption.
(a) Mandatory Prepayment. If, at any time prior to the full repayment or full conversion of all amounts owed under this Debenture, the Company or any of its Subsidiaries receives cash proceeds from the issuance of equity or indebtedness (other than the issuance of other Debentures), in one or more financing transactions, whether publicly offered or privately arranged (including, without limitation, pursuant to the Arena ELOC), the Company shall, within one (1) Business Day of the Company or the applicable Subsidiary’s receipt of such proceeds, inform the Holder of such receipt via written notice (a “Mandatory Prepayment Notice”), whereupon the Holder shall have the right in its sole discretion to require, by written notice to the Company delivered within five (5) Business Days of the Holder’s receipt of any such Mandatory Prepayment Notice, that the Company immediately apply up to thirty percent (30%) of the gross cash proceeds received from the applicable financing transaction to prepay the Company’s then outstanding obligations under the Debentures (a “Mandatory Prepayment Exercise Notice”). The Company shall, within one (1) Business Day of the Company’s receipt of a Mandatory Prepayment Exercise Notice, the portion of the gross cash proceeds received from the applicable financing transaction indicated in the Mandatory Prepayment Exercise Notice (not to exceed 30%) to prepay the Company’s then outstanding obligations under the Debentures; provided, such gross cash proceeds shall be applied to prepay all of the Debentures then outstanding pro rata in proportion to the respective outstanding principal amount of each Debenture at the time the Holder delivers the applicable Mandatory Prepayment Exercise Notice.
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(b) Optional Redemption at Election of Company.
(i) Subject to the provisions of this Section 6(b), the Company may deliver a notice to the Holder at any time (an “Optional Redemption Notice”, and the date such notice is deemed delivered hereunder, the “Optional Redemption Notice Date”) of its irrevocable election to redeem all or any portion of the then outstanding principal amount of this Debenture for cash in an amount (i) equal to the sum of (1) 120% of the portion of the outstanding principal amount of this Debenture elected to be redeemed; plus (2) 100% of accrued but unpaid interest thereon; plus (3) all liquidated damages and other amounts then due in respect of the Debenture (the “Optional Redemption Amount”) on the 30th calendar day following the Optional Redemption Notice Date (such date, the “Optional Redemption Date”, and such redemption, the “Optional Redemption”); provided, notwithstanding anything to the contrary set forth herein, the Company may not deliver an Optional Redemption Notice at a time when an Event of Default has occurred and is continuing.
(ii) The Optional Redemption Amount shall be payable in full on the Optional Redemption Date. If the Company elects to redeem this Debenture pursuant to this Section 6 or any other Debenture, it shall redeem all outstanding Debentures in full simultaneously by paying the Holder the applicable Optional Redemption Amount payable with respect to all outstanding Debentures on the same Optional Redemption Date. If any portion of the Optional Redemption Amount payable in respect of an Optional Redemption shall not be paid by the Company by the applicable due date, interest shall accrue thereon at an interest rate equal to the lesser of two (2%) per annum or the maximum rate permitted by applicable law until such amount is paid in full. Notwithstanding anything herein contained to the contrary, if any portion of the Optional Redemption Amount remains unpaid after such date, the Holder may elect, by written notice to the Company given at any time thereafter, to invalidate such Optional Redemption, ab initio, and, with respect to the Company’s failure to honor the Optional Redemption, the Company shall have no further right to exercise such Optional Redemption. The Holder may elect to convert the outstanding principal amount of the Debenture pursuant to Section 4 prior to actual payment in cash for any redemption under this Section 6 by the delivery of a Notice of Conversion to the Company. The Company covenants and agrees that it will honor all Notices of Conversion tendered from the time of delivery of the Optional Redemption Notice through the date all amounts owing thereon are due and paid in full.
Section 7. Negative Covenants. As long as any portion of this Debenture remains outstanding, unless the Holder shall have otherwise given prior written consent, the Company shall not, and shall not permit any direct or indirect Subsidiary of the Company to, directly or indirectly:
(a) other than Permitted Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any indebtedness for borrowed money of any kind, including, but not limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;
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(b) other than Permitted Liens, enter into, create, incur, assume or suffer to exist any Liens of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;
(c) amend its charter documents, including, without limitation, its certificate of incorporation or memorandum of association, and articles of association or bylaws, as applicable, in any manner that materially and adversely affects any rights of the Holder;
(d) repay, repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of Common Stock or Common Stock Equivalents other than as to (i) the Conversion Shares or Commitment Shares as permitted or required under the Transaction Documents and (ii) repurchases of shares of Common Stock or Common Stock Equivalents of departing officers and directors of the Company, provided that such repurchases shall not exceed an aggregate of $100,000 for all officers and directors during the term of this Debenture;
(e) repay, repurchase or offer to repay, repurchase or otherwise acquire any Indebtedness, other than (i) the Debentures if on a pro-rata basis, (ii) regularly scheduled principal and interest payments of Indebtedness and amounts outstanding to service providers outstanding as of the Execution Date in accordance with the terms thereof as in effect as of the Execution Date and (iii) regularly scheduled principal and interest payments of Permitted Indebtedness pursuant to the terms thereof; provided that payments pursuant to the foregoing clauses (ii) and (iii) shall not be permitted if, at such time, or after giving effect to such payment, any Event of Default exists or occurs;
(f) pay cash dividends or distributions on any equity securities of the Company;
(g) enter into any transaction with any Affiliate of the Company which would be required to be disclosed in any public filing with the Commission, unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested directors of the Company (even if less than a quorum otherwise required for board approval);
(h) sell, dispose, assign, exchange, gift, lease, pledge, hypothecate or otherwise transfer, directly or indirectly, in one transaction or a series of transactions, any material portion of its assets outside the ordinary course of business;
(i) engage in any line of business substantially different from (i) those lines of business conducted by the Company and its Subsidiaries on the date hereof or (ii) any business substantially related or incidental, complementary, corollary, synergistic or ancillary thereto or reasonable extensions thereof; or
(j) enter into any agreement with respect to any of the foregoing.
Section 8. Events of Default.
(a) “Event of Default” means, wherever used herein, any of the following events (whatever the reason for such event and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
(i) any default in the payment of (A) the principal amount of any Debenture or (B) interest, liquidated damages, any Floor Price Spread Amount, and/or any other amounts owing to a Holder on any Debenture, as and when the same shall become due and payable (whether on a Conversion Date, Share Delivery Date, Optional Redemption Date, or the Maturity Date or by acceleration or otherwise, as applicable) which default, solely in the case of an interest payment or other payment default under clause (B) above, is not cured within 3 Trading Days;
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(ii) the Company or any of its Subsidiaries shall fail to observe or perform any other covenant or agreement contained in this Debenture (other than a breach by the Company of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed in clause (xi) below) or in any other Transaction Document, which failure is not cured, if possible to cure, within the earlier to occur of (A) 5 Trading Days after notice of such failure sent by the Holder or by any other Holder to the Company and (B) 10 Trading Days after the Company has become or should have become aware of such failure;
(iii) any representation or warranty made by or on behalf of the Company, any of its Subsidiaries or any of their respective officers in this Debenture, any other Transaction Document, or any written statement, report, financial statement or certificate pursuant hereto or thereto shall be untrue or incorrect in any material respect as of the date when made or deemed made;
(iv) the Company or any Subsidiary shall default on any of its obligations under any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced, any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation greater than $250,000 whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;
(v) the Company or any Subsidiary shall default on any of its obligations under any other material agreement, lease, document or instrument to which the Company or any Subsidiary is obligated (and not covered by clause (v) above), which default is not cured, if possible to cure, within the earlier of (A) 5 Trading Days after notice of such default sent by the Holder or by any other Holder to the Company and (B) 10 Trading Days after the Company has become or should have become aware of such default;
(vi) the Common Stock shall not be eligible for listing or quotation for trading on a Trading Market and shall not be eligible to resume listing or quotation for trading thereon within 5 Trading Days;
(vii) the Company (and all of its Subsidiaries, taken as a whole) shall be a party to any Change of Control Transaction or Fundamental Transaction;
(viii) the Company or any of its Subsidiaries shall sell dispose, assign, exchange, gift, lease, pledge, hypothecate or otherwise transfer, directly or indirectly, in one transaction or a series of transactions, any asset, undertaking or business outside of the ordinary course of business, without the prior written consent of the Holder;
(ix) the Initial Registration Statement (as defined in the Registration Rights Agreement) shall not have been declared effective by the Commission on or prior to the 90th calendar day after the Closing Date or the Company does not meet the current public information requirements under Rule 144 in respect of the Registrable Securities (as defined in the Registration Rights Agreement);
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(x) if, during an Effectiveness Period (as defined in the Registration Rights Agreement), either (a) the effectiveness of any Registration Statement lapses for any reason or (b) the Holder shall not be permitted to resell Registrable Securities (as defined in the Registration Rights Agreement) under a Registration Statement for a period of more than 20 consecutive Trading Days or 30 non-consecutive Trading Days during any 12 month period; provided, however, that if the Company is negotiating a merger, consolidation, acquisition or sale of all or substantially all of its assets or a similar transaction and, in the written opinion of counsel to the Company, a Registration Statement would be required to be amended to include information concerning such pending transaction(s) or the parties thereto which information is not available or may not be publicly disclosed at the time, the Company shall be permitted an additional 10 consecutive Trading Days during any 12 month period pursuant to this Section 8(a)(x);
(xi) the Company shall fail for any reason to deliver Conversion Shares to a Holder prior to the third Trading Day after a Conversion Date pursuant to Section 4(c) or the Company shall provide at any time notice to the Holder, including by way of public announcement, of the Company’s intention to not honor requests for conversions of any Debentures in accordance with the terms hereof;
(xii) the electronic transfer by the Company of any shares of Common Stock through the Depository Trust Company or another established clearing corporation is no longer available or is subject to a “chill”;
(xiii) any monetary judgment, writ or similar final process shall be entered or filed against the Company, any subsidiary or any of their respective property or other assets for more than $250,000, and such judgment, writ or similar final process shall remain unvacated, unbonded or unstayed for a period of 45 calendar days;
(xiv) the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) shall be subject to a Bankruptcy Event;
(xv) the Company or any Subsidiary shall attempt to liquidate or dissolve itself without the prior written consent of the Holder;
(xvi) any corporate action, legal proceedings or other procedure or step is taken in relation to: (a) the suspension of payments, a moratorium of any indebtedness, winding up, dissolution, administration or reorganization (by way of voluntary arrangement, scheme of arrangement or otherwise) of the Company or any Subsidiary; (b) a composition, compromise, assignment or arrangement with any creditor of the Company or any Subsidiary; (c) the appointment of a liquidator, receiver, administrative receiver, administrator, compulsory manager or other similar officer in respect of the Company or any Subsidiary or any of their assets; (d) enforcement of any Lien over any assets of the Company or any Subsidiary; or (e) or any analogous procedure or step is taken in any jurisdiction in relation to the foregoing.
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(xvii) the Company or any of its Subsidiaries shall: (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property or assets; (ii) make a general assignment for the benefit of its creditors; (iii) commence a voluntary case under the United States Bankruptcy Code (as now or hereafter in effect) or under the comparable laws of any jurisdiction (foreign or domestic); (iv) file a petition seeking to take advantage of any bankruptcy, insolvency, moratorium, reorganization or other similar law affecting the enforcement of creditors’ rights generally; (v) acquiesce in writing to any petition filed against it in an involuntary case under United States Bankruptcy Code (as now or hereafter in effect) or under the comparable laws of any jurisdiction (foreign or domestic); (vi) issue a notice of bankruptcy or winding down of its operations or issue a press release regarding same; or (vii) take any action under the laws of any jurisdiction (foreign or domestic) analogous to any of the foregoing;
(xviii) a proceeding or case shall be commenced in respect of the Company or any of its Subsidiaries, without its application or consent, in any court of competent jurisdiction, seeking: (i) the liquidation, reorganization, moratorium, dissolution, winding up, or composition or readjustment of its debts; (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of it or of all or any substantial part of its assets in connection with the liquidation or dissolution of the Company or any of its Subsidiaries; or (iii) similar relief in respect of it under any law providing for the relief of debtors, and such proceeding or case described in clause (i), (ii) or (iii) shall continue undismissed, or unstayed and in effect, for a period of forty-five (45) days or any order for relief shall be entered in an involuntary case under United States Bankruptcy Code (as now or hereafter in effect) or under the comparable laws of any jurisdiction (foreign or domestic) against the Company or any of its Subsidiaries or action under the laws of any jurisdiction (foreign or domestic) analogous to any of the foregoing shall be taken with respect to the Company or any of its Subsidiaries and shall continue undismissed, or unstayed and in effect for a period of forty-five (45) days;
(xix) any Subsidiary is not or ceases to be a Subsidiary of the Company; or
(xx) any Transaction Document or any interest of the Holder thereunder shall, for any reason, be terminated, invalidated, void or unenforceable.
(b) Remedies Upon Event of Default. If any Event of Default occurs, then the Holder may, by written notice to the Company, declare the entire outstanding principal amount of this Debenture, plus accrued but unpaid interest, liquidated damages and all other amounts then owing in respect thereof to be forthwith due and payable immediately in cash at the Mandatory Default Amount, whereupon the entire principal amount of this Debenture, all such accrued and unpaid interest, liquidated damages and all such other amounts shall become forth with due and payable immediately in cash at the Mandatory Default Amount without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Company, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law; provided however, that in the case of any Event of Default pursuant to clause (xvi), (xvii) or (xviii) of Section 8(a), the entire outstanding principal amount of this Debenture, plus accrued but unpaid interest, liquidated damages and all other amounts then owing in respect thereof shall automatically become and be due and payable in cash at the Mandatory Default Amount, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Company.
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Section 9. Miscellaneous.
(a) Notices. All notices, requests, demands, and other communications provided for hereunder must be in writing and will be deemed to have been duly given and effective on the earliest of: (a) the date of transmission shown in a delivery confirmation report generated by the sender’s email system which indicates that delivery of the email to the recipient’s email address has been completed, if such notice or communication is sent via e-mail prior to 5:30 p.m. (New York City time) on any Business Day; (b) the next Business Day after the date of transmission shown in a delivery confirmation report generated by the sender’s email system which indicates that delivery of the email to the recipient’s email address has been completed, if such notice or communication is sent via e-mail on a day that is not a Business Day or later than 5:30 p.m. (New York City time) on any Business Day; (c) the second Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given, addressed as follows:
If to the Company:
Aspire Biopharma Holdings, Inc.
________________________
________________________
Attention: Ernest J. Scheidemann
Email: escheidemann@aspire-biopharma.com
With a copy to (which shall not constitute notice):
Sichenzia Ross Ference Carmel LLP
1185 Avenue of Americas
New York, NY 10036
Attn: Arthur Marcus, Esq.
If to the Holder:
[Holder]
Attention:
e-mail:
or as to the Company or the Holder, at such other address as shall be designated by such party in a written notice to the other party delivered in accordance with this Section 9(a).
(b) Amendments. This Debenture and any provision hereof may only be amended by an instrument in writing signed by the Company and the Holder. The term “Debenture” and all references thereto, as used throughout this instrument, shall mean this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented.
(c) Assignability. This Debenture shall be binding upon the Company and its successors and assigns, and shall inure to be the benefit of the Holder and its successors and assigns. The Company shall not assign this Debenture or any rights or obligations hereunder without the prior written consent of the Holder. The Holder may, without the consent of the Company, assign its rights hereunder (i) to any of its “affiliates”, as that term is defined under the Exchange Act, and (ii) solely during the continuance of any Event of Default, to any other Person. The Company’s prior written consent, not to be unreasonably withheld, conditioned or delayed, shall be required for the Holder to assign its rights hereunder to any Person that is not one of its “affiliates”, as that term is defined under the Exchange Act during any period in which an Event of Default is not then continuing. Notwithstanding anything in this Debenture to the contrary, this Debenture may be pledged as collateral in connection with a bona fide margin account or other lending arrangement. The Holder and any assignee, by acceptance of this Debenture, acknowledge and agree that following conversion of a portion of this Debenture, the unpaid and unconverted outstanding principal amount of this Debenture represented by this Debenture may be less than the amount stated on the face hereof.
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(d) Absolute Obligation. Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest, as applicable, on this Debenture at the time, place, and rate, and in the coin or currency, herein prescribed. This Debenture is a direct debt obligation of the Company. This Debenture ranks pari passu with all other Debentures now or hereafter issued under the terms set forth herein.
(e) Lost or Mutilated Debenture. If this Debenture shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Debenture, or in lieu of or in substitution for a lost, stolen or destroyed Debenture, a new Debenture for the principal amount of this Debenture so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Debenture, and of the ownership hereof, reasonably satisfactory to the Company.
(f) Governing Law; Submission to Jurisdiction; Waivers. All questions concerning the construction, validity, enforcement and interpretation of this Debenture shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware, without regard to the principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Debenture and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Debenture or the transactions contemplated hereby.
(g) Waiver. Any waiver by the Company or the Holder of a breach of any provision of this Debenture shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Debenture. The failure of the Company or the Holder to insist upon strict adherence to any term of this Debenture on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Debenture on any other occasion. Any waiver by the Company or the Holder must be in writing.
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(h) Severability. If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal of or interest on this Debenture as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Debenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.
(i) Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Debenture shall be cumulative and in addition to all other remedies available under this Debenture and any of the other Transaction Documents at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Debenture. The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any such breach or any such threatened breach, without the necessity of showing economic loss and without any bond or other security being required. The Company shall provide all information and documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of this Debenture.
(j) Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
(k) Headings. The headings contained herein are for convenience only, do not constitute a part of this Debenture and shall not be deemed to limit or affect any of the provisions hereof.
(l) Payments. So long as the Maturity Date has not yet occurred and the Debenture has not been accelerated, payments made hereunder (other than payments effected pursuant to any conversion of the Debenture) shall be applied, (i) first, to reimbursable expenses of the Holder and liquidated damages then due and payable hereunder and/or pursuant to any other Transaction Documents, and (ii) then payments matching specific scheduled payments then due shall be applied to those scheduled payments. At any time after the Maturity Date or after the Debenture has been accelerated, all payments remitted to the Holder by the Company and all proceeds of the collateral securing the Company’s obligations hereunder or any enforcement action (including any payments by any guarantors of the Company’s obligations hereunder) received by the Holder shall be applied as follows: (i) first, to the reimbursable expenses of the Holder, indemnity claims of the Holder and liquidated damages then due and payable to the Holder hereunder and/or pursuant to any other Transaction Documents, (ii) second, to pay interest due and payable in respect of the Debenture until paid in fall, (iii) third, to pay principal of the Debenture until paid in full; (iv) fourth, to pay any other obligations then due in respect of the Debenture or any other Transaction Documents; and (v) lastly, to the Company or such other Person entitled thereto under applicable law.
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(m) Costs and Expenses. The Company agrees to pay the Holder, immediately upon written notice from the Holder, all out-of- pocket costs, expenses, and disbursements, including without limitation, legal expenses and attorneys’ fees incurred by the Holder in connection with: (i) the collection, attempted collection, or negotiation and documentation of any settlement or workout of any payment due hereunder, (ii) enforcement of this Debenture or any other Transaction Document (including without limitation, any costs and expenses of any third party provider engaged by the Holder for such purpose), (iii) collection, protection, or enforcement of any rights of the Holder in the collateral securing the Company’s obligations hereunder, and (iv) any suit or proceeding whatsoever in regard to this Debenture or the protection or enforcement of the lien of any instrument securing this Debenture, including, without limitation, in connection with any litigation, mediation, bankruptcy or administrative proceeding, and including any appellate proceeding or judicial or non-judicial foreclosure proceeding in connection therewith.
(n) Secured Obligations. The obligations of the Company under the Debentures are secured by (i) a pledge of all assets of the Company and the Subsidiaries pursuant to the terms of the Security Agreement (ii) the Guarantee and (iii) the other Security Documents.
(o) Guaranteed Obligations. The obligations of the Company under the Debentures are guaranteed by each Subsidiary pursuant to the Guarantee (as amended, amended and restated, supplemented, or otherwise modified from time to time).
Section 10. New Subsidiaries. If the Company or any Subsidiary forms or acquires any new direct or indirect Subsidiary, or any Subsidiary merges, amalgamates, or consolidates with or into any other Person and such Subsidiary is not the surviving entity as a result of such merger, amalgamation, or consolidation (any such surviving entity, a “Surviving Entity”), the Company agrees to, or to cause such Subsidiary or Surviving Entity to, concurrently with such formation, acquisition, merger, amalgamation or consolidation, as applicable, (i) provide notice to the Holder of such formation, acquisition, merger, amalgamation or consolidation, (ii) cause such newly formed or acquired Subsidiary or Surviving Entity to become a party to the Subsidiary Guarantee pursuant to an assumption agreement in form and substance acceptable to the Holder, and (iii) execute and/or deliver, and/or cause such newly formed or acquired Subsidiary or Surviving Entity and any other applicable Subsidiary to execute and/or deliver, such other agreements or documents as are determined by the Holder to be necessary or advisable in order for all of the capital shares in such newly formed or acquired Subsidiary or Surviving Entity to be pledged as additional collateral for the obligations of the Company under the Debentures and for such newly formed or acquired Subsidiary or Surviving Entity to pledge all of its assets as additional collateral for the obligations of the Company under the Debentures, and (iv) deliver to the Holder an opinion of counsel in form and substance acceptable to the Holder addressing, among other things, the due authorization, due execution and delivery and enforceability of the foregoing documents with respect to such Subsidiary or Surviving Entity.
Section 11. Disclosure. Upon receipt or delivery by the Company or any Subsidiary of any notice in accordance with the terms of this Debenture, unless the Company has in good faith determined that the matters relating to such notice do not constitute material, nonpublic information relating to the Company or its Subsidiaries, the Company shall within two (2) Business Days after such receipt or delivery publicly disclose such material, nonpublic information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice contains material, non-public information relating to the Company or its Subsidiaries, the Company so shall indicate to the Holder contemporaneously with delivery of such notice, and in the absence of any such indication, the Holder shall be allowed to presume that all matters relating to such notice do not constitute material, nonpublic information relating to the Company or its Subsidiaries.
*********************
(Signature Page Follows)
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IN WITNESS WHEREOF, the Company has caused this 20% Original Issue Discount Senior Secured Convertible Debenture to be duly executed by a duly authorized officer as of the date first above indicated.
| ASPIRE BIOPHARMA HOLDINGS, INC. (formerly known as Powerup Acquisition Corp.) | ||
| By: | ||
| Name: | ||
| Title: | Chief Executive Officer | |
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ANNEX A NOTICE OF CONVERSION
The below referenced holder (the “Holder”) of the 20% Original Issue Discount Senior Secured Convertible Debenture issued on February __, 2025 and due ______, 2026 of ASPIRE BIOPHARMA HOLDINGS INC. (formerly known as PowerUp Acquisition Corp.), a Delaware corporation (together with its successors and assigns, the “Company”), hereby elects to convert the below referenced amounts owing thereunder into shares of common stock, par value $0.0001 per share (the “Common Stock”), of the Company according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a person other than the Holder, the Holder will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the Holder for any conversion, except for such transfer taxes, if any.
By the delivery of this Notice of Conversion the Holder represents and warrants to the Company that its ownership of shares of Common Stock does not exceed the amounts specified under Section 4 of this Debenture, as determined in accordance with Section 13(d) of the Exchange Act.
The Holder agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer of the aforesaid shares of Common Stock.
Conversion calculations:
Date to Effect Conversion:
Principal Amount of Debenture to be Converted:
Conversion Price:
Number of shares of Common Stock to be issued:
Floor Price Spread Amount (if any):
Signature:
Name:
Address for Delivery of Certificates for shares of Common Stock:
Or
DWAC Instructions:
Broker No: ____________
Account No: ___________
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Exhibit 10.6
PURCHASE AGREEMENT
between
FireFish TopCo, LLC
and
Aspire Biopharma Holdings, Inc.
Dated as of June 10, 2026
TABLE OF CONTENTS
| Article I DEFINITIONS AND INTERPRETATIONS | 1 | ||
| Section 1.01. | Definitions | 1 | |
| Article II CLOSING | 1 | ||
| Section 2.01. | Closing | 1 | |
| Section 2.02. | Transferred Equity and Other Interests | 2 | |
| Section 2.03. | Purchase Price | 2 | |
| Section 2.04. | Allocation of Purchase Price | 3 | |
| Section 2.05. | Transfer Taxes and Other Costs | 4 | |
| Section 2.06. | Withholding Taxes | 4 | |
| Section 2.07. | Delivery by Seller | 4 | |
| Section 2.08. | Delivery by Purchaser | 5 | |
| Article III REPRESENTATIONS AND WARRANTIES OF SELLER | 6 | ||
| Section 3.01. | Due Organization | 6 | |
| Section 3.02. | Authority | 6 | |
| Section 3.03. | Title to Transferred Equity Interests. | 6 | |
| Section 3.04. | No Conflict; Governmental Authorizations | 7 | |
| Section 3.05. | Financial Statements; Indebtedness | 8 | |
| Section 3.06. | Absence of Certain Changes | 8 | |
| Section 3.07. | Taxes. | 8 | |
| Section 3.08. | Intellectual Property. | 9 | |
| Section 3.09. | Legal Proceedings | 10 | |
| Section 3.10. | Compliance with Laws; Permits. | 10 | |
| Section 3.11. | Anti-Corruption and Trade Controls | 11 | |
| Section 3.12. | Environmental Matters. | 11 | |
| Section 3.13. | Benefit Plans. | 12 | |
| Section 3.14. | Contracts. | 13 | |
| Section 3.15. | Real Properties. | 14 | |
| Section 3.16. | Labor and Employment. | 15 | |
| Section 3.17. | Privacy Laws | 15 | |
| Section 3.18. | Finder’s Fee | 15 | |
| Section 3.19. | Insurance | 16 | |
| Section 3.20. | Disclaimer of Other Representations and Warranties | 16 | |
| Article IV REPRESENTATIONS AND WARRANTIES OF PURCHASER | 17 | ||
| Section 4.01. | Organization | 17 | |
| Section 4.02. | Authority | 17 | |
| Section 4.03. | No Conflict; Governmental Authorizations. | 17 | |
| Section 4.04. | Litigation | 18 | |
| Section 4.05. | Solvency | 18 | |
| Section 4.06. | Finder’s Fee | 18 | |
| Section 4.07. | Sufficient Funds | 18 | |
| Section 4.08. | No Reliance. | 18 | |
| i |
| Article V CONDITIONS TO CLOSING | 20 | ||
| Section 5.01. | Conditions Precedent to Purchaser’s Obligations at the Closing | 20 | |
| Section 5.02. | Conditions Precedent to Seller’s Obligations on the Closing Date | 21 | |
| Article VI CERTAIN COVENANTS | 21 | ||
| Section 6.01. | Conduct of Business. | 21 | |
| Section 6.02. | Certain Covenants Regarding the Transferred Entities | 23 | |
| Section 6.03. | No Undue Interference | 23 | |
| Section 6.04. | Publicity | 23 | |
| Section 6.05. | Commercially Reasonable Best Efforts; Regulatory Approvals | 24 | |
| Section 6.06. | Access. | 26 | |
| Section 6.07. | Closing I/C Liabilities | 27 | |
| Section 6.08. | R&W Insurance | 27 | |
| Section 6.09. | Non-Competition; Non-Solicitation | 27 | |
| Section 6.10. | Landlord Consents | 27 | |
| Article VII POST-CLOSING COVENANTS | 28 | ||
| Section 7.01. | Access | 28 | |
| Section 7.02. | Insurance | 28 | |
| Section 7.03. | Payments from Third Parties | 28 | |
| Section 7.04. | Tax Matters. | 28 | |
| Section 7.05. | Transaction Expenses and Bonuses | 31 | |
| Section 7.06. | PCAOB Audit Costs | 31 | |
| Article VIII EMPLOYEE MATTERS | 31 | ||
| Section 8.01. | Employees. | 31 | |
| Section 8.02. | Transferred Employees. | 32 | |
| Section 8.03. | Other Employee Issues; Cooperation. | 33 | |
| Article IX TERMINATION | 34 | ||
| Section 9.01. | Termination | 34 | |
| Section 9.02. | Effect of Termination | 35 | |
| Section 9.03. | Termination Fees. | 35 | |
| Article X SURVIVAL AND INDEMNIFICATION | 36 | ||
| Section 10.01. | Survival | 36 | |
| Section 10.02. | Losses | 37 | |
| Section 10.03. | Indemnification. | 37 | |
| Section 10.04. | Notification of Claims. | 37 | |
| Section 10.05. | Exclusive Remedies | 39 | |
| Section 10.06. | Additional Indemnification Provisions. | 39 | |
| Section 10.07. | Mitigation | 40 | |
| Section 10.08. | Tax Treatment of Indemnification Payments | 40 | |
| ii |
| Article XI MISCELLANEOUS | 40 | ||
| Section 11.01. | Financial Information and Projections. | 40 | |
| Section 11.02. | Amendment and Modifications | 41 | |
| Section 11.03. | Interpretation and Construction. | 41 | |
| Section 11.04. | Waiver | 42 | |
| Section 11.05. | Notices | 42 | |
| Section 11.06. | Binding Effect; Assignment | 43 | |
| Section 11.07. | Entire Agreement | 44 | |
| Section 11.08. | Third Party Beneficiaries | 44 | |
| Section 11.09. | Governing Law | 44 | |
| Section 11.10. | Submission to Jurisdiction | 45 | |
| Section 11.11. | Severability | 45 | |
| Section 11.12. | Waiver of Jury Trial | 45 | |
| Section 11.13. | Counterparts | 45 | |
| Section 11.14. | Facsimile or .pdf Signature | 45 | |
| Section 11.15. | No Presumption Against Drafting Party | 45 | |
| Section 11.16. | Further Assurances | 46 | |
| Section 11.17. | Specific Performance | 46 | |
| Section 11.18. | Headings | 46 | |
| Section 11.19. | Disclosure Schedules | 46 | |
| Section 11.20. | Payment of Expenses | 46 | |
| Section 11.21. | Non-Recourse | 47 | |
| Section 11.22. | Publicity | 47 | |
| Section 11.23. | Fulfillment of Obligations | 47 | |
| iii |
| Exhibits | |
| Exhibit A | Definitions |
| Exhibit B | Allocation Schedule |
| Exhibit C | Local Transfer Documents |
| Exhibit D | Transition Services Agreement |
| Exhibit E | License Agreement |
| Exhibit F | Restricted Cash |
| Annexes | |
| Annex A | Sellers |
| Annex B | Intercompany Debt Restructuring |
| Annex C | Business Units |
| Annex D | French Acceptance Notice |
| Schedules | |
| Schedule A | Transfer of French Equity Interests |
| Schedule B | Gross Profit |
| iv |
THIS PURCHASE AGREEMENT (this “Agreement”), dated as of June 10, 2026, is entered into by and among FireFish TopCo, LLC (the “Seller” and collectively with its Subsidiaries listed as Sellers on Annex A, the “Sellers”) and Aspire Biopharma Holdings, Inc. (the “Purchaser”).
W I T N E S S E T H:
WHEREAS, the Transferred Entities and other Sellers currently conduct the Business;
WHEREAS, Sellers own, directly or indirectly, all of the issued and outstanding equity interests in the Transferred Entities;
WHEREAS, prior to the Closing, Seller intends to cause to be consummated each of the intercompany debt restructuring transactions set forth on Annex B that are intended to be consummated prior to the Closing (the “Intercompany Debt Restructuring”); and
WHEREAS, at the Closing, and following the completion of the Intercompany Debt Restructuring, (a) Seller desires to cause the applicable Sellers to sell, and Purchaser desires to purchase or cause certain of its Affiliates to purchase, the Transferred Equity Interests and (b) Seller and Purchaser desire to complete or cause to be completed the other transactions provided for herein with respect to the sale of the Business to Purchaser, in each case subject to the conditions of this Agreement and the applicable Transaction Documents.
NOW, THEREFORE, in view of the foregoing premises and in consideration of the mutual covenants, agreements, representations and warranties herein contained, the parties hereto agree as follows:
Article I
DEFINITIONS AND INTERPRETATIONS
Section 1.01. Definitions. For purposes of this Agreement, except as otherwise specifically provided in this Agreement, each capitalized term has the meaning given to it in Exhibit A attached hereto.
Article II
CLOSING
Section 2.01. Closing. Unless otherwise agreed by the Purchaser and Seller in writing, the closing of the purchase and sale of the Transferred Equity Interests, the U.S. Enterprise and the KOP Enterprise (the “Closing”) shall take place remotely via the electronic exchange of documents, at 10:00 A.M., New York City time, on the date that is three (3) Business Days following the satisfaction of the conditions set forth in Section 5.01 and Section 5.02 (excluding those conditions to the extent permitted by applicable Law, waived at such time) have been satisfied or such other date as the parties may mutually agree in writing. The date on which the Closing occurs is referred to in this Agreement as the “Closing Date.” For accounting and tax purposes, the Closing shall be deemed to take effect at 12:00 A.M., local time (in each country in which a Business Unit is located), on the day immediately following the Closing Date, unless stipulated otherwise in the relevant Local Transfer Documents.
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Section 2.02. Transferred Equity and Other Interests.
(a) Transfers. Pursuant to the terms and subject to the conditions set forth in this Agreement, at the Closing, Seller will cause the applicable Sellers to sell, convey, assign and transfer to Purchaser, and Purchaser will (or will cause its designated Affiliates to), (i) purchase, acquire and accept, the Transferred Equity Interests, the U.S. Enterprise and the KOP Enterprise, free and clear of all Liens other than Permitted Liens and in accordance with the applicable Local Transfer Documents and (ii) complete the asset and liability assignment and assumption transactions contemplated by the applicable Local Transfer Documents.
(b) Transfer of French Equity Interests. Pursuant to the terms and subject to the conditions set forth in this Agreement and to Seller sending a French Acceptance Notice to Purchaser pursuant the terms of Schedule A hereto, at the Closing, Seller will cause the applicable Sellers to sell, convey, assign and transfer to Purchaser, and Purchaser will (or will cause its designated Affiliates to), purchase, acquire and accept, the French Equity Interests, free and clear of all Liens other than Permitted Liens and in accordance with the applicable Local Transfer Documents (the “French Equity Transfer”).
(c) Local Transfer Documents. The transfer of each Business Unit set forth on Annex C will be effected pursuant to the applicable transfer, assignment and assumption and other documents and instruments described or attached in respect of each such Business Unit on Annex C (each, a “Local Transfer Document”). Notwithstanding the foregoing, to the extent that the provisions of a Local Transfer Document (including any provisions required by local Law to be included in the Local Transfer Document) are inconsistent with, or (except to the extent they implement a transfer in accordance with this Agreement) additional to, the provisions of this Agreement (or do not fully give effect to the provisions of this Agreement with respect to the transfer of the Transferred Equity Interests): (i) the provisions of this Agreement shall prevail and (ii) so far as permissible under applicable Law of the relevant jurisdiction, Seller and Purchaser shall cause the provisions of the relevant Local Transfer Document to be adjusted, to the extent necessary to give effect to the provisions of this Agreement. With respect to businesses and the Transferred Entities domiciled in India, Mexico and Czech Republic, the Purchaser shall have the right to assign all or portion of such purchases to Subsidiaries of the Purchaser at Closing; provided that, Purchaser shall continue to remain responsible for all of its obligations hereunder with respect thereto (including as to payment of the Closing Purchase Price).
Section 2.03. Purchase Price.
(a) Subject to the terms and conditions of this Agreement, at the Closing, Purchaser shall pay or cause to be paid to the Seller (or one or more of its designated other Sellers or Affiliates), in immediately available cash funds, in U.S. Dollars, by wire transfer to one or more bank accounts designated in writing by the Seller at least two (2) Business Days prior to the Closing Date as directed by the Seller in an amount equal to (i) $30,000,000.00 (the “Purchase Price”), plus (ii) $800,000 in respect of deferred revenue of the Business Entities (it being acknowledged that such $800,000 represents an agreed upon fixed credit for such deferred revenue, regardless of the actual amount of such deferred revenue), minus (iii) any Income Tax obligations of the Transferred Entities net of any Income Tax receivables, minus (iv) Indebtedness of the Transferred Entities as of the Closing (such final amount, the “Closing Purchase Price”).
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(b) No later than three (3) Business Days prior to the Closing, Seller shall deliver to Purchaser a statement setting forth, in reasonable detail, the calculation of the Closing Purchase Price (such statement, the “Closing Statement”), such statement to be prepared in good faith and in accordance with GAAP and the applicable definitions set forth in this Agreement. Purchaser shall have two (2) Business Days after delivery of the Closing Statement to review and raise in writing any objections to the calculations therein and Seller shall consider any such objections and consult with Purchaser in respect therewith in good faith; provided, however, no such objections with respect to the Closing Statement or any calculation contained therein shall prevent, delay or otherwise affect Purchaser’s obligation to consummate the Closing, or constitute a condition to Closing or a basis for termination of this Agreement.
Section 2.04. Allocation of Purchase Price.
(a) Purchaser and Seller agree that the Purchase Price shall be allocated among the Transferred Entities and/or Business Units as set forth on Exhibit B (the “Allocation Schedule”). To the extent relevant under applicable Tax Law, the Purchase Price associated with each Transferred Entity and/or Business Unit shall be further allocated among the assets of such Transferred Entities in a manner consistent with Section 1060 of the Code (including the Treasury Regulations thereunder), the Allocation Schedule and this Section 2.04.
(b) Within ninety (90) calendar days after the Closing, Seller shall deliver a draft of the allocation of the Purchase Price associated with an applicable Transferred Entity among the assets of such Transferred Entity (the “Proposed Allocation”) to Purchaser. Except as provided in subparagraphs (c) and (d) of this Section 2.04, at the close of business on the sixtieth (60) calendar day after delivery of the Proposed Allocation, the Proposed Allocation shall become binding upon Purchaser and Seller as the “Allocation.”
(c) Purchaser shall raise any objection (so long as such objection is reasonable) to the Proposed Allocation in writing within sixty (60) calendar days of the delivery of the Proposed Allocation. Purchaser and Seller shall negotiate in good faith to resolve any dispute within thirty (30) calendar days after delivery of the Proposed Allocation. If Purchaser and Seller resolve all such disputes concerning the Proposed Allocation within thirty (30) calendar days after its delivery, the Proposed Allocation, as amended to reflect such resolution, shall become binding upon Purchaser and Seller as the Allocation.
(d) If Purchaser and Seller cannot agree on the Allocation within thirty (30) calendar days after delivery of the Proposed Allocation, then all remaining disputed items shall be submitted for resolution by the Accountant. Purchaser and Seller shall submit a written proposal to the Accountant and instruct them to make a final determination as to the disputed items within thirty (30) calendar days after such submission. The Proposed Allocation shall be amended in accordance with the findings of such Accountant, and the Proposed Allocation, as so amended, shall become binding upon Purchaser and Seller as the Allocation. The fees, costs and expenses of the Accountant shall be borne by Purchaser.
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(e) The Allocation shall be amended to reflect any adjustments (including those described in this Section 2.04) to the Purchase Price under this Agreement, and any other adjustments mutually agreed to between the parties. Each of Seller, Purchaser and their respective Affiliates shall prepare and file its Tax Returns (including IRS Form 8594) on a basis consistent with the Allocation and Allocation Schedule, and shall take no position inconsistent with the Allocation (or Allocation Schedule, as applicable) on any Tax Return or in any proceeding before any Taxing Authority or otherwise, except as required by applicable Law. In the event that the Allocation or Allocation Schedule is disputed by any Taxing Authority, the party receiving notice of the dispute shall promptly notify the other party hereto.
Section 2.05. Transfer Taxes and Other Costs.
(a) All Transfer Taxes that may be imposed or assessed as a result of the execution of this Agreement or the Ancillary Agreements (or in connection with the transfer of the Transferred Entity and/or Business Unit to Purchaser or its Affiliates), together with any interest, additions or penalties with respect thereto shall be borne and paid in full by Purchaser when due in compliance with applicable Transfer Tax Laws; provided, however, that if Seller determines (in its sole reasonable discretion) that it is required by applicable Law to pay any Transfer Taxes, then Seller shall pay such Transfer Taxes, and Purchaser shall, subject to receipt of reasonably satisfactory evidence of Seller’s payment thereof, promptly reimburse Seller in dollars (or, at Seller’s request, reimburse Seller in local currency), whether or not such Transfer Taxes were correctly or legally imposed by the applicable Taxing Authority.
(b) Seller and Purchaser shall file all Tax Returns required to be filed with respect to all Transfer Taxes, and, if required by applicable Law, the parties will, and will cause their Affiliates to, join in the execution of any such Tax Returns.
Section 2.06. Withholding Taxes. Purchaser is permitted to withhold amounts from the Purchase Price as required under applicable Tax Law. However, at least five (5) days before the expected withholding, Purchaser shall deliver a schedule of expected withholding amounts to Seller. Furthermore, Purchaser shall reasonably cooperate with Seller to reduce the amount of withholding Taxes imposed on the payment of the Purchase Price, including by executing and filing any forms or certificates reasonably required to claim an available reduced rate of, or exemption from, withholding Taxes.
Section 2.07. Delivery by Seller. At the Closing, Seller will deliver or cause to be delivered to Purchaser (unless delivered previously), the following:
(a) the officer’s certificate referred to in Section 5.01(c) hereof;
(b) the Local Transfer Documents and/or transfer instruments, as applicable, required for effecting the sale of the equity or business of each Business Unit, substantially as described on or attached to Exhibit C;
(c) the Transition Services Agreement in the form of Exhibit D hereto with such service schedules and pricing as mutually agreed between Purchaser and Seller prior to the Closing Date (the “Transition Services Agreement”) and duly executed by Seller; provided, however, that the execution of the Transition Services Agreement shall not constitute a condition to Closing, and the failure of the parties to finalize or execute the Transition Services Agreement prior to the Closing Date shall not delay or prevent the consummation of the Closing;
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(d) a duly executed license agreement (the “License Agreement”) in the form of Exhibit E granting Purchaser a perpetual, royalty-free license to utilize the trademarks set forth therein in connection with the Business;
(e) a duly executed certificate of a secretary or other authorized signatory of each Seller enclosing a copy of (i) resolutions of its board of directors (or other applicable body) authorizing each Seller to enter into this Agreement and the other Transaction Documents and to consummate the Transactions and (ii) its good standing certificate;
(f) consents or notifications of all workers’ counsels and labor unions required in connection with the Transactions;
(g) resignations of all directors and officers of any of the Transferred Entities that are not Business Employees;
(h) a duly executed IRS Form W-9 of Seller; and
(i) counterparts of all other Ancillary Agreements to which any Seller or any Transferred Entity is a party, duly executed by such Seller or such Transferred Entity, as applicable
Section 2.08. Delivery by Purchaser. At the Closing, Purchaser will deliver or cause to be delivered to Seller or, as designated by Seller, one or more of Seller’s Affiliates (unless previously delivered), the following:
(a) the Closing Purchase Price;
(b) the officer’s certificate referred to in Section 5.02(c) hereof;
(c) the Local Transfer Documents and/or transfer instruments, as applicable, required for effecting the sale of the equity or business of each Business Unit, substantially as described on or attached to Exhibit C;
(d) a duly executed certificate of a secretary or other authorized signatory of Purchaser enclosing a copy of (i) resolutions of its board of directors (or other applicable body) authorizing Purchaser to enter into this Agreement and the other Transaction Documents and to consummate the Transactions and (ii) a certificate of the appropriate Governmental Authority certifying the status or good standing, if applicable, of Purchaser in its jurisdiction of incorporation, or the equivalent of the documents referred to in clauses (i) and (ii) above under applicable Law governing Purchaser; and
(e) counterparts of all other Ancillary Agreements to which Purchaser or any Purchaser Affiliate is a party, duly executed by Purchaser or such Purchaser Affiliate, as applicable.
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Article III
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in the Disclosure Schedules and subject to Section 11.19, each Seller represents and warrants to Purchaser as follows:
Section 3.01. Due Organization. Each Seller and Transferred Entity is duly organized, validly existing and, where such concept or a functional equivalent is recognized in the applicable jurisdiction, in good standing under the Laws of its jurisdiction of organization, except where such failure to be in good standing would not have a Material Adverse Effect. Each Seller and Transferred Entity (i) has all requisite power and authority under its organizational documents to own, lease and operate its properties and assets related to the Business and to conduct the Business conducted by such entity as it is currently conducted and (ii) is duly qualified or otherwise authorized to do business in each of the jurisdictions in which the ownership, operation or leasing of the assets held by a Transferred Entity by such entity and the conduct of the Business conducted by such entity requires such entity to be so qualified or otherwise authorized, except, in the case of clauses (i) and (ii), as would not have a Material Adverse Effect.
Section 3.02. Authority. Each Seller has full power and authority to execute and deliver this Agreement and to consummate, or cause to be consummated, the transactions contemplated hereby. Each Seller has, or will have at the Closing, full power and authority to execute and deliver each other Transaction Document to which it is or will be a party and to consummate, or cause to be consummated, the transactions contemplated by each of the other Transaction Documents to which it is or will be a party. The execution, delivery and performance by each Seller of the Transaction Documents to which such Seller is a party and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary action on the part of such Seller, and no other corporate or other proceedings on the part of such Seller are necessary to authorize the execution, delivery and performance by such Seller of such Transaction Documents or to consummate the transactions contemplated hereby or thereby. This Agreement has been, and upon their execution the other Transaction Documents shall have been, duly executed and delivered by each Seller party thereto, and, assuming due authorization and delivery by Purchaser and, if applicable, its Affiliates, this Agreement constitutes, and assuming due authorization and delivery by the other parties thereto, upon their execution the other Transaction Documents shall constitute, a valid and binding obligation of such Seller, enforceable against such Seller, in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, civil claw-back actions and other similar Laws now or hereafter in effect relating to or affecting creditors’ rights generally or by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) (collectively, the “Enforceability Exceptions”).
Section 3.03. Title to Transferred Equity Interests.
(a) Schedule 3.03(a) sets forth, as of the date of this Agreement, the number of authorized, issued and outstanding equity interests of the Transferred Entities and the jurisdiction of incorporation or legal organization of the Transferred Entities. Except as set forth in Schedule 3.03(a), there are no other authorized, issued or outstanding shares of capital stock or other equity interests of the Transferred Entities.
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(b) The Transferred Equity Interests have been duly authorized and validly issued and are fully paid and non-assessable. Other than this Agreement, no Transferred Entity is a party to or subject to any contract or obligation wherein any third party has, or will have, a right, option or warrant to purchase or acquire any rights in any additional equity interests of such Transferred Entity. None of the Transferred Equity Interests was issued in violation of any preemptive rights, rights of first offer, rights of first refusal or similar rights. Each Seller of the Transferred Equity Interests is the record and legal and beneficial owner of, and has good and valid title to, the Transferred Equity Interests that it owns, free and clear of any and all Liens, other than Permitted Liens. There are no options, warrants, call rights, equity holder agreements, voting trusts or proxies or other instruments, agreements or understandings in effect with respect to the sale, issuance, redemption or voting of any shares of capital stock, membership interests or other equity interests of the Transferred Entities (including the Transferred Equity Interests), or any securities or other instruments convertible into, exchangeable for, evidencing the right to purchase, or otherwise requiring the Transferred Entities to make a payment or otherwise provide value or benefits, in each case, in respect of the value of, any shares of capital stock or other equity interests in the Transferred Entities. The Transferred Entities do not have any obligations for payment in respect of any stock appreciation, phantom stock, profit participation or similar rights.
(c) No Transferred Entity, directly or indirectly, owns, of record or beneficially, any shares of capital stock or other equity interests of any other Person.
(d) No Transferred Entity has any option, warrant, call or right to purchase or acquire any rights in any shares of capital stock or other equity interests of any other Person, or any interest convertible into, or exercisable or exchangeable for, any capital stock or other equity interest of any other Person.
Section 3.04. No Conflict; Governmental Authorizations.
(a) The execution and delivery by each Seller of the Transaction Documents to which it is a party and the consummation by such Seller of the transactions contemplated hereby and thereby do not and will not, as applicable, (i) violate or conflict with any organizational documents of such Seller or Transferred Entity, as applicable, in any material respect, (ii) violate, conflict with or result in a breach of, or constitute a default by (or create an event which, with notice or lapse of time or both, would constitute a default by) such Seller or Transferred Entity, as applicable, or give rise to a right of termination, cancellation or acceleration of any obligation or loss of a benefit under any Material Contract, (iii) result in the creation of any Lien (except for Permitted Liens) upon a Transferred Entity or a Seller’s interest in the Transferred Equity Interests, or (iv) subject to the matters described in Section 3.04(b), violate or result in a breach of any Governmental Order or Law applicable to a Transferred Entity, in each case except for filings that may be required as a result of facts specific to Purchaser and except as set forth on Schedule 3.04(a) and, in the case of clauses (ii) and (iii), except as would not have a Material Adverse Effect.
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(b) Except as set forth on Schedule 3.04(b), no consent of, or registration, declaration, notice or filing with, any Governmental Authority is required to be obtained or made by any Seller in connection with the execution, delivery and performance of the Transaction Documents to which it is a party or the consummation of the transactions contemplated hereby and thereby, other than such consents, registrations, declarations, notices or filings that, if not obtained, would not have, individually or in the aggregate, a Material Adverse Effect on, or materially delay, the ability of the Purchaser Parties to consummate the transactions contemplated by this Agreement and the other Transaction Documents.
Section 3.05. Financial Statements; Indebtedness.
(a) Schedule Section 3.05(a) sets forth the unaudited balance sheets and the related unaudited statements of operations, stockholders’ equity and cash flows of the Transferred Entities as of and for the (i) 12-month period ended December 31, 2024, and (ii) 9-month period ended September 30, 2025 (the “Financial Statements”). Except as set forth on Schedule 3.05, the amounts included in the Financial Statements are derived from the books and records of the Business, which are kept in the ordinary course of the Business and in accordance with Seller’s accounting policies and practices. The Financial Statements fairly present, in all material respects, the financial condition of the Business as of such dates.
(b) Schedule Section 3.05(b) sets forth all Indebtedness of the Transferred Entities.
Section 3.06. Absence of Certain Changes. Except as set forth on Schedule 3.06(b), between January 1, 2025 and the date hereof, except as required by this Agreement and the other Transaction Documents, (i) each of the Business Entities has operated the Business in the Ordinary Course of Business in all material respects; (ii) each of the Business Entities has conducted its collection of accounts receivable and the payment of accounts payable and accrued expenses and management of working capital in the Ordinary Course of Business; and (iii) there have not been any events or occurrences that have resulted in a Material Adverse Effect.
Section 3.07. Taxes.
(a) All material Tax Returns that are required to be filed with respect to the Transferred Entities have been timely filed (taking into account any applicable extensions). All such Tax Returns were correct and complete in all material respects and were prepared and filed in material compliance with all applicable Laws.
(b) All material Taxes with respect to the Transferred Entities that are due and payable have been paid, except for Taxes being contested in good faith through appropriate proceedings or Taxes for which adequate reserves have been established in the accounting books and records.
(c) Each Transferred Entity has duly and timely withheld (or caused to be duly and timely withheld) all material amounts required to be deducted or withheld with respect to any amounts payable to any employee, independent contractor, client, creditor or customer and has timely paid to the appropriate authorities all such deducted or withheld amounts.
(d) There is no Lien for material Taxes upon any of the Transferred Entities other than Permitted Liens.
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(e) Except as set forth on Schedule 3.07(e), no actions, claims, audits, administrative proceedings or court proceedings with regard to material Taxes or the Tax Returns referred to in Section 3.07(a) are currently pending, and all deficiencies asserted or assessments made, if any, as a result of such examinations have been paid in full, unless the validity or amount thereof is being contested by such Transferred Entity or its Affiliates in good faith by appropriate action.
(f) No written agreement or other document extending, or having the effect of extending, the period of assessment, deficiency or collection of any material Taxes payable by any Transferred Entity is in effect as of the date hereof, and no Transferred Entity is, as of the date hereof, the beneficiary of any extension of time (other than an automatic extension of time not requiring the consent of the applicable Governmental Authority) within which to file any Tax Return not previously filed.
(g) No Transferred Entity is a party to any Tax allocation or Tax sharing agreements, other than lease, financing, or other agreements or arrangements entered into in the Ordinary Course of Business whose principal purpose is other than Tax matters.
(h) Notwithstanding anything to the contrary in this Agreement or any other Transaction Document, the representations and warranties contained in this Section 3.07 constitute the sole representations and warranties of Seller with respect to Taxes. Nothing in this Section 3.07 shall be construed as providing a representation with respect to any Post-Closing Tax Period.
Section 3.08. Intellectual Property.
(a) Schedule 3.08(a) sets forth a list of all Intellectual Property owned by the Business Entities (the “Owned IP”), that is registered or subject to a pending application for registration for the following: (i) patents, (ii) trademarks, (iii) copyrights and (iv) domain names (collectively, “Registered IP”). Each item of Registered IP is subsisting, and to the Seller’s Knowledge, valid and enforceable; all necessary registration, maintenance and renewal fees currently due in connection with any Registered IP has been paid and all necessary documents and certificates in connection therewith have been filed with the relevant patent, copyright, trademark or other authorities in the United States or foreign jurisdictions, as the case may be, for the purposes of maintaining such Registered IP.
(b) Except as set forth on Schedule 3.08(b), the Business Entities are the exclusive owner of all right, title and interest in and to the Owned IP, free and clear of all Liens other than Permitted Liens, subject only to non-exclusive licenses granted to (i) customers in the Ordinary Course of Business, (ii) other third parties under a settlement or (iii) entities and businesses previously divested by Seller to operate such divested entities and businesses. Each of the Business Entities has taken commercially reasonable steps to protect and maintain the confidentiality of trade secrets included in the Owned IP.
(c) Except as would not be material to the Business, taken as a whole, (i) the conduct of the Business as currently conducted does not infringe, misappropriate, dilute or otherwise violate the IP Rights of another Person and (ii) to the Knowledge of Seller, no Person is infringing, misappropriating, diluting or otherwise violating any Owned IP. No Business Entity has, in the last three (3) years, received any written charge, complaint, claim, demand, or notice alleging any such infringement, misappropriation or violation, or challenging the ownership by any Business Entity of or the validity or enforceability of any Owned IP.
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(d) Except as would not be material to the Business, to the Knowledge of Seller, no material software included in the Owned IP incorporates any open source code in any software that is licensed or made available, or intended to be licensed or made available, to third parties in a manner that would (i) require the contribution, sale, licensing, provision or public disclosure to any Person of any source code for such software, or (ii) impose limitations on Purchaser’s or the Transferred Entities’ right to require royalty payments from or restrict further distribution of such software. Except (i) as set forth on Schedule 3.08(d), no Person other than the Business Entities (or their Affiliates) has accessed or possessed (or has any current or contingent right to access or possess) any material proprietary source code included in the Owned IP (except for disclosures to employees, contractors or consultants under binding written agreements, or under a statutory, common law or contractual duty of confidentiality, that prohibit use or disclosure except in the performance of services to a Seller).
(e) Except as would not be material to the Business, taken as a whole, none of the Business Entities is a party to any pending or, to the Knowledge of Seller, threatened Action or Governmental Order (i) alleging that the operation of the Business, infringes, misappropriates, dilutes or otherwise violates the IP Rights of any Person or (ii) challenging the ownership, validity, patentability, enforceability, registrability or use of any Intellectual Property.
(f) No current of former employee or service provider has retained any rights, licenses, claims or interest whatsoever with respect to any Intellectual Property developed by him or her for any Business Entity, and each such employee and service provider has executed an assignment of inventions assigning all rights to any Intellectual Property developed by him or her for any Business Entity to such Business Entity or such ownership rights have otherwise vested in the Business Entity by operation of Law.
Section 3.09. Legal Proceedings. Except as set forth on Schedule 3.09 (the “Current Litigation”), as of the date hereof, there are no Actions pending against or, to the Knowledge of Seller, threatened in writing against, any Business Entity. None of the Business Entities is subject to any Governmental Order and, to the Knowledge of Seller, there are no Governmental Orders threatened to be imposed, in each case, except as would not have a Material Adverse Effect. This representation and warranty does not apply to Tax matters, which are the subject of Section 3.07, Intellectual Property matters, which are the subject of Section 3.08, or Actions under Environmental Laws, which are the subject of Section 3.12.
Section 3.10. Compliance with Laws; Permits.
(a) Except as set forth on Schedule 3.10(a) and except for non-compliance or violations that would not have a Material Adverse Effect, (i) the Business has been, since January 1, 2022, conducted at all times in compliance with all Laws and Governmental Orders applicable to the Business, and (ii) none of the Business Entities has received, since January 1, 2022, any written notice of any violation or alleged violation by the Business of any such Law or Governmental Order.
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(b) Except as set forth on Schedule 3.10(b), (i) The Business Entities have all Permits that are necessary to conduct the Business as currently conducted, (ii) all such Permits are in full force and effect, (iii) the Business is not being conducted in violation or default of such Permits, (iv) none of the Business Entities is in receipt of any written notification that any Governmental Authority is threatening to revoke any such Permit, (v) all such Permits were lawfully obtained in each of the foregoing clauses (i) through (iii) other than any exceptions as would not have a Material Adverse Effect.
(c) Notwithstanding the foregoing, the representations and warranties contained in this Section 3.10 do not apply to Intellectual Property, Taxes, environmental matters, Benefit Plans or employee benefits.
Section 3.11. Anti-Corruption and Trade Controls. Since January 1, 2022, the Business and each of its officers, directors, employees, and to the Knowledge of Seller, agents, distributors, and other individuals or entities acting for or on behalf of the Business (collectively, the “Relevant Persons”) have not directly or indirectly violated any provision of the U.S. Foreign Corrupt Practices Act of 1977 (as amended) or any other anti-corruption or anti-bribery Laws or regulations applicable to the Business (collectively, “Anti-Corruption Laws”). To the Knowledge of Seller, since January 1, 2022, each of the Business’s officers, directors, employees and the Relevant Persons have not in the course of their actions for, or on behalf of, the Business engaged directly or indirectly in transactions prohibited by any Law administered by the U.S. Treasury Department Office of Foreign Assets Control, or by any other applicable economic or trade sanctions Law (collectively, “Sanctions”).
Section 3.12. Environmental Matters.
(a) Except as set forth on Schedule 3.12(a) and except as would not have a Material Adverse Effect:
(i) each Seller, with respect to the Business, is in compliance with all, and since January 1, 2022 has not violated any, Environmental Laws, except where such violation has been resolved;
(ii) each Seller, with respect to the Business, has obtained and is in compliance with all, and since January 1, 2022 has not violated any, Permits required pursuant to Environmental Law to conduct the Business as currently conducted, except where such failure to obtain or such violation has been resolved;
(iii) as of the date hereof, none of the Business Entities has received a written order, complaint or penalty, since January 1, 2022 or which otherwise has not been resolved, that alleges with respect to the Business a violation of, or liability under, any Environmental Law, the substance of which has not been resolved;
(iv) as of the date hereof, there is no Action pending or, to the Knowledge of Seller, threatened in writing by a third party against any Seller with respect to the Business Unit or relating to the Transferred Entities alleging a liability under any Environmental Law; and
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(v) none of the Business Entities is currently investigating or remediating any liability pursuant to Environmental Law concerning any Release of Hazardous Materials by any Seller with respect to the Business.
(b) The representations and warranties in this Section 3.12 are the sole and exclusive representations and warranties of the Seller regarding environmental matters.
Section 3.13. Benefit Plans.
(a) Schedule 3.13(a) sets forth a complete and correct list of each material Seller Benefit Plan and identifies any such Seller Benefit Plan that is sponsored or maintained by a Transferred Entity and/or Business Unit.
(b) With respect to each material Seller Benefit Plan, the Seller has made available to Purchaser true, current and complete copies of, as applicable: (i) the most recent plan document (and all amendments thereto) or a written description of the terms of any unwritten plan; (ii) the most recent IRS determination or opinion letter; (iii) the most recently filed IRS Forms 5500; and (iv) the most recent summary plan description and any summaries of material modi¬fications with respect thereto.
(c) Neither the Seller nor any Transferred Entity has any obligation under any Seller Benefit Plan to provide post-employment medical, health, life insurance or other welfare-type benefits to any Business Employees or their beneficiaries, except for continuation coverage required to be provided under Part 6 of Subtitle B of Title I of ERISA, Section 4980B of the Code, and any similar state Law.
(d) No Seller Benefit Plan is, and neither the Seller nor any Transferred Entity maintains, sponsors, contributes (or is required to contribute) to, or has any material Liability under or with respect to, any: (i) “defined benefit plan” (as defined in Section 3(35) of ERISA); (ii) “multiemployer plan” (as defined in Section 3(37) of ERISA); (iii) multiple employer welfare arrangement (as defined in Section 3(40) of ERISA); or (iv) multiple employer plan as described in Section 413(c) of the Code.
(e) With respect to each Seller Benefit Plan, all payments, premiums, contributions or reimbursements for all periods ending prior to or as of the Closing that are required to be made with respect to the relevant Business Employees have been made within the time periods prescribed by applicable Laws in all material respects.
(f) Each Seller Benefit Plan and each related trust, insurance contract and fund have been maintained, funded and administered in compliance in all material respects with their terms and with the applicable provisions of ERISA, the Code, and the requirements of other applicable Laws. There are no actions, suits or proceedings (other than routine claims for benefits) pending or, to the Knowledge of Seller, threatened in writing with respect to any Seller Benefit Plan that would reasonably be expected to result in any Liability to Purchaser or its Affiliates following the Closing, as applicable, in respect of any Business Employees.
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(g) Each Seller Benefit Plan that is intended to be qualified under Section 401(a) of the Code has received a current favorable determination letter or opinion letter from the IRS upon which the Seller is currently entitled to rely, and, to the Knowledge of Seller, there are no circumstances that would reasonably be expected to adversely affect the qualified status of any such Seller Benefit Plan.
(h) Neither the execution or delivery of this Agreement nor the consummation of the Transactions (and without regard to any compensatory arrangements entered into between Purchaser or its Affiliates and any Business Employee) will entitle any Business Employee to any payment, or accelerate the time of payment or vesting, or increase the amount of compensation or benefits due to any Business Employee. The consummation of the Transactions (and without regard to any compensatory arrangements entered into between Purchaser or its Affiliates and any Business Employee) is not reasonably expected to result in the payment of any compensatory amount to any Business Employee that would be characterized as an “excess parachute payment” under Section 280G of the Code.
Section 3.14. Contracts.
(a) Schedule 3.14(a) sets forth a complete list of the following Contracts (other than purchase orders and invoices entered into in the Ordinary Course of Business) to which the Business Entities are a party to or otherwise bound by (other than any Contract that constitutes an Ancillary Agreement and other than any Seller Benefit Plan), as of the date hereof:
(i) any lease (whether of real or personal property) requiring (A) annual rentals of $500,000 or more or (B) aggregate payments by Transferred Entities and/or Business Units of $500,000 or more;
(ii) that (A) limits or purports to limit the ability of the Business to compete in any line of business, service or product or within any industry or geographical area, (B) grants any right of first refusal, right of first offer or similar right to acquire exclusive rights or ownership with respect to any service, product or Intellectual Property and/or (C) grants “most favored nation” or similar rights to any Person, in the case of clauses (B) and (C) other than Contracts entered into in the Ordinary Course of Business;
(iii) that expressly creates a partnership or joint venture involving an investment or any sharing or profits, losses, costs or liabilities by the Business with any other Person other than another Transferred Entity and/or Business Unit;
(iv) under which any Transferred Entity and/or Business Unit has an outstanding obligation or liability, including any continuing indemnification obligation and any “earn-out” or similar contingent payment obligation, relating to the acquisition or disposition of any business or entity (whether by merger, sale of stock, sale of assets or otherwise);
(v) for the purchase of materials, supplies, goods, equipment or services under which payments in excess of $500,000 were made by or on behalf of the Business during calendar year 2025, other than any Material Contract that can be terminated by any Seller or any Transferred Entity and/or Business Unit at will without premium or penalty on less than ninety (90) days’ notice;
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(vi) for goods and services provided by the Business under which the amount billed by the Business exceeded $750,000 during fiscal year 2025, other than any Material Contract that can be terminated at will without premium or penalty on less than ninety (90) days’ notice;
(vii) relating to indebtedness having an outstanding principal amount, or the making of guarantees or loans by any Transferred Entity and/or Business Unit, in each case, involving amounts in excess of $500,000;
(viii) that requires any outstanding capital commitment or capital expenditure by any Transferred Entity and/or Business Unit in respect of the Business of $250,000 or more, in the aggregate, other than any Material Contract that can be terminated by any Seller or any Transferred Entity and/or Business Unit at will without premium or penalty on less than ninety (90) days’ notice;
(ix) that grants to any Transferred Entity and/or Business Unit (A) ownership or exclusive rights to material Intellectual Property or (B) any other license to material Intellectual Property used in the Business, other than non-exclusive, commercially available software licenses with annual fees of less than $1,000,000; and
(x) reflecting a settlement of any threatened or pending Action containing continuing obligations or restrictions on the Business or any Transferred Entity and/or Business Unit.
The Material Contracts required to be set forth on Schedule 3.14(a) are collectively referred to herein as the “Material Contracts.”
(b) Seller has delivered to Purchaser, in all material respects, true and correct copies of each of the Material Contracts, together with any material amendments, modifications or supplements thereto. Except as set forth on Schedule 3.14(b), (i) Each Material Contract is in full force and effect and is a valid and binding agreement of the Seller or the Business Entity party thereto, enforceable in accordance with its terms, subject to the Enforceability Exceptions, (ii) none of the Business Entities or, to the Knowledge of Seller, any counterparty to a Material Contract is in breach of or default thereunder to which it is a party, (iii) none of the Business Entities has received from any counterparty any written notice of termination under any Material Contract, and (iv) to the Knowledge of Seller, no event has occurred that would result in a breach or default under any Material Contract by any Seller or any Business Entity, in each case except as would not have a Material Adverse Effect.
Section 3.15. Real Properties.
(a) Schedule 3.15(a) includes a true and complete list of all owned Real Property and leased Real Property which any of the Business Entities, as of the Closing will own, lease (as tenant) or sublease (as subtenant) (the “Real Property”).
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(b) The Real Property constitutes all the real property that is used or held for use primarily in the conduct of the Business as currently conducted. No Person other than Seller or the Business Entities has the right to use the Real Property. Since January 1, 2022, the Seller or the relevant Business Entity has not received written notice from any Governmental Authority of (i) any pending condemnation proceedings with respect to any Real Property, or (ii) any violation in any material respect of any local planning, zoning or similar land use restrictions of any Governmental Authority. To the Knowledge of Seller, all of the buildings, structures, appurtenances and other improvements situated on any Real Property have been maintained in good condition in all material respects in accordance with the usual business practices of Seller or the relevant Business Entity.
(c) Except as set forth on Schedule 3.15(c), Seller, or one of its Affiliates, as the case may be, has legal title to, or in the case of any leased Real Property that constitutes Real Property or personal property to the extent related to the Business, has valid leasehold interests (or the right to occupy the Real Property under a services agreement or license) in the Ordinary Course of Business.
Section 3.16. Labor and Employment.
(a) Schedule 3.16(a) contains a complete and correct list, as of the date of this Agreement, of each Collective Bargaining Agreement. Since January 1, 2022, there have been no (i) labor strikes, work stoppages or lockouts pending or, to the Knowledge of Seller, threatened in writing against any Seller by or on behalf of any Business Employee, (ii) unfair labor practice charges or material grievances pending, or to the Knowledge of Seller, threatened in writing against any Seller by or on behalf of any Business Employee before any applicable Governmental Authority, or (iii) to the Knowledge of Seller, labor organizing campaigns seeking to authorize representation of any Business Employee by any labor union.
(b) Since January 1, 2022, none of the Business Entities, solely with respect to the Business, has conducted any “mass layoff” or “plant closing” that required the issuance of notice under the Worker Adjustment and Retraining Notification Act of 1988 and any similar U.S. state or local Law.
Section 3.17. Privacy Laws. Except as set forth on Schedule 3.17 and except as would not have a Material Adverse Effect, each of the Business Entities, with respect to the Business has, since January 1, 2022, complied in all material respects with all applicable Privacy Laws. Each of the Business Entities has, with respect to the Business, taken adequate steps consistent with normal industry practices and appropriate to the risks of individuals to (i) maintain and protect the integrity, continuous operation and security of all IT assets used in the Business and (ii) secure the data related to the Business from loss, corruption, unauthorized access or unauthorized use by any Person, and to the Knowledge of Seller, there have been no breaches, violations, outages or unauthorized or accidental access to or use or loss of the foregoing, other than those that were resolved without material cost, material liability or the duty to notify any Person. Since January 1, 2022, none of the Business Entities has received a material complaint from any Person in relation to the processing of Personal Information relating to the Business or a written communication from any Governmental Authority that such Seller is acting or has acted in material breach of or is otherwise being investigated or is the subject of enforcement action in respect of a breach of any Privacy Laws with respect to the Business.
Section 3.18. Finder’s Fee. Other than as set forth on Schedule 3.18, none of the Sellers or Business Entities has incurred any liability to any Person for any brokerage or finder’s fee or agent’s commission, or the like, in connection with the transactions contemplated by this Agreement or the other Transaction Documents.
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Section 3.19. Insurance. Schedule 3.19 sets forth a complete list of all material insurance policies that insure the Business Entities. The Business Entities and the Business are insured in amounts no less than as required by applicable Law and any Material Contract, other than any failure to be so insured that would not have a Material Adverse Effect. All such insurance policies are in full force and effect, in all material respects, and all premiums due and payable on such insurance policies have been timely paid, in all material respects. None of the Business Entities is in breach or default, and none of the Business Entities has taken any action or failed to take any action which, with notice or the lapse of time, would constitute such a breach or default, or permit termination or modification, of any such insurance policies. No notice of cancellation, termination or non-renewal has been received by any of the Business Entities with respect to any such insurance policies. This Section 3.19 shall not apply to any Benefit Plan or any other employee benefit plan or arrangement.
Section 3.20. Disclaimer of Other Representations and Warranties. Except as expressly set forth in this Article III (as modified by the Disclosure Schedules), the certificates delivered pursuant to Section 2.07(a) and Section 2.07(e) and the other Transaction Documents, none of the Sellers, Business Entities nor any Affiliate of the Sellers or the Business Entities nor any of their respective officers, employees, agents or representatives makes or has made any representation or warranty, express or implied, at law or in equity, with respect to the Business, the Business Units, the Transferred Equity Interests or the past, present or future condition of any of the assets, liabilities or operations, or the past, current or future profitability or performance, individually or in the aggregate, of the Business, the Business Entities, the Business Units, the Transferred Equity Interests or any other matter, and Seller, on behalf of itself and the Business Entities and their respective Affiliates, successors, assigns, officers, directors, managers and advisors, specifically disclaims any such other representations or warranties. Except for the representations and warranties expressly set forth in this Article III (as modified by the Disclosure Schedules), the certificates delivered pursuant to Section 2.07(a) and Section 2.07(e) and the other Transaction Documents, Seller, on behalf of itself and the Sellers, Business Entities and their respective Affiliates, successors, assigns, officers, directors, managers and advisors, hereby disclaims all liability and responsibility for all projections, forecasts, estimates, financial statements, financial information, appraisals, statements, promises, advice, data or information made, communicated or furnished (orally or in writing, including electronically) to Purchaser or any of Purchaser’s Affiliates or any representatives of Purchaser or any of its Affiliates, including omissions therefrom. Without limiting the foregoing, neither the Sellers, Business Entities or their respective Affiliates, successors, assigns, officers, directors, managers and/or advisors makes any representation or warranty of any kind whatsoever, express or implied, written or oral, at law or in equity, to Purchaser or any of its Affiliates or any representatives of Purchaser or any of its Affiliates regarding the success, profitability or value of the Business Entities, the Transferred Equity Interests, the Business Units or the Business.
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Article IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants and acknowledges and agrees to Seller that:
Section 4.01. Organization. Purchaser is a Delaware corporation, and Purchaser and each of its Affiliates that is party to any Transaction Document (each, a “Purchaser Party”) are, or will be as of the Closing, duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization. Each Purchaser Party (a) has all requisite power and authority to carry on its business as it is now being conducted, and (b) is duly qualified or otherwise authorized to do business and is in good standing in each of the jurisdictions in which the ownership, operation or leasing of its properties and assets and the conduct of its business requires it to be so qualified or otherwise authorized, except, in the case of clause (b), as would not have, individually or in the aggregate, an adverse effect on, or materially delay, the ability of Purchaser to consummate the transactions contemplated by this Agreement and the other Transaction Documents.
Section 4.02. Authority. Each Purchaser Party has all requisite power and authority to execute, deliver and perform its obligations under the Transaction Documents to which such Purchaser Party is a party and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by each Purchaser Party of the Transaction Documents to which such Purchaser Party is a party and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary action on the part of such Purchaser Party, and no other corporate or other proceeding on the part of such Purchaser Party is necessary to authorize the execution, delivery and performance by such Purchaser Party of the Transaction Documents to which it is a party or to consummate the transactions contemplated hereby and thereby. This Agreement has been, and upon their execution each of the other Transaction Documents to which each Purchaser Party is a party shall have been, duly executed and delivered by such Purchaser Party, and, assuming due authorization and delivery by Seller, this Agreement constitutes, and assuming due authorization and delivery by the other parties thereto, upon their execution each such Transaction Document shall constitute, valid and binding obligations of such Purchaser Party, enforceable against such Purchaser Party in accordance with their terms, subject to the Enforceability Exceptions.
Section 4.03. No Conflict; Governmental Authorizations.
(a) The execution and delivery by each Purchaser Party of the Transaction Documents to which it is a party and the consummation by such Purchaser Party of the transactions contemplated hereby and thereby do not and will not (i) violate or conflict with any organizational documents of such Purchaser Party, (ii) violate, conflict with or result in a breach of, or constitute a default by (or create an event which, with notice or lapse of time or both, would constitute a default by) such Purchaser Party, or give rise to a right of termination, cancellation or acceleration of any obligation or loss of a material benefit under, or result in the creation of any Lien (except for Permitted Liens) upon any material assets of the Purchaser Parties under, any material Contract of the Purchaser Parties, or (iii) violate or result in a breach of any Permit held by the Purchaser Parties or any Governmental Order or, subject to the matters described in Section 4.03(b), Law applicable to the Purchaser Parties, in the case of clauses (ii) and (iii), except as would not have, individually or in the aggregate, a Material Adverse Effect on, or materially delay, the ability of the Purchaser Parties to consummate the transactions contemplated by this Agreement and the other Transaction Documents.
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(b) No consent of, or registration, declaration, notice or filing with, any Governmental Authority is required to be obtained or made by the Purchaser Parties in connection with the execution, delivery and performance of this Agreement and the other Transaction Documents or the consummation of the transactions contemplated hereby and thereby, other than such consents, registrations, declarations, notices or filings that, if not obtained, would not have, individually or in the aggregate, a Material Adverse Effect on, or materially delay, the ability of the Purchaser Parties to consummate the transactions contemplated by this Agreement and the other Transaction Documents.
Section 4.04. Litigation. There are no actions, suits, proceedings, claims or investigations pending or, to the Knowledge of Purchaser, threatened in writing concerning Purchaser or any of its Affiliates relating to the Transactions.
Section 4.05. Solvency. Assuming satisfaction of the conditions to Purchaser’s obligation to consummate the Transactions, and after giving effect to the Transactions and the payment of the Purchase Price, including any financing thereof, Purchaser will be Solvent immediately after the completion of the Closing.
Section 4.06. Finder’s Fee. Purchaser has not incurred any liability to any party for any brokerage or finder’s fee or agent’s commission, or the like, in connection with the transactions contemplated by this Agreement or the other Transaction Documents, in each case, for which Seller or any of its Affiliates may become liable.
Section 4.07. Sufficient Funds. Purchaser (a) has, and will have as of the Closing Date, cash sufficient to enable it to consummate the transactions contemplated by this Agreement and the other Transaction Documents to which it is a party and pay any expenses incurred by Purchaser or its Affiliates in connection with the transactions contemplated by this Agreement and the other Transaction Documents to which it is a party and (b) has not incurred, and will not incur between the date hereof and the Closing Date, any obligation, commitment, restriction or liability of any kind, which would impair or adversely affect such resources or capabilities.
Section 4.08. No Reliance.
(a) Purchaser is an informed and sophisticated purchaser and has engaged expert advisors who are experienced in the evaluation and purchase of businesses such as the Business (including the Transferred Equity Interests) as contemplated hereunder and has conducted its own independent investigation, review and analysis of the business, results of operations, prospects, condition (financial or otherwise) and assets of the Business. Purchaser acknowledges that it has had such access to the information, documents, personnel and properties of the Business Entities and relating to the Business as it deems necessary and appropriate to make such independent evaluation and purchase.
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(b) Purchaser has agreed to purchase the Transferred Equity Interests and other Business Units as set forth on Annex C on an “AS IS, WHERE IS AND WITH ALL FAULTS” basis as of the Closing Date, based on its own inspection, examination and determination with respect to all matters and without reliance upon any representations, warranties, communications or disclosures of any nature other than those expressly set forth in Article III of this Agreement, the certificates delivered pursuant to Section 2.07(a) and Section 2.07(e) and the other Transaction Documents. Purchaser agrees that the representations and warranties set forth in Article III, the certificates delivered pursuant to Section 2.07(a) and Section 2.07(e) and the other Transaction Documents, in each case, by Seller are in lieu of, and Purchaser hereby expressly waives all rights to, any implied warranties that may otherwise be applicable because of the provisions of the Uniform Commercial Code or any other statute, including the warranties of merchantability and fitness for a particular purpose.
(c) Without limiting the generality of the foregoing or Section 11.01, Purchaser, in entering into this Agreement, acknowledges and agrees that (i) no officer, agent, advisor, employee or representative of the Seller and none of their respective Affiliates has any authority, express or implied, to make any representations, warranties or agreements not specifically set forth in Article III of this Agreement, the certificates delivered pursuant to Section 2.07(a) and Section 2.07(e) and the other Transaction Documents, (ii) Purchaser is relying solely on the representations and warranties set forth in Article III of this Agreement, the certificates delivered pursuant to Section 2.07(a) and Section 2.07(e) and the other Transaction Documents, and (iii) none of the Sellers, the Business Entities nor any other Person makes any representation or warranty, express or implied, with respect to, and Purchaser expressly disclaims any reliance on, (A) any information included in information packages delivered to Purchaser related to the Business (including the Transferred Equity Interests ) or other matters, (B) any information, written or oral and in any form provided, made available to it or any of its agents, accountants, advisors, employees or representatives, (C) any projections, estimates or budgets delivered to or made available to it or any of its agents, advisors, employees or representatives, or which is made available to it or any of its agents, advisors, employees or representatives after the date hereof, or future revenues, expenses or expenditures, future results of operations (or any component thereof), future cash flows or future financial condition (or any component thereof) of any Seller or the future business and, (D) the operation of the Business by Purchaser after the Closing in any manner, (E) the probable success or profitability of the ownership, use or operation of the Business (including the Business Units) by Purchaser after the Closing or (F) the accuracy or completeness of any other information, written or oral and in any form provided, or documents previously made available or which is made available after the date hereof to it or any of its agents, advisors, employees or representatives with respect to any of the Business Entities, the Transferred Equity Interests, the Business Units or their respective businesses and operations or other related matters, whether in expectation of the transactions contemplated by this Agreement or otherwise.
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Article V
CONDITIONS TO CLOSING
Section 5.01. Conditions Precedent to Purchaser’s Obligations at the Closing. All of the obligations of Purchaser hereunder are subject to fulfillment, prior to or at the Closing, of the following conditions (compliance with which or the occurrence of which may be waived, to the extent permitted by applicable Law, in whole or in part by Purchaser in writing):
(a) The representations and warranties of Seller contained herein (disregarding all qualifications and exceptions contained therein relating to materiality or Material Adverse Effect), other than the Seller Fundamental Representations shall be true and correct on and as of the Closing Date (other than representations and warranties made as of a specified date, which shall be true and correct as of the date specified), unless the failure of such representations and warranties to be so true and correct would not have, individually or in the aggregate, a Material Adverse Effect. Each of the Seller Fundamental Representations shall be true and correct in all material respects as of the Closing Date as though made on and as of the Closing Date, except that representations and warranties that are made as of a specific date shall be true and correct in all material respects, as of the date specified.
(b) Seller shall have or have caused the applicable Sellers to have performed and complied in all material respects with all of the covenants and agreements contained in this Agreement and the other Transaction Documents (subject to Section 2.07(c)) to be complied with and performed by Seller at or before the Closing.
(c) Seller shall have delivered to Purchaser a certificate as of the Closing Date and executed by an authorized officer of Seller to the effect that each of the conditions specified above in Sections 5.01(a) and (b) is satisfied in all respects.
(d) No Law enacted, entered, promulgated, enforced or issued by any Governmental Authority or other legal restraint or prohibition preventing the consummation of any of the Transactions (each, a “Closing Legal Impediment”) shall be in effect.
(e) All Antitrust Approvals and Foreign (Direct) Investment Approvals specified on Section 5.01(e) shall have been obtained.
(f) Seller shall have or caused the applicable Sellers to have assigned and delivered, or caused one or more of its Affiliates to sign and deliver, the Ancillary Agreements.
(g) Seller shall have delivered or obtained all consents, notices or approvals, as required, for all applicable works councils and/or labor unions of the French Subsidiary in connection with the Transactions.
(h) Seller shall have delivered the French Acceptance Notice such that the French Equity Transfer will take place on the Closing Date as contemplated by Section 2.02(b) (collectively, the “French Equity Transfer Approval”).
(i) A PCAOB audit of the Business for fiscal years 2024 and 2025 (the “PCAOB Audit”) shall have been completed and shall reflect (i) an unqualified (clean) audit opinion and (ii) Gross Profit minus capital expenditures of at least $12,000,000 in each of fiscal years 2024 and 2025 (the “PCAOB Audit Condition”); provided, that, in the event a clean PCAOB Audit opinion satisfying the foregoing is not obtained prior to the Outside Date, Purchaser shall have the right to terminate this Agreement pursuant to Section 9.01.
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Section 5.02. Conditions Precedent to Seller’s Obligations on the Closing Date. All of the obligations of Seller hereunder are subject to the fulfillment, prior to or at the Closing, of the following conditions (compliance with which or the occurrence of which may be waived, to the extent permitted by applicable Law, in whole or in part by Seller in writing):
(a) The representations and warranties of Purchaser set forth in this Article IV of this Agreement (disregarding all qualifications and exceptions contained therein relating to materiality), other than the Purchaser Fundamental Representations, shall be true and correct as of the Closing Date as though made on and as of the Closing Date (except to the extent such representations and warranties are made as of a specific date, in which case such representations and warranties shall be true and correct only as of such date), unless, the failure of such representations and warranties to be so true and correct would not, individually or in the aggregate, have a Material Adverse Effect on Purchaser’s ability to execute, deliver or perform this Agreement or any Ancillary Agreement, or to timely consummate the transactions contemplated hereby or thereby. Each of the Purchaser Fundamental Representations shall be true and correct in all material respects as of the Closing Date as though made on and as of the Closing Date, except that representations and warranties that are made as of a specific date shall be true and correct in all material respects only as of such date.
(b) Purchaser shall have performed and complied in all material respects with all of the covenants and agreements contained in this Agreement and the other Transaction Documents (subject to Section 2.07(c)) to be complied with and performed by Purchaser at or before the Closing.
(c) Purchaser shall have delivered to Seller a certificate dated as of the Closing Date and executed by an authorized officer of Purchaser to the effect that each of the conditions specified above in Section 5.02(a) and Section 5.02(b) is satisfied in all respects.
(d) No Closing Legal Impediment shall be in effect.
(e) Purchaser shall have signed and delivered, or caused one or more of its Affiliates to sign and deliver, the Ancillary Agreements.
(f) Seller shall have obtained the French Equity Transfer Approval.
Article VI
CERTAIN COVENANTS
Seller covenants and agrees with Purchaser and Purchaser covenants and agrees with Seller that during the period from the date of this Agreement to the Closing Date for each Business Unit:
Section 6.01. Conduct of Business.
(a) Except as otherwise permitted by this Agreement, as required by applicable Law, or as consented to by Purchaser in writing (such consent not to be unreasonably withheld, conditioned or delayed), Seller agrees to (and to cause the Sellers and the Business Entities to) use commercially reasonable efforts to run the Business in the Ordinary Course of Business (other than in order to comply with the specific restrictions set forth in Section 6.01(b)).
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(b) Except as required by applicable Law or as otherwise expressly required by the terms of this Agreement, to the extent that any of the following actions are not in the Ordinary Course of Business, Seller will (to the extent primarily related to the Business) seek the prior written consent of Purchaser (which consent shall not be unreasonably withheld, conditioned or delayed) to (or for any Transferred Entity and/or Business Unit to):
(i) materially increase the compensation or employee benefits payable or to be provided to any Business Employee or materially amend any Seller Benefit Plan to the extent applicable to any Business Employee;
(ii) make any material change in any of its present financial accounting methods and practices other than changes in the Ordinary Course of Business and other than as may be appropriate to conform to GAAP or as may be required by applicable Law;
(iii) waive any material claims or rights of material value that relate exclusively to the Business;
(iv) transfer, assign or grant any license or sublicense of any material rights under or with respect to any material Intellectual Property outside the Ordinary Course of Business;
(v) create or allow the Business to create, incur, assume or guarantee any indebtedness for borrowed money;
(vi) (a) make, revoke or change any material Tax election, (b) adopt, elect or change any material method of accounting for Income Tax purposes, (c) amend any material Tax Return, or (d) settle any material Tax Action, in each case other than in the Ordinary Course of Business consistent with past practice or as required by applicable Law (including Tax Laws); and
(vii) agree, whether in writing or otherwise, to do any of the foregoing.
(c) Notwithstanding the foregoing, nothing herein will prevent Seller or any of its Affiliates from taking actions, including (i) contributions, transfers, assignments and acceptances of assets and liabilities, subject to Section 6.01(d); (ii) the repayment of indebtedness and the extinguishment of Liens; and (iii) the cancellation of any intercompany contracts and other agreements that will not constitute Material Contracts, in each case in order to facilitate the consummation of the Transactions.
(d) Seller shall be permitted to transfer, distribute or repatriate, or cause to be transferred, distributed or repatriated, any cash or cash equivalents, other than Restricted Cash, from any Business Entity at any time and from time to time; provided, that any such transfer, distribution or repatriation shall not result in material overdue payables of any Business Entity as of the Closing Date outside of the Ordinary Course of Business.
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Section 6.02. Certain Covenants Regarding the Transferred Entities. Except as otherwise required by this Agreement or permitted pursuant to Section 2.02, Seller agrees not to, and to cause the Transferred Entities and/or Business Units not to issue or sell any capital stock or other equity interests or options, warrants, calls, subscriptions or equity rights to purchase any capital stock or other equity interests of the Transferred Entities or Business Units to a Person.
Section 6.03. No Undue Interference. From the date of this Agreement to the Closing Date, except as otherwise permitted by this Agreement or consented to by Seller in writing, Purchaser shall not interfere with the relevant Business or any relevant Business Employee in any inappropriate or undue manner.
Section 6.04. Publicity. From the date hereof until the Closing or earlier termination of this Agreement, Purchaser and Seller shall not, and each shall cause its Affiliates and its and their representatives not to, issue any press release or public announcement concerning this Agreement or the transactions contemplated hereby, without obtaining the prior written approval of the other party hereto, which approval will not be unreasonably withheld, conditioned or delayed, unless, in the reasonable judgment of Purchaser or Seller, disclosure is otherwise required by applicable Law or the rules of any stock exchange, as applicable; provided that, to the extent required by applicable Law or by the rules of any stock exchange, the party intending to make such release or announcement shall use its commercially reasonable efforts, consistent with such applicable Law, to consult with the other party with respect to the text thereof; provided, further, that (A) Purchaser and Seller are permitted to disclose the consummation of the Transactions (but not, without the consent of the other party, price terms or the name of such other party) on their websites and otherwise in the ordinary course of their businesses and (B) Purchaser and Seller are permitted to report and disclose the status and terms of this Agreement and the transactions contemplated hereby to their respective (or their respective sponsors’) direct or indirect, current and prospective, investors or limited partners if required by the governing documents with those investors or limited partners and otherwise in the ordinary course of their business or if such report or disclosure is in connection with any fund raising activities of such Persons, in each case, so long as such investors or limited partners are subject to confidentiality obligations with respect to such information. If Purchaser, based on the advice of its counsel, determines that this Agreement, or any of the other Transaction Documents, must be publicly filed with a Governmental Authority, then, subject to applicable Law, Purchaser, prior to making any such filing, shall provide Seller and its counsel with a redacted version of this Agreement (and any other Transaction Document) which it intends to file, and will give due consideration to any comments provided by Seller or its counsel and use commercially reasonable efforts to ensure the confidential treatment by such Governmental Authority of those sections specified by Seller or its counsel.
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Section 6.05. Commercially Reasonable Best Efforts; Regulatory Approvals. Subject to any obligation imposed by Law, including all antitrust, competition and foreign (direct) investment Laws:
(a) Subject to the terms and conditions set forth in this Agreement, including Section 1.01(a), each of Seller and Purchaser shall use reasonable best efforts to make any Antitrust Filings and any other filings required by applicable Law. Purchaser shall use its reasonable best efforts to (i) obtain required consents, approvals (including any required Antitrust Approvals), authorizations, qualifications and orders of Governmental Authorities and other third parties and (ii) take other actions, in each case as is necessary to consummate the Transactions as soon as reasonably practical following the date of this Agreement; provided that Seller shall have no obligation to pay money or make any concessions to obtain such consents. Purchaser shall not, and shall cause its Affiliates not to, willfully take any action or enter into any transaction that will have the effect of delaying, impairing or preventing consummation of the Transactions. In addition to the foregoing, Purchaser agrees to provide such evidence as to financial capability, resources and creditworthiness as may be reasonably requested by any third party whose consent or approval is sought hereunder. Subject to appropriate confidentiality protections, each of the parties hereto will cooperate with and furnish to the other party such necessary information and assistance as such other party may reasonably request in connection with the foregoing. As soon as practicable and in no event later than thirty (30) calendar days after the date of this Agreement, Purchaser shall form or otherwise identify to Seller the Affiliate of Purchaser in each jurisdiction that will acquire any Transferred Entity and/or Business Unit, in each case, related to such jurisdiction (including, if required by applicable Law, executing the applicable Local Transfer Documents).
(b) As soon as reasonably practicable after the date hereof, but in no event later than five (5) days after the date hereof (unless, in each case, a later date is mutually agreed between the parties), Seller and Purchaser shall file any required Antitrust Filings and any other filings required under any applicable Laws and shall provide as promptly as practicable to any Governmental Authority whose consent, authorization, order or approval is required in connection with the Transactions any additional information, documentation or other material or testimony required under any applicable Laws or otherwise properly requested. The parties shall use their reasonable best efforts to obtain early termination or acceleration of any applicable waiting or review period, to the extent permitted by Law, from the applicable Governmental Authorities. The parties also shall use their reasonable best efforts to cooperate by providing information reasonably requested by the other party in order to fulfill the foregoing obligations. Subject to applicable Law and except as required by any Governmental Authority, Purchaser shall not (i) agree to extend any waiting period under any antitrust or competition or foreign (direct) investment Law without the prior written consent of the Seller; (ii) enter into any agreement with any Governmental Authority not to consummate the Transactions without the prior written consent of the Seller; or (iii) take any other action, and shall cause its Affiliates not to take any action, that would reasonably likely prevent or delay the receipt of any Antitrust Approvals or Foreign (Direct) Investment Approvals, in each case, to the extent necessary for the timely consummation of the Transactions contemplated by this Agreement unless Purchaser is terminating this Agreement in accordance with Article IX. Purchaser will not withdraw its initial filing under any applicable antitrust, competition or foreign (direct) investment Law from any Governmental Authority, as the case may be, and refile it unless Seller has consented in advance to such withdrawal and refiling (such consent not to be unreasonably withheld, conditioned or delayed) unless Purchaser is terminating this Agreement in accordance with Article IX.
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(c) Subject to applicable Law relating to the exchange of information, Purchaser and Seller and their respective counsel shall (i) have the right to review in advance, and to the extent practicable each shall consult the other on, any filing made with, or written materials to be submitted to, any Governmental Authority in connection with the Transactions, and they shall consider in good faith the views of the other party regarding such filing or submission, (ii) promptly inform each other of any communication (or other correspondence or memoranda) received from, or given to, any Governmental Authority in connection with the Transactions, (iii) consult with the other party, and consider in good faith the views of the other party, prior to entering into any agreement with any Governmental Authority with respect to the Transactions, (iv) furnish each other with copies of all correspondence, filings and written communications between them or their Subsidiaries or Affiliates, on the one hand, and any Governmental Authority or its respective staff, on the other hand, with respect to the Transactions and (v) keep each other apprised of the status of any communications with and inquiries or requests for additional information from any Governmental Authority. Purchaser and Seller shall, to the extent permitted by the relevant Governmental Authority, provide each other and their respective counsel with advance notice of and the opportunity to participate in any in-person discussion or meeting with any Governmental Authority in respect of any filing, investigation or other inquiry in connection with the Transactions and to participate in the preparation for such discussion or meeting. Purchaser also agrees to keep Seller fully informed about any antitrust or foreign (direct) investment issues raised by any Governmental Authority. Any materials exchanged in connection with this Section 6.05 may be redacted or withheld as necessary to address reasonable privilege or confidentiality concerns (including with respect to other businesses of Purchaser), and to remove references concerning the Purchaser’s consideration of the transactions contemplated by this Agreement or other competitively sensitive material; provided that the parties hereto may, as they deem advisable and necessary, designate any materials provided to the other under this Section 6.05 as “outside counsel only.” In the event materials are designated as “outside counsel only,” such materials and the information contained therein shall be given only to the outside legal counsel of the recipient and will not be disclosed by such outside counsel to the recipient or to employees, officers, or directors of the recipient, unless express written permission is obtained in advance from the source of the materials. For purposes of this Section 6.05, to the extent necessary to obtain the waiver or consent from any Governmental Authority required to satisfy the conditions set forth in Sections 5.01(e) or 5.02(e), as applicable, to obtain consents, approvals, authorizations, qualifications or orders of Governmental Authorities or to avoid the entry of or have lifted, vacated or terminated any Closing Legal Impediment, Purchaser shall: (i) propose, negotiate, offer to commit and effect (and if such offer is accepted, commit to and effect), by consent decree, hold separate order or otherwise, and in connection with the consummation of the Transactions, the sale, divestiture or disposition (including by licensing any Intellectual Property) of any assets of the Business and/or any other assets or businesses of Purchaser or any of its Affiliates (or equity interests held by Purchaser or any of its Affiliates in entities with assets or businesses); (ii) terminate or modify any existing relationships and contractual rights and obligations of the Business or the Purchaser or any of its Affiliates; and (iii) otherwise offer to take or offer to commit to take any action which it is capable of taking and, if the offer is accepted, take or commit to take such action, that limits its freedom of action with respect to, or its ability to retain, any portion of the Business and/or any other assets or businesses of Purchaser or any of its Affiliates (or equity interests held by Purchaser or any of its Affiliates in entities with assets or businesses). Notwithstanding anything contained in this Section 6.05 or elsewhere in this Agreement, (a) Purchaser shall not be required to commence any Action against, or defend any Action by, any Governmental Authority or Person challenging the consummation of the transactions contemplated by this Agreement; and (b) Purchaser shall not be required to, and none of the parties to this Agreement may, without the prior written consent of Purchaser, take any action, or commit to take any action, or agree to any condition or limitation that (x) for the avoidance of doubt, relates to the assets, properties, contractual rights, services, or businesses of Purchaser or any of its Affiliates, or (y) would be, individually or in the aggregate, materially detrimental to (1) the Purchaser, or (2) Purchaser’s expected benefits of the transactions contemplated by this Agreement. For the avoidance of doubt, Purchaser’s obligations under this Section 6.05(c) shall be absolute and shall not be qualified or limited by what may be considered commercially reasonable.
(d) The filing fees and expenses with respect to any Antitrust and Foreign (Direct) Investment Filings and other filings made under this Section 6.05 shall be borne by Purchaser.
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Section 6.06. Access.
(a) Each party shall give the other party and its accountants, legal counsel and other representatives reasonable access, as such party may request in writing with reasonable advance notice, for the sole purpose of allowing such party to successfully transition the Business, during normal business hours and without undue interruption of the Business throughout the period prior to the Closing, to all of the properties, books and records (other than records relating to Income Taxes, materials subject to confidentiality obligations or attorney-client or other privilege, any books or records containing or depicting IP Rights of such disclosing party or any of its Affiliates and, for the avoidance of doubt, other than where access to such information is prohibited by applicable Law) to the extent relating to the Business, and will furnish, at the requesting party’s expense, each party, its accountants, legal counsel and other representatives during such period all such information (other than records relating to Income Taxes, materials subject to confidentiality obligations or attorney-client or other privilege, any such books or records containing or depicting IP Rights of such disclosing party or any of its Affiliates and, for the avoidance of doubt, other than where access to such information is prohibited by applicable Law) to the extent relating to the Business as such party may reasonably request; provided, further, that this Section 6.06 shall not entitle either party or its accountants, legal counsel or other representatives to contact any third party doing business with such party or its Affiliates or access the properties, books or records of any such third party or of either party or its Affiliates to the extent related to any business of either party or its Affiliates other than the Business, in each case without such party’s prior written consent, and neither party nor any of its representatives shall conduct any invasive investigation, sampling or testing of any environmental media (including groundwater, surface water, soil, soil gas, sediment, air, or building materials). Neither party nor its representatives shall contact any suppliers, customers, landlords and other business relations or Business Employees regarding or in connection with the transactions contemplated hereby without the prior written consent (such consent not to be unreasonably withheld, conditioned or delayed) such party.
(b) The parties acknowledge that the information being made available to each party and its Affiliates by each party and its Affiliates (or its agents or representatives) is subject to the terms of the Confidentiality Agreement, the terms of which are incorporated herein by reference. Effective upon, and only upon, the Closing, the terms of the Confidentiality Agreement will terminate solely with respect to information relating to the relevant part of Business; provided that each party acknowledges that any and all other information provided or made available to it or its representatives concerning the other party or any of its other Affiliates will remain subject to the terms and conditions of the Confidentiality Agreement and all other provisions of the Confidentiality Agreement shall survive in accordance with its terms after the final Closing.
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Section 6.07. Closing I/C Liabilities. Prior to the Closing, Seller shall or cause the applicable Sellers to settle the Closing I/C Liabilities in accordance with Annex B.
Section 6.08. R&W Insurance. If Purchaser obtains a representation and warranty insurance policy in connection with the Transactions (the “R&W Insurance Policy”), Purchaser shall not waive, amend or modify the R&W Insurance Policy in a manner adverse to Seller without the prior written consent of Seller (such consent not to be unreasonably withheld, conditioned or delayed). The R&W Insurance Policy shall include a provision whereby the insurer expressly waives, and agrees not to pursue, directly or indirectly, any subrogation rights against Sellers or any of their Affiliates, Business Entities or any former or current equityholders, managers, members, directors, officers, employees, agents, advisors and representatives of any of the foregoing with respect to any claim made by any insured thereunder (except for Fraud in connection with the Transactions).
Section 6.09. Non-Competition; Non-Solicitation. For a period of three (3) years following the Closing Date (the “Restricted Period”), Seller and each of the Sellers shall not, and shall cause their respective Affiliates not to, directly or indirectly, own, manage, operate, control, be employed by, provide services to, participate in or be connected with any business or enterprise that competes with the Business as conducted as of the Closing Date; provided, however, that the foregoing restriction shall not apply to (i) MiddleGround Capital, any of its Affiliates, any funds, vehicles or portfolio companies affiliated, managed, or sponsored by MiddleGround Capital or any vehicle or Person in which MiddleGround Capital has any kind of interest (other than Seller and its Affiliates constituting the Business), (ii) any buyer of the remaining businesses of Seller not included in the Transactions (“RemainCo”) or any Affiliates of such buyer, or (iii) RemainCo and its operations until RemainCo is sold. During the Restricted Period, Seller and each of the Sellers shall not, and shall cause their respective Affiliates not to, directly or indirectly, solicit or recruit any Transferred Employee for employment or engagement; provided that general solicitations or advertisements not specifically targeted at Transferred Employees shall not constitute a violation of this Section 6.09.
Section 6.10. Landlord Consents. The parties shall use commercially reasonable efforts to cooperate with each other in seeking any landlord consents that both parties determine, acting reasonably and in good faith, are necessary or desirable in connection with the Transactions. Notwithstanding the foregoing, Seller shall be primarily responsible for using commercially reasonable efforts in obtaining all landlord consents. Seller shall promptly notify Purchaser of any landlord that has indicated it may withhold, condition or delay consent, or impose any rent increase or other material modification as a condition of consent, and the parties shall cooperate in good faith to resolve any such issue. Neither party shall have any obligation to (a) accept any modification to any lease that would materially impair the ability to occupy and operate any leased Real Property following the Closing or (b) (i) incur any material additional costs or expenses, (ii) provide any security deposit or collateral commitment, or (iii) assume any liability for cross-defaults under any other lease or agreement, in each case, as a condition to obtaining any landlord consent.
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Article VII
POST-CLOSING COVENANTS
Seller covenants and agrees with Purchaser and Purchaser covenants and agrees with Seller that during the period commencing after the Closing:
Section 7.01. Access. The parties agree that after the Closing, the other party or its authorized representatives may, at the requesting party’s cost and expense, make copies of those books and records (or redacted portions thereof) that relate exclusively to the Business, except where providing copies is prohibited by applicable Law. The requesting party shall reimburse the other party for reasonable, out-of-pocket, expenses incurred in providing such assistance.
Section 7.02. Insurance. The coverage under all insurance policies related to the Business and arranged or maintained by Seller or its Affiliates is only for the benefit of Seller and its Affiliates, and not for the benefit of Purchaser or the Business; provided, however, that Seller and its Affiliates shall continue to defend the Current Litigation through the Seller and its Affiliates’ insurance policies until finally resolved. As of the Closing Date, Purchaser agrees to arrange for its own insurance policies with respect to the Business covering all periods and agrees, except for the Current Litigation, not to seek, through any means, to benefit from any of Seller’s or its Affiliates’ insurance policies which may provide coverage for claims relating in any way to the Business.
Section 7.03. Payments from Third Parties. In the event that, on or after the Closing Date, either party shall receive any payments or other funds due to the other pursuant to the terms of any of the Transaction Documents, then the party receiving such funds shall promptly forward such funds to the proper party. For the avoidance of doubt, if Sellers fail to transfer any cash away from the Business (including any cash held in foreign bank accounts of the Business Entities, including those domiciled in the People’s Republic of China and India) as of the Closing, such cash shall belong to the Purchaser following the Closing without adjustment to the Purchase Price. The parties acknowledge and agree there is no right of offset regarding such payments and a party may not withhold funds received from third parties for the account of the other party in the event there is a dispute regarding any other issue under any of the Transaction Documents.
Section 7.04. Tax Matters.
(a) Tax Returns.
(i) Seller shall (at its sole expense) timely prepare and file, or shall cause to be prepared and timely filed, all pass-through Income Tax Returns of the Transferred Entities with respect to any taxable period ending on or before the Closing Date (each, a “Seller Prepared Return”). Each Seller Prepared Return shall (x) be prepared consistent with the past practices of such Transferred Entity, unless otherwise required by applicable Law, and (y) be submitted by Seller at least thirty (30) days prior to the due date of such Tax Return for Purchaser’s review and comment. Seller shall consider in good faith any reasonable comments made by Purchaser in respect of any such Seller Prepared Return, and shall timely file all such Seller Prepared Returns and remit the applicable Taxes shown as owing on such Tax Returns.
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(ii) Purchaser shall, at the cost and expense of the Transferred Entities, prepare and file (or cause to be prepared and filed) Tax Returns of the Transferred Entities that are not Seller Prepared Returns, including all Tax Returns that relate to Straddle Periods. Each such Tax Return shall be prepared in a manner consistent with past practices of the respective Transferred Entity unless required by applicable Law. At least thirty (30) days prior to the due date for filing any such Tax Return prepared by Purchaser pursuant to this Section 7.04(a)(ii) (or, if the due date for any such Tax Return is within thirty (30) days of the Closing, as soon as reasonably practicable) that could materially (y) increase the liability of Seller on a pass-through basis by operation of Law or pursuant to the terms of this Agreement, or (z) affect the amount of Tax refunds due to Seller pursuant to Section 7.04(d), Purchaser shall provide Seller with a copy of each such Tax Return for Seller’s review and comment, and shall consider in good faith any reasonable comments timely received from Seller with respect to such Tax Return.
(b) Straddle Periods. (i) Any Taxes, other than property or similar Taxes, of the Transferred Entities relating to any Straddle Period shall be allocated between the Pre-Closing Tax Period and the portion of such Straddle Period beginning after the Closing Date by treating the relevant Tax period as if it ended on (and included) the Closing Date; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the Pre-Closing Tax Period and the period beginning after the Closing Date in proportion to the number of days in each period to which such exemption, allowance or deduction is applicable, and (ii) any property or similar Taxes relating to any Straddle Period shall be allocated between the Pre-Closing Tax Period and the portion of such Straddle Period beginning after the Closing Date on a daily basis, with the portion of such Taxes that are attributable to the Pre-Closing Tax Period determined by multiplying the amount of such Taxes by a fraction the numerator of which is the number of days in the Pre-Closing Tax Period and the denominator of which is the number of days in the entire Straddle Period.
(c) Cooperation. The parties will cooperate as and to the extent reasonably requested by any other party in connection with the filing of any Tax Return or claim for refund and any proceeding with respect to Taxes or Tax Returns of any Transferred Entity. Such cooperation will include the retention and (upon any party’s request) the provision of records and information that are reasonably relevant to any such Tax Return or proceeding and making employees available (if applicable) on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.
(d) Tax Refunds. After the Closing, to the extent Purchaser or any of its Affiliates or Subsidiaries (including any Transferred Entity) receives any Income Tax refund or is otherwise given credit for any overpayment of Income Taxes (including as a result of installments or estimated Tax payments) from any Governmental Authority in connection with or arising out of a Transferred Entity’s payment of Income Taxes with respect to any Pre-Closing Tax Period, Purchaser, its Affiliates or such Transferred Entity shall pay (or cause to be paid) to Seller within five (5) Business Days of such receipt or credit for overpayment, by wire transfer of immediately available funds to accounts designated by Seller to Purchaser, the amount of such refund or credit for overpayment and any interest received thereon.
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(e) Tax Indemnity. Notwithstanding anything in this Agreement to the contrary, following the Closing, solely with respect any Pre-Closing Tax Period, Seller shall be obligated to bear and pay, reimburse, indemnify and hold harmless the Purchaser Indemnified Parties from and against any and all Losses incurred in connection with, arising out of, resulting from or incident to any Income Tax obligations of the Transferred Entities net of any Income Tax receivables (collectively the “Indemnified Income Taxes”).
(f) Tax Audits.
(i) If an audit or other proceeding is commenced, an adjustment is proposed or any other claim is made by any Taxing Authority with respect to any Seller Prepared Return or any pass-through Income Taxes of any Transferred Entity for a taxable period ending on or before the Closing Date (each, a “Pre-Closing Tax Audit”), Purchaser shall promptly notify Seller of such Pre-Closing Tax Audit. Seller shall have the right to control, at Seller’s own expense, any such Pre-Closing Tax Audit and shall keep Purchaser reasonably informed of the status of any such Pre-Closing Tax Audit, provided that Purchaser and its representatives shall be permitted, at Purchaser’s expense, to be present at, and participate in, any such Pre-Closing Tax Audit. Notwithstanding the foregoing, Seller shall not have the right to compromise or settle any such Pre-Closing Tax Audit without Purchaser’s consent (such consent not to be unreasonably withheld, conditioned or delayed).
(ii) If an audit or other proceeding is commenced, an adjustment is proposed or any other claim is made by any Taxing Authority with respect to Taxes of any Transferred Entity for a Straddle Period that could materially increase the Tax liability of Seller on a pass-through basis by operation of Law or pursuant to the terms of this Agreement, or affect the amount of Tax refunds due to Seller pursuant to Section 7.04(d) (each, a “Straddle Period Tax Audit”), Purchaser shall promptly notify Seller of such Straddle Period Tax Audit. Purchaser shall have the right to control any such Straddle Period Tax Audit and shall keep Seller reasonably informed of the status of any such Straddle Period Tax Audit, provided that Seller shall be permitted, at its own expense, to be present at, and participate in, any such Straddle Period Tax Audit. Notwithstanding the foregoing, Purchaser shall not have the right to compromise or settle any such Straddle Period Tax Audit without Seller’s consent (such consent not to be unreasonably withheld, conditioned or delayed).
(g) Post-Closing Actions. Without the prior written consent of Seller (not to be unreasonably withheld, conditioned or delayed), Purchaser and its Affiliates shall not, and shall cause the Business Entities not to, (i) other than with respect to the filing of Tax Returns pursuant to Section 7.04(a), file, amend or re-file any Tax Return of a Business Entity with respect to a Pre-Closing Tax Period, (ii) agree to waive or extend the statute of limitations relating to any Taxes of any Business Entity for any Pre-Closing Tax Period, (iii) make, revoke or change any election with respect to, or that has retroactive effect to, any Pre-Closing Tax Period of a Business Entity, (iv) make any election under Section 336 or 338 of the Code (or any similar provision under state, local, or non-U.S. Law) with respect to the acquisition of the Transferred Entities, (v) voluntarily approach any Taxing Authority regarding any Taxes or Tax Return of a Business Entity for a Pre-Closing Tax Period, or (vi) take any other action (or fail to take any action) with respect to a Pre-Closing Tax Period to the extent that such action (or inaction) may result in any additional liability of Seller (or its direct or indirect owners) pursuant to this Agreement or under applicable Law, or affect the amount of Tax refunds due to Seller pursuant to Section 7.04(d).
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Section 7.05. Transaction Expenses and Bonuses. Prior to the Closing, Seller will pay, or cause to be paid, all accrued but unpaid 2026 bonuses that have been approved by Seller or its Subsidiaries prior to the Closing, which approved bonuses are in the aggregate amount of $191,250. Seller will pay, or cause to be paid in cooperation with Purchaser, all sale or transaction bonuses payable to employees of the Business Entities that are committed by Seller to be paid in connection with the Transactions in the Ordinary Course of Business as and when required to be paid at or following the Closing. Seller will remain responsible for and shall pay all 2025 annual bonuses or incentive compensation related to any Business Entity (all of which shall be paid prior to Closing).
Section 7.06. PCAOB Audit Costs. The costs and expenses of the PCAOB Audit shall be borne equally by Seller and Purchaser, with each party responsible for fifty percent (50%) of such costs. Each party shall pay its respective share promptly upon receipt of applicable invoices. The parties shall cooperate in good faith to manage the audit process and shall keep each other reasonably informed of the status of, and any material developments with respect to, such audit.
Article VIII
EMPLOYEE MATTERS
Section 8.01. Employees.
(a) At least fourteen (14) days prior to the Closing Date, Purchaser will make an offer of employment to all of the Business Employees who are not employed by one of the Transferred Entities. With respect to any Business Employee who is not employed by one of the Transferred Entities and is not actively at work on the Closing Date due to an approved leave of absence (including medical leave, military leave, workers compensation leave and short-term or long-term disability) or vacation, such Business Employee shall be offered employment with Purchaser or one of its Affiliates consistent with the requirements of this Article VIII when and if such Business Employee presents himself or herself to Purchaser or its applicable Affiliate for active employment during the six (6)-month period beginning on the Closing Date (or such longer period that may be required under applicable Law).
(b) From and after the date of this Agreement until the Closing Date, Purchaser shall consult with Seller and obtain Seller’s consent before distributing any communications to any Business Employee whether relating to employee benefits, post-Closing terms of employment or otherwise. Purchaser shall provide Seller with advance copies of, and a reasonable opportunity to comment on, all such communications.
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Section 8.02. Transferred Employees.
(a) All Transferred Employees.
(i) For a period of twelve (12) months immediately after the Closing Date (or for such longer period as required by applicable Law, but in any case, not after the date of the applicable Transferred Employee’s termination of employment with Purchaser or any of its Affiliates), Purchaser shall provide to each Transferred Employee (i) a base salary or base wages and cash incentive compensation opportunities (including, in the case of persons receiving commission based income, the rate of commissions) that, in each case, are no less than the base salary or wage rate and cash incentive opportunities (including, in the case of persons receiving commission based income, the rate of commissions) provided to such Transferred Employee by the Seller or any of its Affiliates immediately prior to the Closing Date, (ii) all other employee benefits that are substantially comparable in the aggregate to the employee benefits provided to such Transferred Employee immediately prior to the Closing Date and (iii) any other additional terms and conditions of employment required by applicable Law. Notwithstanding the foregoing, nothing contained in this Agreement shall prohibit Purchaser from terminating any Business Employee following the Closing in the ordinary course of business.
(ii) In addition to and notwithstanding the foregoing provisions of this Section 8.02, Purchaser shall provide each Transferred Employee whose employment is terminated within twelve (12) months following the Closing Date (or within such longer period as required by applicable Law) with severance and other separation benefits which such Transferred Employee would have been eligible to receive under the Seller Benefit Plans as in effect immediately prior to the Closing. Purchaser shall be solely responsible for, and have all liability with respect to, any severance or similar obligation with respect to or arising from the termination of employment with Purchaser or any of its Affiliates of a Transferred Employee.
(iii) Each Transferred Employee shall be given service credit for all purposes under each Purchaser Benefit Plan as of and after the Closing for such Transferred Employee’s service prior to the Closing with Seller or any of its Affiliates (and their predecessors), to the same extent such service is recognized by Seller and its Affiliates under the corresponding Seller Benefit Plan immediately prior to the Closing; provided that such service shall not be credited to the extent it would result in a duplication of benefits.
(iv) Purchaser shall use commercially reasonable best efforts to cause the Purchaser Benefit Plans (i) not to limit or exclude coverage on the basis of any pre-existing condition of any Transferred Employee or dependent (other than any limitation already in effect under the corresponding Seller Benefit Plan) and (ii) to provide each Transferred Employee or dependent full credit, for the year in which the Closing Date occurs, for any deductible or co-payment already incurred by such Transferred Employee under the corresponding Seller Benefit Plan and for any other out-of-pocket expenses that count against any maximum out-of-pocket expense provision of the corresponding Seller Benefit Plan as if such amounts had been paid in accordance with the applicable Purchaser Benefit Plan.
(v) Purchaser or its Affiliates shall assume the Liability for the accrued and unused paid time off of the Transferred Employees as of the Closing Date, and the Transferred Employees shall be permitted to use such accrued and unused paid time off following the Closing in accordance with the applicable paid time off policy of Purchaser or its Affiliates as in effect from time to time.
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(vi) Effective at the Closing, Purchaser shall cause each Transferred Employee who, as of immediately prior to the Closing, was eligible to participate in a Seller Benefit Plan that is a U.S. Tax-qualified defined contribution plan (collectively, the “Seller 401(k) Plans”) to be eligible to participate in a U.S. Tax-qualified defined contribution plan sponsored by Purchaser or any of its Affiliates (the “Purchaser 401(k) Plan”). Commencing as soon as administratively feasible following the Closing Date, Purchaser shall cause the Purchaser 401(k) Plan, to accept “eligible rollover distributions” (within the meaning of Section 401(a)(31) of the Code) from the accounts of Transferred Employees under the Seller 401(k) Plans, including outstanding loan balances.
(vii) To the extent permitted by applicable Law and any applicable Collective Bargaining Agreement the provisions of this Section 8.02 shall also apply to any Transferred Employees of Automotive Czech employed in the KOP Enterprise.
Section 8.03. Other Employee Issues; Cooperation.
(a) If any Business Employee requires a work permit, work visa, employment pass or other legal or regulatory approval for his or her employment with Purchaser or its Affiliates, Purchaser shall, and shall cause its Affiliates to, use their commercially reasonable best efforts (at their sole cost and expense) to cause any such permit, visa, pass or other approval to be obtained and in effect prior to the Closing Date so that each Business Employee requiring such permit, visa, pass or other approval may be legally employed by Purchaser or its applicable Affiliate as of the Closing Date, and the Purchaser or its applicable Affiliate will assume all employer obligations with respect to any work permits, visas, passes and other approvals with respect to any such Business Employees. Notwithstanding the foregoing, to the extent permitted by applicable Law and any applicable Collective Bargaining Agreement, in the event an applicable work permit, visa, pass or other approval for a Business Employee is not in place with Purchaser or its applicable Affiliate as of the Closing Date the parties shall reasonably cooperate to provide for the services of such Business Employee to be made available exclusively to Purchaser through an employee secondment, services or similar arrangement. Unless such individual remains actively employed and performing services for any of the Business Entities throughout such period, Purchaser shall be responsible for all the economic costs of such individual’s compensation and benefits (including reimbursement for any expenses incurred by such Business Employee, all applicable fees, Taxes and other amounts owed to third parties and all applicable social or national insurance contributions) for the period from the Closing Date and until the applicable work permit, visa, pass or other approval can be obtained (whether or not such individual performs services for Purchaser during such period); provided, however, that Purchaser shall, and shall cause its Affiliates to, continue to use their commercially reasonable best efforts to obtain the applicable work permit, visa, pass or other approval (at the sole cost and expense of Purchaser and its Affiliates).
(b) Following the date hereof, Seller and Purchaser and their respective Affiliates shall reasonably cooperate to implement the obligations of the parties under this Article VIII. To the extent permitted by applicable Law, Seller shall provide to Purchaser and its Affiliates copies of such employment records relating to the Transferred Employees as necessary for Purchaser to establish payroll systems or employee benefit plans as of the Closing and otherwise for Purchaser to satisfy its obligations under this Article VIII. Seller shall be permitted to retain copies of such employment records, except where prohibited by applicable Law. Purchaser and its Affiliates shall ensure that all such records are used only in connection with the employment of such Transferred Employee and shall keep such employment records confidential; provided that Purchaser and its Affiliates shall indemnify and hold harmless Seller and its Affiliates from and against any statutory, common Law or other claims that arise from the use of such employment records other than for employment, compensation or termination-related purposes.
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(c) Purchaser shall be responsible for, and shall defend, indemnify and hold the Seller and its Affiliates harmless against, any severance or other obligations arising with respect to (x) any failure to comply with the terms of this Article VIII, (y) any Business Employee who does not accept Purchaser’s or one of its Affiliates’ offer of employment or who does not automatically transfer by operation of applicable Law to Purchaser or one of its Affiliates because of his or her refusal to transfer or the refusal of applicable labor authorities to accept or approve such transfer, or (z) the termination of employment of any Transferred Employee solely to the extent such termination occurs as a result of an action by the Purchaser or its Affiliates (including the Transferred Entities) after the Closing. Notwithstanding the foregoing, Seller shall be solely responsible for, and shall defend, indemnify and hold Purchaser and its Affiliates harmless against, any and all severance obligations or other termination-related payments arising with respect to any Business Employee whose employment is terminated by Seller or any of its Affiliates on or before the Closing Date.
Article IX
TERMINATION
Section 9.01. Termination. Notwithstanding anything to the contrary set forth herein, this Agreement may be terminated and the transactions contemplated hereby abandoned at any time prior to the Closing:
(a) by mutual written agreement of Purchaser and Seller;
(b) by Purchaser by written notice to Seller, if the Closing shall not have occurred on or before the Outside Date; provided that Purchaser shall not have the right to terminate this Agreement pursuant to this Section 9.01(b) if the failure of Purchaser to fulfill any obligation under this Agreement shall have been the primary cause of, or shall have resulted in, the failure of the Closing to occur on or prior to the Outside Date;
(c) by Seller by written notice to Purchaser, if the Closing shall not have occurred on or before the Outside Date; provided that Seller shall not have the right to terminate this Agreement pursuant to this Section 9.01(c) if the failure of Seller to fulfill any obligation under this Agreement shall have been the primary cause of, or shall have resulted in, the failure of the Closing to occur on or prior to the Outside Date.
(d) by Purchaser by written notice to Seller, if there has been a breach by Seller of any representation, warranty, covenant or agreement on the part of Seller set forth in this Agreement that would cause any condition set forth in Section 5.01(a) or Section 5.01(b) not to be satisfied, and such breach has not been waived by the Purchaser or cured by Seller prior to the earlier to occur of (x) thirty (30) days after receipt by Seller of written notice of such breach from the Purchaser or (y) the Outside Date; provided that Purchaser shall not have the right to terminate this Agreement pursuant to this Section 9.01(d) at any time during which Purchaser is in material breach of this Agreement;
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(e) by the Seller by written notice to Purchaser, if there has been a breach by Purchaser of any representation, warranty, covenant or agreement on the part of Purchaser set forth in this Agreement that would cause any condition set forth in Section 5.02(a) or Section 5.02(b) not to be satisfied, and such breach has not been waived by the Seller or cured by Purchaser prior to the earlier to occur of (x) thirty (30) days after receipt by Purchaser of written notice of such breach from the Seller or (y) the Outside Date; provided, that the Seller shall not have the right to terminate this Agreement pursuant to this Section 9.01(e) at any time during which the Seller is in material breach of this Agreement; and
(f) by Purchaser or Seller by written notice to the other party if any court of competent jurisdiction or other competent Governmental Authority shall have issued a Governmental Order or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement and having the effect set forth in Section 5.01(d) and such Governmental Order or other action shall have become final and non-appealable, unless the failure to consummate the Closing because of such action by a Governmental Authority shall be primarily due to the failure of Purchaser, if Purchaser is seeking to terminate this Agreement, or of Seller, if Seller is seeking to terminate this Agreement, to have fulfilled any of its obligations under this Agreement.
Section 9.02. Effect of Termination. If this Agreement is terminated pursuant to this Article IX, it will become null and void and of no further force and effect, with no liability on the part of any party to this Agreement (or any of their respective Subsidiaries, former, current or future general or limited partners, equityholders, managers, members, directors, officers, Affiliates or agents), except that the provisions of this Section 9.02, Section 9.03 and Article XI will survive any termination of this Agreement; provided, however, that nothing herein shall relieve (a) any party from liability for losses incurred or suffered by any other party as a result of any Fraud or willful misconduct or intentional breach of any covenant or agreement contained in this Agreement (it being acknowledged and agreed by the parties hereto that failure to consummate any Closing by a party that was obligated to do so pursuant to the terms of this Agreement shall be deemed to be an intentional breach of a covenant hereunder), or (b) any party from any obligation to pay a Termination Fee or Reverse Termination Fee that has become payable pursuant to Section 9.03.
Section 9.03. Termination Fees.
(a) If this Agreement is terminated: (i) by Seller pursuant to Section 9.01(c) at a time when Seller would have been entitled to terminate this Agreement pursuant to Section 9.01(e); (ii) by Seller pursuant to Section 9.01(e); or (iii) by Seller at a time when all conditions set forth in Section 5.01 have been satisfied or waived (other than those conditions that by their terms are to be satisfied at the Closing, each of which is then capable of being satisfied at the Closing) and Purchaser has failed to consummate the Closing in breach of its obligations under this Agreement, then Purchaser shall pay, or cause to be paid, to Seller (or its designee) an amount equal to Three Million Five Hundred Thousand Dollars ($3,500,000) (the “Reverse Termination Fee”) by wire transfer of immediately available funds to an account designated in writing by Seller, within three (3) Business Days after such termination.
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(b) If this Agreement is terminated: (i) by Purchaser pursuant to Section 9.01(b) at a time when Purchaser would have been entitled to terminate this Agreement pursuant to Section 9.01(d); (ii) by Purchaser pursuant to Section 9.01(d); or (iii) by Purchaser at a time when all conditions set forth in Section 5.02 have been satisfied or waived (other than those conditions that by their terms are to be satisfied at the Closing, each of which is then capable of being satisfied at the Closing) and Seller has failed to consummate the Closing in breach of its obligations under this Agreement, then Seller shall pay, or cause to be paid, to Purchaser (or its designee) an amount equal to Three Million Five Hundred Thousand Dollars ($3,500,000) (the “Termination Fee”) by wire transfer of immediately available funds to an account designated in writing by Purchaser, within three (3) Business Days after such termination.
(c) In no event shall Purchaser be required to pay the Reverse Termination Fee on more than one occasion, and in no event shall Seller be required to pay the Termination Fee on more than one occasion. The Reverse Termination Fee and the Termination Fee shall not be payable in respect of the same termination event, and payment by a party of the Reverse Termination Fee or the Termination Fee, as applicable, shall satisfy such party’s obligations under this Section 9.03 in full.
(d) Each of the parties acknowledges that (i) the agreements contained in this Section 9.03 are an integral part of the transactions contemplated by this Agreement, (ii) the Reverse Termination Fee and the Termination Fee are not a penalty, but rather each constitutes liquidated damages in a reasonable amount that will compensate the receiving party in circumstances in which such fee is payable for the efforts and resources expended and opportunities foregone while negotiating this Agreement and in reliance on this Agreement and on the expectation of the consummation of the transactions contemplated hereby, which amount would otherwise be impossible to calculate with precision, and (iii) without the agreements contained in this Section 9.03, the parties would not have entered into this Agreement. For the avoidance of doubt, payment of the Reverse Termination Fee or the Termination Fee shall not limit, cap or otherwise affect any party’s right to recover losses incurred or suffered as a result of any Fraud, willful misconduct or intentional breach, as contemplated by Section 9.02.
Article X
SURVIVAL AND INDEMNIFICATION
Section 10.01. Survival. The parties, intending to modify any applicable statute of limitations, agree that (a) the representations and warranties contained in this Agreement or (except as otherwise expressly set forth therein) any Ancillary Agreement, and in any certificate delivered hereunder, shall terminate effective as of the Closing without the need for any further action by any Person and shall not survive the Closing for any purpose whatsoever, and thereafter there shall be no liability or obligation on the part of, nor shall any claim be made by, any party or any of their respective Affiliates in respect thereof, in connection therewith or related thereto, (b) the covenants and agreements set forth herein to be performed solely prior to the Closing shall terminate effective as of the Closing without the need for any further action by any Person and shall not survive the Closing for any purpose whatsoever, and thereafter there shall be no liability or obligation on the part of, nor shall any claim be made by, any party or any of their respective Affiliates in respect thereof, in connection therewith or related thereto, and (c) the covenants and agreements set forth herein to be performed after the Closing shall survive the Closing in accordance with their respective terms only for such period as shall be required for the party required to perform under such covenant or agreement to complete the performance required thereby.
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Section 10.02. Losses. As used in this Article X and this Agreement, “Loss” and/or “Losses” shall mean any kind of actions, claims, losses, liabilities, obligations, damages, costs, expenses (including reasonable attorneys’ fees), Taxes, interest and penalties.
Section 10.03. Indemnification.
(a) By the Sellers. Subject to Section 10.01 and the limitations in this Article X, the Sellers shall jointly and severally indemnify, defend and hold harmless the Purchaser and its representatives (collectively, the “Purchaser Indemnified Parties”) against, and reimburse any Purchaser Indemnified Party for, all Losses that such Purchaser Indemnified Party may at any time suffer or incur, or become subject to, as a result of or in connection with:
(i) any breach or failure by such Seller or any Affiliate to perform any of its covenants or obligations contained in this Agreement or any Ancillary Agreement to the extent such performance is expressly required after the Closing;
(ii) any liability for (A) the Seller’s Transaction Expenses or (B) Indebtedness (incurred and not repaid prior to Closing);
(iii) any Indemnified Income Taxes; and
(iv) any liability for Current Litigation against any Business Entity.
(b) With respect to each claim under Section 10.03(a), each Seller jointly and severally shall individually be responsible for the indemnification provided for herein (whether or not the indemnifiable damages for such claim are limited to the cap specified below).
(c) By the Purchaser. Subject to Section 10.01 and the limitations in this Article X, the Purchaser shall indemnify, defend and hold harmless each Seller and its respective representatives (collectively, the “Seller Indemnified Parties”) against, and reimburse any Seller Indemnified Party for, all Losses that such Seller Indemnified Party may at any time suffer or incur, or become subject to, as a result of or in connection with any breach or failure by the Purchaser to perform any of its covenants or obligations contained in any Transaction Agreement to the extent such performance is expressly required after the Closing.
Section 10.04. Notification of Claims.
(a) A Person that may be entitled to be indemnified under this Agreement (the “Indemnified Party”), shall promptly notify the Seller on behalf of the Sellers, or the Purchaser, as applicable (the “Indemnifying Party”) in writing of any actual or imminent Loss or pending or threatened claim or demand that the Indemnified Party has determined has given or could reasonably give rise to a right of indemnification under this Agreement (including a pending or threatened claim or demand asserted by a third party against the Indemnified Party, such claim being a “Third Party Claim”) prior to the expiration of the representation, warranty covenant or obligation forming the basis of such Loss or claim or demand, describing in reasonable detail the facts and circumstances with respect to the subject matter of such Loss or claim or demand; provided, however, that the failure to provide such notice shall not release the Indemnifying Party from any of its obligations under this Article X except to the extent the Indemnifying Party is actually prejudiced by such failure.
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(b) Upon receipt of a notice of a Third Party Claim for indemnity from an Indemnified Party pursuant to Section 10.04(a), the Indemnifying Party will assume the defense and control of any Third Party Claim but shall allow the Indemnified Party a reasonable opportunity to participate (but not control) in the defense of such Third Party Claim with its own counsel and at its own expense; provided, however, that, if the Indemnified Party is Purchaser, and Purchaser believes in good faith that such Third Party Claim, or the resolution thereof, would either (i) have a Material Adverse Effect on the Purchaser or (ii) seek to impose an injunction or other equitable relief against the Purchaser Indemnified Party, Purchaser shall have the right to defend in good faith such Third Party Claim, with its own counsel and at its own expense, and the Sellers shall extend reasonable cooperation in connection with such defense. Subject to such exception, the Indemnifying Party shall select counsel, contractors and consultants of recognized standing and competence after consultation with the Indemnified Party and shall take all steps reasonably necessary in the defense or settlement of such Third Party Claim. The Indemnified Party shall, and shall cause each of its Representatives to, reasonably cooperate with the Indemnifying Party, at the Indemnifying Party’s expense, in the defense of any Third Party Claim. The Indemnifying Party shall not settle any Third Party Claim unless (i) such settlement is on exclusively monetary terms and provides a complete release of, or dismissal with prejudice of, all claims against any Indemnified Party potentially affected by such Third Party Claim for all matters that were or could have been asserted in connection with such claim, or (ii) the Indemnified Party shall have consented in writing to the terms of such settlement, which consent shall not unreasonably be withheld, conditioned or delayed. Notwithstanding the foregoing, in the event the Indemnifying Party fails or refuses to defend the Third Party Claim within a reasonable length of time or ceases to actively defend such Third Party Claim, the Indemnified Party may assume control of the defense of such Third Party Claim with its own counsel, and the Indemnifying Party shall be liable for all costs and expenses (including reasonable attorneys’ fees) incurred by the Indemnified Party in connection with such defense; provided, however, that the Indemnifying Party will not be bound by the entry of any such judgment consented to, or any such compromise or settlement effected, without its prior written consent (which consent will not be unreasonably withheld or delayed), and any such settlement shall be subject to the limits on the Indemnifying Party’s indemnity obligations set forth herein. If the Indemnified Party assumes the defense of a Third Party Claim pursuant to this Section 10.04(b), the Indemnifying Party shall be liable to repay the Indemnified Party for all reasonable expenses incurred in connection with said defense (including reasonable attorneys’ fees and settlement payments) if it is determined that such request for indemnification was proper under this Section 10.04(b) but shall be subject to the limitations of this Article X.
(c) In the event an Indemnifying Party receives a notice of a claim for indemnity from an Indemnified Party pursuant to Section 10.04(a) that does not involve a Third Party Claim, the Indemnifying Party shall notify the Indemnified Party within forty-five (45) days following its receipt of such notice if the Indemnifying Party disputes its liability to the Indemnified Party under this Article X. If the Indemnifying Party does not so notify the Indemnified Party, the claim specified by the Indemnified Party in such notice shall be conclusively deemed to be a liability of the Indemnifying Party under this Article X, and the Indemnified Party will be free to pursue such remedies as may be available to the Indemnified Party pursuant to the terms of this Agreement. If the Indemnifying Party has timely disputed its liability, in whole or in part, with respect to such claim as provided above, the Indemnifying Party and the Indemnified Party shall resolve such dispute in accordance with Section 11.10, unless otherwise resolved by written agreement between Purchaser and Seller.
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(d) If, prior to the expiration of the applicable period provided in Section 10.01 for survival of claims for indemnification under this Article X, an Indemnified Party shall incur Losses which are otherwise indemnifiable under this Article X, and such Indemnified Party gives written notice of such Losses to the Indemnifying Party in accordance with this Section 10.04 on or before such expiration date, the expiration of such period shall not affect the Indemnified Party’s right to be indemnified for Losses otherwise recoverable but for the expiration of such period.
(e) If there shall be any conflicts between the provisions of this Section 10.04 and Article VII (relating to Tax contests), the provisions of Article VII shall control with respect to Tax contests.
Section 10.05. Exclusive Remedies. Each of the Sellers and the Purchaser acknowledges and agrees that following the Closing, other than in the case of Fraud by the Purchaser or a Seller, the indemnification provisions of Article X shall be the sole and exclusive remedies of the Sellers and the Purchaser, respectively, under this Agreement, including for any breach of the representations or warranties in this Agreement and for any failure to perform or comply with any covenants or agreements in this Agreement; provided, however, that nothing set forth in this Article X shall be deemed to prohibit or limit any party’s right at any time on or after the Closing, to (a) seek injunctive or equitable relief for the failure of any other party to perform any covenant or agreement contained herein and each Party shall have the right to seek specific performance of any duties or obligations of another Party hereunder to the extent permitted by Applicable Law or (b) make a claim under the R&W Insurance Policy. Notwithstanding anything to the contrary herein and without limiting any of the waivers, releases or other limitations set forth in Section 11.21, (i) for purposes of determining any Losses suffered by a Indemnified Party, Losses shall in no event include any punitive or exemplary damages unless owing to an unaffiliated third party, (ii) the aggregate liability of the Seller Indemnifying Parties in all circumstances shall never exceed the Purchase Price, (iii) no Indemnified Party shall be entitled to recover from the Indemnifying Party pursuant to this Article X more than once in respect of the same Losses suffered, or (iv) no Indemnifying Party shall be required to pay any amount in discharge of a valid indemnification claim unless and until the Loss in respect thereof has become due and payable.
Section 10.06. Additional Indemnification Provisions.
(a) The Sellers and the Purchaser agree, for themselves and on behalf of their respective Representatives, that with respect to each indemnification obligation in the Transaction Agreements or any other document executed in connection with the Closing, all Losses shall be net of any third-party insurance proceeds (including the R&W Insurance Policy) which have been recovered by the Indemnified Party after reasonable effort in connection with the facts giving rise to the right of indemnification, (net of any (x) deductibles incurred or required to be paid or utilized first prior to receiving such insurance proceeds; (y) out-of-pocket costs and expenses incurred by Indemnified Party in connection with such claim not reimbursed by such insurer or the Indemnifying Party or (z) premium increases as a result of such claim), provided that the Indemnified Party’s reasonable efforts shall not require it to pursue legal action against an insurer if the Indemnified Party provides the Indemnifying Party the opportunity in accordance with Section 10.04 to pursue and assume the control of such legal action at its own expense. In the event that the Indemnifying Party commenced such legal action, the Indemnified Party shall, and shall cause each of its Representatives to, reasonably cooperate with the Indemnifying Party, at the Indemnifying Party’s expense, in such legal action.
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(b) In any case where an Indemnified Party recovers from a third Person any amount in respect of a matter for which the Indemnifying Party has indemnified it pursuant to this Article X, such Indemnified Party shall promptly pay over to the Indemnifying Party the amount so recovered (after deducting therefrom the amount of expenses incurred by it in procuring such recovery and any deductibles or other Losses from such matter paid by the Indemnified Party), but not in excess of the sum of (i) any amount previously paid by the Indemnifying Party to or on behalf of the Indemnified Party in respect of such claim and (ii) any amount expended by the Indemnifying Party in pursuing or defending any claim arising out of such matter. The parties shall treat any indemnification payment made under this Agreement as an adjustment to the Purchase Price.
Section 10.07. Mitigation. Each of the parties agrees to take all reasonable steps to mitigate their respective Losses upon and after becoming aware of any event or condition which would reasonably be expected to give rise to any Losses that are indemnifiable hereunder.
Section 10.08. Tax Treatment of Indemnification Payments. All indemnification payments made under this Agreement shall be treated by the parties as an adjustment to the Purchase Price for all purposes hereunder (including Tax purposes, unless otherwise required by Law).
Article XI
MISCELLANEOUS
Section 11.01. Financial Information and Projections.
(a) In connection with Purchaser’s investigation of the Business, Purchaser has received from Seller various forward-looking statements regarding the Business (including the estimates, assumptions, projections, forecasts and plans furnished to it) (the “Forward-Looking Statements”). Purchaser acknowledges and agrees (i) there are uncertainties inherent in attempting to make the Forward-Looking Statements; (ii) Purchaser is familiar with such uncertainties; (iii) Purchaser is taking full responsibility for making its own investigation, examination and valuation of the Business and has employed outside professionals to assist it with the foregoing; (iv) Purchaser is taking full responsibility for making its own evaluation of the adequacy and accuracy of all Forward-Looking Statements; (v) Purchaser is not relying on any Forward-Looking Statement in any manner whatsoever and (vi) with respect to the foregoing, Purchaser shall have no claim against Seller or any of its Affiliates.
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(b) Seller makes no representation or warranty with respect to the reasonableness of the assumptions underlying any Forward-Looking Statement.
(c) Seller makes no representation or warranty with respect to any Forward-Looking Statement made (i) in the Management Presentation, (ii) in the Data Room, (iii) in any supplemental due diligence information provided or made available to Purchaser, (iv) in connection with Purchaser’s discussions with management of the Business, (v) in negotiations leading to this Agreement or (vi) in any other circumstance.
Section 11.02. Amendment and Modifications. This Agreement may be amended, restated or supplemented or otherwise modified only in a writing signed by all parties hereto.
Section 11.03. Interpretation and Construction.
(a) Unless otherwise provided herein all monetary values stated herein are expressed in U.S. currency and all references to “dollars” or “$” will be deemed references to the lawful money of the United States.
(b) Each accounting term set forth herein and not otherwise defined shall have the meaning accorded it under GAAP as applied by Seller. For the avoidance of doubt, in the event of any discrepancy between GAAP and the provisions of this Agreement, the provisions of this Agreement shall control.
(c) Whenever conversion of values from any Foreign Currency for a particular date or period shall be required, such conversion shall be made using the closing rate provided by Bloomberg at 5:00 A.M. New York City time three (3) Business Days prior to such date.
(d) The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, provincial, local or foreign Law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. When a reference is made in this Agreement to a party or to a Section, Exhibit or Annex, such reference shall be to a party to, a Section of, or an Exhibit or Annex to, this Agreement, unless otherwise indicated. When a reference is made in this Agreement to a Schedule, such reference shall be to the corresponding numbered Schedule of the Disclosure Schedules. All terms defined in this Agreement shall have their defined meanings when used in any Exhibit or Annex to this Agreement or any Disclosure Schedule or any certificate or other document made or delivered pursuant hereto, unless otherwise defined therein. Whenever the words “include,” “includes,” “including” or “such as” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” The words “hereof,” “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 word “or” when used in this Agreement is not exclusive. The word “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and such phrase shall not mean simply “if.” Whenever used in this Agreement, any noun or pronoun shall be deemed to include the plural as well as the singular and to cover all genders. Any agreement, instrument or statute defined or referred to herein means such agreement, instrument or statute as from time to time amended, supplemented or modified, including (i) (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and (ii) all attachments thereto and instruments incorporated therein. The words “asset” and “property” shall be construed to have the same meaning and effect. References to a Person are also to its permitted successors and assigns. In the event of any conflict between this Agreement and any Local Transfer Document, the terms of this Agreement shall control.
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Section 11.04. Waiver. A waiver of any breach or failure to enforce any of the terms or conditions of this Agreement shall not in any way affect, limit or waive either party’s rights at any time to enforce strict compliance thereafter with every term or condition of this Agreement. Any waiver of rights hereunder must be set forth in writing, signed by the waiving party.
Section 11.05. Notices. All notices, demands and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given or made (a) in the case of personal delivery, on the date of such delivery; (b) in the case of electronic mail, on the date of transmittal when transmitted by email prior to 5:00 p.m. New York, New York, time on a Business Day (and when sent outside of such hours at 9:00 a.m. New York, New York time on the next Business Day), provided such electronic mail is not promptly returned as undeliverable; (c) three Business Days after being mailed by registered or certified mail (postage prepaid, return receipt requested); and (d) one Business Day after being sent by overnight courier (providing proof of delivery):
| if to Seller to: | ||
| Firefish TopCo, LLC | ||
| c/o MiddleGround Capital Partners | ||
| 1500 Aristides Blvd | ||
| Lexington, KY 40511 | ||
| Attn: [Intentionally Omitted] | ||
| E-mail Address: [Intentionally Omitted] | ||
| With a copy (which shall not constitute notice) to: | ||
| Dechert LLP | ||
| 1095 Avenue of the Americas | ||
| New York, NY 10036 | ||
| Attn: | Omoz Osayimwese | |
| Stephen Pratt | ||
| David Cosgrove | ||
| Email: | omoz.osayimwese@dechert.com; stephen.pratt@dechert.com; david.cosgrove@dechert.com | |
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and if to Purchaser to:
Aspire Biopharma Holdings, Inc.
194
Candelaro Drive, #233
Humacao, Puerto Rico 00791
Attn: Chief Executive Officer
Email: [Intentionally Omitted]
and
Lakewood & Company, LLC
2451 Cumberland Parkway, Suite 3627
Atlanta, Georgia 30339
Attn: Gregory J. Corona
Email: greg@lakewoodcompany.com
With a copy (which shall not constitute notice) to:
Dorsey & Whitney LLP
1401 New York Avenue, N.W.
Suite 900
Washington,
DC 20005
Attn: Christopher Hagan
Email: Hagan.Chris@dorsey.com
Kaufman
& Canoles, P.C.
Two James Center, 14th Floor
1021 E. Cary St.
Richmond, VA 23219
Attn: Anthony Basch; J. Britton Williston
Email: tony.basch@kaufcan.com; britton.williston@kaufcan.com
Section 11.06. Binding Effect; Assignment. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective legal representatives and successors. Notwithstanding the foregoing, this Agreement shall not be assigned by any party hereto by operation of Law or otherwise without the express written consent of each of the other parties, except that (i) Seller may after the Closing, assign all or any portion of its rights or obligations hereunder to any Person in connection with an internal restructuring, joint venture, sale or divestiture of all or a portion of the equity of the Seller or any of its Affiliates, or any other action or combination of actions, in each case without the consent of the Purchaser, and (ii) Purchaser may (A) assign all or part of its rights or obligations in respect of the purchase and acceptance of any Transferred Entity to any of its Affiliates to the extent any such assignment does not delay or otherwise impede closing or otherwise require any additional Antitrust Approval, foreign direct investment approval, or any other authorization, consent or approval from, or notice to, in each case from any Governmental, Authority, or otherwise, (B) on or after the Closing, assign all or any portion of its rights or obligations hereunder to any Person in connection with any debt financing, or (C) after the Closing, assign all or any portion of its rights or obligations hereunder to any Person in connection with an internal restructuring, joint venture, sale or divestiture of all or a portion of the equity interests of Purchaser or any of its Affiliates, or any other action or combination of actions, in each case without the consent of Seller. No assignment of any obligations hereunder shall relieve the parties hereto of any such obligations.
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Section 11.07. Entire Agreement. This Agreement, together with the Annexes, Exhibits, Schedules and Disclosure Schedules expressly contemplated hereby and/or attached hereto and the other agreements (including the Transaction Documents) and certificates delivered in connection herewith including the Confidentiality Agreement, constitutes the entire agreement between the parties with respect to the Transactions and supersedes any and all prior agreements and undertakings, both written and oral, among the parties hereto, or any of them, with respect to the subject matter hereof, including, without limitation, the Letter of Intent, dated as of April 2, 2026, among Purchaser and Seller, which the parties acknowledge is superseded in its entirety by this Agreement. Before signing this Agreement, the parties have had numerous conversations including preliminary discussions, formal negotiations and informal conversations at meals and social occasions, and have generated correspondence and other writings, in which the parties discussed the transaction which is the subject of this Agreement and their aspirations for success. In such conversations and writings, individuals representing the parties may have expressed their judgments and beliefs concerning the intentions, capabilities, and practices of the parties, and may have forecasted future events. The parties recognize that such conversations and writings often involve an effort by both sides to be positive and optimistic about the prospects for the transaction. However, it is also recognized that all business transactions contain an element of risk, as do the Transactions, and that it is normal business practice to limit the legal obligations of contracting parties to only those promises and representations which are essential to their transaction so as to provide certainty as to their respective future rights and remedies. Accordingly, other than the Confidentiality Agreement entered into between the parties, the Transaction Documents are intended to define the full extent of the legally enforceable undertakings and representations of the parties hereto, and no promise or representation, written or oral, which is not set forth explicitly in such agreements is intended by either party to be legally binding. Each of the parties acknowledge that in deciding to enter into this Agreement and the other Transaction Documents and to consummate the transaction contemplated hereby and thereby, none of them has relied upon any statements or representations, written or oral, other than those explicitly set forth herein or therein.
Section 11.08. Third Party Beneficiaries. Other than as explicitly set forth herein, including in Section 8.03(c), Section 9.02 and Article X, and other than Non-Party Affiliates pursuant to Section 11.21, this Agreement does not, and is not intended to, confer upon any Person other than the parties to this Agreement and the other Business Entities any rights or remedies hereunder.
Section 11.09. Governing Law. This Agreement shall be governed in all respects, including as to validity, interpretation and effect, by the internal laws of the State of Delaware, without giving effect to the conflict of laws rules thereof to the extent that the application of the law of another jurisdiction would be required thereby.
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Section 11.10. Submission to Jurisdiction. Each party hereby irrevocably agrees that any action, suit or other proceeding arising out of or relating to this Agreement or any transaction contemplated hereby shall be brought in the Delaware Court of Chancery and any state appellate court therefrom within the State of Delaware (or, if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, then any state or federal court within the State of Delaware), and each party hereby submits to the exclusive jurisdiction of such courts in any such suit, action or other proceeding. A final judgment in any such suit, action or other proceeding may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. Each party irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or other proceeding arising out of or relating to this Agreement or any transaction contemplated hereby in such courts, and hereby irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or other proceeding brought in any such court has been brought in an inconvenient forum. Each party further agrees that service of any process, summons, notice or document to such party pursuant to Section 11.05, or in such other manner as may be permitted by Law, shall be valid and sufficient service thereof.
Section 11.11. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon a determination that any term or other provision is invalid, illegal or incapable of being enforced, Seller and Purchaser shall negotiate in good faith to modify this Agreement so as to affect their original intent as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the maximum extent possible.
Section 11.12. Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN CONNECTION WITH ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING DIRECTLY OR INDIRECTLY OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF THE PARTIES IN THE NEGOTIATION, EXECUTION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT OR ANY OTHER AGREEMENT ENTERED INTO IN CONNECTION HEREWITH. EACH OF THE PARTIES HERETO (1) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (2) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS Section 11.12.
Section 11.13. Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties in separate counterparts, each of which when executed shall be deemed to be an original, but all of which shall constitute one and the same agreement.
Section 11.14. Facsimile or .pdf Signature. This Agreement may be executed by facsimile or .pdf signature and a facsimile or .pdf signature shall constitute an original for all purposes.
Section 11.15. No Presumption Against Drafting Party. Each party acknowledges that it has been represented by legal counsel in connection with this Agreement and the transactions contemplated by this Agreement. Accordingly, any rule of law or any legal decision that would require interpretation of any claimed ambiguities in this Agreement against the drafting party has no application and is expressly waived.
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Section 11.16. Further Assurances. Each party agrees to execute such additional instruments, agreements and documents and to take such other actions as may be necessary to effect the purposes of this Agreement.
Section 11.17. Specific Performance. Subject to Section 9.03, each party acknowledges and agrees that remedies at Law would be an inadequate remedy for the breach of any agreement contained herein and that in addition thereto, each party shall be entitled to specific performance of the terms hereof or other equitable remedies in the event of any such breach, without the necessity of proving the inadequacy of remedies at Law and to obtain injunctive relief against any breach or threatened breach of any covenant or agreement contained in this Agreement.
Section 11.18. Headings. The Article and Section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning and interpretation of this Agreement.
Section 11.19. Disclosure Schedules. The Disclosure Schedules shall be construed with and as an integral part of this Agreement to the same extent as if the same had been set forth verbatim herein. Any matter disclosed in the Disclosure Schedules shall not be deemed to be an admission or representation as to the materiality of the item so disclosed. With respect to the Disclosure Schedules, any disclosure made on any section or subsection thereof with respect to any representation or warranty shall be deemed to be made with respect to any representation or warranty to which such disclosure’s application or relevance is reasonably apparent on the face of such disclosure.
Section 11.20. Payment of Expenses. Except as otherwise set forth in this Agreement, and whether or not the Transactions are consummated, all costs and expenses associated with this Agreement and the Transactions, including the fees of counsel and accountants, shall be borne by the party incurring such expenses. Without limiting the foregoing, Seller hereby assumes and shall be fully responsible for the payment of all Transaction Expenses.
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Section 11.21. Non-Recourse. Except as expressly set forth in the other Transaction Documents or the Confidentiality Agreement, all claims, obligations, liabilities, or causes of action (whether at Law, in equity, in contract, in tort or otherwise) that may be based upon, in respect of, arise under, out or by reason of, be connected with, or relate in any manner to this Agreement or any other Transaction Document, or the negotiation, execution, or performance of this Agreement or any other Transaction Document (including any representation or warranty made in, in connection with, or as an inducement to, this Agreement or any other Transaction Document ), may be made only against (and such representations and warranties are those solely of) the Persons that are expressly identified as parties to this Agreement or such other Transaction Document (the “Contracting Parties”). No Person who is not a Contracting Party, including any current, former or future equityholder, incorporator, controlling person, general or limited partner, member, Affiliate, assignee or representative of, and any financial advisor to, any Contracting Party, or any current, former or future equityholder, incorporator, controlling person, general or limited partner, Affiliate, assignee or representative of, any of the foregoing or any of their respective successors, predecessors or assigns (or any successors, predecessors or assigns of the foregoing) (collectively, the “Non-Party Affiliates”), shall have any liability (whether in Law or in equity, whether in contract or in tort or otherwise) for any claims, causes of action, obligations, or liabilities arising under, out of, in connection with, or related in any manner to this Agreement or such other Transaction Document or based on, in respect of, or by reason of this Agreement or such other Transaction Document or its negotiation, execution, performance, or breach (other than as expressly set forth in the other Transaction Documents or the Confidentiality Agreement), and, to the maximum extent permitted by Law, each Contracting Party hereby waives and releases all claims, causes of action, obligations, or liabilities arising under, out of, in connection with, or related in any manner to this Agreement or based on, in respect of, or by reason of this Agreement or its negotiation, execution, performance, or breach (other than as expressly set forth in the other Transaction Documents or the Confidentiality Agreement) against any such Non-Party Affiliates. Without limiting the foregoing, to the maximum extent permitted by Law, except to the extent otherwise expressly set forth in the other Transaction Documents or the Confidentiality Agreement, (i) each Contracting Party hereby waives and releases any and all rights, claims, demands, or causes of action that may otherwise be available, whether at Law, in equity, in contract, in tort or otherwise, to avoid or disregard the entity form of a Contracting Party or otherwise impose liability of a Contracting Party on any Non-Party Affiliate, whether granted by statute or based on theories of equity, agency, control, instrumentality, alter ego, domination, sham, single business enterprise, piercing the veil, unfairness, undercapitalization, or otherwise, in each case arising under, out of, in connection with, or related in any manner to this Agreement or based on, in respect of, or by reason of this Agreement or its negotiation, execution, performance, or breach and (ii) each Contracting Party disclaims any reliance upon any Non-Party Affiliates with respect to the performance of this Agreement or any representation or warranty made in, in connection with, or as an inducement to this Agreement. Notwithstanding the foregoing, the provisions of this Section 11.21 shall not apply to claims for Fraud by a party to this Agreement against a party to this Agreement, in each case, in connection with the Transactions.
Section 11.22. Publicity. After the Closing, Purchaser and Seller shall not, and each shall cause its Affiliates and its and their representatives not to, issue any press release or public announcement concerning this Agreement or the transactions contemplated hereby, without obtaining the prior written approval of the other party hereto, which approval will not be unreasonably withheld, conditioned or delayed, unless, in the reasonable judgment of Purchaser or Seller, disclosure is otherwise required by applicable Law or the rules of any stock exchange, as applicable; provided that, to the extent required by applicable Law or by the rules of any stock exchange, the party intending to make such release or announcement shall use its commercially reasonable efforts, consistent with such applicable Law, to consult with the other party with respect to the text thereof; provided, further, that (A) Purchaser and Seller are permitted to disclose the consummation of the Transactions (but not, without the consent of the other party, price terms or the name of such other party) on their websites and otherwise in the ordinary course of their businesses and (B) Purchaser and Seller are permitted to report and disclose the status and terms of this Agreement and the transactions contemplated hereby to their respective (or their respective sponsors’) direct or indirect, current and prospective, investors or limited partners if required by the governing documents with those investors or limited partners and otherwise in the ordinary course of their business or if such report or disclosure is in connection with any fund raising activities of such Persons, in each case, so long as such investors or limited partners are subject to confidentiality obligations with respect to such information. If Purchaser, based on the advice of its counsel, determines that this Agreement, or any of the other Transaction Documents, must be publicly filed with a Governmental Authority, then, subject to applicable Law, Purchaser, prior to making any such filing, shall provide Seller and its counsel with a redacted version of this Agreement (and any other Transaction Document) which it intends to file, and will give due consideration to any comments provided by Seller or its counsel and use commercially reasonable efforts to ensure the confidential treatment by such Governmental Authority of those sections specified by Seller or its counsel.
Section 11.23. Fulfillment of Obligations. Any obligation of any party to any other party under this Agreement, which obligation is performed, satisfied or fulfilled by an Affiliate of such party, shall be deemed to have been performed, satisfied or fulfilled by such party.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written.
| PURCHASER: | ||
| Aspire Biopharma Holdings, Inc. | ||
| By | ||
| Name: | Kraig Higginson | |
| Title: | Chief Executive Officer | |
| SELLER: | ||
| FireFish TopCo, LLC | ||
| By | ||
| Name: | ||
| Title: | ||
[Signature page to Purchase Agreement]
Exhibit A
Definitions
“Accountant” means CBIZ, or if CBIZ is unavailable, unwilling or unable to serve, an independent accounting firm of internationally recognized standing that is reasonably satisfactory to Purchaser and Seller and that has no material relationship with Purchaser or Seller.
“Action” means any judicial, administrative or arbitral actions, suits, investigations, audits or proceedings (public or private) by or before a Governmental Authority (whether civil, criminal, administrative, or otherwise).
“Affiliate” means, with respect to any specified Person, any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with, such specified Person. For purposes of this definition, the term “control” (including the correlative meanings of the terms “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of such Person, whether through the ownership of voting securities or by contract or otherwise.
“Ancillary Agreements” means, other than this Agreement, the agreements and instruments, including, to the extent required by applicable Law, any Local Transfer Documents and any related instruments of transfer, and including the Transition Services Agreement, the U.S. APA, the KOP APA, and the License Agreement, executed and delivered in connection with the transactions contemplated by this Agreement.
“Antitrust Approvals” means all authorizations, orders, grants, consents, clearances, permissions and approvals and all expirations, lapses and terminations of any required waiting periods (including extensions thereof), in each case under any antitrust, merger control, competition or similar Law required in order to consummate the Transactions.
“Antitrust Filings” means all applicable notifications to or filings with an antitrust, merger control, competition or other similar authority in the United States, the European Union (or any member state thereof) or any other jurisdiction required to consummate the Transactions.
“Automotive Czech” means DURA Automotive Systems CZ, s.r.o., a company incorporated and existing under the laws of the Czech Republic, with its registered office at Průmyslový park 300, Vlčovice, 742 21 Kopřivnice, Czech Republic, Identification No. 260 31 531, registered in the Commercial Register maintained by the Regional Court in Ostrava, Section C, Insert 25141.
“Benefit Plan” means (i) each “employee benefit plan” as defined in Section 3(3) of ERISA and (ii) each other retirement, pension, severance, bonus, commission, incentive, equity or equity-based, group health, welfare, life insurance, disability, change in control, transaction bonus or retention plan, program, agreement or arrangement, in each case, excluding any plan, program, agreement or arrangement required by applicable Law or regulation (e.g., government mandated plans).
“Business” means the business of designing, manufacturing, marketing and selling automotive systems that facilitate electronic driver control and the migration toward vehicle electrification, safety, lightweighting and sustainability, as conducted by the Transferred Entities on the date hereof, and in respect to (a) Automotive Czech, the business conducted by the KOP Enterprise and (b) DUS Operating Inc., the business conducted by the U.S. Enterprise.
“Business Day” means any day, other than a Saturday or a Sunday or a day on which banking and savings and loan institutions are authorized or required by applicable Law to be closed in the State of New York.
“Business Employee” means (a) each employee of the Business Entities who, as of the Closing Date, is exclusively engaged in the Business, (b) each employee of the Business Entities whose employment will transfer to Purchaser or one of its Affiliates on the Closing Date by operation of applicable Law or (c) each Person who is employed by Seller or one of its Affiliates immediately prior to the Closing and is set forth on Schedule Section 8.01, including in all cases of clauses (a), (b) and (c), each such employee who as of the Closing Date is on leave of absence (including medical leave, military leave, workers compensation leave and short-term or long-term disability) or vacation.
“Business Entities” means, collectively, Transferred Entities, DUS Operating Inc. with respect to the U.S. Enterprise and Automotive Czech with respect to the KOP Enterprise.
“Business Unit” means each of the Transferred Entities and with respect to (a) DUS Operating Inc., the U.S. Enterprise and (b) Automotive Czech, the KOP Enterprise, described on Annex C.
“Code” means the Internal Revenue Code of 1986, as amended.
“Collective Bargaining Agreement” means each collective bargaining, works council or other material labor union contract to which any Seller or a Transferred Entity is a party or its subject to with respect to the employment of any Business Employee, but excluding any national, industry or similar generally applicable contract or arrangement.
“Confidentiality Agreement” means the Confidentiality and Non-Disclosure Agreement, dated as of July 20, 2025, between Lakewood & Company, LLC and Seller.
“Contracts” means all contracts, agreements, options, leases, licenses, sales and accepted purchase orders, consensual obligations, promises, undertakings, commitments and other contracts of any kind, to which Seller is a party.
“COVID-19” means the COVID-19 disease caused by the SARS-CoV-2 virus (or any mutation or variation thereof).
“COVID-19 Pandemic” means the outbreak of COVID-19.
“Data Room” means the electronic data room containing documents and materials relating to the Business as constituted as of the Closing Date.
“DAS GmbH” means Dura Automotive Systems GmbH, Schiessstr. 60, 40549 Düsseldorf, Germany, registered in the commercial register at the local court (Amtsgericht) in Düsseldorf under HRB 36406, being an Affiliate.
“Disclosure Schedules” means the Disclosure Schedules attached hereto being delivered by the Sellers on the date hereof setting forth any exceptions to or any disclosures required by Article III and/or Article IV and which identifies the corresponding section of Article III and/or Article IV to which such Schedule relates.
“Emergency Action” means any commercially reasonable actions that the Seller or any of its Affiliates reasonably determine are necessary or prudent for the Business to take in connection with any emergency condition (or the anticipated effects of such emergency condition), including any pandemic or other public health emergency (including the COVID-19 Pandemic), such as actions (i) to suspend or resume operation of all or a portion of any of the Business’s facilities, (ii) intended to mitigate the adverse effects of such condition on the Business or its customers, personnel or stakeholders or (iii) intended to ensure compliance with any Law or Governmental Order or any recommendation by a Governmental Authority.
“Environmental Claim” means all foreign, federal, state and local statutes, laws, common law, regulations, ordinances and other provisions having the force or effect of law, and all judicial and administrative orders and determinations that are binding upon any Transferred Entity, concerning Hazardous Substances or protection of the environment or natural resources, including all those relating to the generation, transportation, treatment, storage, disposal, distribution, discharge, Release, threatened Release, exposure to or cleanup of any Hazardous Substances.
“Environmental Law” means applicable federal, state, provincial, local or foreign Law relating to pollution or protection of the environment or natural resources; provided that in no event shall such Laws or regulations include those applicable to any virus (including COVID-19).
“ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as amended.
“Foreign Currency” means any currency other than U.S. dollars.
“Foreign (Direct) Investment Laws” means any statute, law, ordinance, rule or regulation of any jurisdiction or any country designed to prohibit, restrict, regulate or screen foreign direct investments into such jurisdiction or country.
“Foreign (Direct) Investment Approvals” means all authorizations, orders, grants, consents, clearances, permissions and approvals and all expirations, lapses and terminations of any required waiting periods (including extensions thereof), in each case under any foreign (direct) Investment Law required in order to consummate the Transactions.
“Fraud” means, with respect to any party to this Agreement, a successful claim (as finally determined by a court of competent jurisdiction) by the other party against such first party for common law liability under the Laws of the State of Delaware for its actual and intentional fraud with respect to the making of representations and warranties pursuant to Article III (in the case of the Seller) or Article IV (in the case of Purchaser); provided, that such actual and intentional fraud of such party shall only be deemed to exist if such party itself (and not any other Person on its behalf (including any Representatives or Affiliates (or any Representatives of any of the foregoing) of such party)) makes a knowing and intentional misrepresentation of a material fact with the intent that the other party rely on such fact, coupled with such other party’s detrimental reliance on such fact under circumstances that constitute common law fraud under the Laws of the State of Delaware.
“French Equity Interests” means 100% of the issued and outstanding equity interests in the French Subsidiary.
“French Subsidiary” means Dura Automotive Systems, a French simplified joint stock company (société par actions simplifiée) having its registered office located at ZI de Molina La Chazotte, rue de la Chazotte, 42350 La Talaudière, France and registered under number 414 362 327 RCS Saint-Etienne.
“French Subsidiary Perimeter” means the French Subsidiary, together with its wholly owned subsidiary Duratronics GmbH.
“GAAP” means generally accepted accounting principles in the United States as of the date of this Agreement, applied in a manner consistent with the Transferred Entities’ past practice.
“Governmental Authority” means any international, multinational, foreign, domestic, federal, territorial, state, municipal, local or other governmental, quasi-governmental, legislative, executive, regulatory, administrative or other authority, agency, commission, official, body, central bank, department, ministry, commission, board, bureau or instrumentality of any country or any court, tribunal or judicial or arbitral body thereof, or any quasi-governmental or private body or instrumentality (including any stock or other securities exchange or professional association) exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, expropriation or taxing authority or power of any nature.
“Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination, assessment, arbitration, decision or other award entered by or with any Governmental Authority.
“Gross Profit” means the amount of plant-level EBITDA equal to (a) total sales minus the sum of (b) (i) total material costs, plus (ii) total direct labor costs, plus (iii) total variable overhead costs, plus (iv) total fixed overhead costs, plus (v) customer tooling, as set forth on Schedule B.
“Hazardous Materials” means any substance, material or waste which is or has been listed or regulated as a “hazardous waste,” “hazardous substance,” “toxic waste,” “toxic substance,” “pollutant” “contaminant” or similar term under Environmental Laws, including petroleum, petroleum constituents and any hazardous substance as defined in CERCLA, as well as radioactive materials, asbestos in any form, lead or lead-containing materials, perfluorooctanoic acid (PFOA), perfluorooctane sulfonate (PFOS) or other perfluoroalkyl substances (PFASs), urea formaldehyde foam insulation and polychlorinated biphenyls.
“Income Tax” means any Tax imposed on or determined with reference to gross or net income or profits (but excluding, for the avoidance of doubt, any sales or similar Taxes).
“Indebtedness” means, as of the Closing, without duplication, all liabilities of the Transferred Entities in respect of any funded indebtedness for borrowed money. For the avoidance of doubt and notwithstanding the foregoing, “Indebtedness” does not include, without limitation, (a) any intercompany obligations solely between or among the Transferred Entities, (b) any obligations in respect of any financing obtained by, or at the express direction of, Purchaser in connection with the transactions contemplated hereby, (c) any items included in the definition of Transaction Expenses, and (d) any liabilities in respect of factoring or similar arrangements or agreements.
“Intellectual Property” or “IP Rights” means any and all intellectual property rights worldwide, including: (i) all patents and patent applications, utility models and industrial designs, and all applications and registrations therefor, including continuations, continuations-in-part, divisionals, reexaminations, renewals, extensions, provisionals and reissues with respect thereto, (ii) trademarks, service marks, trade dress, logos, trade names, domain names and other source identifiers, and all registrations of, and applications to register, the foregoing, and all associated goodwill, (iii) copyrights, including copyrights in software, and all registrations of, and applications to register, the foregoing, (iv) databases and data (including all compilations thereof and all rights therein) and (v) trade secrets, and, to the extent confidential, algorithms, methods, processes, technical data, designs, drawings, specifications and know-how.
“Judgment” means any judgment, award, order, writ, injunction, legally binding agreement with a Governmental Authority, stipulation or decree.
“Knowledge of Purchaser” means the actual knowledge of Kraig Higginson.
“Knowledge of Seller” means the actual knowledge of [Intentionally Omitted].
“KOP APA” means that certain asset purchase agreement by and between Automotive Czech and Purchaser governing the sale and transfer of the KOP Enterprise.
“KOP Enterprise” means substantially all the assets and liabilities collectively representing an enterprise (in Czech: obchodní závod) of Automotive Czech relating to the driver control systems business unit, located in Kopřivnice, Czech Republic.
“Law” or “Laws” means any statute, law, ordinance, treaty, rule, code, regulation, Judgment or other binding directive issued, promulgated or enforced by any Governmental Authority.
“Lien” means any deed of trust, option, claim, mortgage, pledge, lien, charge, security interest, easement or similar encumbrance.
“Losses” means any damages, losses, liabilities, penalties, fines, Taxes and interest, including reasonable and documented out-of-pocket costs and expenses related thereto.
“Material Adverse Effect” means any effect or change that is or would reasonably be expected to be materially adverse to the business, assets, results of operations or financial condition of the Business, taken as a whole; provided that none of the following shall be deemed (either alone or in combination) to constitute, and none of the following shall be taken into account in determining whether there has been or would reasonably be expected to be, a Material Adverse Effect: (a) the failure of the Business to meet projections, forecasts or budgets for any period (for the avoidance of doubt, any underlying cause for any such failure shall not be excluded by this clause (a) unless otherwise excluded by any of the other clauses of this proviso); or (b) any adverse effect or change arising from or relating to (i) the economy in general, or the securities, syndicated loan, credit or financial markets, (ii) the economic, business, financial or regulatory environment (including changes with respect to pricing or reimbursement by any insurance provider or other commercial entity or any governmental payor whether stemming from United States healthcare reform initiatives or otherwise) generally affecting the industries or any geographic markets in which the Business operates, (iii) the general conditions and trends in the industries or markets in which the Business operates, including competition in any of the geographic or product areas in which the Business operates, (iv) an act of civil unrest, terrorism, sabotage or an outbreak or escalation of hostilities or war (whether declared or not declared) or any natural or manmade disasters (including hurricanes, floods, tornados, global health conditions (including any epidemic, pandemic, or disease outbreak (including related to COVID-19 or any Emergency Action)), tsunamis, earthquakes or other acts of God) or any national or international calamity or crisis, (v) changes or proposed changes in applicable Law or GAAP (or the applicable accounting standards in any jurisdiction outside of the United States) or the enforcement thereof, (vi) the announcement of the Transactions, including any litigation, any reduction in revenues or income, any loss of employees or customers, any cancellation of or delay in customer orders or renewals, or any disruption in supplier, distributor or similar relationships, or (vii) any labor strikes, labor stoppages, labor slowdowns, lockouts, labor disputes, or loss, absence, illness, disability, death, quarantine, diminished productivity or work schedule, termination, layoff or furlough of employees or independent contractors with respect to the Business (including in connection with the COVID-19 Pandemic), (viii) currency fluctuations or (ix) changes or effects that are the primary result of actions or omissions of Purchaser or any of its Affiliates, or actions or omissions of Seller or any of its Affiliates that are required by the terms of this Agreement or are consented to by Purchaser or any of its Affiliates; provided, further, that any effect or change referred to in clause (b)(i), (ii), (iii) or (v) may be taken into account in determining whether there has been or would reasonably be expected to be a Material Adverse Effect to the extent such effect or change has a materially disproportionate adverse effect on the Business, taken as a whole, as compared to other participants in the industries in which the Business operates.
“Measurement Time” means 12:00 p.m., local time, on the Closing Date.
“Ordinary Course of Business” means (i) any action taken in the ordinary course of business, consistent with past practice or (ii) an Emergency Action.
“Outside Date” means September 10, 2026.
“Permit” means any permit, franchise, authorization, license or other approval issued or granted by any Governmental Authority or pursuant to any Law and, for the avoidance of doubt, shall not include Public Use Licenses.
“Permitted Liens” means (a) such Liens as are set forth on Schedule 2.02(a), (b) mechanics’, carriers’, workmen’s, repairmen’s or other like Liens arising or incurred in the Ordinary Course of Business, (c) Liens arising under purchase price conditional sales contracts or equipment leases with third parties entered into in the Ordinary Course of Business, (d) Liens for Taxes or other governmental charges that may thereafter be paid without penalty, or that the taxpayer is contesting in good faith through appropriate proceedings, (e) easements, covenants, rights-of-way and other similar restrictions, (f) statutory Liens of landlords with respect to real property, (g)(i) zoning, building, land use and other similar restrictions and (ii) Liens that have been placed by any developer, landlord or other third party on property over which Seller or its Affiliates have easement rights and subordination or similar agreements relating thereto, (h) Liens created by or for the benefit of Purchaser or its Affiliates, (i) Liens securing liabilities reflected in the Financial Statements all of which will be removed at Closing, (j) any immaterial matters shown by a current, accurate survey or physical inspection of real property none of which are reasonably likely to impair, the continued use and operation of the assets to which they relate in the conduct of the Business as conducted as of the date of this Agreement, (k) software or other third-party licenses granted by the Business, as applicable, in the Ordinary Course of Business and on a non-exclusive basis, and (l) other imperfections of title or encumbrances, if any, that, individually or in the aggregate, do not impair, and are not reasonably likely to impair, the continued use and operation of the assets to which they relate in the conduct of the Business as conducted as of the date of this Agreement.
“Person” means any individual, partnership, corporation, limited liability company, association, joint stock company, trust, joint venture, unincorporated organization, Governmental Authority or other entity.
“Personal Information” means information about an identified or identifiable individual, including an individual’s combined first and last names, home address, telephone number, email address, social security number, driver’s license number, passport number and credit card or other financial information, or information relating to a natural Person’s physical or mental health, racial or ethnic origin, religious or political views or beliefs, criminal record or activity, in each case, that constitutes personal information or personally identifiable information as defined under applicable Law.
“Post-Closing Tax Period” means, for each Business Unit, any taxable period beginning after the Closing Date and the portion of any Straddle Period beginning after the Closing Date.
“Pre-Closing Tax Period” means, for each Business Unit, any taxable period ending on or before the Closing Date and the portion of any Straddle Period ending on or before the Closing Date.
“Privacy Laws” means all Laws regarding the collection, use, storage, disclosure or other processing of Personal Information, including but not limited to Laws, regulations, guidelines and codes of practice relating to data protection, information security, cybercrime, use of electronic data and privacy matters in any applicable jurisdictions.
“Public Use License” means any commercial data license granted by a Governmental Authority.
“Purchaser Benefit Plan” means each Benefit Plan that is sponsored, contributed to or maintained by Purchaser or any of its Affiliates in which any Transferred Employee is eligible to participate.
“Purchaser Fundamental Representations” means the representations and warranties solely set forth in Section 4.01, Section 4.02, Section 4.05, Section 4.06, and Section 4.07.
“Release” means any release, spill, emission, discharge, leaking, pumping, injection, deposit, disposal, dispersal, leaching or migration into the indoor or outdoor environment (including ambient air, surface water, groundwater and surface or subsurface strata) of Hazardous Materials.
“Restricted Cash” means any cash or cash equivalents which are (i) customer deposits, (ii) landlord or similar long-term vendor or bonding deposits or escrows that will continue following the Closing; or (iii) with respect to the line items set forth on Exhibit F.
“Seller Benefit Plan” means each material Benefit Plan that is sponsored, contributed to or maintained by Seller or any of its Affiliates, in any case, in which any Business Employee participates.
“Seller Fundamental Representations” means the representations and warranties solely set forth in Section 3.01, Section 3.02, Section 3.03 and Section 3.18.
“Solvent” means that, as of any date of determination (A) the amount of the “fair saleable value” of the assets of such Person will, as of such date, exceed (1) the value of all “liabilities of such Person, including contingent and other liabilities,” as of such date, as such quoted terms are generally determined in accordance with applicable Laws governing determinations of the insolvency of debtors, and (2) the amount that will be required to pay the probable liabilities of such Person, as of such date, on its existing debts (including contingent and other liabilities) as such debts become absolute and mature, (B) such Person will not have, as of such date, an unreasonably small amount of capital for the operation of the businesses in which it is engaged or proposed to be engaged following such date, and (C) such Person will be able to pay its liabilities, including contingent and other liabilities, as they mature. For purposes of this definition, “not have an unreasonably small amount of capital for the operation of the businesses in which it is engaged or proposed to be engaged” and “able to pay its liabilities, including contingent and other liabilities, as they mature” means that such Person will be able to generate enough cash from operations, asset dispositions or refinancing, or a combination thereof, to meet its obligations as they become due.
“Straddle Period” means, for each Business Unit, a taxable period that includes but does not end on the Closing Date.
“Subsidiary” of a Person means a corporation, partnership, joint venture, association, limited liability company or other entity of which such Person (i) owns, directly or indirectly, more than 50% of the outstanding voting stock or other ownership interests or (ii) is a general partner or managing member (and all Subsidiaries of any Subsidiary of such Person).
“Tax” and “Taxes” means all taxes, charges, duties, fees, levies or other assessments, including income, excise, property, business, goods and services, sales or use, value added, profits, license, withholding (with respect to compensation or otherwise), payroll, employment, net worth, capital gains, transfer, stamp, social security, environmental, occupation and franchise taxes, in each case imposed by any Governmental Authority and in the nature of a tax, and including any interest, penalties and additions attributable thereto.
“Tax Benefit” means any reduction in Income Taxes payable to a Taxing Authority or any increase in any Income Tax refund receivable (including any related interest) from a Taxing Authority.
“Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
“Taxing Authority” means any Governmental Authority exercising any authority to impose, regulate or administer the imposition of Taxes (foreign or domestic).
“Transaction Documents” means this Agreement and the Ancillary Agreements.
“Transaction Expenses” means, without duplication and to the extent remaining unpaid as of immediately prior to the Closing, those fees, commissions, costs and expenses incurred or payable by the Transferred Entities or Seller in connection with the Transactions and the other Ancillary Agreements including brokerage fees, legal and accounting fees.
“Transactions” mean, collectively, the transactions contemplated by this Agreement and the other Transaction Documents, including the purchase and sale of the Transferred Entities.
“Transfer Taxes” mean any federal, state, provincial, county, local, foreign and other sales, use, transfer, value added, conveyance, documentary transfer, stamp duty, recording or other similar Tax, fee or charge imposed in connection with the Transactions or the recording of any sale, transfer, or assignment of property (or any interest therein) effected pursuant to this Agreement.
“Transferred Employee” means each Business Employee who, as of the Closing Date (or, if applicable, such later date that such employee commences employment with Purchaser or one of its Affiliates), becomes an employee of Purchaser or one of its Affiliates whether by operation of Law or otherwise.
“Transferred Entities” means the Subsidiaries of the Seller listed as Transferred Entities on Annex C.
“Transferred Equity Interests” means the issued and outstanding equity interests of the Transferred Entities.
“U.S. APA” means that certain asset purchase agreement by and between DUS Operating Systems Inc. and Purchaser governing the sale and transfer of the U.S. Enterprise.
“U.S. Enterprise” means substantially all the assets and liabilities collectively representing the driver control systems business unit of DUS Operating Systems Inc.
“Value Added Tax” means any value added tax, including that imposed in compliance with the European Council directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112), and any similar value added goods and services, consumption, excise, sales or use tax or any other similar, replacement or supplemental tax wherever imposed, together with any interest, penalties and additions imposed with respect thereto.
Exhibit B
Allocation Schedule
[Intentionally Omitted]
Exhibit C
Local Transfer Documents
[Intentionally Omitted]
Exhibit D
Transition Services Agreement
[Intentionally Omitted]
Exhibit E
License Agreement
[Intentionally Omitted]
Exhibit F
Restricted Cash
[Intentionally Omitted]
Annex A
Sellers
[Intentionally Omitted]
Annex B
Intercompany Debt Restructuring
[Intentionally Omitted]
Annex C
Transferred Entities
[Intentionally Omitted]
Annex D
French Acceptance Notice
[Intentionally Omitted]
SCHEDULE A
Transfer of French Equity Interests
[Intentionally Omitted]
SCHEDULE B
Gross Profit
[Intentionally Omitted]
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Kraig T. Higginson, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Aspire Biopharma Holdings, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and | |
| b) | (Paragraph omitted pursuant to Exchange Act Rules 13a-14(a) and 15d-15(a)); | |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 13, 2026 | |
| /s/ Kraig T. Higginson | |
| Kraig T. Higginson | |
| Chief Executive Officer and Chairman | |
| (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Ernest J. Scheidemann, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Aspire Biopharma Holdings, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and | |
| b) | (Paragraph omitted pursuant to Exchange Act Rules 13a-14(a) and 15d-15(a)); | |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 13, 2026 | |
| /s/ Ernest J. Scheidemann | |
| Ernest J. Scheidemann | |
| Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Aspire Biopharma Holdings, Inc. (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2026, as filed with the Securities and Exchange Commission (the “Report”), I, Kraig T. Higginson, Chief Executive Officer and Chairman of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Dated: August 13, 2026 | |
| /s/ Kraig T. Higginson | |
| Kraig T. Higginson | |
| Chief Executive Officer and Chairman | |
| (Principal Executive Officer) |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Aspire Biopharma Holdings, Inc. (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2026, as filed with the Securities and Exchange Commission (the “Report”), I, Ernest J. Scheidemann, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Dated: August 13, 2026 | |
| /s/ Ernest J. Scheidemann | |
| Ernest J. Scheidemann | |
| Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |